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Electricity utility Eskom expects to formally roll-out a virtual wheeling scheme, which it has been piloting with mobile telecoms group Vodacom since August, to the rest of the market before the end of 2024.

The contracting platform will allow for one or more generators to transact with multiple customers that have operations distributed across the country, including those whose facilities are located in municipal distribution areas and connected to low-voltage networks.

Eskom group executive for distribution Monde Bala says that the electricity crisis, as well as some of the reforms that have been implemented to tackle it, including the ability of generators of any size to proceed without a licence and sell electricity through the grid, has highlighted the need to move beyond traditional wheeling, that typically involved one generator and one offtaker.

The State-owned utility has, thus, been working with Vodacom for the past 15 months on a virtual wheeling framework to respond to those customers eager to secure renewable energy for facilities that are too small or too widely distributed to enter into one-on-one power purchase agreements that had contract terms of up to 20 years.

Over the period, Vodacom subsidiary Mezzanine has developed an open platform that is able, using smart meters, to aggregate consumption data across multiple sites, including those within municipal boundaries, so as to generate a single electricity bill for the buyer, which can be a corporate or a trading entity.

The single bill includes both Eskom and independent power producer (IPP) electricity chargers, which is paid to the municipality and Eskom, as is the case currently under existing billing arrangements. A refund is then generated in favour of the buyer, which remunerates the IPPs.

Vodacom South Africa CEO Sitholizwe Mdlalose stressed that the Mezzanine platform, which is undergoing testing using the solar electricity produced at Vodaworld in Gauteng, has not been tailored specifically to meet the telecom group's needs and will be open to other users.

In addition, it is anticipated that competing aggregation solutions will also be incorporated as the concept gains market acceptance.

Eskom senior adviser for electricity pricing Onicah Rantwane stresses that the product is heavily reliant on the deployment of meters that are able to provide time-of-use readings, as well as the associated information communication technology systems needed to collect and process that data.

Mezzanine has developed the data aggregation aspect of the solution, and is currently working on what it calls a "settlement hub". However, Eskom is likely to proceed initially on the basis of the manual settlement of accounts.

Rantwane stresses that the model has been designed to integrate with existing Eskom and municipal billing systems, as well as for revenue neutrality.

The concept does, thus, not depend on amendments to any electricity supply agreements, which will remain intact.

That said, the creditworthiness of municipalities, many of which owe Eskom billion of rand in outstanding debts, could limit deployment as Eskom will have to receive payment before it will refund the buyer or the trader.

While various stakeholders believe the framework is a positive development for creating new addressable markets for renewable electricity, the weak financial position of many municipalities, together with Eskom's strict position in relation to outstanding debt, could affect uptake.

Nevertheless, the appetite for the solution is expected to be strong, with virtual wheeling especially attractive to companies such as retailers and manufacturers that have decarbonisation commitments but limited options to integrate renewables across their multiple stores and factories in various locations.

Bala says the product is fully aligned to the changes under way in the electricity market, including the shift towards a more decentralised electricity supply industry.

It is also in line with Esk...

Engineering News editor Terence Creamer discusses the latest update on the creation of South Africa's Green Hydrogen Commercialisation Strategy; the launch of a green hydrogen proof-of-concept initiative in the transport sector; and what developments may be next on the green hydrogen front.

Presidential Climate Commission (PCC) executive director Dr Crispian Olver says South Africa's energy transition and the pace at which it progresses will determine the country's long-term economic and human-development prospects and should, thus, no longer be treated only as an environmental problem.

Speaking at the Joburg Indaba, Olver acknowledged that stakeholders were "not of one mind" regarding the pace of the transition, despite broad-based agreement that South Africa needed to reduce its emissions, which were strongly associated with the continued dominance of coal in domestic energy production.

His point was underlined in a statement released by the National Union of Mineworkers only days prior in which it acknowledged both climate change and the need to reduce emissions but called for the transition to be delayed because of the threat it posed to 25 000 direct jobs and 26 000 indirect jobs in the coal value chain.

Addressing an audience that included several coal mining executives, Olver stressed that no PCC member expected the coal-fired power stations to close overnight, especially in the context of intense loadshedding.

Nevertheless, he also cautioned against moving too slowly in a context where South Africa's per capita emissions were 1.22 times the G20 average and significantly higher than those of India and even China.

This reality could subject the country's trade-exposed sectors to the growing risk of carbon taxes and border adjustment schemes, despite strenuous efforts by the South African and other African governments to oppose the introduction of such measures, particularly where these were imposed unilaterally.

