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Mail & Guardian
27-05-2025
- Business
- Mail & Guardian
Beyond the Grid: Pinging power from farms to factories
Virtual wheeling: The Selemela Solar Park in Lichtenburg, North West, generates and sells electricity to other parts of the country via a wheeling agreement. Pictured here is plant manager Tebogo Tong. Photo: Ihsaan Haffejee Land leases: The SOLA Group rents land for Selemela from two farmers. Photo: Ihsaan Haffejee The practice of electricity wheeling is gaining momentum in South Africa as a pathway for companies and municipalities to transmit renewable energy using Eskom's grid. A large-scale solar energy facility about 15km outside the town of Lichtenburg in North West is reshaping how this virtual transfer works. Developed by a South African company, the Sola Group, the project is taking place on grazing land leased from two farmers who each earn rental of about R1 million a year. Called the Selemela Solar Park, it supplies renewable energy to factories in KwaZulu-Natal and the Western Cape via a wheeling agreement with the Eskom transmission network. Katherine Persson, managing director of assets at the Sola Group, says the Selemela facilities together represent one of the largest electricity wheeling initiatives in South Africa. The project comprises two solar plants that generate about 200 megawatts per hour for the Tronox wheeling deal. A third plant still in commissioning phase will supply another 100MW to African Rainbow Minerals. According to Persson, the scale of the project reflects its significant financial backing. 'We raised about R4.2 billion to construct them, so they are large infrastructure investments,' she said. 'They were funded by a consortium of banks, including Absa, Standard Bank, Nedbank and DBSA. Additional equity finance was provided by the Sola Group and African Rainbow Energy Partners.' Parallel deals: Tronox Mineral Sands is the off-taker of electricity generated at Selemela, via the NTCSA. Here, workers are maintaining equipment at the facility. Photo: Ihsaan Haffejee Self-build: Selemela was constructed under a self-build agreement, where the SOLA Group was responsible for building most of the project's infrastructure. Photo: Ihsaan Haffejee Wheeling deal Tronox Mineral Sands, which manufactures products used in paints, plastics and paper, off-takes the electricity via the National Transmission Company South Africa (NTCSA), a recently unbundled division of Eskom responsible for managing transmission infrastructure. 'We engage with NTCSA and Eskom in parallel,' said Persson. 'These projects connect at the Watershed main transmission substation, which is managed by NTCSA. So we have agreements with both NTCSA and Eskom Distribution around the grid connection for the projects.' Building and connecting private energy projects to the grid, however, is far from simple. Selemela was constructed under a self-build agreement, where the project company is responsible for building most of the required grid infrastructure, but collaboration with Eskom and NTCSA remains essential. 'Even though you're building most of the stuff yourself, there are still certain points where there's interaction with Eskom, where they need to do bits of work on their side,' Persson explained. Oxpeckers submitted a set of detailed questions to Eskom on 7 May, seeking clarity on wheeling arrangements, grid readiness, regulatory alignment and infrastructure upgrades. No response had been received by the time of publication. Gaining traction: Selemela is one of several projects operating under a wheeling agreement as there is an increase in these types of energy arrangements. Pictured is a substation located at Selemela. Photo: Ihsaan Haffejee Unlocking investment: Wheeling projects in South Africa are paving the way for a liberalised energy market. Pictured here is plant manager Tebogo Tong (right) and SOLA Group workers maintaining equipment. Photo: Ihsaan Haffejee Growing trend The Selemela project is part of a growing trend in South Africa's energy landscape. Eskom recently launched its Virtual Wheeling platform as a commercial product, marking a breakthrough in how renewable energy is transmitted to end-users. The platform, co-developed with Vodacom subsidiary Mezzanine, simplifies billing and reconciliation for off-takers, making wheeling more accessible for large companies with distributed operations. It forms part of broader reforms unveiled alongside a new national wheeling framework recently approved by the National Energy Regulator of South Africa. Together, these reforms are widely seen by commentators as a major step toward liberalising the energy market and unlocking large-scale private investment. Municipal transitions Nhlanhla Ngidi, head of energy and electricity at the South African Local Government Association (Salga), said municipalities are joining the virtual trend by slowly transitioning from electricity resellers to facilitators of third-party wheeling. 