When it comes to electricity in South Africa, the price you pay isn’t a single flat “rate per kWh”. Your tariff is a pricing structure made up of different charges (energy, network, service/admin and, for many larger users, demand-related charges). Those charges can change depending on whether you’re supplied directly by Eskom or through a municipality, what voltage you’re connected at, and how your site uses power across the day.
For businesses looking at renewable procurement especially wheeling getting the tariff piece right is often what separates a clean, predictable saving from a messy bill surprise.
What is an electricity tariff?
A tariff is the set of rules that determines what you pay for electricity. On many commercial and industrial accounts, your bill can include:
- Energy charges (c/kWh): what you pay for the electricity you consume.
- Network / use-of-system charges: what you pay for using the grid and for capacity being available on the network.
- Service and administration charges: fixed charges that support billing and customer service (and these structures can change over time for example, Eskom has moved service charges towards being raised per point of delivery (POD) rather than per account for certain customers).
- Demand-related charges (where applicable): linked to your maximum demand in kVA/kW on certain tariffs.
The result: two sites using the same number of kWh per month can still pay very different totals depending on their tariff and load profile.
Flat-rate vs Time-of-Use (TOU) tariffs
Most people know “flat-rate” pricing, but many business customers operate on Time-of-Use (TOU) tariffs. Flat-rate tariffs,The unit rate stays the same, regardless of time of day. Simple, but there’s no incentive to shift load. TOU tariffs, Eskom defines a TOU tariff as one where energy charges change across different TOU periods and seasons. TOU periods are time blocks based on demand and typically include peak, standard and off-peak, with different periods in high- and low-demand seasons. If you can move energy-intensive operations away from peak periods, TOU can materially improve costs and it also matters for wheeling settlement.
What is wheeling, in plain language?
Eskom describes wheeling as the delivery of energy from a generator to an end-user in another area using existing transmission/distribution networks (including across Eskom and municipal networks). A key detail many people miss: wheeling is often more of a financial transaction than a physical “these exact electrons moved from A to B” process. In Eskom’s explanation, it’s about balancing generation against the end user’s consumption within the TOU period.
Wheeling “rebates” are usually credits or refunds not free grid use
The word “rebate” is commonly used in conversation, but in practice you’ll typically see a credit (or, in virtual wheeling, a refund) calculated using tariff rules.
1) Traditional third-party wheeling
Eskom’s wheeling guidance is clear that:
- You still pay full tariff charges for all energy through the Eskom meter.
- The buyer must be on a TOU tariff, and an amendment agreement is required.
- A separate billing/service mechanism is used to apply a credit for the wheeled energy, at an energy rate excluding losses under the Gen-wheeling tariff (credited on a TOU basis).
- You can’t “swap” energy between TOU periods (standard can’t cover off-peak, etc.).
2) What the regulator calls the “wheeling tariff/credit rate”
NERSA’s rules define:
- Wheeled Energy as the electrical energy produced by the generator and delivered to the customer through the network service provider’s network.
- The Wheeling tariff/Credit rate as the rate at which wheeled energy is accounted for, based on the network service provider’s avoided cost, and it excludes use-of-system charges.
So the important takeaway is this: wheeling doesn’t mean you stop paying network charges it means there is a defined credit/refund mechanism for the wheeled portion, based on approved rules and tariff structures.
Municipal wheeling
Municipal rules can be different from Eskom’s approach, and the detail matters. For example, the City of Cape Town notes that as of 1 March 2025 it introduced one-to-one (bilateral) wheeling on its electricity infrastructure at medium and high voltage levels, and it requires customers to be on a Time-of-Use tariff structure. The City also states that wheeling tariffs are designed so customers are charged the full network cost for total usage, plus energy cost for any deficit energy in bilateral wheeling agreements. This is why a wheeling project must always be checked against the specific distributor’s wheeling rules (Eskom vs your municipality).
Virtual wheeling
Eskom describes virtual wheeling as a financial mechanism that facilitates transactions from IPPs to end-users via existing networks. Crucially, Eskom states that off-takers still need to settle their utility accounts with Eskom/the municipality, and Eskom processes the refund separately. Eskom even publishes the basic logic behind the refund calculation: it uses the lower of (a) energy consumed or (b) wheeled energy for each TOU period, multiplied by the relevant generation wheeling tariff for that period.
Conclusion
In a market where tariffs and billing structures can vary widely between Eskom and municipalities, clarity matters. Knowing how TOU periods, network charges, and wheeling credits are applied helps businesses make confident procurement decisions and avoid costly surprises. If you’re planning a wheeling-linked procurement (or a site upgrade where TOU performance, metering, and controllability matter), we can help you build the right technical stack and avoid the common integration issues that cause delays later.
Want to scope a system or get product support for your next commercial project? Contact Huanyu Energy: info@huanyuenergy.co.za | 010 595 3687.
