SA Unveils Updated Rules for Electricity Wheeling to Reshape Energy Landscape

Electricity wheeling is the process through which electricity generated in one location is delivered to a consumer in another location using the existing transmission and distribution infrastructure.

In a landmark move to reshape South Africa’s electricity sector, the Department of Electricity and Energy has released the updated Regulatory Rules on Network Charges for Third-Party Transportation of Energy, commonly referred to as the electricity wheeling framework. This initiative was officially unveiled during a media briefing on Tuesday by Minister of Electricity, Kgosientsho Ramokgopa, who described the policy as the “most consequential intervention” in the nation’s electricity sector to date.

What Is Electricity Wheeling?

Electricity wheeling is the process through which electricity generated in one location is delivered to a consumer in another location using the existing transmission and distribution infrastructure. This enables energy producers—particularly independent power producers (IPPs)—to sell electricity directly to end-users across geographical distances, bypassing the monopolistic reliance on Eskom as the sole generator.

A Major Shift in South Africa’s Energy Policy

The updated framework marks a dramatic departure from Eskom’s historic dominance in electricity generation. It aligns with South Africa’s Energy Action Plan (EAP), announced in 2022 by President Cyril Ramaphosa, and aims to diversify the country’s energy sources, improve grid access, and create a competitive energy market.

“This is about remaking the energy and electricity landscape,” said Ramokgopa. “It’s a tool that will bring into life what was envisaged in the Energy Action Plan… and ensure we achieve energy security and resilience.”

Key Conditions for Third-Party Participation

To take part in the electricity wheeling process, third-party generators and distributors must meet several regulatory and operational conditions:

• Licensing and Registration: All participants must be registered with the National Energy Regulator of South Africa (NERSA).

• Legal Agreements: Entities must conclude power purchase agreements (PPAs), connection agreements, and use-of-system agreements.

• Technical Compliance: Participants are required to comply with the national grid code and provide auditable metering for energy flow.

Core Objectives of the Updated Framework

The electricity wheeling framework is designed around several key principles to encourage transparency, competition, and equity:

• Open Access: Consumers can choose their power source, promoting a competitive electricity market.

• Non-Discriminatory Grid Use: All users will have equal access to the grid, regardless of size or affiliation.

• Cost Reflectivity: Network charges must reflect the actual cost of transporting electricity to prevent unfair pricing.

• Fairness and Equity: Tariff structures must balance the interests of both consumers and providers.

• Transparency: Encouragement of unbundled tariffs to reflect true costs, including levies and subsidies.

• Reliability: The framework ensures the continued security and integrity of the national grid during third-party wheeling.

• Standardisation: Uniform procedures across all service providers will simplify implementation.

• Regulatory Certainty: NERSA will retain a strong governance role to maintain consistency and clarity.

• Just Energy Transition: Wheeling will be a key mechanism to expand access to renewable energy sources.

A Path Toward Energy Democracy

Minister Ramokgopa emphasized the transformative nature of the framework, especially for historically underserved areas. “We are democratising this space… With competition comes efficiency, comes innovation, research and investment—and we are likely going to drive the prices down,” he said.

He also highlighted the social implications of the reform: “When we talk about affordable electricity, these are the components that are going to make it possible… for the poor and downtrodden, those in villages and peri-urban areas.”

Energy Action Plan: A Holistic Vision

The updated wheeling rules breathe life into the broader Energy Action Plan (EAP), a roadmap designed to address South Africa’s chronic energy shortages and load shedding crises. The EAP, coordinated by the National Energy Crisis Committee (NECOM), aims to:

1. Fix Eskom and improve plant performance.

2. Accelerate private investment in new generation capacity.

3. Fast-track procurement from renewables, gas, and batteries.

4. Enable businesses and households to invest in rooftop solar.

5. Fundamentally restructure the electricity market for long-term energy security.

The Road Ahead

This regulatory overhaul represents a fundamental restructuring of South Africa’s electricity market. By opening the grid to diverse players and technologies, the government hopes to foster a more resilient, affordable, and sustainable energy system.

Industry analysts and stakeholders have welcomed the announcement, noting that it signals regulatory clarity and investor confidence. With NERSA set to play a central role, and open-access frameworks now in place, South Africa may soon witness an influx of innovation, investment, and renewable energy solutions.