New South Africa third party wheeling rules provide opportunities for power producers

This regulatory development is particularly relevant to IPPs and energy traders who rely on wheeling to deliver electricity to customers without owning the transmission infrastructure. The rules provide clarity and transparency on how use-of-system charges are determined, including components such as service and administration fees, connection charges, and contributions to subsidies and charges.

By unbundling these tariffs and defining consistent methodology, NERSA aims to empower market participants to better forecast operational costs and assess the financial viability of wheeling agreements. This is expected to enhance competition, promote investment in renewable energy, and support South Africa’s broader energy transition goals.

NERSA’s move is seen as a step toward regulatory certainty and market liberalisation, aligning with global trends in energy decentralisation and consumer choice. Energy sector stakeholders are encouraged to scrutinise the rules carefully, as understanding the detailed cost structure will be essential for developing effective pricing strategies and identifying the most cost-effective wheeling routes.

Roberts said: “To capitalise on the opportunities and mitigate against the risks presented by the wheeling framework, IPPs and traders should scrutinise how transmission and distribution use-of-system charges are calculated to determine pricing strategies and identify cost-effective wheeling routes. In addition, since the wheeling framework allows for wheeling at all voltage levels, including in and out of municipal networks, IPPs should assess the viability levels based on their generation capacity and target customers.”

“Furthermore, IPPs should develop robust contractual agreements. For example, IPPs should ensure the connection and use-of-system agreements and power purchase agreements clearly stipulate obligations, tariffs, payment terms and dispute resolution mechanisms, and include clauses that resolve potential future changes in NERSA’s rules or tariffs,” said Roberts.