Opinion
- For the past several years, South Africans have been told that electricity reform is about decentralisation, competition and reducing Eskom’s dominance over the country’s energy sector.
- Yet recent developments suggest a very different reality is emerging.
- My view is that Eskom is not being unbundled.
- It is being rebuilt.
The Presidency continues to assure investors and the public that South Africa is on track to establish an independent Transmission System Operator (TSO), separate transmission assets from Eskom, and create a more competitive electricity market. These reforms are important and, if implemented as intended, could fundamentally reshape the sector.
However, while policymakers speak about market liberalisation, Eskom is quietly positioning itself to become the dominant player in the next phase of South Africa’s energy transition.
The launch of Eskom Green is perhaps the clearest signal yet. What was once expected to be a renewable energy market led primarily by Independent Power Producers (IPPs) is increasingly becoming a market in which Eskom intends to be a major developer, owner, aggregator and supplier of renewable energy. With plans for up to 32GW of renewable generation and storage capacity by 2040, Eskom Green has the potential to become one of the largest renewable energy developers on the African continent.
This is not necessarily a bad thing. Eskom possesses engineering expertise, land, grid connections and operational capabilities that few private developers can match. The problem is that South Africa risks replacing one form of market concentration with another.
The key question is whether future electricity market reforms will create genuine competition or merely provide a competitive façade behind which Eskom retains strategic control.
The proposed independent TSO illustrates this concern. Government has committed to establishing a standalone transmission operator by 2029, a reform that should remove conflicts of interest and provide equal access to the grid for all participants. Yet the timeline remains lengthy, and until then the National Transmission Company South Africa remains a subsidiary within the Eskom group structure.
By the time the TSO becomes fully independent, Eskom may already have secured a commanding position in renewable generation, storage, industrial energy supply and electricity trading.
At the same time, Eskom’s financial position is improving dramatically. The utility has achieved more than a year without load shedding, diesel expenditure has fallen sharply, operational performance has improved, and recent credit-rating upgrades have strengthened its ability to access capital markets. Discussions around suspending South Africa’s carbon tax could further improve Eskom’s balance sheet while extending the commercial life of coal-fired generation.
This combination is important. A financially weakened Eskom was always likely to lose market share to private competitors. A financially strengthened Eskom is capable of expanding into new markets and defending its position.
The resurgence of industrial policy reinforces this trend. Electricity and Energy Minister Kgosientsho Ramokgopa’s support for concessional electricity tariffs for ferrochrome producers and other strategic industries signals a return to the developmental-state approach that characterised South Africa’s industrialisation strategy for decades.
Eskom is also turning the municipal debt crisis into an opportunity by taking over power distribution and billing in municipalities that have defaulted on their payments across the country. This is likely to soon include major metropolitan areas such as the City of Johannesburg.
Cheap electricity is once again being viewed not merely as a commodity but as an economic policy instrument used to protect jobs, encourage beneficiation and support industrial competitiveness – plus secure votes, some would argue. That approach naturally favours a strong state-owned utility.
For investors, this has important implications. Many international developers entered South Africa expecting a progressively liberalised market characterised by private generation and open competition. Instead, they may find themselves competing with a resurgent Eskom that benefits from sovereign support, access to concessional finance, strong political backing and a growing renewable energy portfolio. Importantly, Eskom currently acts as the gatekeeper for all new power generation and transmission infrastructure.
As a result, banks and institutional funders may start viewing Eskom Green as their biggest potential client. For IPP’s, some of the most attractive opportunities may increasingly lie outside South Africa’s borders. Across the Southern African region, countries such as Zambia, Botswana, Angola, Namibia, Botswana and the Democratic Republic of Congo are opening new opportunities for private generation, merchant trading and cross-border electricity sales through the Southern African Power Pool. These markets may offer greater room for innovation and private-sector growth than a South African market increasingly shaped by Eskom’s strategic ambitions. There is also creative funding models that sidestep the need for sovereign guarantees in cases where governments are the off-taker.
None of this means that electricity reform has failed. Rather, South Africa appears to be moving toward a different model than many expected: not a fully liberalised electricity market, but a state-led competitive market in which Eskom remains the dominant strategic actor. Whether that model succeeds will depend on execution, governance and politics.
The biggest risk to this strategy is not technical or financial. It is political. The ANC’s performance in the 2026 local government elections and the 2029 national elections could significantly alter the policy landscape. A different political coalition may take a very different view of Eskom’s role, market reform and state ownership.
While South Africa debates the mechanics of unbundling Eskom, Eskom itself appears to be preparing for something entirely different: a return to the centre of the country’s economic and industrial development strategy.
The future of South Africa’s electricity sector may not be defined by the decline of Eskom, but by its reinvention.
Author: Bryan Groenendaal
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