Tanzania uses more energy than it produces. Although the country has 4 031 MW of installed capacity (thanks in large part to the landmark 2 115 MW Julius Nyerere Hydropower Project), that’s still not enough to satisfy its rapidly growing demand.

Ethiopia, meanwhile, produces more energy than it needs. Thanks in very large part to the enormous 6 000 MW Grand Ethiopian Renaissance Dam, the country is a regional energy hub, and people in Addis Ababa are utterly in the dark about things such as load shedding.

Tanzania needs energy. Ethiopia has plenty to spare. And in June 2025, the two countries successfully completed a two-week trial where the latter transmitted power to the former via a middleman: Kenya, which sits geographically between the two.

That watershed pass-the-power-parcel game was made possible by energy wheeling, a process of transferring electricity from a generation source (Ethiopia) to a consumer (Tanzania) via the national grid (in this case, Kenya’s).

Energy wheeling is particularly useful when there’s significant geographic distance between the generator and the consumer.

For South Africans, wheeling has emerged as a solution to our ongoing energy crisis. Replace ‘Ethiopia’ with ‘a local solar or wind farm’, ‘Tanzania’ with ‘your business’, and ‘Kenya’s national grid’ with ‘Eskom’s grid’, and a picture quickly emerges of how this model could work in our context.

The Department of Electricity and Energy agrees. In May, it formally launched the National Energy Regulator of South Africa’s (Nersa) wheeling framework, which Minister of Electricity and Energy Kgosientsho Ramokgopa called the ‘most consequential intervention’ in the country’s beleaguered energy sector.

At the launch, Nersa chair Thembani Bukula reminded the media that wheeling is not new to SA (more than 100 wheeling agreements have been implemented over the past 15 years, he said); but what is new is that the framework now allows wheeling to take place between Eskom and municipalities, and vice versa, which expands market access beyond Eskom’s infrastructure. It also allows licensed or registered generators to take part in wheeling transactions at all voltage levels – including through municipal distribution systems.

SA’s largest operational wheeling project is the Selemela Solar Park. Developed by the Sola Group, an independent power producer (IPP), and located on two separate sites outside Lichtenburg in the North West province (one generating 126 MWp, the other 130 MWp), it was completed in 2023 and commissioned in 2024.

The Selemela Solar Park delivers 200 MW of clean, renewable energy to Tronox Mineral Sands’ operations in KwaZulu-Natal and the Western Cape, via Eskom’s high-voltage grid. The project avoids more than 420 000 tons of CO₂ per year, and its solar PV plants generate 593 721 MWh of energy annually, which is enough to power at least 80 000 households with electricity.

Direct wheeling projects like this are only one leg of a giant leap forward for SA’s energy system. The other is virtual wheeling.

While direct wheeling takes energy from Generator A and sends it via Grid B to Consumer C, virtual wheeling is a financial mechanism that does the same, but everything happens on paper (or, in our digital world, on spreadsheets).

In a virtual wheeling system, smart meters track how much electricity Consumer C uses. Meanwhile, Generator A (which might be a solar farm, for example) sends its energy into Grid B (which could be Eskom or a municipal grid). A virtual wheeling platform then matches Consumer C’s consumption with Generator A’s generation, and Grid B gives Consumer C a refund or credit on their bill.

Or, to put it differently: direct wheeling moves electrons; virtual wheeling moves value. And through its relative simplicity and scalability, virtual wheeling allows multiple generators and consumers to transact without direct energy flow between their sites.

In September, Vodacom became the first SA company to fully operationalise virtual wheeling, leveraging an agnostic platform developed by Vodacom subsidiary Mezzanine and renewable energy from Sola Group’s solar power plant in Virginia, Free State.

At the announcement, Vodacom South Africa CEO Sitho Mdlalose called virtual wheeling ‘a game-changer for companies like ours with distributed operations’, while Sola Group chair Simon Haw said it ‘marks a pivotal moment’ in SA’s energy transition. ‘By enabling large, distributed businesses to access our renewable energy at scale and at lower cost, this innovation not only decarbonises operations but also accelerates the shift to a cleaner, more resilient energy system,’ said Haw.

Virtual wheeling is indeed a game-changer – especially for small businesses – as it removes the barriers that have been keeping them out of the renewable energy market. While traditional/direct wheeling involved complex contracts, direct grid connections and high-voltage infrastructure, virtual wheeling removes the red tape and the high costs. All it needs is a smart meter and a billing system to match the business’ electricity use with clean energy credits from a remote renewable energy provider.

Actually, that’s not all it needs. As Niveshen Govender, CEO of the South African Wind Energy Association (Sawea), points out, it also needs grid capacity.

‘While significant progress has been made, unlocking grid capacity remains the most critical enabler for scaling wind energy,’ Govender writes in a recent Sawea newsletter. ‘It is the top priority for the industry – and encouragingly, it is now recognised as one of government’s national energy priorities, with clear signals of commitment through policy, planning and early-stage reforms.’

In a recent statement, National Treasury emphasised that ‘South Africa’s energy transition and economic recovery agenda hinges on the rapid expansion and modernisation of its transmission infrastructure’.

According to government’s Integrated Resource Plan and Eskom’s Transmission Development Plan 2024–2033, SA will require more than 14 000 km of new transmission lines in the next decade to accommodate an additional 53 GW of generation capacity.

‘The current grid expansion pace is wholly inadequate, necessitating a minimum of 1 400 km per year required for the country’s energy security requirements,’ said National Treasury.

To Govender’s point, though, the country’s energy future is already looking a lot brighter. Discovery Green, a renewable energy platform launched by financial services group Discovery Limited, recently commissioned a report by advisory firm Krutham.

Titled Wheeling for Growth, the white paper claims that, by 2031, SA’s electricity sector will be ‘markedly different, driven by the full implementation of the Electricity Regulation Amendment Act, the operationalisation of the Independent Transmission System and Market Operator (ITSMO) and a mature third-party wheeling framework’.

Krutham’s report sees the ITSMO managing the country’s national grid independently, ‘overseeing the real-time balancing of electricity supply and demand and operating an open-market platform for competitive electricity trading’. Meanwhile, it sees IPPs moving from the current dynamic (where they enter the market ‘through ministerial determinations and long-term Eskom purchase power agreements’) to a space where they respond directly to market signals and enter the market freely based on potential profitability, and where electricity prices are set through competitive mechanisms.

‘This shift from central planning enables a willing-buyer-willing-seller market, where generators can trade with large customers or distributors through both physical and financial bilateral contracts,’ Krutham’s report predicts.

We’re not there yet… but the wheels in SA’s energy space are already turning.

By Mark van Dijk
Images: Gallo/Getty Images