'More than 40 municipalities currently have wheeling contracts with Eskom,' he said. This is progress since a 2023 #PowerTracker investigation that found only four municipalities had operational wheeling systems at the time: Nelson Mandela Bay, Ekurhuleni, City of Cape Town and George. Ngidi said Salga had contributed to the national wheeling framework and has provided municipalities with training and guidelines to implement it. However, Eskom has warned that wheeling through municipal grids is only permitted in areas where municipalities are up to date with their Eskom payments. 'The concerns are around security of payments for [independent power producers]. Some alternative arrangements, such as escrow accounts, have been identified as a solution,' Ngidi said. While Salga was not involved in the Lichtenburg project under Ditsobotla Local Municipality, Ngidi said these projects highlight the financial potential of wheeling. 'If the municipality signs the wheeling agreement, it won't completely lose revenue from the customer receiving the power. There is revenue to be made through wheeling, which will cover the lost income,' he said. Feeding local communities: General worker Gift Serai and department head Lee Serongwane working in a community vegetable garden at Treasure Trove Primary School in the village of Bakerville, near Lichtenburg. Photo Haffejee Helping hands: A worker hands out a meal to students in bowls donated by SOLA Group to Treasure Trove Primary School. This is one of the various community-based initiatives run by the company. Photo: Ihsaan Haffejee No bare feet: Learners wearing school shoes donated to Treasure Trove Primary School. Photo: Ihsaan Haffejee Community benefits There are direct and indirect benefits that flow into local communities from wheeling projects in the form of job creation, investments and enterprise development — with the potential to uplift rural communities and support vulnerable groups. As a private project that was not developed under the government's Renewable Energy Independent Power Producer Procurement Programme, Selemela Solar Park does not include a formal community trust. However, the project has implemented various social impact initiatives. 'The landowners are one of our most critical partners in the project,' Persson said. 'It's important for us to maintain good relations with them and with all the local community stakeholders. 'About R335 million has gone directly into procuring goods and services in the local community, and in addition to that, around R7 million has been spent on community investment,' she said. Working through a project liaison committee, the project has provided 305 educational opportunities and established a stakeholder engagement structure to ensure ongoing community support and dialogue. 'The project liaison committee consists of members of the community and representatives from the provincial government. We focus mostly on healthcare, education and infrastructure,' explained Janine Bergstedt, economic development administrator at the Sola Group. Working together: Letlhogonolo Mabitso is one of the community members participating in a sewing and fashion design skills programme at the Grasfontein Community Hall. Photo: Ihsaan Haffejee Local contracts: A local service provider gets ready to cut the grass around Selemela. Photo: Ihsaan Haffejee Formal education Letlhogonolo Mabitso, who lives in the neighbouring community of Grasfontein, about 10km from the solar park, was unemployed and had no hope of receiving formal education. Today, he is one of 30 adults enrolled in a three-month sewing and fashion design skills course at the Grasfontein Community Hall — a facility renovated by Selemela's developer, WBHO and the Sola Group. Once he and his peers complete the course, they plan to start selling uniforms to nearby schools. Mabitso said they've already started a five-member cooperative, and the income will soon begin circulating within their community. Bergstedt said this is just one of many initiatives. Communities in Ward 16 have benefitted from school internet installations, nutrition programmes and school supplies such as shoes and bags for learners. 'It's always important to have a healthy relationship with the communities we work in and know what their needs are in order to do a thorough community needs analysis,' she said. Tshepo Oliphant, economic development officer at the Sola Group, said the project created over 800 temporary jobs for community members during construction. 'This was mostly general workers. We also had the workers trained in health and safety,' he said. Through a partnership with the provincial department of economic development, environment, conservation and tourism, local service providers also received mentorship and training. 