South Africa's electricity sector is at a critical juncture, where reform is no longer a theoretical concept but a pressing necessity. The country's energy landscape is on the brink of a transformative phase, and the new report, 'Policy to Power: Ten actions to deliver green, accessible and secure electricity', sheds light on the pivotal moment we are facing. But here's where it gets controversial...
The report, released by the South Africa Electricity Traders Association and produced by Krutham, emphasizes that the reform process is now about more than just drafting laws; it's about strategic sequencing, accountability, and political will. The authors argue that without these crucial elements, the reform efforts risk fragmentation and inefficiency across various departments, regulators, and state-owned entities.
From Monopoly to Market: Unlocking Competition
South Africa's electricity reform architecture is already in place, thanks to the amended Electricity Regulation Act. This legislation paves the way for a competitive wholesale market, open grid access, and an independent transmission system operator. The South African Wholesale Electricity Market (SAWEM) is designed to anchor this new model, operating alongside bilateral contracts.
However, the report makes it clear that legislation alone is not enough to build a thriving market. And this is the part most people miss... Unbundling Eskom Holdings is the key economic reform needed to ensure the sector's success. Transmission, system operation, and market functions must be insulated from commercial conflicts of interest, and grid access must be non-discriminatory. Eskom's end state, including its capital structure and shrinking generation fleet, must be defined with clarity and finality.
Traders Reshaping the System
One of the report's most compelling findings is that the market is already evolving, even with an incomplete regulatory framework. Between 2023 and 2025, nearly 4.7GW of private-contracted projects above 5MW reached financial close, with traders playing a pivotal role in aggregation and risk management. An additional 18GW is in the pipeline, indicating a tangible shift towards market-driven solutions.
Traders are aggregating demand, structuring bankable offtake arrangements, and unlocking finance without sovereign guarantees. In a fiscally constrained state, this is a significant development. However, the report also cautions that trading cannot flourish in a regulatory vacuum. Trading rules must be finalized, wheeling frameworks harmonized, settlement systems automated and non-discriminatory, and the Market Code governing SAWEM must operate coherently alongside bilateral trading.
Pricing Reform: The Political Third Rail
Electricity pricing is a highly sensitive reform area. Average tariffs have risen sharply over the past decade and a half, widening the gap between electricity price inflation and consumer inflation. The current multi-year price determination framework remains anchored in an Eskom-centric cost recovery model.
The revised Electricity Pricing Policy (EPP), still awaiting finalization, aims to reset this architecture and align it with a competitive market. Without cost-reflective, unbundled tariffs, neither bankable private contracts nor fair competition can emerge. The report calls for Cabinet approval of the revised EPP in 2026, alongside a clear transition path from administered prices to market-based pricing.
Transmission: The Binding Constraint
Grid expansion is a critical component of any successful reform. The National Transmission Company South Africa must accelerate the delivery of the transmission development plan. Without new lines, generation projects, whether public or private, cannot connect. The report bluntly describes transmission build-out as the binding constraint on investment.
In parallel, municipalities, which control roughly 40% of the distribution grid, require financial stabilization and standardized wheeling frameworks to avoid becoming the weak link in reform.
A Narrow Window of Opportunity
The message of 'Policy to Power' is clear: South Africa has a narrow window to lock in reform before momentum dissipates. Load shedding has eased, private capital is mobilizing, and presidential backing for an independent transmission entity has been reiterated.
However, without disciplined execution, including a roadmap, pricing clarity, regulatory capacity, grid build-out, and functioning markets, reform could stall at the very point where it should begin delivering growth, affordability, and security of supply.
Electricity reform is not optional; it is the mechanism through which South Africa can replace aging capacity, crowd in investment, and secure a credible decarbonization pathway. The policy debate is largely settled, and the execution phase has begun. The question now is whether the government, regulators, and market participants can move from intent to delivery before the next crisis forces their hand. And this is the part most people miss...
Chris Yelland, Managing Director at EE Business Intelligence, emphasizes the urgency of the situation, stating, '© Copyright 2026 – EE Business Intelligence (Pty) Ltd. All rights reserved. This article may not be published without the written permission of EE Business Intelligence.'
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