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Research report · University of Pretoria

Energy Aggregators: Turning South Africa's Distributed Energy into a Grid Resource

Thousands of rooftop solar systems, batteries, EVs and flexible loads add up to a power station, if someone coordinates them. That is the job of an aggregator.

Prof. Raj Naidoo

South Africa's electricity system was built around a handful of large coal stations. It is now becoming a system of many small resources: rooftop solar on homes and businesses, batteries behind the meter, electric vehicles, and loads that can shift in time. On their own, each is too small to matter to the grid. Coordinated, they can behave like a power plant. Our literature survey of global aggregator models asks what it would take to make that work in South Africa.

Energy Aggregators · Watch on YouTube
Industry
51%
of South Africa's final energy use, the largest pool of demand response
Commercial and residential
11% / 7%
of final energy use, spread across many smaller customers
Eskom DDMP incentive cap
R3m per MW
for verified demand reduction, paid over a 24-month term

What an aggregator does

An energy aggregator brings together many small energy producers or consumers so that they can act as one larger entity. By pooling them, the aggregator can negotiate better contracts, optimise how energy is used, and take part in energy markets that would be closed to any single participant.

The survey distinguishes three types:

  • Demand-side aggregators manage the consumption of a group of customers, reducing or shifting load at peak times through demand response.
  • Supply-side aggregators pool the output of many small generators, especially solar and wind, to offer a larger and steadier supply.
  • Virtual power plants (VPPs) coordinate generation, storage and flexible loads through central software, so that a network of distributed energy resources (DERs) responds to the grid much like a conventional power station.

For the grid, the benefits are practical: peak shaving, frequency support and ramping help as renewables grow; market access and economies of scale for small players; and a smoother path for integrating variable solar and wind.

Why it matters now

The case for aggregation in South Africa rests on three pressures acting at once. The grid remains heavily coal-dependent; Eskom's nominal capacity in 2019 was about 44 GW, of which coal made up roughly 83%. Supply constraints have made load shedding a recurring reality. And the system is decentralising quickly, as households and businesses install their own solar and storage.

Aggregators turn that decentralisation from a problem into a resource. Instead of thousands of systems acting independently, they can be orchestrated to reduce demand when the grid is stressed and absorb energy when renewables are plentiful.

Opportunities, sector by sector

Industry

Industry consumes 51% of the country's final energy, led by chemicals and petrochemicals, iron and steel, and mining. Its large motor and heating loads make it the natural starting point for demand response. Aggregators can pool many industrial sites into one load block and handle market participation on their behalf, using tools such as time-of-use tariffs, demand bidding, interruptible load contracts, automated demand response and energy management systems. The Energy Intensive User Group (EIUG) offers a ready platform for collective participation.

Commercial

The commercial and public sector uses about 11% of final energy, a third of it as electricity. Beyond demand response programmes, where businesses are rewarded for trimming HVAC and non-essential loads at peak times, the survey highlights two models: renewable energy certificates (RECs), which let businesses support renewable generation they cannot host on site, and energy-as-a-service, where a provider installs, finances and operates energy systems in return for a service fee.

Residential

Households use about 7% of final energy, but they own a growing share of flexible assets. The survey groups appliances by how easily their use can shift: non-flexible loads (lights, computers), semi-flexible loads that can move with notice (washing machines, dishwashers), and flexible loads that can be adjusted without inconvenience (refrigeration, ventilation). Batteries and electric vehicles, especially with vehicle-to-grid capability, are the most valuable flexible assets of all. Residential estates and complexes that resell electricity are a practical entry point, since one agreement reaches many homes.

Agriculture

Agriculture accounts for about 2% of final energy, mostly liquid fuels. For the electricity it does use, solar PV for irrigation, cooling and heating, combined with shifting pumping to off-peak hours, can cut costs and grid dependence.

What successful aggregators have in common

International experience points to a consistent set of traits:

  1. Technology: forecasting and analytics, interoperability with different meters and systems, and real-time control.
  2. Flexibility and scale: a modular design that can add or remove participants without disruption.
  3. Clear commercial terms: transparent pricing and contracts that define rights and obligations.
  4. Trust: regular engagement with participants and strong protection of their data.
  5. Market and grid integration: access to energy and ancillary-service markets, not just energy trading.
  6. Regulatory engagement: strict compliance, and active participation in shaping the rules.

The risks

The survey rates the main risks an aggregator faces by probability and impact (each on a scale of 1 to 5):

RiskProbabilityImpactMitigation
Cybersecurity threats55Multi-layered security protocols; regular staff training
Data management and privacy45Data protection compliance; robust encryption
Regulatory change44Ongoing dialogue with regulators; monitor legislation
Operational disruption35Predictive maintenance; recovery plans
Market price volatility34Prediction tools; diverse energy sources
Integration with legacy systems34Prioritise interoperability; pilot projects
Stakeholder trust and acceptance34Transparent communication; regular outreach
Financial risk34Credit checks; diverse customer base

Cybersecurity stands out: an aggregator controls many devices from one platform, so a breach could undermine both the grid and participants' trust.

What has to be in place

Smart metering. Aggregation and VPPs depend on real-time data from every resource. South Africa has a large base of prepaid meters, which manage payment, but smart meter roll-outs, which measure consumption in real time and communicate it automatically, are still scattered. Without smart meters, time-of-use pricing and verified demand response are hard to deliver. Accelerating the roll-out, together with the communication networks behind it, is the single biggest enabler.

Forecasting. Aggregators need accurate forecasts of both renewable generation and demand to schedule flexible resources and bid into markets with confidence.

Regulation. The current framework (NERSA licensing and tariffs, the Integrated Resource Plan, REIPPPP and the Grid Code) was not designed with aggregators in mind. Clear rules for how aggregated resources participate, are measured and are paid will determine how quickly the model can grow.

Building on what already exists

South Africa is not starting from zero. Eskom's industrial demand response programme has run for more than a decade, and in 2023 Eskom piloted demand response for small commercial and residential customers. Eskom Distribution's Distribution Demand Management Programme (DDMP) uses performance contracts: project developers are paid per megawatt or per kilowatt-hour of independently verified demand and energy reduction, quarterly over a 24-month term, capped at R3 million per megawatt.

These programmes show that verified, paid-for demand reduction works here. Aggregators are the natural way to extend it from large customers to the many small ones.

The bottom line

Aggregator models fit the direction South Africa's energy system is already moving: more distributed, more renewable and more digital. They promise lower costs, a more resilient grid, faster renewable integration and new jobs, and they let consumers become active "prosumers". Realising that promise depends on investment in smart metering and cybersecurity, a regulatory framework that recognises aggregators, and close collaboration between utilities, government, technology providers and participants.


The JET Group at the University of Pretoria works on demand response, smart grids and the integration of distributed energy resources. To discuss research collaboration or an aggregation pilot, contact raj.naidoo@up.ac.za.

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