City explores smart energy future through first Virtual Power Plant
02 August 2026
Cape Town’s Virtual Power Plant (VPP) options are being investigated, with the City of Cape Town taking part in a pilot assessment technical partnership. Essentially, a VPP is a network of decentralised cleaner energy sources, from rooftop solar PV systems to utility-scale generation and storage plants, working together to act as a traditional power station. The energy environment is rapidly changing with more players entering the market. The City is at the forefront of energy reform.
Mayor Geordin Hill-Lewis and the Mayoral Committee have approved the City’s exciting new technical partnership with RMI, a global non-profit dedicated to transforming worldwide energy systems to accelerate clean energy adoption. This collaboration will deliver a pre-feasibility assessment and pilot framework to assess the implementation of a municipal VPP.
Through this partnership, the City is exploring how to optimise its existing assets and infrastructure to:
- Improve electricity system reliability and performance
- Reduce operational energy costs
- Unlock new revenue opportunities
- Support the transition to a low-carbon, sustainable energy system
‘The initiative comes as the City responds to changes in the energy landscape, including the growth of Distributed Energy Resources (DERs), increasing interest in flexible energy systems and an emerging competitive electricity market in South Africa. The City’s emphasis on large-scale infrastructure investment, moving to multiplayer energy utility services and cleaner more affordable energy remains key in future-fitting Cape Town. The project will distinguish between opportunities which can be implemented quickly and those requiring further development.
‘The primary outcome of the project is an assessment and framework which will enable the City to determine whether, and how, to implement a VPP. It will also guide future stakeholder engagement and market-facing initiatives. This partnership reinforces the City’s commitment to innovation and building a more resilient, efficient and sustainable energy system for all customers and residents,’ said Mayoral Committee Member for Energy, Alderman Xanthea Limberg.
‘Utilities across Africa are entering a new era where DERs are rapidly reshaping their electricity networks. Together, RMI and the City of Cape Town are exploring how a growing portfolio of distributed energy assets can be orchestrated to unlock greater operational flexibility, enhance visibility and coordination, and position their utility for the next generation of power system operations. The City’s proactive leadership will help other cities and municipalities across South Africa and the continent harness the value of DERs to build more resilient, affordable and flexible electricity systems,’ said Ije Okeke, Managing Director at RMI.
The project is planned to be implemented in two phases:
- Phase 1 (the current pilot assessment): This phase includes identifying City-owned assets which could participate in a VPP and assessing the financial viability of different use cases.
- Phase 2: Development of an implementation framework and pilot roadmap, including institutional, commercial and operational requirements.
The technical assistance for Phase 1 will be delivered over approximately eight months, with a total value estimated at R3 million. The deliverable for Phase 1 will determine whether to proceed to Phase 2. There are no financial implications for the City.
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Published by:
City of Cape Town, Media Office
