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  1. 1D AGO

    Report labels unbundling of Eskom as 'most important economic reform since 1994'

    A new report commissioned by the South African Energy Traders Association (SAETA) identifies the unbundling of Eskom Holdings as the most important economic reform since 1994, arguing that a new competitive electricity sector construct is required to attract the capital needed to deliver security of supply and affordability. Titled 'Policy to power: 10 actions to deliver green, accessible and secure electricity' the SAETA report has been produced by research and consulting firm Krutham. SAETA itself represents electricity traders and its members include Africa GreenCo, Apollo, Discovery Green, Enpower Trading, Envusa, Etana, EXSA, Investec, Lyra Energy, Mainstream, NOA, POWERX and Sturdee Energy. The unbundling announcement took other parts of government and organised business by surprise in stating that the transmission assets would not be transferred to a new independent and State-owned Transmission System Operator (TSO), but would instead be retained by an Eskom Holdings subsidiary in the form of the National Transmission Company South Africa. The move led to concerns that Eskom was pursuing a restructuring model that was not in line with the economic-reform commitments made under Operation Vulindlela; reforms that envisage a transition to a competitive electricity supply industry in order to derisk a sector that, under its prevailing monopoly structure, has experienced years of debilitating loadshedding, tariff surges that have made several sectors uncompetitive and costly misgovernance and corruption. In his SoNA speech, Ramaphosa insisted that the TSO would have ownership and control of transmission assets and be responsible for operating the electricity market. He also announced a dedicated task team under the National Energy Crisis Committee to address various issues relating to the restructuring process and gave it three months to report back with clear time frames and a phased implementation plan. In response, Eskom said it fully supported the task team that was being created to deliver the TSO. The SAETA report argues that, if executed efficiently and timeously, Eskom's unbundling will enable competition, crowd-in private capital and support a resilient power system. "It will facilitate the establishment of a wholesale electricity market, encouraging competition, enabling trading among many participants and providing the foundation for an electricity multi-market." The unbundling of Eskom Holdings has, thus, been included as one of ten priority actions that the report describes as the "minimum set of decisions and deliverables required to move from policy and legislation to a functioning electricity multi-market". REFORM ROADMAP The first action identified, however, is for a Cabinet-endorsed electricity reform roadmap that sets out the intended market target state, key milestones and institutional responsibilities. "The roadmap should bring together existing reform strands under the Electricity Regulation Amendment Act including the establishment of the South Africa Wholesale Electricity Market, Eskom Holdings' unbundling and reform of pricing and the distribution industry. "Clear targets, sequencing and accountability, backed by political authority, are essential to maintain momentum, reduce uncertainty and give investors confidence as reforms move into a more complex execution phase," the report states. "South Africa has made progress, but the window is narrow. Reform is not self-executing. It requires active intervention, political backing, and disciplined delivery. "The opportunity is substantial: lower-cost power, cleaner electricity, stronger growth, and reduced pressure on the public balance sheet. The cost of delay is equally clear. "The direction is right. Now is the time to move faster, with clarity and purpose, to unlock the benefits for households, businesses, and the economy," Taylor said. The other nine priority actions listed in the report, include: "They connect generators, customers, financiers a...

