Trader-Led Wheeling Is Replacing Bilateral PPAs: What C&I Buyers Must Negotiate Differently in 2026

The Ground Has Shifted: Trader-Led Wheeling Is Now the Default

South Africa's commercial and industrial (C&I) electricity market has crossed a structural threshold. For most of the past decade, a corporate buyer seeking renewable power faced a straightforward — if lengthy — path: negotiate a bilateral Power Purchase Agreement (PPA) directly with an Independent Power Producer (IPP), amend your Electricity Supply Agreement (ESA) with Eskom or your municipality, and lock in a fixed tariff for 15 to 20 years. That model is not dead, but it is rapidly being displaced.

Trader-led, portfolio-based aggregation models are beginning to replace traditional one-to-one bilateral power purchase agreements, and in 2026, trader-led wheeling is poised to become the dominant commercial model in the South African private power market. For CFOs and property managers who last reviewed their energy procurement strategy even two years ago, the negotiating landscape they face today is fundamentally different — and the contractual risks have migrated in ways most advisers have not yet fully mapped.

What Changed, and Why It Matters Now

After years of policy development, 2026 marks the point at which electricity reform has begun to change procurement mechanics in practice. Clearer governance structures and participation rules are reducing regulatory uncertainty and enabling decision-makers to act with more clarity and confidence.

The regulatory catalyst was decisive. During the last week of November 2025, the National Energy Regulator of South Africa (NERSA) announced a series of decisions that collectively accelerate South Africa's shift to a competitive electricity market, creating clearer governance for grid access and laying the practical foundations for market-based trading alongside bilateral wheeling. Critically, approval of the Market Operator Licence is a pivotal step in the implementation of the Electricity Regulation Amendment Act 38 of 2024 and the transition to a multi-buyer, multi-seller framework.

In parallel, NERSA published the draft Electricity Trading Rules, with the draft rules outlining a phased opening of trading starting with transmission and high-voltage customers, and setting out licensing, reporting, metering data access, reconciliation, settlement and supplier switching protocols. Under NERSA's own draft rules, traders shall be treated as independent market participants, not as intermediaries — a classification that carries profound implications for how C&I buyers must structure and protect their contractual positions.

The new framework provides a standardised set of rules for third-party wheeling across the entire network, including wheeling in and out of municipal supply areas. It caters for non-discriminatory access, stipulates that charges be cost-reflective, and allows generators licensed or registered with NERSA to participate in wheeling transactions at low-, medium- and high-voltage levels.

The Financial Imperative: Tariffs Are Not Waiting

The urgency is not merely structural — it is financial. Following its review of Eskom's R54.7-billion revenue redetermination, NERSA has confirmed tariff increases of 8.76% from April 2026, followed by a further 8.83% in April 2027, effectively around CPI plus 5% in each of the next two years. This is against the backdrop of a decade in which tariffs rose by approximately 180%.

In 2026, energy is no longer treated as solely an operational cost; for many large users, it now moves onto the balance sheet and into the risk management function — one of the most significant energy trends reshaping how businesses think about long-term electricity pricing and cost certainty. For a property manager running a multi-tenanted commercial building, or a CFO responsible for a multi-site retail footprint, this is a board-level conversation, not a facilities management line item.

How the Trader-Led Model Actually Works

Under the trader-led model, licensed traders sit between independent power producers (IPPs) and end-users, coordinating supply and demand across portfolios, managing volume and balancing risk, and assuming much of the administrative and operational complexity historically carried by buyers.

This is a fundamental inversion of the traditional bilateral PPA structure. Previously, the C&I buyer was exposed directly to a single IPP's generation risk — if the plant underperformed, the buyer bore the shortfall. Aggregation drives the adoption of renewables by providing flexibility in terms of power generated from renewable energy sources, and also provides a range of contracting options that enable companies to sign PPAs more quickly than in bilateral models. These contracts also often provide terms more suited to various companies' needs, such as shorter durations of three to five years, for companies that do not want to take long-term contracts.

The milestone that crystallised this shift at scale is the Naos 1 project. The 300 MW solar facility developed by SOLA Group near Viljoenskroon in the Free State, with 435 MWp installed capacity and 660 MWh of battery storage, has reached financial close and commenced construction, backed by long-term power purchase agreements with Sasol and Air Liquide. It is the first utility-scale solar PV and battery project purpose-built to wheel electricity across the national grid to private end users, capable of storing daytime production and dispatching it during evening peak demand.

