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Vodacom’s power wheeling project takes off

Sibahle Malinga
By Sibahle Malinga
Johannesburg, 31 Aug 2023
Eskom interim group chief executive Cassim Calib, Vodacom Group CEO Shameel Joosub and Vodacom SA CEO Sitho Mdlalose.
Eskom interim group chief executive Cassim Calib, Vodacom Group CEO Shameel Joosub and Vodacom SA CEO Sitho Mdlalose.

Vodacom has signed an electricity wheeling agreement with Eskom, in a move the mobile operator says will help accelerate efforts to solve the country’s energy crisis.

Last year, the operator announced it was planning a pilot project with Eskom, to boost its use of renewable power through “wheeling” or transferring energy to its operations over Eskom’s grid.

In a statement, Vodacom says after a successful pilot phase, and following rigorous testing, the co-developed solution is now accessible to the public and private sector on a larger scale.

With the agreement now signed, Vodacom will be able to add more capacity to the grid without impacting Eskom’s balance sheet, while helping to reduce its greenhouse gas emissions, it notes.

Furthermore, the solution provides a roadmap for others in the private sector, effectively involving those that want to benefit from cost saving in the process of stabilising South Africa’s grid and reducing overall emissions, it says.

The agreement will enable Vodacom to execute the next phase of the process – securing independent power producers (IPPs) under the same terms and conditions that underpin its agreement with Eskom.

Vodacom Group CEO Shameel Joosub says: “Vodacom’s partnership with Eskom is transformational in that our virtual wheeling solution will enable SA’s private sector to participate in resolving the energy crisis, which continues to impact the country’s economy.

“It also provides a blueprint for other South African corporates to adopt, as we pool our collective resources with the common objective of bringing an end to load-shedding. The virtual wheeling solution has the potential to be fast-tracked, depending on the available licensed capacity of IPPs.”

Wheeling of electricity is a common practice globally, and Eskom has approved third-party wheeling since 2008 for the physical export of energy onto the national grid by an IPP, and this facilitates open network access.

It allows privately-generated power to be transmitted across the national grid to customers that need it, in a willing buyer/willing seller model, according to Eskom.

Vodacom SA says it has spent more than R4 billion on backup power solutions and R300 million in the past financial year alone on operational costs, such as diesel for generators.

Over the years, South African telcos have been vocal about the adverse effects of the rolling blackouts, which impact network quality and infrastructure across the country.

Network towers and base stations often shut down during power cuts, resulting in poor connectivity, or even complete network outages, which disrupt phone calls and internet connectivity.

Although the industry has spent billions on backup power solutions to provide network stability and continuity, related challenges become largely unavoidable when load-shedding is at stage four and beyond – leaving customers frustrated.

“Vodacom had four objectives when we approached Eskom with this solution: one, to remove complexity; two, to use technology to solve legacy limitations; three, to access renewable energy with a sound business case; and lastly, encourage private participation to help solve the energy crisis,” notes Joosub.

Sitho Mdlalose, CEO of Vodacom South Africa, adds: “We estimate that this initial phase will move approximately 30% of Vodacom SA’s power demand onto renewable sources − a significant step towards our 2025 renewable energy ambitions. To make up the difference, we are working hard at exploring and developing additional solutions.”

In May 2022, the City of Cape Town announced the launch of its first electricity wheeling pilot research project.

The city says the renewable initiative has received significant interest from residents and businesses, as they look to implement alternative power sources to mitigate load-shedding-related losses.