South Africa’s electricity prices have grown three times faster than household income

With electricity prices increasing steeply in South Africa, many households are considering ditching Eskom for solar power solutions.

Nedbank explained that the easiest way to track the rise of a household’s average electricity bill is to compare tariff increases with inflation and average wage increases over the same period.

However, this isn’t always a straightforward process, since factors like the size of the household, their consumption habits, geographical location and the tariff structure of the local municipality all complicate the calculation.

The variety of factors that affect household electricity bills also means that increases are not necessarily a result of Eskom hiking its prices. For example, if a family has children, their power bill will naturally increase.

“However, no matter how you interpret the statistics, South Africa has experienced a significant rise in electricity costs over the past few decades,” Nedbank said.

A 2021 study by PowerOptimal’s Matthew Capes and Sean Moolman looked into how the price and affordability of water and electricity in South Africa changed from 1996 to 2020.

They explained that Eskom, plagued by ageing infrastructure, mismanagement, corruption, shrinking or stagnant revenues and increasing debt, was caught in a “death spiral”.

This has manifested in two ways. The first is load-shedding, which has fortunately eased since mid-2024. The second is tariff increases, which have not slowed at all.

From 2007 to 2020, electricity tariffs increased by 512%, which is five times faster than inflation.

“The trend has been accelerating,” Nedbank said. “Household electrical costs have risen by 60% since 2017, and recent price increases of 18.7% for the 2023/24 financial year have put further pressure on households.”

For the 2025/26 year, Eskom proposed increasing electricity prices by 36.15%. However, the National Energy Regulator of South Africa (NERSA) rejected this proposal and approved a significantly lower increase of 12.74%.

Costs soar as incomes lag

Capes and Moolman also examined how much monthly electricity and water bills have increased. In 1996, households were paying, on average, R161 per month. By 2020, that number had shot up to R2,028 – an increase of 1,159.63%.

This isn’t solely attributable to inflation. They found that if household electricity and water bills had increased with inflation, they should only have risen to R638 in 2020.

However, above-inflationary increases over the last few decades have sent household utility bills skyrocketing. From July 2025, NERSA approved an annual increase of a baseline of 11.32% in bulk electricity prices for municipalities.

After these increases, MyBroadband calculated average monthly prices across the country. They found that East London’s Buffalo City metro is the most expensive for the average resident, with a monthly utility bill of around R2,760.

The City of Tshwane was the second most expensive, with an average monthly bill of R2,707, followed closely by Nelson Mandela Bay at R2,697.

At the same time, household incomes have not kept up with the rising water and electricity costs.

Capes and Moolman pointed out that while average monthly electricity and water bills have increased by 200% from 1996 to 2020, average household disposable income has increased by a mere 37%.

As households are forced to navigate stark annual increases, Nedbank advised that there are things they can do to lower their electricity consumption and costs.

“Check the energy efficiency of your appliances, improve the insulation in your home, and consider installing an energy-efficient geyser – a major consumer of household electricity – with a timer, so it draws power only when necessary,” the bank suggested.

Even with these changes, electricity bills are still largely dependent on the area, the number of people in the household, and the number of appliances.

Most of these things are difficult, or sometimes impossible, to change. Even if South Africans can afford to switch out their appliances for bare minimum-rated units, they still have no control over escalating service fees.

“It looks like electricity costs will continue to increase in the future, even as we continue to battle load-shedding and breakdowns in grid infrastructure,” Nedbank said.

The graph below shows how electricity and water tariffs in South Africa have risen compared to inflation since 1996.

Solar power

As electricity prices have shot up in recent years and Eskom’s performance has deteriorated, many South Africans have invested in alternatives to reduce their reliance on the utility.

While solar power may seem like an attractive option, as it can cut back on electricity costs, provide power during outages and is more sustainable, it requires a large upfront investment.

Solar power also comes with costs that need to be paid throughout its lifespan. Given how much of an investment the switch can be, Nedbank urged consumers to consider the following before committing:

• Size: Consider whether there will be a need to expand the system over time to generate and store more power. While consumers may be constrained by what they can afford now, they should assess their electricity needs with scaling up in mind.
• Cost: This relates to the system’s size, as costs will depend on the inverter chosen and the number of roof panels and batteries needed.
• Installation and maintenance: Installation is a once-off cost, but households also need a service agreement to maintain the system’s components throughout its lifetime. Both costs must be factored into ROI calculations.
• Costs of credit: Consumers must factor the fees and interest they’ll pay on any loan to finance a solar installation into their ROI expectations.
• Cost of electricity: Electricity costs have escalated considerably over the past few decades. When basing ROI calculations on current electricity cost per unit, the solar system will offset those costs even as they escalate.

“Put simply, you could recoup the cost of your investment faster and then continue to make significant savings,” Nedbank said. “The potential ROI on solar power is very attractive.”

For example, someone could choose a midrange solar installation package at a cost of R128,000, which includes panels with a 4.4 kW peak generation capacity, a 5.5 kW inverter, a pair of 5 kWh batteries, installation, and a 10-year warranty.

Then, they will break even on their investment in about 5 years and 6 months. “After 10 years, you’ll have recouped the full cost and banked R180,000 in savings from your investment,” Nedbank said.