What C&I Buyers Must Negotiate Differently

The shift to trader-led wheeling introduces a new set of contractual pressure points that did not exist — or mattered far less — in a simple bilateral PPA. Here is what every CFO and property manager must now place front and centre in any energy procurement negotiation:

1. Trader Creditworthiness and Licence Continuity

In a bilateral PPA, your counterparty risk was the IPP. In a trader-led structure, your primary counterparty is the licensed trader — an entity that may be younger, less capitalised, and whose NERSA trading licence is subject to ongoing compliance obligations. Insist on audited financials, parent guarantees where applicable, and explicit licence continuity clauses. Ask what happens to your supply agreement if the trader's licence is suspended or revoked.

2. Portfolio Composition and Source Transparency

Traders aggregate supply from multiple IPPs across multiple technologies. Smart meters will be installed at both generation and consumption locations to collect generation and time-of-use data, and the trader will aggregate this data and transfer it to Eskom's platform. From the perspective of IPPs, the trader will contract with diverse IPPs who will produce power and feed it to the grid in accordance with a negotiated pricing structure. You need contractual rights to audit the portfolio composition, especially if your ESG reporting depends on Renewable Energy Certificates (RECs) or verified green attributes. A vague "renewable portfolio" claim is not sufficient for Scope 2 carbon accounting.

3. Wheeling Charge Pass-Through and Tariff Exposure

Wheeling costs in South Africa vary from municipality to municipality. Traders will typically pass these through to buyers, but the mechanism matters enormously. Wheeling customers must now fairly contribute to inter-tariff subsidies through the removal of the affordability subsidy credit for wheeled energy, and charges related to non-Eskom generators using the Eskom network to transport electricity will no longer be rebated. Negotiate a clear cap or index on wheeling charge pass-throughs, and ensure that any change in NERSA's network charge methodology triggers a renegotiation right — not just a notification.

4. Volume Balancing and Curtailment Risk

Poorly negotiated tariffs or escalation clauses can erode projected savings over time. Volume uncertainty — especially under as-consumed models — also creates risks in addressing CO₂ reduction targets. Grid congestion is real: 75% of all private renewable applications are for either the Eastern, Western or Northern Cape, yet these resource-rich areas are grid-saturated, having officially reached 0GW of remaining firm capacity, with a backlog of 53GW worth of renewable energy projects. Ensure your agreement specifies who bears curtailment risk and whether the trader is obligated to source replacement supply if your allocated generation is curtailed.

5. Municipal Participation Constraints

Limitations such as grid congestion and the current structure of virtual wheeling — which restricts access to customers in municipalities in good financial standing — are narrowing the addressable market for large-scale renewable solutions. Before signing, verify that your specific sites — particularly those in municipal supply areas — are eligible for wheeled supply under current rules, and obtain a written representation from the trader on this point.

6. Contract Duration and Exit Mechanics

One of the genuine advantages of trader-led models is flexibility on contract term. Short-term PPAs of two to five years allow a wider range of South African businesses to access renewable energy from the Eskom network, providing significant flexibility to energy users with unpredictable future energy requirements, or who are unable to sign long-term contracts. However, shorter terms mean more frequent renegotiation exposure. Build in price review mechanisms tied to verifiable market benchmarks, and negotiate step-down exit penalties rather than flat break fees.

7. Financing Risk and Project Delivery

In 2026, more traders are entering the energy trading pool, with more off-takers and more complex structures, putting pressure on banks that are still geared for simpler, single-buyer deals. Reaching financial close on these projects is already taking longer than developers would like. If you are signing a forward-start agreement linked to a project under construction, ensure the agreement contains longstop dates, developer step-in rights in the event of trader default, and a clear remedy if the project fails to achieve commercial operation within the contracted window.

The Competitive Window Is Narrowing

As reform, constraint and innovation converge, the margin for indecision is shrinking. "Passive observation is no longer a viable energy strategy," in the words of leading market participants. The C&I buyers who secure the best pricing in 2026 are those who enter negotiations with a detailed understanding of how the trader-led model differs from the bilateral PPA they may have signed — or avoided signing — in prior years.

Private PPAs linked to renewable energy wheeling have rapidly evolved from specialised procurement structures into mainstream energy strategies for corporate electricity users. Industry stakeholders emphasise that contract signature marks the start of a technically complex process rather than the end of it. The sophistication you bring to the negotiating table will determine not just the tariff you pay, but the risk exposure you carry for the next three to ten years.

At SolarXgen, we work with CFOs and property managers across South Africa's commercial and industrial sector to structure wheeling and on-site solar solutions that are financially robust, contractually sound, and grid-ready. The market has changed. Your negotiating strategy must change with it.