Reinventing Municipal Energy: How Token Wheeling Delivers Simple, Green and Affordable Power

• Introduced the session and the concept of Token Wheeling, a novel solution developed by Meridian Economics since 2023 to overcome the practical limitations of traditional wheeling
• Highlighted key challenges with traditional wheeling: lack of flexibility for multi-party portfolios, complex billing, revisions to electricity supply agreements, and high infrastructure demands
• Stressed that Token Wheeling offers a simpler, more efficient pathway for municipalities to enable wheeling at scale while protecting revenue and reducing administrative burden

Key takeaways:

• Most municipalities want to embrace wheeling in principle but face very real barriers that prevent large-scale rollout
• Current wheeling activity is limited to a handful of metros and larger municipalities (e.g., Cape Town, eThekwini, Nelson Mandela Bay, George) running small-scale, one-to-one traditional wheeling pilots
• Main municipal concerns identified through SEA's extensive work and recent surveys:
  • Regulatory and policy confusion (even after NERSA wheeling rules)
  • Billing and reconciliation complexity, especially with many generators/off-takers
  • Inadequate IT and metering systems
  • Limited staff capacity and time
  • Risk to cross-subsidies and affordability for poor households
  • Overall revenue erosion risk
  • Technical/operational issues (voltage rise, substation upgrades)
  • Scalability challenges (especially to low-voltage and prepaid customers)
  • General lack of knowledge and understanding, particularly at council level
• Municipalities need:
  • Ability to monitor and reconcile wheeled energy on a time-of-use basis
  • Guaranteed revenue neutrality via proper use-of-system charges and cost-reflective tariffs
  • Greatly reduced financial, technical and administrative complexity
  • Lower barriers to entry (including for municipalities in arrears with Eskom)
  • Clear, standardised, country-wide framework and templates (preferably hosted by NERSA)
• If these needs are met, municipalities are ready and willing to confidently roll out wheeling at scale

Key takeaways:

• Municipalities are caught in a "cyclone" of simultaneous reforms (energy wholesale market launch in 2026, EDI reform, Just Energy Transition, National Treasury metro trading-services reform) with little clarity on municipal roles or funding
• Token Wheeling is viewed by SALGA as a far simpler, more practical mechanism than traditional wheeling and aligns well with eComm wheeling framework principles
• Token Wheeling advantages for municipalities:
  • Streamlined settlement via transferable credit tokens instead of complex energy credits
  • Low/rapid deployment, minimal administrative overhead
  • Enables private renewable investment without municipalities funding new generation
  • Shifts municipal role from sole buyer/supplier to network enabler and platform provider
  • Retains municipal relevance and centrality in a liberalising market
  • Protects and potentially opens new revenue streams while keeping customers on-grid
• SALGA commits to:
  • Developing model token-wheeling frameworks and guidelines
  • Advocating continued regulatory clarity
  • Building capacity for engineers, planners and CFOs
  • Facilitating IPP-municipal matchmaking and pilot projects
  • Influencing broader reforms to safeguard municipal revenue
  • Acting as "lighthouse" to guide municipalities from vulnerability to opportunity

Key takeaways:

• Traditional wheeling remains highly complex and largely inaccessible to most customers (especially LV, residential and prepaid) due to requirements for new tariffs, smart meters, billing-system changes, use-of-system agreements and monthly/hourly reconciliations
• Token Wheeling is not "wheeling" in the legal sense; it financialises the municipality's avoided Eskom purchase cost and turns it into transferable digital electricity credit tokens (ECTs)
• Core mechanism:
  • Generator injects energy - municipality saves on Eskom bulk purchase (avoided cost) - token platform issues digital credit tokens at that exact avoided-cost value - tokens sold to off-taker customers - customers settle municipal bill partly with tokens and balance in cash
  • Municipality remains fully revenue-neutral (still sells 100 % of energy at normal tariff, recovers full margin and fixed charges)
• Major simplifications and benefits:
  • No new tariffs, meters, billing changes or supply agreements required
  • Works for all customer classes including prepaid and analogue-meter customers
  • No procurement trigger, no NERSA wheeling licence or trading licence needed
  • Protects municipal revenue and rates base (customers stay on-grid for cheaper green power)
  • Enables green-attribute transfer (RECs/carbon accounting) for commercial customers
  • Very low transaction costs (~1 % of energy value)
  • Tokens issued near real-time, value reflects time-of-use avoided cost, shelf life likely 1-3 years
• Current status and next steps:
  • Concept proven legally and technically; ready for municipal pilots in 2026
  • Seeking interested municipalities (council approval + modest billing-system integration required)
  • Pilots can start small and scale
  • Platform will be open-architecture; Meridian to operate first instance commercially but welcomes competition
  • Eskom-to-municipality and Eskom-to-Eskom token wheeling possible with Eskom buy-in