Eskom presented a multi-market model at the National Energy Regulator of South Africa’s Power Trading webinar on June 11.

Industry stakeholders were invited to the online workshop to engage with the regulator on the role and impact of the “rise of trading in the regulated industry”.

Keith Bowen, Power Systems Economist at Eskom, presented the multi-market model. He explained that the model was based on the principles of the 2002 proposal but has been adjusted to fit the current energy landscape, focusing on sustainable capacity expansion and more effective management of legacy contracts established before the rise of renewable energy independent power producers.

Bowen outlined the four main businesses within the National Transmission Company of South Africa:

· Transmission Network Operator responsible for grid maintenance and expansion, ensuring robust infrastructure to support future energy needs.

· Transmission System Operator managing complex interactions among suppliers and customers to maintain balance in a dynamic environment.

· Market Operator functioning as a neutral platform that facilitates trading without engaging in buying or selling. It is an impartial platform provider, ensuring that buyers and sellers can connect on a dynamic basis.

· Central Purchasing Agency responsible for managing capacity and energy hedging, handling legacy contracts and ensuring a smooth transition to the new market structure. It will also manage the financial impacts of price differences and balancing responsibilities.

Bowen emphasised the crucial role of the Central Purchasing Agency in purchasing energy under these contracts, meeting obligations, managing prices and settlements and subsequently selling the energy in the market.

The Central Purchasing Agency may conduct indicative integrated resource plans to identify capacity gaps and possibly engage in capacity auctions or trading mechanisms, he said. “The market will play a significant role in determining future capacity.”

The aim is to encourage suppliers to build new capacity for long-term commitments. “If there is a gap between the market’s supply and the capacity people need, we can identify this gap and then procure the necessary capacity from the market,” Bowen said.

The move to this multi-market model will need to be carefully managed to minimise risk for current generators, distributors and new market players. The goal is not only to create multiple market platforms but also to link them with physical bilateral trading to support current operations and future growth in South Africa’s energy sector, he said.