South Africa’s renewable energy industry has gained significant traction over the past decade with a notable acceleration in recent months. The sector is poised for further growth as new regulations aim to open a competitive wholesale electricity market says Aishah Gire, Chief Operating Officer at EXSA.
Energy wheeling, the process of using existing transmission and distribution infrastructure to deliver electricity from a private generator to an end user, is expected to play an important role in unlocking investment and bringing more renewable energy projects to fruition, provided the model is implemented effectively.
The path towards mainstream wheeling has been long and complex and there is still work to be done. However, lessons learned over the past decade are helping shape the next phase of development as South Africa moves towards scaling wheeling across the country and potentially the broader region.
Advocacy and collaboration bring wheeling into focus
Although third-party wheeling was approved by Eskom more than a decade ago, several legacy challenges complicated implementation in practice. Tariff structures remained bundled and the concept of wheeling was not widely understood among many stakeholders.
This created uncertainty around wheeling tariffs as a subset of bundled tariffs and made it difficult for companies, particularly energy traders, to develop viable commercial products for customers seeking wheeled electricity.
In 2017, EXSA collaborated with several industry stakeholders to advance wheeling-related advocacy across various forums. The objective was to support broader understanding of the model and encourage practical implementation across the electricity sector.
Engagement between private companies, Eskom, municipalities and independent advisors focused on unpacking cost-of-supply components and understanding how these would be affected in a wheeling environment. This collaboration also supported knowledge-sharing across municipalities and helped clarify how existing tariff structures could be applied in wheeling scenarios.
While tariffs largely remain bundled, this phase of advocacy and collaboration laid important foundations. It enabled stakeholders to better understand the existing system and begin designing practical mechanisms for delivering wheeled electricity to customers in a commercially viable manner.
Electricity trading: Early lessons from licensing and execution
The first electricity trading licence in South Africa was issued by the National Energy Regulator of South Africa (NERSA) in 2009. Since then the pace of licence issuance has increased significantly, particularly over the past year, with an estimated 23 domestic trading licences issued by December 2025.
EXSA received its trading licence in November 2022. As one of the earlier energy traders to enter the market, the licensing process proved complex and time-consuming. Nevertheless, engagement with NERSA and Eskom during this period provided valuable insight into the regulatory and operational requirements of electricity trading.
EXSA’s first pilot wheeling transaction took place in December 2022 when excess power was wheeled to a customer through the Eskom network. This pilot allowed for practical testing of Eskom-related wheeling processes and administrative procedures, providing important lessons on execution in a complex and evolving environment.
These early experiences enabled the company to begin higher-volume trading to five customer sites approximately six months later.
Practical experience such as these pilots has helped trading aggregators develop operational capabilities and build relationships across the electricity value chain. Understanding the execution aspects of wheeling and trading is critical to ensuring accurate and timely allocation of energy credits to customers.
Regulatory reform is approaching but challenges remain
Looking ahead, EXSA is preparing to participate in the South African Wholesale Electricity Market, which is expected to launch this year. The market represents an important step in South Africa’s electricity sector reform and introduces the possibility of greater competition and customer choice.
However, several challenges remain:
- If customers are to choose their own electricity supplier, greater clarity is required regarding the rules and frameworks that will govern this process.
- The issue of bundled tariffs remains a key constraint. Greater transparency around tariff structures will be necessary to support a competitive market environment.
- Supply and grid capacity remain critical considerations. As South Africa’s ageing coal fleet is gradually decommissioned, the country will face a significant supply gap. Renewable energy could help address this gap but sufficient grid capacity will be required to connect the large number of new projects needed.
While the path towards a liberalised electricity market may not be smooth, the progress made through industry collaboration, regulatory engagement and practical market experience over the past decade provides a strong foundation.
These lessons, together with continued cooperation between the public and private sectors, will play an important role in shaping a more competitive and resilient electricity system for South Africa and the broader region.
