City of Cape Town and GreenCape launch South Africa's first Virtual Power Plant regulatory sandbox pilot to test distributed energy integration

The City of Cape Town is collaborating with GreenCape on the pilot to better understand the capacity, flexibility, and shared value private-sector VPPs could bring to electricity utilities.

With South Africa hosting over 6GW of distributed generation assets and smart appliances, the project aims to bring together underused customer-side resources, such as rooftop solar, residential battery storage, and smart devices, into a coordinated system that can act as a flexible power resource for the local electricity grid.

Cleaner electricity system

Glen Tyler-Davies from PIE said: “This project holds great potential, with business, government and philanthropy coming together to back the same goal: a more reliable, affordable and cleaner electricity system for South African households.”

Operating within the City of Cape Town’s distribution grid, the pilot provides a controlled sandbox environment to test key virtual power plant use cases, focusing primarily on shifting peak electricity use into off-peak periods.

The lessons learned will directly inform the City of Cape Town and other South African municipalities on how to structure VPP frameworks, contract third-party aggregators, and design fair incentive models for distributed energy resources.

The pilot supports the City of Cape Town’s 2050 Energy Strategy, which outlines a clear roadmap to build a future-fit energy utility with lower-cost, lower-carbon, and more reliable energy.

“The city’s energy directorate has established itself as a progressive and innovative player in the energy transition, particularly as a leader in enabling distributed energy resources, with a strong uptake of rooftop solar and growing participation in our feed-in programme.

“Almost 2,000 small-scale embedded generation feed-in customers have received credits totalling near R9m (incentives included) by exporting excess electricity to the grid.

“The Virtual Power Plant Regulatory Sandbox Pilot is a natural next step, helping us explore how customer-owned energy resources such as solar, batteries and smart devices can work together to support a more resilient, affordable and efficient energy system.

“The lessons from this pilot will help inform future market frameworks and strengthen the city’s journey towards a future-fit, multi-player energy utility,” said Mayoral Committee Member for Energy, Xanthea Limberg.

Pilot application details

• Target participants: A minimum of one and a maximum of four VPP providers will be selected to participate in the pilot.
• Initial scale: The initial phase anticipates onboarding approximately 150 homes to showcase proof-of-concept value propositions, primarily using residential battery energy storage.
• Incentive funding: Successful applicants will be eligible for incentive funding across two pools: A primary pool for peak-to-off-peak energy shifting, and a secondary pool for other use cases and technical infrastructure support.

Key timelines:

• 15 November 2026: Submissions close.
  
• 30 November 2026: Appointment of panel of participants.
  
• December 2026 – January 2027: Setup and technical testing phase.
  
• February 2027 – September 2027: Active incentive run.

Interested VPP providers can submit applications here. Applications must be submitted by 15 November 2026.