The Terms of Renewable Energy Wheeling

From acronyms to bills to colours, navigating the ABCs of the energy sector language, and most specifically, renewable energy wheeling, can be challenging. Here is our simple glossary of some of the most used terms:

1. Aggregation
Aggregation refers to the process of combining multiple renewable energy generators, such as solar or wind facilities, into a larger group or portfolio. This allows for more efficient management of energy resources and may provide benefits such as increased energy availability for users or improved consistency of supply. Aggregation can apply to energy supply (various facilities) and energy buyers (various energy users).

NOA is an energy aggregator connecting multiple renewable energy sites to customers through its energy trading platform, NOA Trading.

2. Baseload
Baseload energy requirements are an off-taker or specific area’s minimum energy requirements to meet their needs over a period of 24 hours.

3. Brown Energy

Brown energy is energy derived from burning fossil fuels such as coal, gas, and oil. The word ‘brown’ is used to draw attention to the fact that this process emits carbon emissions that are harmful to the environment and contribute to global warming.

4. Carbon Footprint
A carbon footprint is an organisation or country’s total amount of carbon (CO2) or greenhouse gas emissions. Organisations such as the United Nations’ Intergovernmental Panel on Climate Change use it to track and report on climate change goals. In the context of renewable energy, reducing carbon footprints involves minimising emissions by utilising clean, renewable energy sources.

5. ESG
An acronym for environmental, social and governance, ESG is a metric framework used to assess an enterprise’s sustainability and ethical performance. The role of these non-financial indicators is to determine the enterprise’s broader impact on the environment and society.

6. Fossil Fuel
Fossil fuels are hydrogen- and carbon-containing materials formed when dead prehistoric plants and animals were buried within layers of rock. These non-renewable materials are burnt to provide heat or as fuel. Fossil fuels include natural gas, oil, and coal.

7. Green Energy
Green energy is derived from natural renewable resources such as wind, sunlight, and water. The generation of green energy does not emit carbon dioxide.

8. Greenhouse Gases

Greenhouse gases (GHGs) are gases found in the earth’s atmosphere. They trap heat by absorbing radiation in the form of heat, raising the planet’s surface temperature. Carbon dioxide is the main gas responsible for this greenhouse effect.

9. Independent Power Producer (IPP)
An independent power producer is a non-state-owned enterprise developing or operating a power-generating plant or asset.

10. Just Transition
The Presidential Climate Commission developed a Just Transition Framework to guide the transition from fossil fuels to renewable energy. It aims to manage the social and economic risks associated with the transition, securing workers’ rights and livelihoods whilst maximising social and economic opportunities and benefits.

11. National Grid
The national grid comprises a transmission and distribution network, which transports electrons from power plants or generators to private, public, or industrial off-takers.

12. Power Purchase Agreement (PPA)
Also referred to as a Master Energy Supply Agreement (MESA), A PPA is a long-term contractual agreement entered into between an independent power producer or trader and an energy user or off-taker. The terms of these agreements contractualise the supply of energy at a pre-negotiated price for a period of between five and 20 years.

13. Trader

An energy trader buys and sells energy. They set up long-term contracts between multiple power producers and off-takers. In the renewable energy wheeling space, an organisation can be an exclusive energy trader or supplement the energy it generates at its owned assets with energy from other IPPs.

14. Virtual Wheeling Platform (VWP)
Eskom’s VWP is a digital platform being rolled out in 2024. It allows commercial and industrial buyers to enter into agreements with an Eskom-certified trader or IPP to supply renewable energy to single or multiple sites at a negotiated price. The platform collects, aggregates, processes, and reports on energy generation and consumption. Eskom then refunds the buyer for the energy added to the grid from the supplier and allocates it to the buyer. The buyer then pays the trader or IPP based on their contractual terms.

15. Wheeling
Wheeling refers to the transmission of electricity from a generator to a consumer through the existing grid infrastructure owned and operated by a utility. In the context of renewable energy, wheeling allows consumers to access renewable electricity generated at remote locations and deliver it to their premises, even if they are not directly connected to the renewable energy source.

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