The National Transmission Company South Africa (NTCSA), which is set to remain an Eskom Holdings subsidiary and owner of the transmission assets, has moved to explain the role of the yet-to-be-created Transmission System Operator (TSO) under the revised and newly endorsed unbundling strategy.

The strategy has been approved by Electricity and Energy Minister Dr Kgosientsho Ramokgopa and will see Eskom Holdings retain not only the NTCSA as a subsidiary, but also the National Electricity Distribution Company of South Africa, as well as an entity currently dubbed GenerationCo, which will hold its legacy generation assets, and a new Eskom Green subsidiary to house its renewable-energy business.

A separate TraderCo would also be set up by Eskom Holdings to operate alongside other licensed traders in a more open electricity market.

Under the strategy, which is expected to be fully implemented by 2030, the NTCSA will continue to own and expand the high-voltage transmission grid, and roll out the Transmission Development Plan (TDP) of some 14 000 km of new powerlines and associated grid infrastructure.

In a statement following the approval, NTCSA also sought to outline the responsibilities of the TSO, once it was set up as a new State-owned company outside of Eskom Holdings, but without the transmission assets.

As a transmitter, the TSO would develop and execute the TDP, maintain and operate the transmission grid, and provide nondiscriminatory access to that grid to all market participants, the NTCSA said.

As system operator, it would operate the integrated power system and balance supply and demand in real time.

As market operator, the TSO would establish and manage a transparent, nondiscriminatory electricity trading platform in compliance with market codes and rules issued by the National Energy Regulator of South Africa (Nersa), to ensure competitive trading between generators, traders and customers.

As the central purchasing agency, the NTCSA said the TSO would act as buyer of electricity from generators, including Eskom (through GenerationCo and Eskom Green) and independent power producers (IPPs), and facilitate power purchase agreements.

The other responsibilities of the TSO would be to support ancillary services such as frequency control and voltage regulation to maintain system reliability. 

In keeping with separate statements issued by Eskom and Ramokgopa, the NTCSA said the revised unbundling strategy met the requirements of the Electricity Regulation Amendment Act, which came into force in early 2025 and which set a five-year timeframe for the establishment of an independent TSO.

NTCSA CEO Monde Bala insisted that the TSO would be fully independent of the NTCSA and Eskom Holdings and would provide transparent and unbiased access to the transmission network, under the regulatory oversight of Nersa.

“This will enable energy security and removes Eskom from the potential conflict of interest that may exist in relation to its dual role of being a generator and owner-operator of the transmission grid,” Bala said.

Some initial concerns have been raised, however, about whether the approved model would decisively remove the conflict of interest associated with Eskom being the dominant generator while owning the grid; one that has been blamed for inadequate investment in strengthening and expanding the grid and the difficulties IPPs still have in securing connection agreements.

For their part, Ramokgopa and Eskom highlighted the financial and operational risks of unbundling the TSO with the transmission assets, with the Minister stating that the revised approach preserved the “financial stability of the Eskom Group by minimising disruptions to its highly leveraged balance sheet, thereby mitigating risks to both Eskom and national energy security”.

Meanwhile, Eskom Holdings CEO Dan Marokane argued that the chosen framework would enable the “fastest and most orderly transition”, while providing “strategic certainty for lenders and bondholders”.

“Eskom’s approach enables a smooth and orderly transition to the future market structure by retaining NTCSA as the transmission asset owner within Eskom Holdings, while a separate and independent TSO SOC Ltd is established.”

Eskom Holdings said that it would now proceed with implementation of the unbundling strategy in a “carefully sequenced manner” to 2030.

“This phased approach allows Eskom and government to manage financial, legal, and operational risks while building the skills, systems, and institutions required for a more open and competitive electricity market,” the group added.