Engineering News and Mining Weekly
Energising Start
Red Rocket confirms initial 500 MW of interest in 2 000 MW virtual wheeling renewables scheme
Independent power producer (IPP) Red Rocket reports that it has signed up customers for 500 MW of the 2 000 MW of capacity it aims to deploy over the coming three years as part of an innovative scheme designed to provide multiple private offtakers with renewable electricity as from 2026.
In recent weeks, the company has been running a national advertising campaign inviting potential customers to make contact regarding its intention to sell “affordable, renewable energy to businesses”.
Red Rocket says the 2 000 MW forms part of a broader hybrid portfolio comprising 2 800 MW of wind and 1 500 MW of solar photovoltaic that has been fully permitted and has received cost estimate letters for grid access from Eskom. The projects are not yet registered with the National Energy Regulator of South Africa, with such registration to be undertaken only once a critical mass of customers has been secured.
The power purchase agreement contracts will vary based on the arrangements with the specific offtaker, with pricing determined by the length of the contract, wheeling costs and whether the contract is ‘take or pay’ or ‘take and pay’.
“The objective is to produce the first electricity at the end of 2026, with the full 2 000 MW operational by the end of 2027.
“This is the first phase of the full development, consisting of over 4 000 MW,” the company, which is headed by Matteo Brambilla, tells Engineering News & Mining Weekly.
The first phase of the project will produce about 5 500 GWh of renewable electricity yearly.
The investment value for the initial 2 000 MW is estimated at R70-billion, including self-build grid upgrades, and Red Rocket says it will be fully funded through a project finance scheme.
The initiative is in response to regulatory changes that have made it possible to wheel renewable electricity through the grid and is also aligned with the virtual wheeling framework that is being developed by Eskom and which will be implemented at scale this year..
The framework, which has been piloted by Eskom and Vodacom, incorporates the principle of revenue neutrality for Eskom and municipal distributors, which is seen as critical for unlocking virtual wheeling. However, Eskom has indicated that it intends excluding those municipalities whose accounts reflect long-standing arrear debt.
“Virtual wheeling is an important component of these projects, as it enables these types of transactions to occur.
“Traditional wheeling severely impacted the geographic areas to which we could deliver the electrons, as only a few municipalities have wheeling frameworks in place,” Red Rocket says.
Therefore, no additional regulatory changes are required before the scheme can be launched, as the lifting of the generation cap has enabled private-sector offtakers to transact directly with IPPs. “The solution that Red Rocket is proposing is viable under the current electricity regulations and legislation.”