The revised Eskom unbundling strategy announced is emerging as something of a touchstone for government’s commitment – or otherwise – to reforming the structure of an electricity industry that has held back growth and weighed on investor confidence for nearly 20 years.

When the unbundling strategy was confirmed in the 2019 ‘Roadmap for Eskom in a Reformed Electricity Supply Industry’, the utility was facing deep financial, operational and governance crises. It had become clear that a new market design and set of institutional arrangements were required to reduce the risk that Eskom’s vertically integrated structure was not only posing theoretically, but was imposing in reality.

Support for a reformed model grew further as South Africa’s loadshedding crisis intensified to new and dangerous levels between 2021 and 2023; a period when significant work was done to prepare for the new market design that was in keeping with restructuring moves that had already taken place in many other countries.

To the credit of government, Eskom and those in the private sector that decided that it was simply too treacherous not to get involved, various joint initiatives were then taken to stabilise its performance.

There is no denying that, with the support of the taxpayer and a strong Minister, the Eskom board and the executives rose to the occasion. The performance of the coal fleet has improved remarkably, the risk of loadshedding has receded and electricity supply is no longer the main topic of conversations within boardrooms and at dinner tables.

There is a risk, however, that this operational stability is now being mistaken for structural resilience. Or to put it more bluntly, there are signs that some view this as an opportunity to return to business as usual, rather than as breathing space for shifting to a new market design without also having to make daily crisis-management decisions.

True, these shifts are complex and every change carries opportunity and risk. Yet to conflate stability with institutional resilience would be an incorrect reading.

South Africa’s electricity supply industry is not yet structured for the technological changes that are under way and that will ultimately not be halted despite the uncertainties that have been introduced globally by US attempts to counter the transition.

The unbundling of Eskom and the creation of an independent Transmission System Operator (TSO) that also owns the transmission assets is still very much part of the institutional arrangements required to place the industry on a more sustainable footing.

It will level the playing field for generation investors at a time when South African needs significant new investment and in a context where Eskom Generation simply does not have the financial firepower alone to ensure affordable supply security as coal units are retired and new pockets of demand emerge.

Given the importance of the grid to unlocking new generation, every effort should be made to ensure that the TSO is empowered to expand and modernise it, unencumbered by Eskom’s financial burdens and conflicts of interest.