South African telco Vodacom has signed a Power Purchase Agreement (PPA) with Sola Group, a South African independent power producer (IPP) for energy from a solar power plant in Virginia, Free State province, South Africa.

The PPA is a virtual wheeling agreement that aggregates energy consumption across multiple consumption points through the use of smart meters. Following this, the energy consumption data is reconciled with the energy generated from the IPP within a virtual wheeling platform, enabling companies with complex, distributed operational footprints to access renewable energy at scale.

"Virtual wheeling is a game changer for companies like ours with distributed operations, removing long-standing barriers to access renewable energy. More importantly, this achievement demonstrates our purpose to connect for a better future – one where we protect the planet, accelerate the adoption of renewable energy, and contribute to the stability of the national grid," said Sitho Mdlalose, CEO of Vodacom South Africa.

This differs from traditional wheeling agreements that usually involve a one-to-one relationship between an IPP and an offtaker using the national grid to transport energy. For Vodacom, which operates more than 15,000 low-voltage sites across 168 municipalities, the use of a virtual system is required due to the geographic and infrastructural complexities involved.

"Virtual wheeling marks a pivotal moment in South Africa's energy transition, and we are proud to be the independent power producer behind Vodacom's first agreement of this kind. 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. Our partnership with Vodacom on this milestone underscores the power of collaboration in unlocking the full potential of renewable energy for South Africa's economy and its people," said Simon Haw, founder & chairman of Sola Group.

The deal is Vodacom’s second virtual wheeling agreement to date. In August 2023, it inked a deal with the country’s leading utility, Eskom, to support new capacity additions to the country’s grid.

Vodacom has stated that the agreement will not only result in lower CO2 emissions from its operations but also contribute to grid stability.

South Africa has long struggled with load shedding issues due to insufficient power generation capacity, resulting from aging, poorly maintained coal-fired power plants, mismanagement by Eskom, and allegations of corruption.

Although not confirmed, the PPA appears to be linked to Sola’s planned 198MW Springbok Solar project. When built, it is expected to supply 440,000MWh of power per year into the South African grid.

However, the project has faced several setbacks due to an objection filed by gas producer Renergen late last year, which argued that the project interfered with their gas extraction rights without a co-existence agreement.

In April, the Director-General of the Department of Mineral and Petroleum Resources upheld Renergen’s appeal, reversing a previous decision that had allowed the project to continue with construction. In response, Sola maintained that it had all the necessary permits and had consulted Renergen multiple times. However, its subsequent appeal was dismissed, leaving the project in limbo.

DCD has contacted Sola and Vodacom to determine whether the Springbok project is indeed the one linked to the PPA.