Electricity wheeling toolkit for municipalities launched

The Provincial Minister of Infrastructure Tertuis Simmers and the Provincial Minister of Finance and Economic Opportunities Mireille Wenger launched the Western Cape Government’s electricity wheeling toolkit. The toolkit will support municipalities to help fast-track the implementation of third-party electricity wheeling.

The toolkit was developed by the Western Cape Government in consultation with industry bodies, municipalities, and private sector stakeholders.

Minister Wenger announced that “I am proud to launch the wheeling toolkit for municipalities today, which will go a long way to improve energy resilience in municipalities across the Western Cape. For years, under the then Municipal Energy Resilience Initiative, the Western Cape Government has been working to facilitate, support and position our municipalities for the implementation of energy infrastructure development (public and private) that supports economic growth, municipal financial sustainability, and a low carbon pathway. The launch of the wheeling toolkit today is the culmination of this work and will allow private sector entities to transport power over the grid to other businesses, organisations, or facilities, while ensuring that costs are allocated correctly to ensure municipal revenue sustainability.”

The toolkit features a step-by-step third-party wheeling implementation guide. It contains spreadsheets to assist municipalities in setting fair tariffs for electricity wheeled through their distribution systems and standardised templates for necessary agreements with third parties. Further implementation support is available to municipalities upon request.

The benefits of the third-party wheeling for the Western Cape include:

• Mitigating the impact of load shedding by making more electricity available on the grid.
• A reduction in the bulk purchase cost of electricity for consumers.
• Reducing consumer and municipal reliance on Eskom
• Providing better electricity price certainty to businesses and commercial electricity consumers.
• Enabling businesses to use renewable energy, thereby helping them to reduce threats of export market carbon border adjustment mechanisms, meet their climate change mitigation commitments and/or negate carbon tax obligations; and
• Providing an incentive for investment, with the associated economic development and job creation benefits, which helps to support the aims of the WCG Growth for Jobs Strategy.

Speaking on other wheeling pilot projects currently underway in the Western Cape, Minister Simmers said. “George Municipality started running its pilot wheeling project earlier this year, and the City of Cape Town has also recently completed its pilot wheeling project. Several other Western Cape municipalities are looking to follow suit.”

We expect the release of the toolkit to ramp up the rate at which Western Cape municipalities enable the connection of private electricity generators to private consumers, mitigate the impact of load shedding, make more independent power producers’ renewable energy available to consumers, as well as reduce the cost of supply. This is expected to improve investor confidence and help support the success of the WCG Growth for Jobs Strategy”, he added.

The WCG also issued letters of award to HLT Advisors t/a Africa International Advisors for the bid relating to Exploring Options for Gas to Power for the Western Cape through conducting a detailed analysis and providing reasoned recommendations including a position paper for the period ending before 31 March 2024.
Additionally, Cresco Advisory has been appointed to provide transaction advisory services to Stellenbosch Municipality for their Independent Power Producer Procurement (MIPPP) Pioneering Project for 3 years.

Due to municipalities being dependent on the revenue generated from distributing electricity generated by Eskom, municipalities are concerned that third-party electricity wheeling will affect this revenue source and their financial sustainability. However, extensive modeling undertaken using the data from two Western Cape municipalities has shown that electricity wheeling can be implemented in a way that protects municipal revenue streams.

The launch follows the establishment of the Western Cape Energy Council by Premier Alan Winde in 2022 and its concerted efforts to find innovative solutions to mitigate the energy crisis and build long term energy resilience for the citizens of the Western Cape.