Should such measures be introduced, Olver said workers in the steel, automotive and chemicals industries, which collectively employed thousands more people than was the case in the coal sector, could be affected.

He also urged the mining sector to begin preparing for a decline in domestic and export coal sales considering the actions being taken elsewhere in the world to reduce emissions, and cautioned against viewing the build-up of coal stocks that took place in the wake of Russia's invasion of Ukraine as signalling a sustainable revival.

While the International Energy Agency is forecasting that coal demand will remain close to the record 8.38-billion tons of 2022, the agency expects demand to begin declining and for that decline to accelerate in the 2030s.

Olver expressed scepticism about the prospects for clean coal, but said he would support the industry if it had genuine projects to demonstrate the effectiveness and cost-competitiveness of carbon capture, utilisation and storage in the South African context.

He also urged coal miners to consider diversification, particularly given the opportunities emerging because of rising demand for critical minerals. But where jobs were at risk, reskilling should be prioritised alongside rehabilitation efforts, which could extend job opportunities in mining regions.

On why South Africa should be pushing ahead with its transition when some developed countries were seemingly reneging, Olver argued that the transition would be "lumpy" and that the period ahead could be characterised by both spurts of acceleration and bouts of sluggishness.

However, if viewed through an economic and human-development "prism", including those of human health and sustainable employment, the transition offered significant upside potential.

"But the stakes are really high," Olver acknowledged.

Africa is utilising less than 1% of its wind power potential, which is "very, very, very little", says Global Wind Energy Council (GWEC) Africa director Wangari Muchiri.

A new report released at Windaba 2023 this week shows that the continent has 9 GW of wind energy installed, but that the potential hovers around 33 000 GW.

The study was limited to wind farms bigger than 1 MW.

Muchiri says there are currently 223 wind projects in Africa, either announced, under construction, or installed.

The main markets are South Africa, Egypt and Morocco, with new markets such as Senegal, Djibouti and Nigeria also starting to roll out wind energy.

The new study indicates that the continent's wind energy potential is greatest in the north - Egypt, Morocco - at around 18 000 GW.

Southern Africa actually has the least potential, notes Muchiri, at a mere 891 MW, even though it currently has the most installed wind energy in Africa.

South Africa has close to 3.7 GW of installed wind energy, states the report. Egypt is at number three.

This potential is the reason Egypt has announced a raft of large-scale wind projects, often measured in GWs, rather than MWs.

Muchiri says it appears as if wind power is starting to make a comeback following a project lull during the Covid-19 pandemic.

"However, this is still very small in comparison with what it could be on the continent."

The GWEC report also reveals that Siemens Gamesa has a 48% share of the African wind power market, outgunning every other wind turbine competitor. However, China's Goldwind, currently at a 2% market share, is expected to gain ground rapidly, challenging Europe's dominance, says Muchiri.

She adds that GWEC's manufacturing members have indicated that they require 1 GW of wind power installations every year, consistently, to consider manufacturing in Africa, most likely of turbine blades and towers.

The report highlights that wind power has provided energy to 19-million African households to date, while it has also secured $15.2-billion in investment and abated 24.4-billion tons of carbon dioxide.

Muchiri notes that the current drivers of wind power are the need for additional power; providing grid stability as a secondary or tertiary source of energy; moving away from fossil fuels; and providing energy to captive, localised projects and installations, such as mines.

"We see a lot of [the latter] happening across Africa."

Future drivers for wind power include the need for existing wind farms to upgrade their technology and output; powering the production of green hydrogen; as well as powering electric mobility, with wind able to charge electric vehicles at night.

Standard Bank reports that it has financed 400 MW of distributed generation since government's recent decision to allow utility scale projects of any size to proceed without a licence even when wheeling electricity through the grid. In addition, its pipeline of such projects for the coming 12 months has increased to 4 GW, including some 1 GW-worth of capacity that is expected to reach financial close within the coming six months.

Corporate & Investment Banking (CIB) head Zaid Moola described the reform to Schedule 2 of the Electricity Regulation Act, which initially removed the licensing requirement for projects below 100 MW in 2021 and later lifted the threshold altogether, as a "proper game changer".

In a briefing on the bank's renewables activities, Moola indicated that the growth in the distributed-generation market had been rapid, noting that the pipeline was equivalent to what Standard Bank CIB had funded between 2011 and 2023 as a consequence of the country's public procurement programmes.

Over that period, the bank provided some R50-billion in funding in support of nearly 4 GW of capacity. This arose from the successive renewables bid windows and the risk mitigation round, when the bank helped finance Scatec's hybrid 540 MW solar, 1 140 MWh battery storage project that reportedly successfully connected to the grid in late September.

