South Africa’s 927% electricity price pain 

Electricity prices in South Africa have risen 927% since 2007, and further price hikes are on the horizon. Eskom has requested a 36% increase for the 2025/26 financial year. 

Clive Spitz, head of climate solutions at Standard Bank Private Banking, said these increases may be so severe that they directly impact households’ ability to meet their bond repayments. 

Spitz said energy expenses, particularly electricity tariffs, have skyrocketed, averaging an above–inflation yearly increase over the past decade. These rising costs are a major contributor to household inflation.

He also said these increases are a major reason for South Africans to invest in rooftop solar, as they seek to avoid repeated above-inflation hikes in electricity prices. 

“It’s crucial to recognise that turning homes powered by traditional energy sources to green alternatives isn’t just about aesthetics or having sleek solar panels on rooftops,” Spitz said. 

The current trajectory of energy costs could directly impact households’ ability to meet their bond repayments.

Eskom’s electricity tariffs have risen by 927% since 2007, and further steep hikes are likely. The utility has requested hikes of between 36% and 44% for its 2025/26 financial year.

Eskom is requesting total revenues of R446 billion for the 2026 financial year, R495 billion for 2027, and R537 billion for 2028.

The proposed average price hikes for Eskom’s direct customers are 36.15% for the period from 1 April 2025 to 31 March 2026.

For the subsequent years, the utility is seeking increases of 11.81% from 1 April 2026 to 31 March 2027 and 9.10% from 1 April 2027 to 31 March 2028.

Electricity Minister Kgosientsho Ramokgopa has warned that these price increases are at risk of spiralling out of control and that the government’s policy of providing free basic electricity is not working. 

He explained that the provision of free basic electricity was always intended as a measure to protect poorer households from high energy costs. 

However, now it is also becoming increasingly important to reduce the impact of higher costs on richer consumers and businesses. 

“It has become a structural problem that needs our attention. You do not resolve this problem by just offering free basic services. You resolve this by growing the economy. It is a crisis of economic production.”

Partner and renewable energy expert at BDO South Africa Nato Oosthuizen explained that this increase is due to Eskom’s dire financial situation.

Eskom is currently in debt of R445 billion and pays around R40 billion a year to service it. This significantly increases the utility’s operating cost. 

This is a direct result of historic mismanagement at the utility, with its capital being allocated poorly over the past decade.

Eskom spent R680 billion between 2007 and 2021, with poor results and a decline in performance. 

As the costs of operating the utility rise, regardless of the reason, the price increases almost in lockstep as South Africa’s electricity tariffs are calculated on a cost-reflective basis. 

Thus, the increase in electricity is not necessarily due to the rising price of actually producing electricity by burning coal or other means – it is due to the inefficiency of Eskom as a company. 

This is only set to get worse in the coming years, as Eskom’s revenue shortfall has reached a cumulative R535 billion and households and companies continue to move away from using its product. 

The move towards small-scale renewable energy by households and businesses has resulted in a greater proportion of non-paying customers for Eskom.

To counteract the lost revenue, Eskom is imposing significant electricity price hikes, which, in turn, drives more paying customers to install solar PV systems to reduce costs, thereby accelerating this trend.

Oosthuizen explained that as the country starts to feel the impact of this progression, a decline in Eskom’s revenue will become increasingly evident, and the trend may accelerate. 

This could spell even tougher financial times ahead for the utility, and some difficult decisions, such as business restructuring and perhaps even retrenchments, may need to be considered, he said. 

Eskom’s revenue shortfall, resulting in the need to borrow money and turn to the government for support, can be seen in the graph below.