Eskom Playing Bully

EXCLUDES TRADERS: SAIPPA TO APPROACH NERSA FOR WHEELING CODE

- Antoinette Slabbert

The SA Independent Power Producers Association (Saippa) will engage with energy regulator Nersa about Eskom's decision to exclude electricity traders from its proposed virtual wheeling.

According to Minister of Electricity and Energy Kgosientsho Ramokgopa, Eskom will also refrain from entering wheeling arrangements in municipalities that are in arrears for their bulk supply from Eskom. The utility did not respond to questions, but according to industry sources this pertains to virtual wheeling.

Wheeling is, in essence, an accounting exercise to reconcile a transaction between an independent power producer (IPP) that supplies energy into the Eskom grid and an offtaker elsewhere who uses a certain volume of energy agreed upon with the IPP, at the price agreed between the parties.

The offtaker may be in an Eskom or municipal distribution area and will, in addition to the payment to the IPP, pay the owner of the network for its use.

Until recently, the local renewable energy market consisted of bilateral contracts between single IPPs, for example a solar or wind farm, with a single offtaker such as a mine.

The entry of traders, also called aggregators, into the local market has brought flexibility and made renewable energy accessible to smaller businesses that cannot on their own enter into long-term bilateral agreements.

This is seen as a crucial step towards a truly competitive wholesale market, which is top of government's policy agenda.

Traders typically get their supply from a basket of IPPs with battery storage and supply a blend of geographically spread customers with different demand profiles.

Eskom pushes back Although Nersa awarded the first trading licence more than a decade ago to PowerX, the recent increase in such licence applications has brought resistance from Eskom. The utility indicated earlier this year that it would challenge recent licence awards.