Moola said the initial distributed projects were primarily linked with clients in the mining and metals sectors but that there was now also growing interest from other less energy intensive sectors.

Standard Bank South Africa CEO Lungisa Fuzile said he expected pending legislative amendments associated with the Electricity Regulation Amendment Bill, on which the Portfolio Committee on Mineral Resources and Energy was currently holding public hearings, could add further impetus to private investment in generation.

The legislation, Fuzile argued, was about ensuring that the legal and regulatory frameworks were "calibrated" such as to make such investments more "durable and functional over the long term".

The bank would continue to support both private and public procurement, with Moola anticipating that future public rounds could be structured to ensure a greater balance between wind and solar, given the dominance of solar photovoltaic investments by the private sector.

Likewise, battery storage capacity could also be a feature of future public procurement, with the first projects arising from the 513 MW/2 052 MWh storage tender expected to proceed soon and to be followed by a second even larger bidding round.

The bank would also continue to monitor developments on possible alternative grid financing, including the potential for public-private partnerships, given that investment was required to unlock further renewables generation.

Along with the wind bidders that participated in the sixth bid window of government's renewables programme, Standard Bank lost out as it had moved to partner with several wind developers, none of which advanced to preferred-bidder status owing to Eskom's claims that the grid capacity in the Western, Eastern and Northern Cape provinces had been absorbed.

Meanwhile, the bank, which is under pressure owing to its ongoing support of fossil fuels, reports that it provided R30-billion in financing for new renewable energy power plants across the board in the last financial year, including in support of residential and business capacity.

"In 2022, Standard Bank financed R5 in renewable energy for every R1 lent to non-renewable power, indicating a strong commitment to renewable energy financing."

Some R1.6-billion had been disbursed to businesses in support of both small and large installations over the past four years, while its total book size in support of individual households investing in renewables was expected to stand at R3-billion by year-end.

In a milestone for South Africa's nascent green hydrogen economy, three large corporates have teamed up to showcase the potential of using domestically produced hydrogen as a zero-emission transportation alternative.

During a demonstration in Gauteng, a second-generation Toyota Mirai fuel cell electric vehicle (FCEV) was refuelled with hydrogen produced by Sasol in Sasolburg, in the Free State. The hydrogen was transported by truck in an Air Products tube trailer, and the vehicle was refuelled on site using the US multinational's mobile hydrogen dispensing technology.

Toyota South Africa Motors (TSAM) CEO Andrew Kirby then drove the vehicle around a test track set up at the Smart Mobility Africa Summit, taking place at the Gallagher Convention Centre, with Gauteng Premier Panyaza Lesufi in the passenger seat.

Sasol CEO Fleetwood Grobler described it as a "beautiful application of hydrogen fuel-cell technology".

He stressed, however, that all three partners were focusing primarily on using green hydrogen in hard-to abate and hard-to-electrify sectors, such as long-distance and mining transportation, as well as aviation green steel, with the passenger vehicle demonstration seen as a catalytic proof-of-concept initiative.

Such an approach appears to be in line with South Africa's yet-to-be-published Green Hydrogen Commercialisation Strategy, which will prioritise exports to lock in green hydrogen-linked subsidies from developed economies, alongside domestic applications such as off-road mining vehicles, long-haul trucking, steel, chemicals, fertilisers and sustainable aviation fuels (SAFs).

This point was underlined by Air Products South Africa MD Rob Richardson who described the FCEV demonstration as an awareness-raising exercise, while also emphasising the potential for green hydrogen in heavy-haul trucking, owing to its energy density.

The Toyota Mirai, for instance, required only 6.8 kg of hydrogen to travel 650 km and hydrogen's energy density was, thus, seen as an advantage for trucks as the fuel would allow for large payloads to be transported over long distances without affecting power or performance.

"Today is an important stepping stone towards realising the ambitious goal of developing an on-road hydrogen mobility ecosystem," Grobler reported.

Sasol has already indicated that it is pursuing partnerships to develop hydrogen fuelling infrastructure on key corridors, including the high-density N3, as part of a three-pronged green hydrogen strategy. Its other two focus areas include manufacturing SAFs, including establishing OR Tambo as a SAF hub, and green steel opportunities in the Vaal Triangle.

The JSE-listed group produced its first green hydrogen in Sasolburg in June, using a repurposed 60 MW electrolyser and electricity produced at a 3 MW solar farm. The electrolyser uses renewable electricity to split water into oxygen and hydrogen.

The electrolysers are currently producing at a daily rate of 150 kg, but Sasol energy business VP Priscillah Mabelane reports that daily output will rise to 3 500 t during 2024 when electricity is wheeled to Sasolburg from the 69 MW Msenge Emoyeni Wind Farm, in the Eastern Cape.

