Netcare, a prominent healthcare provider in South Africa, has committed to procuring electricity for six of its facilities from wind and solar farms

In Short : South Africa’s Netcare, a leading private healthcare provider, has committed to procuring electricity for six of its facilities from wind and solar farms. This move signifies Netcare’s dedication to sustainability and reducing its carbon footprint. By sourcing energy from renewable sources, the company is contributing to the country’s clean energy transition, promoting eco-friendly practices, and supporting the growth of renewable energy infrastructure in South Africa.

In Detail : Electricity wheeling is the act of transporting electricity from a generator to a remotely located end-user using an existing distribution or transmission system. This may also be done across multiple distribution networks, such as through a national utility company and/or a local municipality. We are starting to see more exciting developments around wheeling in South Africa. Wheeling has been a topic of discussion for a long time now in South Africa, and therefore it is good to finally see more projects being implemented.

Wheeling allows locations with ample space to be utilized to unlock significant opportunities for increasing generation from distributed renewable plants in places that would not normally need that generation capacity at a particular time, and then feed that into the grid to offset consumption by other consumers that do not have enough space for their own generation. Wheeling provides a viable route to unlock generation capacity.

A good example comes from one of the other major players in South Africa’s property sector, a Real Estate Investment Trust (REIT) major player, Redefine Properties. Redefine Properties recently shared that it is participating in the City of Cape Town’s first electricity wheeling pilot project that enables commercial entities to sell electricity back to the city’s grid. Redefine is undertaking a 5.9 MWp solar wheeling project on the roof of its Massmart Distribution Centre at its Brackengate 2 development. Warehouses and large “big box” facilities are great for wheeling as they have a lot of space to install more generation capacity than they need. Another example of wheeling, on a much larger scale this time, is from SOLA Group and African Rainbow Energy for the 200 MW solar PV projects for Tronox Mineral Sands. These renewable energy facilities will supply electricity, through wheeling arrangements with Eskom, to 5 Tronox facilities in the Western Cape and KwaZulu-Natal for their own use. Tronox’s operations are highly energy intensive, therefore wheeling can be an avenue to unluck significant renewable generation capacity located at places with the space and grid capacity.

In another exciting development in South Africa’s nascent wheeling sector in the C&I space, one of South Africa’s leading private healthcare providers, Netcare, announced that commercial terms have been agreed for a Renewable Energy supply arrangement with NOA Group Trading, a renewable energy provider. The transaction covers six Netcare facilities, whose power is currently supplied by Eskom’s coal-fired power stations.

From Q1 2026, up to 100% of these sites’ energy consumption (comprising c. 11% or 22 GWh/annum of the Group’s total energy consumption) will be supplied from a combination of wind and solar farms through “Energy Wheeling” over the national electricity grid. In combination with other initiatives already implemented under Netcare’s sustainability program, this agreement will increase the proportion of Netcare’s total energy consumption that is derived from renewable energy sources to c. 26%. This transaction represents a crucial step towards Netcare’s goal of achieving 100% reliance on renewable sources by 2030.

Netcare also gave an update on diesel costs for its backup generators due to the ongoing electricity rationing exercise in South Africa. Netcare said guidance for diesel costs for FY 2023 was based on an expected average of Stage 5 load-shedding across its facilities for H2 2023, in anticipation of higher levels of load-shedding during the winter months. Load-shedding in June, July, and August 2023 proved lower than expected. Consequently, diesel costs (which amounted to R113 million for the 11 months to 31 August 2023) will be lower than the guidance provided of R165 million for the full year. However, this cost still represents a significant increase against the FY 2022 cost of R37 million.

Netcare also gave an update on the ongoing digitization program. The CareOn digitization project which is being implemented to fully integrate Electronic Medical Records across the Netcare ecosystem is nearing completion, with all FY 2023 objectives achieved within scheduled timeframes and budget. Netcare adds that this new way of care has been successfully implemented at 38 hospitals to date, comprising 8,645 beds (90% of registered beds). The remaining seven hospitals will be commissioned in H1 2024, and the project will be earnings accretive from H2 2024.