NERSA's April 2025 approval of congestion curtailment as a constrained generation ancillary service has unlocked a potential 3,470 MW of new grid capacity in the Western and Eastern Cape — but every C&I wheeling buyer signing a PPA in Q4 2026 must now model curtailment delivery risk, right-size behind-the-meter BESS, and stress-test Northern Cape versus Western Cape route choices before contracts close.

Why NERSA's Curtailment Framework Is the Most Consequential Grid Event C&I Wheeling Buyers Have Ignored in 2026

If you are a commercial property owner or CFO finalising a wheeling Power Purchase Agreement (PPA) with a Northern Cape or Western Cape generation source before year-end, one regulatory decision — quietly approved on 29 April 2025 — has materially changed every variable in your delivery-risk model. Most buyers haven't priced it yet. Those who do in Q4 2026 will negotiate materially better contracts.

Here is exactly what happened, what it means for PPA delivery certainty, and the three practical actions you must take before signing anything.

What NERSA Actually Approved — And What It Is Not

On 29 April 2025, NERSA granted approval to the National Transmission Company South Africa (NTCSA) to classify congestion curtailment as a constrained generation ancillary service. The plain-English translation: the grid operator can now deliberately reduce a wind or solar generator's output in a congested corridor, compensate that generator for the lost production, and use the freed-up headroom to connect additional generators that were previously stuck in the connection queue.

By formally recognising congestion curtailment as a constrained generation ancillary service, NTCSA is now empowered to manage grid congestion proactively, enabling the connection of additional generation capacity without compromising system reliability — serving as a short-term, transitional method to facilitate renewable energy integration while long-term grid expansion projects outlined in the Transmission Development Plan are implemented.

This is not a loophole. The Grid Code already makes provision for constrained generation as an ancillary service for conventional power stations; the application expanded that service to include renewable energy resources. NERSA has simply extended an existing mechanism to the private IPP market.

The 3,000 MW Number — Where It Comes From and Why It's Not a Guarantee

The GCCA Addendum suggested that by accepting a reasonable share of no more than 10% curtailment, 3,470 MW of additional wind generation can be connected to the grid almost immediately, with 2,680 MW in the Western Cape and 790 MW in the Eastern Cape.

For C&I wheeling buyers, this figure is both exciting and deceptive. It represents a theoretical ceiling — the maximum capacity that could connect under a managed curtailment regime — not a committed pipeline of project completions. The framework creates the legal and commercial mechanism for connection; it does not guarantee that 3,470 MW of projects will reach financial close or COD within the approval window.

The approval is effective from April 1, 2025, to March 31, 2028, and allows generators that incur financial losses as a result of congestion curtailment to receive compensation. However, such compensation is limited to the allowable revenue approved under the Sixth Multi-Year Price Determination (MYPD6) for the line item relating to ancillary services and energy imbalances. That revenue cap is the binding constraint on how many curtailment events the system can absorb before costs start hitting consumers — and it caps how aggressively NTCSA can use the tool.

The use of congestion curtailment as an ancillary service is restricted to facilitating additional generation capacity in the Eastern and Western Cape regions, and any additional grid connection capacity unlocked through congestion curtailment, along with supporting studies, must be submitted to NERSA for approval before extending the ancillary service to other areas. Northern Cape buyers: note that your corridor is not currently in scope. If your IPP is sited in the Northern Cape and claims curtailment relief as a delivery backstop, challenge that claim directly.

The Shift From Queue Scarcity to Managed-Dispatch Access — What It Means for Your PPA

Before this framework, grid access in the Western and Eastern Cape was a binary problem: your project either had a connection, or it waited in a queue measured in years. The curtailment framework introduces a third state — managed-dispatch access — where a generator is connected but subject to periodic output reduction events. This fundamentally changes three variables in a C&I PPA:

1. PPA Delivery Risk Has a New Clause to Negotiate

The NTCSA must address other forms of curtailment in accordance with the existing grid unavailability provisions outlined in power purchase agreements or connection agreements. This means congestion curtailment events are now a defined, compensated category — distinct from force majeure or grid fault — and your PPA must explicitly state who bears the shortfall risk when your generator is curtailed. Wheeled projects can be curtailed by the network operator; who bears that risk — IPP versus offtaker — is a critical clause. Do not accept boilerplate language that lumps congestion curtailment with general grid unavailability.

2. BESS Sizing Must Now Account for Curtailment-Induced Delivery Gaps

With implementation of 4% curtailment in the Western Cape already underway, the current C&I sector benchmark is 0.21 MWh of BESS for 1 MW of solar PV. That ratio was calibrated for an unconstrained delivery environment. In a curtailment regime, your behind-the-meter BESS must now serve a dual function: bridging peak-rate Eskom exposure and buffering scheduled curtailment windows when your wheeled PPA generator is dispatched down by NTCSA. For Western Cape–sourced wheeling deals signed in Q4 2026, the defensible BESS sizing floor is higher than the market average, and any IPP that refuses to share curtailment event data in due diligence should be treated as a red flag.