Sasol is already a significant producer of grey hydrogen from coal and is keen to progressively shift its feedstock from coal to gas and green hydrogen to meet its commitment to reduce greenhouse-gas emissions by 30% by 2030.

The group's shift to green hydrogen will depend on access to cheap renewable electricity, which South Africa's solar, wind and land endowments make feasible, as well as a decline in the cost of electrolysers so that green hydrogen can be produced at below $2/kg - currently costs are said to be closer to $5/kg.

Air Products, meanwhile, has six decades of experience in hydrogen, including supplying hydrogen to NASA for the Apollo space programme, and operates the largest hydrogen pipeline network in South Africa.

Richardson said the group is keen to play a leading role in establishing a su...

Electricity Minister Kgosientsho Ramokgopa has welcomed the earlier-than-expected return of Kusile Unit 3 coal-fired generation, but has also acknowledged that government simultaneously failed to meet its end of September deadline for the release of the next public procurement round for renewable energy.

Eskom confirmed on Saturday September 30 that Kusile Unit 3 had been restarted nearly a year after it, together with units 1 and 2, became inoperable after a slurry build up in the Unit 1 flue led to its collapse, damaging the other two flues in the west chimney they share in the process.

Unit 3 was restarted after Forestry, Fisheries and the Environment Minister Barbara Creecy and the Nkangala district municipality upheld decisions to allow for a postponement of Kusile's compliance with minimum emission standards (MES) in relation to its sulphur dioxide emissions. The decisions, which were made days prior to the firing of Unit 3, allow the three units to be returned using temporary stacks that bypass the flue gas desulphurisation (FGD) pollution-control system.

The upholding of the postponement followed appeals lodged by groundwork and Vukani Environmental Movement, Fairacres Products, GHB Farms and Topigs Norsvin on the basis of the negative health impacts on communities and livestock in the area.

By Sunday October 1, Unit 3 was said to be producing 550 MW and was being ramped up to its full 800 MW nameplate, 720 MW of which could be available eventually for injection into the loadshedding-prone grid.

The other units would be introduced in stages, with Unit 1 officially due for return on October 30 and Unit 2 on November 30, but Ramokgopa indicated that these deadlines may also be brought forward.

He described the return of Unit 3 as a "significant milestone" and said it was indicative that "we are now beginning to turn the corner in relation to additional capacity".

The bypass of the FGD was seen as a way to "strike a balance" between the needs of the economy, which was struggling to grow partly because of the ongoing power cuts, and meeting environmental and health obligations.

A Reuters report indicated that, besides Kusile, Eskom is currently failing to comply with MES at four of its 15 power stations, namely Matimba, Matla, Kendal, Kriel, with utility data from January showing that Kendal emitted an average of between 10- and 30-times the permissible limit.

Eskom head of generation Bheki Nxumalo reported that Matimba was now operating in line with standards and that actions were being taken at the other three stations, including operating them temporarily at lower load factors when they breached emission limits.

Ramokgopa acknowledged the pollution issue was likely to rise in prominence further should South Africa decide to extend the life of coal stations that are currently scheduled for retirement.

He provided no update, however, regarding the approach government was likely to take in this regard, with the National Treasury having recently received a report from a Vgbe-led consortium into the state of the power stations.

The Minister did confirm, though, that the Department of Mineral Resources and Energy and the Independent Power Producer Office had been unable to meet the September deadline for the release of Bid Window 7 of the Renewable Energy Independent Power Producer Procurement Programme.

No reason was given for the delay, with the Minister saying only that work was under way to ensure that the procurement process was launched soon and that a new release date would be provided in due course.

It is believed that the procurement may be being held back for Eskom to first publish an updated Generation Connection Capacity Assessment (GCCA), which will outline what grid capacity remains available for use and where.

Engineering News understands that the GCCA has been finalised and is undergoing internal Eskom governance processes. It is also possible that it could be released together with the utility's new approa...

The South African government has received additional pledges, worth nearly $3.5-billion, in support of its Just Energy Transition Investment Plan (JET IP), increasing the overall envelope of concessional debt and grant funding to R11.9-billion.

The Presidency's Rudi Dicks told the Presidential Climate Commission (PCC) that Denmark and the Netherlands had combined their pledges with those of the International Partners Group (IPG) of France, Germany, the UK, the US and the European Union, which committed $8.5-billion to the JET IP in 2021.

Denmark has committed $165-million, $23.2-million in the form of grants, while the Netherlands has pledged an indicative $1-billion for a Green Hydrogen Fund and $169-million in grant finance.

