By Awie Bosman and Scott Havemann
Reforms in the South African energy sector, while proceeding glacially, are setting the scene for clean, private power generation. Finally, too, this is opening the door for a game-changing energy option that has been around for a while but is only now a possibility: wheeling.
It’s a devilishly simple concept: imagine depositing cash into one ATM and withdrawing it from another ATM across town. You’re getting the same value out that you put in, even if the banknotes aren’t the same.
Wheeling works in a similar way: a generating facility, such as an independent power producer (IPP), feeds electricity into the national grid in one part of the country (for a fee), and its intended customer, for example, a large industrial user, draws the commensurate amount of electricity at its facility in another part of the country.
Provision and use are then reconciled. Importantly, however, because the end user could consume energy within varying time-of-use periods, with peak periods costing more, the reconciliation is more of a financial transaction than a straight power usage one.