'Some of the local contractors that continue to benefit from the solar project are those who are doing solar panel washing and grass cutting. All of the buildings on the site, like the warehouse and maintenance building, were built by local contractors,' Oliphant said. Exporting energy: Power generated at Selemela travels underground to the substation, and is directly linked to the Eskom national grid. Photo: Ihsaan Haffejee Electrical powerlines near Selemela carry electricity from the substation to the Eskom national grid. Photo: Ihsaan Haffejee Toll fee: Tronox Mineral Sands buys power from Eskom, which is generated by Selemela. Pictured here is Mothokwa Maredi, the health, safety and environment officer at Selemela. Photo: Ihsaan Haffejee Power flows Tebogo Tong, plant manager at Selemela, explained how power flows from the more than 390 000 bifacial solar panels at the plant to the national grid. 'You get the resource which is your sun getting absorbed by the solar panels, going through inverters at transformer stations,' he said. 'At the transformer stations, that is where the power is converted from DC (direct current) to AC (alternating current). Then from there, it goes through underground cables to the substation. From the substation, it's then linked to the Eskom national grid through their transmission lines.' The solar park is equipped with a metering system that records how much energy is exported, which is then offset against how much the buyer consumes. 'The buyer has a wheeling agreement with Eskom and they pay a fee for that. It's the same as when you are utilising the road from here to Johannesburg — you're going to be paying some toll gates to utilise the road. That is how the power is transmitted,' Tong said. Questions sent to Tronox on 9 May about its role as the off-taker in the wheeling deal remain unanswered. Future plans: Selemela is an example of what the shift to greener energy could look like. Photo: Ihsaan Haffejee Working together: There are several power companies working towards a greener future. Pictured here is an aerial view of Selemela. Photo: Ihsaan Haffejee Serving community: A significant part of the energy shift is working with local affected communities to ensure that they benefit from greener technology. Photo: Ihsaan Haffejee Greener energy As South Africa accelerates its shift towards greener energy, the solar park offers a glimpse into what the future of electricity could look like — decentralised, decarbonised and community-aware. It shows how wheeling can unlock private investment, stimulate rural economies and chart a path beyond coal. 'The renewable energy industry is quite small, so all the companies know each other. And what we're seeing now is that there are other projects who are coming after us,' said Persson. 'Some of them are facing similar challenges to the ones that we faced during the construction and commissioning of these projects. We're happy to share our experiences with others. 'Ultimately, the whole industry works together. We're just trying to support each other to deliver projects,' she said. This investigation was supported by the African Climate Foundation's New Economy Hub. Find details about wheeling and other renewable energy projects on the Oxpeckers #PowerTracker digital tool
Forbes
20-05-2025
- Business
- Forbes
Africa Needs More Renewables, So Why Is It Investing In Fossil Fuels?
LICHTENBURG, SOUTH AFRICA - MAY 8: A man is seen near the Selemela Solar Power Plant is one of the ... More largest solar power plants on the African continent that contributes to the country's energy needs with renewable electricity generation from sunlight in Lichtenburg, South Africa on May 8, 2025. (Photo by Ihsaan Haffejee/Anadolu via Getty Images) Sub-Saharan Africa (SSA) has an energy funding deficit. As our new research points out (for which I must credit my colleagues Anne Louise Koefoed and Sujeetha Selvakkumara), SSA needs to spend $20 billion per year to supply its citizens with access to clean and affordable energy by 2030. Instead, this figure is closer to $8 billion annually, which is part of the reason nearly half the population lacks access to electricity. As its economy and population grows, its electricity demand will quadruple to 2100TWh by 2050 – which is the approximately equivalent to half of what the U.S. uses today. We are at the midpoint of a critical climate action decade and parties to the Paris Agreement are expected to submit their second Nationally Determined Contributions (NDCs) with a timeframe for implementation through to 2035. Yet, few have submitted their proposals. DNV's review of current national commitments in Sub-Saharan Africa indicates a regional goal to limit emissions growth to 68% by 2030 compared to 1990 levels. However, these targets are conditional on international support. Several countries in the region have set renewable generation targets. These targets vary widely. For example, the ECOWAS countries aim for a 19% share of generation from new renewables in the electricity mix by 2030, Nigeria is aiming at 36%, South Africa 41%, and