Meanwhile, Spain has made a $2.1-billion commitment outside of the IPG framework, $15-million of which will be in the form of grants.

Dicks reported that the South African government was also in discussions with several other countries and donors on possible JET IP funding.

To date, €600-million had been advanced to the National Treasury from German development bank KfW and French development bank AfD in the form of a concessional policy loan and Dicks said about R600-million in grant funding had also been approved.

The bulk of the funding would flow, however, only once the JET IP implementation plan was finalised, which would outline specific electricity, new energy vehicle and green hydrogen projects for the period covering 2023 to 2027.

Dicks said the implementation plan had been broadly canvassed and its compilation was well advanced.

A draft JET IP implementation plan would be presented to the PCC commissioners on October 18 for their input.

Thereafter, it would be submitted to the JET IP Government Steering Committee before the end of October. The steering committee would provide recommendations to the JET IP Inter-Ministerial Committee, chaired by Forestry, Fisheries and the Environment Minister Barbara Creecy, ahead of submission to Cabinet in November.

The timing indicates that government aims to approve the implementation plan prior to the start of COP28, which is scheduled to take place in Dubai, United Arab Emirates, from November 30 to December 12.

Engineering News editor Terence Creamer discusses Eskom's system outlook for the high-maintenance summer months; the early return of units at Kusile and the impact of that decision on pollution; and an update on Koeberg.

The initial export component of South Africa's yet-to-be-approved Green Hydrogen Commercialisation Strategy is not premised on the trade of scarce renewable electrons - converted into molecules or other tradeable derivatives - to decarbonise the industries of developed economies in Europe and Asia, Presidential Climate Commission (PCC) commissioner Joanne Bates insists.

Instead, such exports are designed to ensure that South Africa can "lock in" the grants, concessional debt and contract-for-difference price subsidies that are currently being offered by countries such as Germany and Japan to stimulate the use of green hydrogen products in their hard-to-abate sectors of steel, cement, petrochemicals, shipping and aviation.

Bates, who is also chief operations officer at the Industrial Development Corporation and part of the panel set up by Trade, Industry and Competition Minister Ebrahim Patel to finalise the strategy, offered this explanation in a presentation on the proposed strategy during a PCC meeting in Johannesburg.

She acknowledged concern over the export-orientation of the strategy, which some critics view as having potential to place the interest of industry and developed countries ahead of pressing domestic needs for clean energy.

However, she stressed that the subsidies being offered could provide an important impetus to the development of a green hydrogen industry that represented a "once-in-a-generation" industrialisation opportunity for the country.

South Africa's resource endowment could position the country to produce green hydrogen, which is made by splitting water into hydrogen and oxygen using renewable electricity, at about $1/kg by 2050, which would be competitive with costs in other similarly well-endowed countries, such as Australia, Chile, Namibia and Saudi Arabia.

"South Africa is well positioned for exports with estimates of the potential ranging between 1.9- and 8-million tons of green hydrogen yearly," she said, adding that the country could possibly secure a market share of up to 10% for green ammonia and methanol shipping fuels along the Atlantic and Indian Ocean shipping routes.

The Green Hydrogen Commercialisation Strategy would be published only once it had been approved by Cabinet, but Bates indicated that six elements, including targeted exports, had been identified as central to its successful implementation.

The other five were listed as being:

A stimulation of domestic markets in parallel to exports, particularly ones linked to green steel, mining vehicles, petrochemical, agriculture and sustainable aviation fuels;

Supporting localisation by developing the local industrial capacity to produce platinum-bearing fuel cells and electrolysers, ammonia cracking and balance-of-plant components;

Securing finance, including concessional finance from key export markets;

Maximising the development and transformation impact through proactive socioeconomic development initiatives; and

Supportive policy and regulation to facilitate the accelerated development of a new industry.

Four green-hydrogen hubs had been identified, including Coega, in the Eastern Cape, Saldanha Bay, in the Western Cape, the Vaal region, in Gauteng, and Boegoebaai, in the Northern Cape. However, the Boegoebaai hub was not viewed as a near-term prospect given the current absence of port and power infrastructure in the area.

Bates also acknowledged concern over the need for water and indicated that various solutions, including desalination and the use of grey water, would have to be assessed on a case-by-case basis.

She argued, however, that the water required for green hydrogen would be less than 0.5% of South Africa's demand, while using desalinated water would add only a smally premium of about $0.01/kg to the cost of producing green hydrogen.

The work of the panel, she added, pointed to green hydrogen being a "tangible opportunity for the country that needs to be prioritised".