From slashing the Nelson Mandela Bay municipality’s electricity bill by hundreds of millions of rand to landing projects nationwide, a Gqeberha firm is showing that homegrown innovation can hold its own on the national stage.
Escotek was recently in the spotlight after being flagged as one of the municipality’s evergreen contracts, an issue raised in parliament’s co-operative governance and traditional affairs committee.
Escotek chief executive Ignus du Toit said his new company, Neura, acquired Escotek at the end of 2024 to roll out its technology.
He said they were leading the way in residential load management, with the Gqeberha-based companies now doing business with Cape Town and Ekurhuleni municipalities.
Neura is the holding company of Escotek.
They have developed an innovative geyser control system that assists Eskom and municipalities in managing electrical grid infrastructure.
At a recent electricity and energy committee meeting, acting executive director Bernhardt Lamour announced that the city had signed a three-year service level agreement with Escotek in March, formalising a partnership that dated back to 2004.
The contract focuses on ripple control of geysers, a system that allows geysers to be remotely switched off during peak electricity demand, helping to ease pressure on the grid.
Speaking from his Walmer office, Du Toit said engagement with the municipality over Neura’s new technology began in January 2024.
The aim was to deploy its technology in the municipality via an Eskom procurement process, under Eskom’s national Residential Load Management Programme.
Du Toit said they engaged the municipality in January 2024 with the new technology.
“In July 2024, Eskom awarded us the contract to implement our technology in Nelson Mandela Bay, and we do it through Escotek because, as much as the legacy system was very successful, there are shortcomings.
“So the legacy system and ripple relay were done in an environment that didn’t have the amount of load-shedding that the country’s seen and didn’t have the challenges in managing grid infrastructure that we have.
“What we’re doing with the Tjommie device is far more advanced and solves all the shortcomings of the ripple system,” Du Toit said.
A Tjommie is a small hardware device installed next to or inside the electrical distribution panel in homes.
Connected to the cloud and powered by AI, Tjommie’s smart algorithms can determine how warm or cold a geyser is and whether it can be switched off to reduce the metro’s electricity demand, without resulting in cold water.
When the country or municipality requires a reduction in load, these geysers will be switched off remotely until peak demand passes.
“The idea was that our new installations would basically integrate into the legacy system to give the municipality the greatest benefit from both the new and the old.
“The proposal is done in the name under Escotek using our [Neuro] technology.”
Eskom pays Escotek for the evening peak, where the power utility will pay R3m per megawatt of independently verified load reduced.
The metro pays for the morning peak savings.
Du Toit said the municipality gets 100% of the benefit of Eskom’s two hours, because Eskom pays the evening peak.
“So we went to the municipality and indicated that after investing all this money into your infrastructure, you’re going to gain massive benefits from us also managing the other peak hours for you.
“Please allow us to manage the other three hours, and like every municipality we’ve spoken to, there’s no capex investment from the municipality and any payment from the municipality is purely out of independently measured and verified savings. It’s our risk.
“We started pitching to the municipality in January 2024, and former acting executive director Luvuyo Magalela signed a letter of intent and the project proposal.
“We engaged the municipality to figure out the best way, and through a legal opinion, it was to procure through a Section 36 process,” he said.
Section 36 of the Municipal Finance Management Act allows a municipality to deviate from standard procurement processes under specific, limited circumstances.
The deviation was approved in December 2024, enabling the municipality to conclude a service level agreement with the company for work conducted outside Eskom’s operating hours.
“We progressed with Eskom signing the SLA on December 31 2024, with the envisioned date being April 1 2025.
“It took the municipality a year to finally sign our SLA, three legal opinions later and four executive directors later, we’re finally in a position where we can start executing on this project,” Du Toit said.
Between November 2024 and March 3 this year, the system was not being used, meaning the city derived no benefit from the ripple system.
“The municipality forfeited probably just short of R100m on this system not being used over that time,” he said.
“So people start talking about evergreen.
“Escotek has been around for a long time, but it’s provided an amazing service for the municipality, and it hasn’t had a contract for more than a year.
“This wasn’t an extension of the old contract.
“It was a brand new contract that would never have come into place if there hadn’t been a new commitment from Escotek to invest a hell of a lot of money into the municipality to upgrade the system to replace the old system and modernise and expand it.
“The municipality also, apart from relying on Section 36, relied on Section 32 being a provision that allows for municipalities or organs of state to piggyback on other organs of state’s procurement processes.”
Du Toit said Escotek was about to sign an SLA with Cape Town and Ekurhuleni.
Since 2004, 110,000 geyser management units have been installed.
Du Toit said there were many things that the municipality has done that should be celebrated.
He said that over the last 20 years, Escotek had saved the municipality close to R500m on its Eskom account.
“Escotek would need to go and spend the money to install the infrastructure, and then, based on actual performance and actual independently measured and verified savings, they would then get paid out of the savings.
“So if there’s a saving, they get paid. If there’s no saving, they don’t get paid.
“Now, with this new project, we’re the first ones that they’ve appointed under the new residential load management programme.”
Du Toit said workers would visit residential areas with the ripple system to install the new Tjommie device.
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