South African companies dumping Eskom

South African companies are continuing to dump Eskom, with large corporates investing heavily in alternative energy sources. 

This is despite expectations that investment might slow after the utility has greatly improved its operational performance, reducing the need to mitigate against load-shedding. 

However, repeated above-inflation increases in electricity tariffs have resulted in companies looking for alternatives to Eskom to try to reduce costs. 

Investment in alternative energy sources, alongside backup water supply and security, have continued growing despite lacklustre economic growth. 

This is feedback from Stanlib chief economist Kevin Lings, who outlined why South African companies are sitting on so much cash and what some of them are investing it in. 

Speaking on Stanlib’s Corporate Conversations podcast, Lings revealed that South African companies are sitting on R1.5 trillion in cash as they are hesitant to deploy it in a stagnant economy. 

However, one area where companies are deploying capital is in alternative energy sources, as investment is increasingly linked to ensuring corporates can keep operating despite a decline in government service delivery. 

“If you break it down, there are a few key trends that stand out. The one is that investment in renewable energy by South African corporates continues at a significant pace,” Lings said. 

“I was looking at the number of projects that have been registered with Nersa in the first six months of 2025, and it is equivalent to their entire investment last year.” 

This is significant considering that investment was expected to slow as Eskom’s performance improves and more companies go off-grid. 

“Corporates continue to invest in renewable energy, and I think part of that is to simply be less reliant on Eskom for electricity,” Lings said.

“Another part may be the hope that companies can soon sell some of their excess generation back into the grid.” 

However, the main reason that has become apparent in recent months is the desire for companies to become less exposed to Eskom’s price increases. 

“A major part of it now is that companies are looking for cheaper energy as the price of electricity from Eskom has continued to rise,” Lings said. 

“This investment has been very welcome, and it continues on. There has been no let-up in that regard, and I think, overall, that is a good thing.” 

Eskom fights back

South Africa has shown substantial progress in reforming its electricity sector to increase private participation in generation. 

The aim of the reform is to effectively create an open, competitive electricity market where private players will compete with Eskom. 

This promises to ensure energy security in the future by reducing reliance on a single entity and attracting much-needed investment in expanded generation capacity. 

Competition may also result in lower electricity prices for South Africa, particularly if private players invest in new technologies. 

Eskom has not taken this threat to its monopoly lying down, with it moving to legally challenge the five electricity trading licences granted to private companies by Nersa. 

This threatens to undermine the progress made in facilitating private participation in the electricity sector and may undo the government’s reform agenda. 

Eskom’s monopoly over the electricity sector is no longer seen as fit for purpose, with the reliance on a single entity for generation, transmission, and distribution being outdated. 

The utility’s historic mismanagement and financial deterioration also ensured that it could not be relied upon to invest heavily in adding new generation capacity to the grid in an efficient manner.

As a result, the government planned to create a competitive electricity sector with increased private participation in the generation and distribution of energy.

Business lobby groups and Electricity Minister Kgosientsho Ramokgopa have criticised Eskom’s move to challenge the award of licences to private players. 

“Eskom’s current strategy of litigation and obstruction is directly undermining South Africa’s national goal of achieving energy security,” Business Leadership South Africa (BLSA) and Business Unity South Africa said. 

“These actions create uncertainty and send a negative signal to  investors, delay critical energy projects, and ultimately may prolong the devastating economic and  social impact of load-shedding.”

“Eskom cannot be both the primary cause of our energy crisis and the gatekeeper of its solution,” CEO of BLSA Busi Mavuso said. 

“South African businesses are failing, jobs are being lost, and our economy is stagnating. We need more power on the grid, now.” 

“For Eskom to spend public money on litigation  designed to frustrate the very reforms the government is championing and block the investment that can  help secure cheaper and more secure energy is illogical and completely untenable.”

Ramokgopa has instructed Eskom to withdraw the challenges as they are a roadblock to the government’s current reform agenda.