Eskom running out of time

After more than a century of vertically integrated monopoly control, the country has begun the transition to a competitive, multi-market electricity system. 

The load-shedding crisis forced action. Now the hard work of execution must follow.

A new report, Policy to Power: Ten actions to deliver green, accessible and secure electricity, was released this week by the South Africa Electricity Traders Association.

Produced by Krutham, this report argues that reform is no longer about drafting laws. It is about sequencing, accountability and political will.

The report lays out ten concrete actions that the government must take to lock in reform momentum and avoid drift. 

At the top of the list is a cabinet-endorsed electricity reform roadmap – a single, authoritative plan with milestones, deadlines and named institutions responsible for delivery.

Without it, the authors warn, reform risks fragmentation across departments, regulators and state-owned entities.

The reform architecture already exists in law. The amended Electricity Regulation Act provides for a competitive wholesale market, open access to the grid and an independent transmission system operator. 

The South African Wholesale Electricity Market (SAWEM) is intended to anchor this new model, operating alongside bilateral contracts. 

But legislation alone does not build a market. The report makes it clear – unbundling Eskom Holdings is the most important economic reform since 1994. 

Transmission, system operation and market functions must be insulated from commercial conflicts of interest. 

Grid access must be non-discriminatory. And Eskom’s end state – including its capital structure and shrinking generation fleet – must be defined with credibility and finality.

Failure to do so will stall private investment at precisely the moment South Africa needs unprecedented capital inflows into generation, storage and transmission.

More than half of the existing coal fleet will need replacement within 15 years. Eskom and the fiscus cannot fund this alone. 

A functioning market is not an ideological preference – it is a financial necessity.

Traders reshaping the system

One of the report’s most striking findings is that the market is already moving – even if the regulatory framework remains incomplete.

Between 2023 and 2025, nearly 4.7 GW of private-contracted projects above 5 MW reached financial close, with traders playing an increasingly prominent role in aggregation and risk management. An additional 18 GW sits in the pipeline.

This is not a theoretical reform. These are steel-in-the-ground projects that would otherwise have waited for state procurement windows.

Traders are aggregating demand, structuring bankable offtake arrangements and unlocking finance without sovereign guarantees. In a fiscally constrained state, that matters.

But the report also cautions that trading cannot flourish in a regulatory vacuum. Trading rules must be finalised. Wheeling frameworks must be harmonised. Settlement systems must be automated and non-discriminatory. 

And the Market Code governing SAWEM must operate coherently alongside bilateral trading.

Without this, only well-capitalised players will survive, risk premia will remain elevated, and competition will be shallow.

Electricity pricing is perhaps the most sensitive reform front. 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 (MYPD) framework remains anchored in an Eskom-centric cost recovery model.

The revised Electricity Pricing Policy (EPP), still awaiting finalisation, is meant 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.

This is not a technocratic tweak. It will determine whether South Africa’s electricity sector stabilises on a sustainable footing or continues lurching between regulatory intervention, litigation and fiscal bailouts.

The binding constraint

No reform will succeed without grid expansion. The National Transmission Company South Africa (NTCSA) must accelerate the delivery of the transmission development plan. 

Without new lines, generation projects – 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 stabilisation and standardised wheeling frameworks to avoid becoming the weak link in reform.

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 mobilising. Presidential backing for an independent transmission entity has been reiterated.

But without disciplined execution – a roadmap, pricing clarity, regulatory capacity, grid build-out and functioning markets – reform could stall at the 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 ageing capacity, crowd in investment and secure a credible decarbonisation pathway 

The policy debate is largely settled. The execution phase has begun. The question now is whether government, regulators and market participants can move from intent to delivery – before the next crisis forces their hand.