    5 min

  2. 6D AGO

    Opinion: Polluters must pay, or we all will

    In this opinion article, Harald Winkler and Tracey Davies argue that suspending the carbon tax, which is reportedly under consideration by government, would be a reckless, self-defeating retreat that shields a handful of high emitters and leaves the rest of the country to pay the price. There are credible reports that Electricity and Energy Minister Kgosientsho Ramakgopa is working on a proposal to suspend the carbon tax, and that National Treasury has been asked to motivate why the tax should be retained. Suspending the tax would be a disastrous move for South Africa's economy. Pricing carbon has multiple economic benefits. It is an efficient way to incentivise behavioural change by big emitters that reduces greenhouse gas (GHG) emissions. It ensures that the cost of carbon is borne by the polluters who produce it rather than the economy and society more broadly. It raises revenue which can be spent to ensure poor households benefit, and on climate mitigation and adaptation measures. Appropriate climate-related interventions have been debated repeatedly in South Africa since at least 2005, and a decade-long stakeholder engagement process preceded the 2019 introduction of the Carbon Tax Act. The proposal that the tax should be suspended is a bolt from the blue, and its advocates are not acting in the best interests of the county. Corporate lobbying against the carbon tax South Africa's biggest emitters have a clear, short-term interest in avoiding a carbon tax. Sasol, Eskom, the Minerals Council South Africa, Business Unity South Africa and others have successfully lobbied to delay climate action, and government has repeatedly capitulated. While claiming to agree with the need for climate policy in principle, these entities consistently work to undermine its efficacy and implementation. It appears that this approach has now found favour with Minister Ramakgopa, who is in a powerful position to advance their agenda with the Cabinet. The rationale for a pause of the tax seems to be based partly on the argument that to date, it has been ineffective in driving decarbonisation and is therefore unnecessary. The irony of this is that its "ineffectiveness" is a direct consequence of those same vested interests lobbying to undermine it. It appears that government is especially receptive to the fossil fuel lobby at present. Several ANC ministers are self-proclaimed coal advocates and climate sceptics, and the DA, which has big business as a core constituency, likes to position itself as anti-tax. The new, controversially appointed Minister of Forestry, Fisheries and the Environment has no prior record to indicate that he understands or is committed to climate action and environmental justice. Big emitters pay a little, Eskom not at all Only a handful of entities pay any significant amount of carbon tax (the biggest emitters, like Sasol), and there are very few companies whose competitiveness is affected by it. The carbon tax has had no influence on the price of electricity to date, because Eskom's carbon tax liability has been offset using the environmental levy on non-renewable electricity and the renewable energy premium. There is therefore no pass-through of carbon costs to the electricity price. While the mechanism for offsetting is set to change from 2026, the effect will be the same until at least 2030, i.e. the electricity supply industry will continue to be shielded from the tax. Positioning SA for future global economy Our country should take a proactive approach, not roll back the law. The carbon tax is overdue to enter its second phase, in which rates should be increasing significantly to "provide a strong price signal to both producers and consumers to change their behaviour over the medium to long term" - i.e. to finally give effect to the polluter pays principle. However, in 2025 National Treasury weakened its Phase 2 proposals in the face of concerted pressure from high emitters. In even considering rolling back climat...

    5 min

  3. 6D AGO

    Eskom says it may take trading rules on legal review, as it calls for material changes

    Eskom has raised a slew of legal and technical issues with the draft trading rules being considered for approval by the National Energy Regulator of South Africa (Nersa) and has indicated that it is ready to take legal action should the rules not be amended. This new threat of a legal challenge was made during Nersa hearings into the trading rules on February 12. It follows Eskom having initiated a High Court review application in 2025 challenging the regulator's decision to grant electricity trading licences to five companies, despite several other licences having already been granted over several years. Following pressure from Electricity and Energy Minister Dr Kgosientsho Ramokgopa, Eskom announced last year that it would "stay" the review application to allow for the Nersa-led process to finalise the trading rules. It emerged earlier this year that Eskom is proceeding with its review application to "protect its legal position". However, it stressed that it was continuing to participate in regulatory processes in the interests of developing "trading rules that enable a fair, transparent and sustainable competitive marketplace". During the virtual hearings that involved 12 oral presentations, including from various licensed traders and the National Transmission Company South Africa, Eskom, represented by Onicah Rantwane and Camintha Moodley, expressed strong opposition to the draft rules under consideration. The State-owned company said that, if implemented, the rules would "compromise the orderly, phased, and sustainable implementation of retail competition and weaken confidence in electricity market reform". While insisting that Eskom supported bilateral trading and recognised the urgency for rules to protect traders, utilities and customers, Moodley outlined ten legal problems that Eskom had identified with the draft rules. These included reference in the draft rules to provisions in a market code that had not yet been approved, as well as insertions that Eskom said contradicted other pieces of legislation, including legislation confirming that Eskom and municipalities were licensed to distribute and supply electricity. Therefore, she said Eskom reserved its right to institute a legal review in terms of the National Energy Regulation Act, while also urging Nersa to urgently workshop the trading rules to allow for a redrafting of the document. Rantwane, meanwhile, argued that the draft rules could allow certain market participants to unfairly avoid certain system and policy costs, including fixed generation and grid infrastructure costs, social subsidies for vulnerable consumers, legacy costs and top-up energy charges. She argued that the rules should require that all grid-connected customers be subject to "non-bypassable charges", which should be unbundled from energy charges. Eskom also outlined two alternatives for what it termed a "phased market opening", both of which were conditional on broader tariff reforms, including: a 'tariff reform-driven opening', whereby market access was granted only after increasing charges in a way that ensured all customers covered fixed grid and generation costs; or a 'volume-restricted opening', where market access would be phased in more slowly using volume limits, allowing incumbents to maintain customer load while tariffs were gradually adjusted. Here, Rantwane made reference to a move by Namibia to cap at 30% the initial amount of electricity that could be supplied to large customers by private sellers. Eskom found support during the hearings from the South African Local Government Association, which presented jointly with the Association of Municipal Electricity Utilities. Both also called for a "structured engagement" with Nersa on the regulatory framework. Most of the other presenters – including the South African Electricity Traders Association, and traders such as Discovery Green, Africa GreenCo, G7 Renewable Energies, and Sasol – were broadly supportive of the framework tha...

