Rules for network charges: Wheeling electricity in South Africa

24 04 2026 | 19:25Theresa Smith / ESI AFRICA

Nersa has publishes regulations for network charges for third-party wheeling of energy in South Africa

The National Energy Regulator of South Africa has published its regulatory rules on network charges for third-party wheeling of energy which included the methodologies for developing transmission and distribution use-of-system charges.

These transmission and distribution tariff codes developed by Nersa mean the methodologies described in the 2012 rules are obsolete.

The amendment is meant to determine applicable charges for the use of the system by both generators and loads connected to the transmission and/or distribution networks in South Africa. It then allows for other parties to access the networks.The rules stipulate all the requirements that affected parties must meet for wheeling energy and were gazetted at the end of March 2025.

Evolution of wheeling in South Africa

GreenCape’s Large-scale Renewable Energy Market Intelligence (MIR) Report 2025 points out that South Africa’s renewable energy market attracts investment through developers focusing on the private sector to secure higher returns through PPAs with private off-takers. These agreements are facilitated through large-scale embedded generation on-site or wheeling on the Eskom network.

“The growing opportunity in private sector procurement is driven by several factors, including the demand for energy security, the need for carbon emissions reduction by large energy users and the emergence of private electricity traders serving as aggregators,” said GreenCape.

This growing focus on wheeling presents an opportunity for investors to develop large-scale renewable energy power plants to sell electricity directly to customers through the Eskom or municipal networks.

Among the operating changes being implemented by Eskom as it unbundles, “the most noteworthy impact on the growth of the large-scale renewable energy sector is the enabling of wheeling on the Eskom network.”

How wheeling is panning out in SA

The traditional wheeling model uses a credit mechanism where the wholesale electricity pricing system (WEPS) tariff is credited to the customer account for wheeled energy. “If an IPP or trader offers a PPA value lower than the WEPS value, it will reduce the customer’s overall utility account,” GreenCape explains.

Traditional third-party wheeling involves a direct relationship between an IPP and an off-taker, necessitating amendments to the Electricity Supply Agreement between the off-taker and Eskom and potentially between Eskom and the municipality.

GreenCape explains in their MIR that this particular structure has resulted in limited adoption, mostly by larger Eskom-connected buyers. In this arrangement, the user effectively pays twice for electricity: Once to Eskom and then again to the IPP. The subsequent rebates are then issued by Eskom to the user (or via the municipality), who then reconciles the energy usage with payments.

Then there is also virtual wheeling – a digital tool that collects, aggregates, processes and reports time-of-use data for both energy generation and consumption. Virtual wheeling allows Eskom to calculate the off-taker’s wheeled energy refund. The off-taker continues to pay Eskom or the municipality as usual, with Eskom providing a wheeled energy refund at the end of the month.

This effectively allows wheeling to occur without an amendment to the Electricity Supply Agreement. Various wheeling scenarios are mooted in South Africa, each with its challenges and advantages.