Although challenges remain on the path to long-term sustainability and energy security, the 2025 financial year showed “meaningful progress” in restoring operational stability and financial resilience, says State-owned power utility Eskom.

It tells Engineering News that its strategy going forward builds on these gains with a stronger focus on operational recovery, financial discipline and positioning Eskom for a liberalised, decarbonising and customer-driven energy market.

“As South Africa’s energy system transitions, Eskom must demonstrate the ability to operate without fiscal intervention,” says Eskom spokesperson Daphne Mokwena.

Importantly Eskom’s financial strategy is orientated toward ensuring that, by the end of the debt-relief period, it is positioned on a clear pathway toward an investment grade profile.

Strengthening the balance sheet, enhancing organisational efficiency and ensuring predictable cash generation are essential strategies for reducing the cost of capital and rebuilding investor confidence.

Eskom’s path to achieving an investment grade rating is built on four pillars that enhance profitability and bolster balance sheet resilience, says Mokwena.

One of these pillars is revenue security and enhancement, which aims to adjust tariffs to “appropriate levels” and broaden commercially-viable offerings, such as wheeling and grid access.

“The goal is to ensure that improved energy availability leads to predictable cash flows.”

She adds the second pillar focuses on enhancing liquidity, creating a more efficient capital structure and fostering better working capital management.

The third is the drive for better cost efficiencies under Eskom’s Cost Optimisation and Revenue Enhancement, or CORE, programme – launched in early 2025 – led by the Strategic Delivery Unit.

Through this programme Eskom will target R112-billion in cumulative savings over five years by focusing on procurement efficiencies, primary energy optimisation, the implementation of digital transformation and improved capital productivity.

Finally, the utility will tackle unsustainable municipal debt reduction through prepaid models, Distribution Agency Agreements (DAA) that were recently endorsed by the finance minister and collaborations with cooperative municipalities, thereby directly enhancing revenue security and mitigating credit risk.

“To support these core pillars, Eskom’s unbundling process is driving structural reforms that clarify risk profiles and enhance cost visibility, which are vital for attracting lower-cost capital,” Mokwena explains.

Additionally, Eskom is embedding sustainability principles into its overall strategy to leverage blended and green financing to aid the acceleration of the Just Energy Transition.

By strengthening governance and control frameworks, the utility seeks to restore credibility and achieve clean audits, which are important for ratings agencies’ analyses and help boost investor confidence.

Eskom is also scaling technology in metering, automation and analytics to minimise losses, improve collections and enhance system planning.

Concurrently, it is investing in critical skills to help develop a high-performing, accountability-driven culture, which, in turn, ensures consistent project execution.

“The revitalised operating model is designed to simplify processes and clarify roles, facilitating effective navigation through the complexities of reform,” notes Mokwena.

Collectively, these initiatives represent a strategic approach to create a more resilient and investment-grade Eskom in 2026, ensuring its capacity to maintain an upward trajectory and achieve long-term financial independence.

Mokwena adds that Eskom is actively investing in renewable energy and alternative generation technologies to diversify South Africa’s power system.

Through its new renewables subsidiary, Eskom Green, the utility is advancing a pipeline of solar, wind and battery storage projects, as well as repowering older coal stations with cleaner technologies, with the aim of providing 2 GW in 2026 and 32 GW by 2040.

“These initiatives support the Integrated Resource Plan 2025 and form part of Eskom’s broader strategy to strengthen energy security and transition to a cleaner, more sustainable generation mix,” concludes Mokwena.