Kenya is going for 100% in 2030 from renewable power generation. Reported investment requirements for the energy transition agenda, such as those by Ghana in September 2023 and Nigeria in August 2022, highlight financing needs rather than reflecting existing domestic policy and funding. For example, about $410 billion above business-as-usual spending is needed in Nigeria between 2021 and 2060. Despite requiring more investment, energy spending in Sub-Saharan Africa is going the wrong way. The region lagged in global energy investment, receiving just 3% of total energy funds and 1.5% of renewables between 2010 and 2020 and dropping to less than 1% since. Financing is also unevenly distributed, with a few countries receiving the bulk, while the 33 least-developed nations secured only 37% of renewable commitments from 2010 to 2019 Africa is missing out on the green technology revolution that is making non-fossil energy the cheapest option. The levelized cost of electricity for renewables is at an all-time low, making solar PV, onshore wind, and storage more viable than ever. The levelized cost of electricity in Sub-Saharan Africa is cheaper for wind and solar, yet ... More investment has been focused on fossil fuels. Despite the manifold benefits of green electrotechnology, our analysis shows that, until 2023, most capital expenditure in the power sector was directed toward fossil-fuel power plants. On average, between 2015 and 2024, for every $3 invested in fossil-fuel power plants, only $1 was invested in solar and wind in the region. However, in 2023, for the first time in Sub-Saharan Africa's history, investments in solar and wind power surpassed those in fossil-fuel power. The main reason for the previous lack of investment in solar and wind lies in the structure of capital financing. Large, centrally planned fossil-fuel projects typically benefit from state-guaranteed funding. To attract more investment into renewable power, it is crucial to enable the free flow of capital — which requires providing risk-guaranteed funding. The success of utility-scale renewables hinges on an enabling policy environment, technical support, and international capital—particularly concessional finance and development bank funding to catalyze private investment. This highlights the critical role of COP29's finance agenda. The financing structure of renewable energy investments varies widely across Sub-Saharan Africa, with projects ranging from fully debt-financed to fully equity-financed models. Both debt and equity capital carry associated costs. The cost of debt is reflected in interest payments, while the cost of equity represents the opportunity cost of invested capital. This overall cost of capital (CoC) is a key determinant of whether a renewable energy project, such as a solar PV power plant, proceeds to implementation. The cost of capital is influenced by the level of risk associated with the project. Two primary risk factors impact financing: technology risk and geographic risk. If a technology and its supply chain are not well established, the perceived project risk is higher, leading to an increased CoC. Even for mature technologies like solar PV, projects located in high-risk regions, such as many parts of Africa, face a 'risk premium' which raises the CoC compared with lower-risk regions. DNV modeled two scenarios to assess how varying cost of capital assumptions affect future solar PV capacity in Sub-Saharan Africa compared with the Energy Transition Outlook (ETO) baseline. If SSA had a CoC equivalent to that of Europe throughout the period from 2024 to 2050, the region's solar PV capacity would be 20% higher. If Sub-Saharan Africa had a cost of capital equivalent to that of Europe throughout the period from ... More 2024 to 2050, the region's solar PV capacity would be 20% higher. The dismantling of USAID will have far reaching consequences for Africa and can be regarded as a sign of where U.S. priorities now lie. With recent geopolitical changes and budgetary pressure, European countries have also prioritized security spending often at the expense of foreign aid and investment. Recent turmoil in the international financial markets demonstrates how previous norms have been upended. The rise in yield of U.S. Treasuries show how risk perception is changing and although investors are unlikely to choose an African utility scale solar project over long-term American debt, there may be a window for African countries to present themselves as a more stable option than previously perceived. The most interesting player is China. Although slower domestic growth has put the brakes on China's Belt and Road Initiative, Beijing may regard U.S. retrenchment in the Africa as an opportunity to act. African countries have already received billions in loans and grants from China and given that it is the global factory for green technology, there is an obvious investment gap for China to extend its soft power in the region.
