South Africa's electricity reform reaches a critical juncture, demanding decisive action and political commitment. A recent report, 'Policy to Power: Ten actions to deliver green, accessible, and secure electricity,' emphasizes the urgency of the situation. It highlights that the reform process is no longer about mere legislation but involves strategic sequencing, accountability, and political will. The report outlines ten concrete actions for the government to maintain reform momentum and prevent stagnation. At the forefront is the need for a comprehensive electricity reform roadmap endorsed by the Cabinet, providing a unified plan with clear milestones, deadlines, and designated institutions for implementation. Without this, the authors caution, reform efforts risk becoming fragmented across various departments, regulators, and state-owned entities, hindering progress.
The legal framework for reform already exists, with the amended Electricity Regulation Act establishing a competitive wholesale market, open grid access, and an independent transmission system operator. The South African Wholesale Electricity Market (SAWEM) is designed to support this new model alongside bilateral contracts. However, the report underscores that legislation alone is insufficient to create a thriving market. Unbundling Eskom Holdings is identified as the most significant economic reform since 1994, requiring the separation of transmission, system operation, and market functions from commercial conflicts of interest. Non-discriminatory grid access and a clear definition of Eskom's future, including its capital structure and shrinking generation fleet, are essential for attracting private investment.
The report reveals that the market is already evolving, even with an incomplete regulatory framework. Between 2023 and 2025, nearly 4.7 GW of private-contracted projects above 5 MW reached financial closure, with traders playing a crucial role in aggregation and risk management. An additional 18 GW of projects is in the pipeline, indicating tangible progress. However, the report also warns that trading cannot thrive in a regulatory vacuum. Finalizing trading rules, harmonizing wheeling frameworks, automating settlement systems, and ensuring the Market Code governing SAWEM aligns with bilateral trading are necessary steps to foster a competitive and efficient market.
Electricity pricing reform is a highly sensitive issue. Average tariffs have risen significantly over the past decade and a half, widening the gap between electricity price inflation and consumer inflation. The current multi-year price determination framework is rooted in an Eskom-centric cost recovery model. The revised Electricity Pricing Policy (EPP), still awaiting finalization, aims to reset this architecture and align it with a competitive market. The report calls for Cabinet approval of the revised EPP in 2026, along with a clear transition path from administered prices to market-based pricing. This critical decision will determine whether South Africa's electricity sector stabilizes on a sustainable foundation or continues to struggle with regulatory intervention, litigation, and fiscal bailouts.
Grid expansion is another critical aspect of reform. The National Transmission Company South Africa must accelerate the transmission development plan to enable the connection of new generation projects, both public and private. The report identifies transmission build-out as the binding constraint on investment. Simultaneously, municipalities, controlling approximately 40% of the distribution grid, require financial stabilization and standardized wheeling frameworks to avoid becoming a weak link in the reform process.
In summary, the 'Policy to Power' report emphasizes that South Africa has a narrow window to secure reform before momentum wanes. Load shedding has decreased, private capital is mobilizing, and presidential support for an independent transmission entity has been reiterated. However, the success of reform hinges on disciplined execution, including a roadmap, pricing clarity, regulatory capacity, grid build-out, and functioning markets. Without these elements, reform may stall at a critical juncture, failing to deliver growth, affordability, and supply security. Electricity reform is not an option but a necessity for South Africa to replace aging capacity, attract investment, and secure a credible decarbonization pathway. The policy debate is largely settled, and the execution phase has begun. The question now is whether the government, regulators, and market participants can translate their intentions into tangible results before the next crisis arises.
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