Cheaper Power For Your Business: Electricity Wheeling 101
What is Wheeling?
Did you know electricity tariffs in South Africa have risen by more than 450% since 2008? This year alone businesses are paying around 33.8% more for their power than they did two years ago. There is a clear need for cheaper electricity rates for businesses and they’re starting to search for a cheap, if not the cheapest, commercial electricity supplier.
Fortunately, there is a way out! It’s called Wheeling.
Wheeling electricity services are set to transform how South African businesses pay for electricity, giving them access to a new world of affordable energy solutions for businesses. It offers a cheaper, greener and more stable alternative to utility power. But what exactly is Wheeling and how does it work? Let’s find out.
What is Wheeling?
You may have heard of power wheeling, energy wheeling and wheeling electricity amongst other terms. But what exactly is it?
Wheeling gives you the choice to buy electricity from a source other than Eskom. Usually, this would be from Independent Power Producers (IPPs) that generate power on solar, wind and hydro farms that businesses can buy.
"Electricity Wheeling gives you the choice to buy electricity from a source other than Eskom."
SolarAfrica is an IPP, which means that your business can buy power directly from us:
- Eskom produces power, which your business buys from them (either directly or through your municipality)
- SolarAfrica, as an electricity wheeling service provider, can also produce power that we put into the grid
- Your business can buy this power from us
- Our power is cheaper (our Wheeling tariffs for commercial businesses are up to 50% cheaper than Eskom’s tariffs) and because it’s generated on massive solar farms, the power is 100% green.
- The power also has a steady supply that is not in danger of ageing power plant infrastructure or repairs.
- The wheeled power you use gets credited against your normal monthly bill (this is called reconciliation).
Total Energy = Wheeling Energy + Energy under your Municipal/Eskom supply agreement
The race is on to find the cheapest electricity prices – and wheeling in South Africa is the ultimate in affordable renewable energy for businesses. We can produce power on one side of the country (at our solar farms) and transport it through the national grid to your business on the other side. Essentially, we generate and push power into the grid and this ‘pool’ of power is available for our customers to use once they’ve signed a Virtual Power Purchase Agreement (VPPA).
How much can my business save with Wheeling?
So, can you really get cheaper electricity with Wheeling?
Yes! Your cost savings through Wheeling are BIG. Electricity Wheeling lets you replace expensive peak, standard and some off-peak utility power with cheaper, greener solar.
This depends on how your business uses power. If you’re an 8-hour user, we can replace up to 90% of your bill with wheeled power. A 24-hour user can replace up to 60% of their bill with cheaper, greener Wheeling.
Watch: How to avoid rising electricity prices through Wheeling
Let’s assume you have an annual bill of R190 million. Here are the kinds of Wheeling energy cost benefits you could see:
This does, of course, come with a few assumptions regarding utility tariff increases, but it should give you a good idea of how much you can save with the cheaper energy tariffs that Wheeling offers.
"Wheeling lets you replace expensive peak, standard and some off-peak utility power with cheaper, greener solar."
When would a business typically choose Wheeling?
Wheeling is ideal for businesses that:
- Have very high electricity bills due to energy-intensive operations
- Have limited roof space or other environmental factors that make a physical solar solution not possible
- Need more renewable power that an on-site solar system can provide in order to meet sustainability targets
This can stretch across various industries such as manufacturing, production, mining, data centres, processing, automotive and more.
By now you might be asking yourself how to get cheaper electricity rates and what you need to do to sign up for Wheeling.
How to get Wheeling
What is a VPPA?
This is essentially your energy Wheeling agreement. Think of a VPPA like a cell phone contract: just like you pay your provider a monthly bill for data, sent from data centres via the mobile network to your phone, you use a VPPA to get power, sent from our solar farms via the national grid to your business. This contract can either work on a pay-as-you-go basis (we call this non-firm) or you sign up for a guaranteed amount of power over a long-term contract, that you can use parts of every month (we call this firm).
Currently, these agreements can be anything from 10 to 20 years, but as the landscape changes we might see this go down to as little as five years.
If you have multiple sites that need Wheeling, you can sign one VPPA as a Wheeling agreement for all of them based on the overall power you need – making billing and admin a breeze.
How does the sign-up process work?
Who can sign up for wheeling?
