South Africa’s electricity system has spent much of the past decade defined by crisis, load-shedding, significant cost increases, emergency interventions and declining confidence that made business planning nearly impossible. The progress of the past three years therefore deserves recognition.
Private investment has accelerated, load-shedding has eased, and long-delayed structural reforms are beginning to move from policy and legislation into reality. But this relative stability brings a different risk. As the immediate crisis recedes, the threat is no longer policy paralysis; it is execution drift.
South Africa now stands at a narrow inflection point. After more than a century of monopoly control, the system is shifting towards a competitive, multi-market model anchored by a wholesale market and supported by bilateral trading. The policy direction is largely settled and was reinforced by President Cyril Ramaphosa in the recent state of the nation address.
The legislative framework exists. What remains is the harder task:
- sequencing decisions correctly;
- co-ordinating institutions; and
- translating reform commitments into functioning market infrastructure.
For those operating daily in the electricity system, this phase is decisive. Reform is no longer about intent; it is about delivery.
These themes are explored in a recent report by Krutham, commissioned by the South Africa Electricity Traders Association (Saeta). The report focuses on the practical constraints now facing implementation and advocates for clarity on sequencing, institutional capacity and the minimum set of decisions required to turn reform momentum into durable outcomes.
Much of the progress since 2022 has been driven by urgency. Measures were taken to stabilise supply, crowd in private generation and reduce pressure on Eskom’s ageing fleet. These interventions were necessary and effective.
Unbundling Eskom Holdings is often described as a technical restructuring. In reality, it is one of the most significant economic reforms undertaken since 1994
The challenge now is different. A stable, investable electricity system cannot be built through ad hoc fixes. It requires a coherent target state for Eskom, sustainable long-term solutions and a clear path to get there.
In this week’s budget, the minister of finance reaffirmed the government’s commitment to stabilising electricity supply and building a competitive energy market, alongside significant infrastructure allocations. Progress on the credit guarantee vehicle signals recognition that transmission expansion is now the binding constraint to growth. The policy direction is clear; the real test is whether implementation can keep pace with ambition.
Markets do not emerge simply because legislation contemplates them. They emerge when the underlying enabling foundations are in place:
- clear pricing frameworks;
- transparent and non-discriminatory grid access rules;
- trading arrangements;
- credible institutions; and
- stable, predictable processes.
Without these critical building blocks being in place, well-intentioned reforms risk stalling in implementation or, worse, creating uncertainty that deters investment just as momentum builds.
One of the most underestimated aspects of reform is sequencing. In complex systems like electricity, the order in which decisions are taken matters as much as the decisions themselves.
For example, cost-reflective and unbundled tariffs are not an abstract economic ideal. They underpin bankable contracts, enable transparent risk allocation and allow different market participants to operate on a level playing field. Without a clear electricity pricing policy, uncertainty seeps into every downstream decision, from grid investment to customer choice.
Similarly, transmission is not just another infrastructure line item. It is the backbone of a competitive market and the renewable energy transition writ large. Delivering the transmission development plan is essential to:
- unlocking grid capacity;
- ensuring non-discriminatory access; and
- enabling new generation to connect where resource availability is best and it is most efficient for the system.
The same logic applies to trading rules, wheeling arrangements and the launch of the South African wholesale electricity market. Each element reinforces the others. Partial or poorly executed implementation weakens the whole.
This is why reform cannot be approached as a checklist of stand-alone actions. It must be treated as an integrated programme, with clarity on dependencies, accountability and timelines.
Execution ultimately depends on institutions. The department of electricity & energy and the National Energy Regulator of South Africa (Nersa) carry heavy responsibility in this next phase. Both have made progress under difficult circumstances. Both are also extremely stretched.
Strengthening these institutions, through skills, resources and clear mandates, is central to reform success. Markets require credible rule-makers and regulators to provide market oversight in an increasingly complex and fast-paced transactional environment. Investors need confidence that decisions will be taken consistently and predictably, even where they are contested.
The same applies to Eskom’s evolution. Unbundling Eskom Holdings is often described as a technical restructuring. In reality, it is one of the most significant economic reforms undertaken since 1994. If done well, it will separate commercial interests, improve transparency and allow capital to flow where it is most productive. If done poorly or left incomplete, it risks perpetuating uncertainty across the entire system.
If reform momentum falters, investment will slow, risk premiums will rise, and the system will drift back towards constraint and crisis
Electricity traders are not yet fully understood. In practice, aggregators and traders perform essential functions: they connect generators, customers, financiers and networks; manage risk across time horizons; and help projects reach financial close, all while reducing the infrastructure build-out burden on the fiscus and ultimately, the taxpayer.
In a transitioning system like South Africa’s, traders also play a practical role in translating policy into real-world transactions. Wheeling arrangements, bilateral contracts and, eventually, wholesale market participation all require counterparties willing to assume and manage risk.
This is not about replacing public institutions or bypassing regulation. It is about operating within clear rules to enable competition, liquidity and customer choice.
As the wholesale market comes into operation, the contribution of traders will become more visible, as critical market participants helping the system function efficiently and disintermediating risk which individual counterparts cannot or should not bear.
Electricity reform is not optional. It is the mechanism through which South Africa can:
- replace ageing capacity;
- modernise its grid; and
- mobilise private investment at the scale required for economic growth and a credible decarbonised pathway.
If reform momentum falters, investment will slow, risk premiums will rise, and the system will drift back towards constraint and crisis.
Conversely, if execution is disciplined and co-ordinated, the payoff is substantial:
- improved security of supply;
- more resilient infrastructure;
- lower long-term costs; and
- a market capable of supporting economic growth and job creation.
The encouraging news is that South Africa has already done much of the most difficult political work. The direction is set. The opportunity and invitation are ripe for South Africa to lock in reform by making the binding decisions required to move from vision to delivery.
That requires focus, collaboration and realism from the government, regulators, Eskom, municipalities and market participants alike. The next phase of electricity reform will be won with implementation.
• Taylor is head of trading and a co-founder at NOA. The trading company is part of Saeta, which commissioned Krutham to produce a report titled ‘Policy to power: Ten actions to deliver green, accessible and secure electricity’
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