South Africa's electricity reform is at a critical juncture, where the country's energy future hangs in the balance. A recent report, titled 'Policy to Power: Ten actions to deliver green, accessible and secure electricity', emphasizes that the time for action is now. The report, released by the South Africa Electricity Traders Association and produced by Krutham, highlights the urgency of the situation, stating that reform is no longer about drafting laws but about sequencing, accountability, and political will. It presents a compelling argument for a comprehensive approach to electricity reform, one that addresses the complex challenges facing the country's energy sector.
The report outlines 10 concrete actions that the government must take to ensure the reform's success. At the top of the list is the development of a Cabinet-endorsed electricity reform roadmap, a single, authoritative plan with clear milestones, deadlines, and designated institutions responsible for its implementation. This roadmap is crucial to prevent fragmentation across different departments, regulators, and state-owned entities, which could hinder progress.
One of the key areas of focus is the transition from monopoly to market. The reform architecture is already in place through the amended Electricity Regulation Act, which 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 designed to anchor this new model, operating alongside bilateral contracts. However, the report emphasizes that legislation alone is not sufficient to build a market.
Unbundling Eskom Holdings is identified as the most significant economic reform since 1994. The report stresses the importance of insulating transmission, system operation, and market functions from commercial conflicts of interest, ensuring non-discriminatory grid access, and defining Eskom's end state with credibility and finality. Failure to do so could stall private investment at a time when South Africa desperately needs unprecedented capital inflows into generation, storage, and transmission.
The report highlights that traders are already reshaping the system, with nearly 4.7GW of private-contracted projects above 5MW reaching financial close between 2023 and 2025. These projects, which would have otherwise waited for state procurement windows, demonstrate the market's potential. Traders are aggregating demand, structuring bankable offtake arrangements, and unlocking finance without sovereign guarantees, which is particularly important in a fiscally constrained state.
However, the report also cautions that trading cannot flourish in a regulatory vacuum. It emphasizes the need for finalized trading rules, harmonized wheeling frameworks, automated and non-discriminatory settlement systems, and a coherent Market Code governing SAWEM. Without these, only well-capitalized players will survive, risk premiums will remain elevated, and competition will be shallow.
Electricity pricing reform is another critical aspect highlighted in the report. 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 framework is anchored 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. 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, along with a clear transition path from administered prices to market-based pricing. This is not a technocratic tweak but a crucial decision that will determine whether South Africa's electricity sector stabilizes on a sustainable footing or continues to struggle with regulatory intervention, litigation, and fiscal bailouts.
Transmission is identified as the binding constraint in the reform process. The National Transmission Company South Africa must accelerate the delivery of the transmission development plan to ensure that new lines are in place for generation projects, both public and private, to connect. In parallel, municipalities, which control roughly 40% of the distribution grid, require financial stabilization and standardized wheeling frameworks to avoid becoming the weak link in the reform process.
The report's message is clear: South Africa has a narrow window to lock in reform before momentum dissipates. Load shedding has eased, private capital is mobilizing, and presidential backing for an independent transmission entity has been reiterated. However, without disciplined execution, including 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 for South Africa; it is the mechanism through which the country can replace aging capacity, crowd in 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 move from intent to delivery before the next crisis forces their hand.
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