    4 min

  4. FEB 10

    Landmark private solar-battery hybrid project aims to enter into operation in 2028

    A large-scale hybrid solar and battery project, underpinned by a landmark 25-year private power purchase agreement (PPA) with Sasol and Air Liquide, has achieved financial close and is targeting to enter into commercial operation in 2028. The Naos-1 hybrid solar and battery project is under construction at a site near Viljoenskroon, in the Free State. It is being built by the SOLA Group, which did not disclose the project cost, saying only that the project is considered to be the largest wheeling project by value in South Africa. The South African independent power producer developed and designed the project and will also implement and operate what is described as the largest privately contracted hybrid renewable energy project to reach financial close in South Africa to date. Naos-1 will comprise a 300 MW (435 MWp) solar PV facility coupled with 855 MWh (660 MWh contracted to Sasol and Air Liquide) of lithium-ion battery energy storage, with the wheeled electricity to be purchased at "competitive tariffs" by Sasol and Air Liquide. The PPA terms were not disclosed, but SOLA MD commercial Jonathan Skeen told Engineering News that the tariff was well below prevailing Eskom rates, and highly competitive relative to tariffs from new wind projects but with higher certainty of contracted energy volumes and timing. "The project also achieves much higher buyer savings than a standalone PV-only project of the same size," he said. The project, SOLA added, was the country's first utility-scale solar PV and battery energy storage project purpose-built for wheeling to private end-users across the grid. "Naos-1 represents a major step forward for dispatchable renewable energy in South Africa's private power market, and is the result of our intensive and innovative collaboration with Sasol and Air Liquide over several months", SOLA MD commercial Jonathan Skeen added. "The project delivers energy during peak periods at substantially lower rates than Eskom peak rates. Beyond this, it is able to adapt as peak demand periods shift, while also providing flexibility to adapt to shifts in buyer demand." Sasol executive VP Dr Sarushen Pillay reported that the project formed part of the group's broader transformation strategy towards a low-carbon energy portfolio. And Air Liquide CEO for Africa, Middle East and India Nicolas Poirot said the hybrid solution set a new benchmark for reliable, firm renewable energy at scale. Financial close was achieved following a multi-lender project finance process involving South Africa's major commercial banks including the Development Bank of Southern Africa as the largest senior debt financier, alongside Nedbank, RMB, Investec and Absa. The 100% South African and 51% black-owned project is majority owned by SOLA, alongside Ubuzwe, with equity financing provided by RMB and Sanlam, while engineering, procurement and construction will be carried out by SOLA Build and WBHO. SOLA Assets MD Katherine Persson said that reaching financial close on schedule for a project of such scale, novelty, and complexity, and following accelerated PPA negotiations, demonstrated SOLA's unrivalled record in delivering clean energy for its partners on time and to budget. The company indicated that it had a further 600 MW of hybrid solar and battery projects at a highly mature development stage, and Skeen reported that SOLA had a target of achieving 2 GW of solar power and 5 GWh of storage by 2030.

