Private renewable energy producers that sell power straight to data centres and other big users have no regulated payment if the grid operator switches them off because of oversupply.
These deals are called wheeling, because the power travels over the national grid to the buyer. So far, the gap has not cost them anything, according to the South African Photovoltaic Industry Association (Sapvia).
Sapvia said in July that orders to switch off independent power producers had risen “from roughly 100 a month earlier this year to more than a thousand a month”. These orders are known as curtailment instructions.
“As far as we are aware, all of these curtailment instructions affected section 34 (state-procured) projects. None of them applied to private off-take or wheeling generation,” Sapvia technical and policy manager Simphiwe Khuluse told TechCentral.
Sapvia speaks for the solar industry, so its view may not cover wind farms, TechCentral reported.
“We had a particularly bad time during winter 2026, where we’ve seen curtailment of up to 3GW in a particular day,” said Gav Hurford. He is acting GM of the system operator at the National Transmission Company South Africa (NTCSA).
Hurford spoke as Energy Minister Kgosientsho Ramokgopa announced a proposed plan for 4.6GW of battery storage and 5GW of gas power. The batteries are meant to charge from power that would otherwise be switched off.
State-procured producers get paid when told to stop. They receive deemed energy payments for the power they could have made. In a 2025 decision, energy regulator Nersa said private generators do not get this payment.
“Instead, the risks and costs associated with lost production due to curtailment are addressed in contracts between private generators and their energy off-takers,” the regulator said.
That decision gave private producers some cover, but only when cuts are caused by grid congestion. Under that system, the buyer’s account is credited with the lost power as if it had been supplied. It runs from 1 April 2025 to 31 March 2028 and applies only in the Eastern Cape and Western Cape.
It does not cover cuts caused by oversupply. For those, Nersa said payment depends on the buyer or the private power purchase agreement.
NTCSA has said cuts happen because of network limits, or when supply is higher than demand, such as at midday. It has not said how this year’s orders split between the two causes.
“For private wheeling deals, the supply contract and applicable compensation framework determine who carries the cost,” said Matthew Cruise, an energy analyst at Jaltech.
Even producers who are paid have felt the strain. According to NTCSA, claims waiting to be checked and settled stood at about R2-billion in mid-June. They fell to R1.5-billion by 24 July, and processing was back to normal on 31 August.
“For IPPs, reduced production and delayed compensation put pressure on cash flow while debt repayments and operating costs continue,” Cruise said.
Robert Marston, data centre director at NTT Data South Africa, said the company had not been directly hit by grid cuts this year. He said who pays depends on the contract between the producer and the data centre operator.
If private projects are cut, data centres would get fewer wheeling credits, Cruise said. A smaller credit “reduces savings and renewable coverage”, he said.
Cruise, whose firm finances battery systems, said batteries on site could help businesses take in more renewable power when it is available. “Batteries cannot recover electricity curtailed at the generator, but they can improve the value of the available energy,” he said.
TechCentral said it asked NTCSA for comment but had not received a reply by the time of publication.
Source: this article is based on reporting by TechCentral. Image: TechCentral. Written with the help of AI and published by the Tzaneen Voice Technology desk. See our Editorial Standards.
Werner Jacobs covers technology for Tzaneen Voice. Werner reports on mobile networks, data prices, internet access, smartphones, apps, AI, cybersecurity and South African tech companies. Each story explains what a new product, price change or policy means for ordinary users in South Africa.