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Two steps back?

8th August 2025

By: Terence Creamer

Creamer Media Editor

     

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The idiom ‘one step forward, two steps back’ has surely arisen in the minds of those who have been monitoring developments in the electricity industry over the recent past.

It is undeniable that there has been some remarkable progress. The dramatic improvement in electricity stability is a significant achievement, particularly when recalling just how extreme and damaging the power cuts were little over a year-and-a-half ago.

On the generation front, there has also been a steady, albeit entirely insufficient, flow of new project announcements, supported strongly by private-to-private deals for wheeled renewable electricity. This, alongside somewhat more stilted movement on the public procurement front for well-priced solar PV, as well as grid-supporting battery storage.

Together, the Department of Electricity and Energy and the National Treasury have made an important intervention to help accelerate an essential roll-out of the grid; stymied for years by a diversion of financial resources to Eskom’s much-delayed and over-budget coal projects and more recently by the National Transmission Company South Africa’s (NTCSA’s) balance sheet and capacity constraints.

New progressive legislation has been enacted, a wheeling framework has been approved belatedly by the National Energy Regulator of South Africa (Nersa), traders have been licensed and there have been significant recent developments to prepare the way for the launch of the South African Wholesale Electricity Market in early 2026.

Yet, all these developments represent but the “end of the beginning” and there are worrying indications that policymakers and industry incumbents are starting to apply the brakes when they should, instead, be pushing the accelerator.

The most visible indication of this shift in attitude is the court action launched by Eskom to have the decision of Nersa to grant five additional trading licences in 2024 reviewed and set aside. Now, there is some public sympathy for Eskom wanting greater clarity on both the rules for traders and the implications for its business model. Nevertheless, the signal sent by the utility launching legal proceedings only a week after Nersa initiated a process to have those rules clarified by mid next year is alarming.

This is doubly so, given that it comes against the backdrop of less visible, yet still obvious, resistance to ongoing reform, which has been designed to eliminate risks inextricably linked to the current industry structure; risks that have already materialised with devastating effect.

This pushback is seen when there is inadequate consultation on a redrafted Integrated Resource Plan, which seems to favour an ‘all-of-the above’ approach that fails to distinguish between high-risk precommercial solutions and bankable ones. In the current resistance to setting up the NTCSA with the commercial wherewithal to transition into an independent Transmission System Operator. In heavy-handed regulation of small-scale generators. And in the emergence of opaque tariff deals for special groups in the absence of a clear cost-benefit analysis.

The reforms are complex and eschewing them could offer greater political control in the short term. It will also reduce prospects of decisively ending the crisis, however.

Edited by Terence Creamer
Creamer Media Editor

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