    3 min

  5. FEB 10

    Discovery Green sees trader-led wheeling becoming dominant commercial model in 2026

    The head of Discovery Green, the renewable-energy trading unit of JSE-listed Discovery, is forecasting that trader-led wheeling will become the dominant commercial model in the South African electricity market in 2026. In a wide-ranging statement, Discovery Green CEO Andre Nepgen highlights that the wheeling framework has matured and that the market is, thus, poised to move beyond one-to-one bilateral agreements and toward more aggregated solutions. "While the proposed South African Wholesale Electricity Market remains in development, the most immediate impact for large energy users is coming from the maturing wheeling framework, with clarified participation rules, standardised processes across utilities, and the rise of trader-led, portfolio-based models that simplify contracting and balance risk." These developments, he says, are expanding access to supply and enabling companies to act ahead of any finality on future market structures. "For our clients, and other large energy users, the wheeling rules, not future market constructs, are what matter right now. "As trader-led models scale, businesses can secure renewable power with greater flexibility and less complexity, aligning supply to their operational needs while managing risk through aggregation." He argues that such models are redefining how electricity is priced, traded and integrated into energy strategies, while also enabling renewable energy to function as a scalable market rather than a collection of independent, bespoke transactions. "Aggregation is what turns renewable energy from a risk into a predictable system that works for business. "This evolution marks a critical step in the sector's maturation, enabling flexibility, resilience and scale that were previously difficult to achieve," he argues. SOLAR COST PRESSURES Besides wheeling, Discovery Green anticipates that the electricity market will continue to be affected by South Africa's well-documented grid constraints. However, the company is also anticipating a new risk in the form of increased solar input costs, amid an impending change to Chinese export policies and rising silver prices. The decision by China to remove a 9% value-added-tax export rebate on solar modules and wafers from April has already resulted in the inclusion of 'policy adjustment clauses' to automatically hike prices the moment the rebate disappears, Nepgen says. In addition, the price of silver, a critical component on the solar cell that collects electricity, has hit record high prices, nearly doubling in two years. "This, combined with the movement to high-efficiency N-type panels which require significantly more silver exacerbates the issue. "Despite the recent strength of the rand, even this is no longer enough to offset dollar-denominated logistics and hardware increases. "With solar panels, inverters, and batteries all priced in US dollars, the 10% to 15% hike in global factory-gate prices is overwhelming any marginal gains in the rand's exchange rate," he warns.

    3 min

  6. FEB 9

    Rail volumes rising but private impetus needed to reach 250Mt target

    Transnet CEO Advocate Michelle Phillips insists there will be no turning back from current yearly railed volume levels of above 160-million tons. But she has also reiterated that private sector participation (PSP) will be central to achieving the "country target" of 250-million tons by 2030. In a podcast interview at the Investing in African Mining Indaba in Cape Town, Phillips said that volumes had fallen to a low of 149-million tons in 2022/23 and had since recovered to 160.1-million tons in 2024/25. In the six month to September 30, 2025, Transnet reported a 4.4% period-on-period rise in rail volumes to 81.4-million tons. However, she described the 250-million-ton target as a country target that could not be met by the State-owned freight logistics group alone, despite its own plans to continue to increase volumes. "We've surpassed the 160-million tons, and we want to get you to the 170-million tons and into the 180-million tons and into the 200-million tons…[but] 250-million tons by 2030 is the country target, or a 'SA Inc' target," Phillips said. "You will recall that we've invited private train operators to join us on the network. "We've granted 11 of them conditional awards, and I signed one of the agreements the other day. "So, we will see these private operators also making use of the network, and we're hoping that, as a country, we can get to the 250-million tons by 2030." She stressed that Transnet had embraced the reforms opening the rail and port networks to private companies and had also embraced collaboration with its customers, particularly on the iron-ore and coal corridors, in a bid to accelerate a recovery in volumes. "We are not scared to go and ask for help," Phillips said, indicating that it was working with coal customers to improve security on the corridor linking Mpumalanga to the Port of Richards Bay, in KwaZulu-Natal, while it had partnered with the iron-ore miners to improve the state of the line to the West Coast. Transnet is also working on several PSP transactions that it aims to release into the market in the coming months, with the PSP at Durban Container Terminal Pier 2 with International Container Terminal Services (ICTSI), of the Philippines, having become operational in January, following resolution of a long-running legal dispute. "We've identified a number of other private sector participation transactions, and we've got about four or five for this next year that we will go to market with. She acknowledged criticism of the slow pace at which these transactions were being released, but insisted that this was in the interests of preparing quality transactions. "I'd rather be slow than rush, and then spend my time in court fighting as to whether I've done the right thing or not."