Incorporating large-scale BESS as part of the renewable energy facility is a more recent development in the private wheeling market, with the first project starting construction in 2026. Generator-side storage co-location is beginning to emerge as the premium delivery-certainty product — and buyers who prioritise this architecture in RFPs will insulate themselves from curtailment-induced shortfalls at source.

3. Route Diversification Is Now a Structured Decision, Not a Nice-to-Have

The curtailment framework does not apply uniformly. The NTCSA may only use congestion curtailment as an ancillary service for facilitating additional generation capacity in the Eastern Cape and Western Cape regions; if NTCSA determines it can unlock additional capacity beyond the stated 3,470 MW through congestion curtailment, it must submit that proposal to NERSA before extending the ancillary service to other areas.

For multi-site C&I buyers with load in Gauteng or KwaZulu-Natal, wheeling from the Western Cape into a managed-curtailment corridor adds a delivery variable that Northern Cape–to-Gauteng or Free State routes do not yet carry. Wheeling a solar project from the Northern Cape to a Gauteng offtaker adds ZAR 0.13–0.27/kWh in transmission and distribution charges, plus 5–8% energy losses, which must be factored into PPA pricing. The higher wheeling cost of a Northern Cape route may be economically justified precisely because it avoids the managed curtailment exposure of Western Cape routes — a trade-off that didn't exist before April 2025.

Current Market Pricing — Q4 2026 Reference Rates

Understanding where the curtailment risk sits requires understanding the tariff landscape it sits within. Wheeled PPA tariffs delivered to the offtaker's site — all-in, including generation, wheeling fees and losses — have compressed materially over the past 18 months: solar-only wheeled PPAs are pricing at R1.15–R1.45/kWh; wind wheeled PPAs at R1.20–R1.55/kWh, with better load-factor and evening profile; and hybrid solar-plus-wind or solar-plus-storage at R1.35–R1.75/kWh, with materially higher availability.

Most C&I Megaflex tariffs have moved through the R2.00–R2.60/kWh range over the same period, giving wheeled deals a 30–50% delivered saving before any Section 12B or carbon considerations. The saving is real and durable — but only if the delivery architecture is structured to survive curtailment events.

Wheeling losses — physical losses across the grid, typically 6–10% — are often quoted separately from the tariff and can hide 10c/kWh of true cost. Add curtailment shortfall risk on top of that, and an apparently cheap Western Cape wind deal can erode its savings margin before the contract is six months old.

The Oversight Mechanism — Why This Isn't a Blank Cheque for NTCSA

Buyers should understand that NERSA built accountability into the framework. The NTCSA is required to report to NERSA on the congestion curtailment's implementation every six months over the three-year period, including providing information on the capacity connected to the grid through this regime, curtailment levels implemented, records of curtailment incidents, costs, and progress on systems and ancillary service projects.

This six-monthly reporting cycle creates a public record of how aggressively NTCSA is using the tool and how much of the MYPD6 ancillary services budget has been consumed. Sophisticated buyers should track these reports as a leading indicator of delivery risk in their specific generation corridor — and build contractual review triggers tied to NTCSA's curtailment utilisation rate.

Three Actions Commercial Property Owners Must Take Before Signing in Q4 2026

Audit your PPA's curtailment clause now. Insist on a dedicated congestion curtailment provision that specifies whether the IPP bears make-whole risk, how curtailment events are declared, and what the notification period is. Generic "grid unavailability" language is no longer adequate for Western or Eastern Cape–sourced deals.
Right-size BESS for a curtailment-inclusive delivery model. Work backwards from a worst-case 10% curtailment scenario on your contracted volume and size your behind-the-meter BESS to bridge that gap during peak-tariff windows. The 0.21 MWh/MW industry average is a starting point, not a ceiling for curtailment-exposed routes.
Run a route diversification analysis before committing to a single corridor. The managed-curtailment premium on Western Cape wind routes may justify paying a higher wheeling tariff for a Northern Cape solar route — or blending both in a portfolio PPA structure. Regulated electricity prices continue to rise, reinforcing the value of price-certain renewable supply; early movers are better positioned to secure favourable long-term pricing. The buyers who diversify across routes now will have more leverage in 2027 when NERSA's curtailment budget is under greater pressure.

The Bottom Line

NERSA's curtailment framework is not a crisis — it is a managed evolution from connection-queue scarcity to a more dynamic, dispatch-managed grid access model. For C&I wheeling buyers, it is precisely the kind of structural change that rewards those who model it explicitly and punishes those who treat it as background regulatory noise. The 3,000+ MW of newly accessible capacity is a genuine opportunity; the curtailment events that unlock it are a genuine delivery risk. Both belong in your PPA before Q4 2026 closes.