Africa’s energy story is undergoing a fundamental shift in 2025, as c.600 million Africans lack access to electricity. Rolling blackouts, rising tariffs and strained utilities have forced commercial institutes to look for alternatives, while investors are searching for sustainable, long-term returns. At the centre of this intersection sits wheeling, which allows independent power producers (IPPs) to deliver electricity directly to commercial institutes through the grid. For private equity, wheeling offers more than just a niche investment play. It represents a scalable platform for financing decentralised power, while giving customers reliable, typically cleaner, energy that bypasses overburdened state utilities.

THE POWER OF WHEELING

Wheeling can be explained as an IPP “wheeling” electricity that it has generated across the existing grid to a consumer, even if the two are not physically connected. Contracts and network charges govern the transaction, making it possible for commercial institutes to secure renewable supply without having to build their own dedicated infrastructure.

FROM DARK TO DAWN

African private sector clean energy investments surged to nearly US$40 billion in 2024, with solar capacity alone exceeding 20 gigawatts, and over 10 gigawatts under construction, primarily driven by Southern Africa.
South Africa’s power story is one of both crisis and innovation. In the late 1990s, South Africa undertook one of the world’s fastest electrification drives, where roughly 2,5 million households were provided access to electricity. When Eskom’s debt burden and rising tariffs collided with surging demand in the early 2000s, the system fell into crisis. By 2007, load shedding had become a national reality, forcing the government and businesses alike to rethink the centralised utility model.

The introduction of IPPs in 2012 was a turning point in South Africa’s energy transformation journey. IPPs eased pressure on Eskom, while proving that decentralised energy could be both viable and scalable. Today, wheeling takes that shift further by allowing commercial institutes to secure power directly from IPPs, reducing dependence on Eskom while accelerating the transition to cleaner energy.

In May 2025, the National Energy Regulator of South Africa established a framework for third-party wheeling that includes rules that standardise how network charges for wheeling are set and collected. By clarifying network charge methodology and access, the rules make wheeling commercially predictable, encouraging more competition and renewable investment.

For commercial institutes – which are generally the continent’s heaviest consumers of electricity – wheeling is more than an energy hedge, and this is perfectly illustrated by Vodacom’s pioneering virtual wheeling deal with SOLA Group. By securing renewable power through a PPA, Vodacom not only reduced its reliance on Eskom, but also set a blueprint for other companies to follow.
Investec’s award of an electricity trading licence by the National Energy Regulator of South Africa also represents a significant milestone in the country’s evolving energy landscape. The bank will be partnering with IPPs and facilitating structured funding, offtake arrangements and wheeling solutions.

The decentralised energy model is also gaining traction beyond South Africa. Kenya’s 2019 Energy Act, reinforced by the 2024 regulations, now enables large consumers to contract directly with IPPs. Eligible commercial institutes consuming more than 1 MVA can soon bypass Kenya Power, opening the door to a competitive open-access energy market. Zambia, Morocco and Egypt are also advancing frameworks that could make wheeling a mainstream option.
The overall benefit of wheeling is significant, with commercial institutes gaining cleaner, reliable power, while IPPs secure bankable off-takers. For investors, particularly in private equity, wheeling creates a pipeline of long-term, creditworthy deals that align with both returns and sustainability mandates.
Wheeling plays a pivotal role in advancing ESG objectives by supporting Africa’s transition to low-carbon, sustainable energy. Its cost-effective nature enables broader, affordable access to clean power, helping reduce emissions while improving energy equity. This model delivers both environmental impact and socio-economic upliftment, creating long-term value for communities and investors. In short, wheeling matters because it transforms Africa’s power challenge into an investment and growth opportunity.

The next frontier for private equity in Africa lies in building regional renewable energy platforms that combine generation, storage and digital innovation. Infrastructure outside South Africa may also be required. These integrated solutions, anchored by bankable corporate off-takers, represent the convergence of infrastructure, finance and technology.

How is Private Equity closing the gap?

Private equity investors are already positioning themselves as catalysts in this space. Their participation typically takes four forms:

• Platform aggregation: bundling smaller PPAs into investment-grade portfolios that attract institutional capital. One example is Discovery Green, a renewable energy platform that enables electricity wheeling while unlocking access to clean, affordable power at scale.

• Infrastructure funds: acquiring or building IPPs and backing construction of new renewable projects tied to wheeling agreements.

• Fintech solutions: enabling smaller commercial institutes to access flexible financing structures, as they may not be able to commit to long-term PPAs.

• Storage investments: adding batteries and smart control systems to projects, improving reliability and making portfolios bankable.

Each of these approaches strengthens the investment case, aligns with ESG mandates, and builds resilience into Africa’s decentralised power ecosystem.

Risks, mitigants and deal considerations

Although the involvement of private equity investors presents opportunities, investors may face a number of key risks. These risks include tariffs and other regulatory requirements differing across jurisdictions, and technical issues such as congestion and location mismatches, in addition to the usual commercial risks. Battery storage can help to reduce some risks, alongside hedging, which can provide financial protection for price and currency fluctuations.

Wheeling is more than a technical mechanism; it is a bridge between Africa’s power deficit and its investment opportunity. For commercial institutes, it secures cleaner, more reliable supply. For IPPs, it creates direct demand. And for private equity, it offers a scalable play at the intersection of infrastructure, energy transition and corporate finance. As regulators refine frameworks and commercial institutes demand sustainable power, private equity’s role will only deepen.

Sibanyoni and Malebe are Corporate Financiers | PSG Capital

This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

DealMakers AFRICA is a quarterly M&A publication
www.dealmakersafrica.com

References: 

1. https://www.eskom.co.za/heritage/history-in-decades/eskom-2003-2012/
2. https://www.eskom.co.za/distribution/tariffs-and-charges/wheeling/#Why-wheeling
3. https://energy-news-network.com/industry-news/vodacoms-pioneering-virtual-wheeling-solution-goes-live-in-south-africa/?utm
4. https://efficacynews.africa/2025/06/19/africas-power-sector-transforms-as-kenya-zambia-and-south-africa-embrace-open-access-energy-markets/?utm

5. https://empowerafrica.com/africa-by-the-numbers-600-million-africans-still-lack-electricity-2024/
6. https://www.pv-magazine.com/2025/08/11/africas-solar-capacity-surpasses-20-gw/
7. https://www.investec.com/en_za/welcome-to-investec/press/investec-granted-energy-trading-licence-by-nersa.html
8. https://www.discovery.co.za/business/discovery-green