Innovative Virtual Wheeling: Vodacom and Eskom’s Game-Changing Energy Accord

Innovative Virtual Wheeling: Vodacom and Eskom’s Game-Changing Energy Accord

(IN BRIEF) Vodacom and Eskom have signed a pioneering Virtual Wheeling agreement in South Africa to address the country’s energy crisis. Load shedding, planned power cuts by Eskom due to high demand, has disrupted daily life and telecom services. Vodacom aims to obtain all its electricity from renewables by 2025. Through this agreement, Vodacom can now procure electricity from Independent Power Producers (IPPs) under the same terms as Eskom. This marks a major breakthrough as it was previously impossible for a company of Vodacom’s size to source power from IPPs. The collaboration has the potential to accelerate South Africa’s transition to green energy and involves private sector participation in stabilizing the power grid.

(PRESS RELEASE) BERKSHIRE, 23-Oct-2023 — /EuropaWire/ —  Vodafone (LON: VOD), a British multinational leader in technology communications, announces that in an unprecedented move in South Africa, Vodacom has entered into a groundbreaking Virtual Wheeling agreement with Eskom, marking a significant stride towards resolving the nation’s energy challenges. This milestone collaboration aligns with Vodacom’s commitment to sourcing all its electricity from renewable energy sources by 2025.

South Africa has grappled with recurring planned power cuts, known as load shedding, as Eskom, the national electricity provider, grapples with surges in demand to avert widespread blackouts.

Load shedding has not only disrupted daily life but has also had a profound impact on telecommunications services. In the past financial year, Vodacom South Africa allocated over R4 billion (€200 million) toward backup power solutions and an additional R300 million (€10 million) in operational costs, primarily for diesel to fuel generators.

The Virtual Wheeling agreement empowers Vodacom to procure electricity from Independent Power Producers (IPPs) under terms and conditions parallel to its agreement with Eskom. IPPs are private entities that generate and supply electricity to utilities, governments, and end users.

Historically, for a company of Vodacom’s size and complexity – encompassing 15,000 low-voltage mobile sites spread across 168 municipalities nationwide – sourcing power from IPPs posed insurmountable challenges. Recognizing the need for innovative solutions, Vodacom initiated discussions with Eskom to aggregate their consumption requirements.

Vodacom subsidiary Mezzanine, in collaboration with Eskom, pioneered a new technology platform that broadened the scope of Virtual Wheeling, extending this opportunity to a diverse range of enterprises, including Vodacom.

Shameel Joosub, Vodacom Group CEO, said, “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.”

Sitho Mdlalose, CEO of Vodacom South Africa, added, “Think of it like purchasing renewable energy certificates, 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 South Africa’s power demand onto 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.”

Despite the abundance of solar, wind, and hydropower resources in Africa, over six hundred million people on the continent still lack access to electricity. The recent Africa Climate Summit held in Nairobi showcased the continent’s potential to become a cost-competitive green industrial hub, paving the way for a less carbon-intensive development trajectory with the right financial backing and technological advancements.

The agreement between Eskom and Vodacom holds the potential to expedite this transformative opportunity. The Virtual Wheeling blueprint presents a well-defined strategy for private sector involvement in stabilizing South Africa’s power grid, with flexibility to adapt according to the licensed capacity of independent power producers.

With multiple stakeholders across diverse industries expressing keen commercial interest, the future appears promising for the Virtual Wheeling initiative.

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