Good news about electricity prices in South Africa

Energy and Electricity Minister Kgosientsho Ramokgopa said his department is looking at ways to make electricity more affordable for South Africans.

Eskom promised a load-shedding-free winter in 2026, thanks to an improving energy availability factor, increased planned maintenance, and other measures.

Ramokgopa told BusinessDayTV that this had opened up room for a conversation around the cost of electricity in the country, which he said may currently be prohibitive.

The minister said his department was currently drafting a new policy paper, which will provide a comprehensive overview of the country’s electricity reform agenda.

Through this paper and other reforms, Ramokgopa said the Department of Energy will strive to keep future electricity tariff increases in the single digits.

“What we know, even before the paper goes out, is that the days of double-digit tariff increases are behind us,” Ramokgopa said.

“We have anchored inflation at 3%, so it must be something that is very close to that inflation number so that the consumers are not worse off.”

Eskom’s electricity tariffs previously rose by 12.74% for direct customers and 11.32% for local municipalities in 2025.

While the latest tariff increases for FY2027 were significantly lower and in the single digits, at 8.76% for direct customers and 9.01% for municipalities, this is still roughly around three times the inflation rate.

The Competition Commission’s Cost of Living report for March 2026 showed electricity prices had risen by 85% between 2020 and early 2026, while overall inflation only increased by 30% within the same period.

Another hike of 8.83% was approved by the National Energy Regulator of South Africa and is set to come into effect in April 2027.

Ramokgopa said a more competitive electricity market will lead to increased efficiency at Eskom, and in turn, a more acceptable energy tariff policy.

“From a cost-efficiency point of view, we think we can recover about R112 billion,” Ramokgopa said. “That is significant because that means we can pass on those savings to the end consumer.”

“In that way, it’s not literally cash in their pocket, but it’s a reduction in the exponential rise of the tariff, meaning there is more disposable income for households.”

Unbundling is key to affordable energy

Energy experts have agreed with Ramokgopa’s assertion that a more competitive energy market is the most effective way to reduce electricity prices.

The National Union of Mineworkers (NUM) held a march on 18 April, protesting against high electricity prices, amongst other challenges faced by their workers.

In the same protest, they rejected the unbundling of Eskom and the privatisation of South Africa’s energy market as a threat to job security and the country’s energy authority.

IMPOWER energy expert Matthew Cruise explained in an interview with eNCA that this move will actually lead to a reduction in the price of electricity.

“Independent power producers will be able to generate electricity and deliver it to the National Transmission Company of South Africa (NTCSA),” Cruise said.

“Private companies are now able to produce power through solar farms and wind farms, as well as batteries, at around half the cost that Eskom is currently charging the nation for electricity.”

Cruise said that while this move will not lead to direct privatisation of Eskom, the unbundling process will create a competitive wholesale energy market.

The launch of South Africa’s Wholesale Energy Market (SAWEM), originally scheduled for 1 April 2026, was delayed by the NTCSA to the third quarter of 2026.

This was reportedly done to ensure that all operational and regulatory requirements were in place to ensure a transparent and competitive electricity market.

The unbundling of Eskom was first announced during President Cyril Ramaphosa’s 2019 State of the Nation Address, with a plan to split the utility into three entities: generation, transmission, and distribution.

Cruise explained that at this stage, Eskom remains technically unbundled with the NTCSA still existing as a subsidiary of Eskom Holdings.

“Independent power producers have not yet started providing power to the NTCSA in the format of it being a competitive environment,” Cruise said.

“We are going towards a democratised state of our energy sector, where private players can invest their own money to provide power to the state, which then distributes that power to the nation.”