It’s important to remember that Wheeling is for companies – in the industrial and commercial industry – and not residential homes just yet. We typically work with companies whose monthly electricity bill (excluding other charges and rates) is more than R400 000 per month. For Wheeling, this number could be higher depending on how your business operates, so we can ensure maximum business energy cost reduction. Our Sales team can help determine if your bill qualifies.
In order to sign up for electricity Wheeling:
- Your premises must have medium-voltage connection (greater than 1 MVA)
- You must be on a Time of Use tariff structure.
"If you have multiple sites that need Wheeling, you can sign one VPPA as a Wheeling agreement for all of them."
Deeper details
How do I know if my tariff structure and connection qualifies?
Your tariff structure is usually displayed on your bill. If your consumption is divided into peak, standard and off-peak then you’re on a Time of Use tariff. Our Energy Experts can help you check whether your connection is MV (medium voltage) or LV (low voltage).
Can you wheel power to my area?
Currently, we can wheel to all Eskom-direct customers who meet the above criteria and have agreements with several municipalities including George and Overstrand in place and hope to wheel to all municipalities soon. You can reach out to our Sales Team to see if your municipality qualifies or to talk about SolarAfrica’s energy solutions.
If your municipality isn’t on the current list, our team will contact you as soon as Wheeling becomes available in your area.
Can Wheeling be integrated with existing energy solutions?
Yes, Wheeling can be integrated with existing solutions such as on-site solar and battery storage to make sure you can gain maximum cost-savings and green energy benefits from your renewable energy sources. Getting the perfect balance for this mix is important for long-term sustainability, which is why you need an Energy Expert to analyse your business and provide the best option.
Did you know? SolarAfrica has a team of in-house specialists, all under one roof? From project development and engineering to compliance and maintenance: our team can ensure that you get the perfect solution to meet your requirements.
Will wheeling protect my business against outages and loadshedding?
In addition to the economic benefits of renewable Wheeling, it also has a direct and indirect role when it comes to loadshedding.
Directly: Like grid-tied solar wheeling needs an active grid to get to your business. Wheeling is designed to help you reduce your monthly electricity bill and not protect your business against loadshedding.
Indirectly: The more businesses that sign up for wheeling, the more power Independent Power Producers like SolarAfrica can generate, which will alleviate generation pressure off Eskom – which in turn alleviates loadshedding.
Remember that battery backup is your best defence against outages. When you get it on a lease from us, you don’t pay anything upfront and we take care of running and monitoring the system.
How reliable is Wheeling?
Wheeling relies on the national grid to make sure the power we produce can be made available to your business. The good news is that role players in the private and public sectors are working together to ensure the national grid has the necessary infrastructure to handle the power generated by IPPs. For instance, we’re installing a R1 billion Main Transmission Substation (MTS) to ensure the power we generate at our SunCentral solar farm can be evacuated into the grid.
Regulations
Does my business need specific infrastructure or permits for Wheeling?
Apart from your line voltage (medium voltage) and tariff structure (time of use), you don’t need any permits or on-site installations for Wheeling. All you need is a functioning metering system and a signed VPPA. Wheeling also doesn’t require any upfront cost or financial investment from your side. All you need to do is work with our Energy Experts to decide on the amount of power and length of your agreement, and you’re ready to go!
"Wheeling also doesn’t require any upfront cost or financial investment from your side."
What regulations govern Wheeling in South Africa?
Wheeling is regulated by the National Energy Regulator of South Africa (NERSA) and involves compliance with various local and national regulations. Eskom also has very strict processes in place for IPPs that want to generate power. This ensures that grid capacity gets allocated to projects that are ready to start (first-ready, first-served) and that customers who sign up for power from these IPPs receive what they are promised.
IPPs that want to wheel electricity (and count themselves amongst the cheaper energy providers in South Africa) need to prove to Eskom that they have a viable, bankable power generation project before getting approval to push power into the grid. This includes environmental, engineering, financial and regulatory requirements, including proof that the IPP already has customers signed up to buy Wheeling from them, proving the validity of the project.
SolarAfrica’s first utility-scale solar farm has already broken ground, meaning that we’ve met Eskom’s requirements to start construction with a project that will bring more power to businesses soon.
Want to experience the business benefits of energy wheeling for yourself? Simply submit your details to our Sales team and we’ll be in touch!
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