Vodacom has signed a virtual wheeling agreement with Eskom which, it says, will help accelerate efforts to solve the country’s energy crisis. In addition to adding capacity to the nation’s power grid, the agreement will also play a significant role in moving Vodacom closer to its goal of sourcing 100% of its electricity demand from renewable energy sources by 2025.
This agreement will now enable Vodacom to execute the next phase of this innovative solution – securing independent power producers (IPPs) under the same terms and conditions which underpin its agreement with Eskom.
“Vodacom’s partnership with Eskom is transformational in that our virtual wheeling solution will enable South Africa’s private sector to participate in resolving the energy crisis which continues to impact the country’s economy,” says Shameel Joosub, Vodacom Group CEO. “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.”
The energy crisis in South Africa has been devastating for many businesses. Vodacom South Africa itself 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. Not only is this a massive financial burden, it also poses a significant challenge for the company to achieve its broader environmental ambitions.
Traditional wheeling typically involves a one-to-one relationship between an IPP and a buyer using the national grid to convey their energy. While the concept of traditional wheeling is fairly common practice globally, it has certain limitations for companies with complex operating environments. For example, Vodacom SA’s operating situation is unique due to the complexities associated with having over 15 000 distributed low-voltage sites across the country that are linked to 168 municipalities. Up until this point, this complexity has prevented Vodacom from accessing large scale renewable energy from IPPs. The virtual wheeling solution addresses these challenges.
“Converting our existing fossil-fuel based electricity supplies directly with onsite renewables is limited by technical constraints that are difficult to scale,” says Joosub. “We explored a traditional wheeling option, but this had numerous limitations which we believed could be overcome by reimagining the problem and using technology to solve the issue.
“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, encouraging private participation to help solve the energy crisis.”
After a successful pilot phase – which concluded last year – and following rigorous testing, the newly 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. Furthermore, the blueprint provides an easy-to-follow roadmap for others in the private sector effectively involving those who want to benefit from cost saving in the process of stabilising South Africa’s grid and reducing overall emissions.
“Think of it like purchasing renewable energy certificates,” says Sitho Mdlalose, CEO of Vodacom SA. “But most importantly, it also has the added benefit of positively impacting the supply deficit currently being experienced and nurturing the growth of renewable energy production in South Africa. We estimate that this initial phase will move approximately 30% of Vodacom SA’s power demand on to 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,” adds Mdlalose.