    3 min

  7. FEB 6

    Terence Creamer speaks about: Oppposition to new Eskom unbundling plan grows

    Engineering News editor Terence Creamer discusses the growing opposition to the new Eskom unbundling plan announced in December and whether the voices of opposition will have an influence on the final strategy.

    11 min

  8. FEB 5

    BLSA Reform Tracker says Eskom unbundling strategy 'broke with the approved reform plan'

    The latest Business Leadership South Africa (BLSA) Reform Tracker Quarterly Review says there has been "concerning backwards movement in the critical electricity sector", attributing the regression primarily to the revised unbundling plan for Eskom unveiled in December. While stressing that the "broad trajectory remains" positive for the reforms being monitored by the tracker, BLSA CEO Busisiwe Mavuso said the unbundling strategy represented "a step backwards from the independent transmission system operator model that Operation Vulindlela, the National Energy Crisis Committee and National Treasury have been working towards". In December, Electricity and Energy Minister Dr Kgosientsho Ramokgopa endorsed an unbundling strategy whereby the National Transmission Company South Africa (NTCSA) would remain an Eskom Holdings subsidiary and retain the transmission assets instead of these being transferred to the new Transmission System Operator (TSO) being set up outside of Eskom. This approach has been criticised by electricity commentators and organised business, with Business Unity South Africa CEO Khulekani Mathe having warned in an interview with Engineering News that the plan represents a "major setback" for the reforms under way in the electricity sector. In addition, the latest quarterly update prepared under the aegis of Operation Vulindlela, which is a joint initiative of the Presidency and the National Treasury, identifies Eskom's restructuring as a reform area "facing significant challenges" and where intervention is required. The BLSA Tracker said the electricity sector's score has declined over two consecutive periods, dropping from 73.2 points at end-May 2025 to 71.4 at end-December 2025. In its associated commentary it stated: "Electricity is emerging as a problem, with the reform area standing out as one of the only ones to have actually moved backwards on the path to completion. "This is after the Department of Electricity and Energy broke with the approved reform plan and approved a revised unbundling strategy for Eskom that keeps the NTCSA within Eskom, rather than being independent. "This diverges from the model developed by Operation Vulindlela, the National Economic Development and Labour Council and National Treasury. "The approved structure will effectively leave the TSO unable to raise capital on its own balance sheet, prolonging grid constraints and deterring investment in renewable generation capacity. "This is clearly not in the long-term interests of electricity stability and the business environment." The commentary also highlighted additional electricity sector challenges, including: the exclusion, due to municipal opposition, of the reticulation sector in the Electricity Regulation Amendment Act that came into effect in January 2025; and a legal challenge launched by Eskom against the national wheeling framework approved by the regulator. The Tracker monitors 245 reform deliverables across criminal justice, governance and economic categories. Of these, 34 have been completed, 19 have been halted, and 192 remain in progress. The most recent review states that South Africa's reform programme continues to advance, with the overall reform score rising 23.7% since tracking began in March 2024.

    3 min
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Engineering News Online provides real time news reportage through originated written, video & audio material. Now you can listen to the top three articles on Engineering News at the end of each day.

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