- South Africa’s long-awaited electricity market reforms have taken a decisive step forward, with the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, approving Eskom’s revised unbundling strategy.
- The endorsement unlocks the next stage of separating the state utility into independent entities, a central requirement of the Electricity Regulation Amendment Act (ERAA), and aims to modernise a sector still grappling with reliability, affordability, and investment challenges.
Under the approved structure, Eskom will shift towards a holding-company model overseeing five key subsidiaries:
- National Electricity Distribution Company of South Africa (NEDCSA)
- GenerationCo (GxCo)
- Eskom Green, the new renewable energy arm
- National Transmission Company South Africa (NTCSA), already legally separated
- A fully independent Transmission System Operator (TSO), to be established outside Eskom
NTCSA will remain the transmission asset owner, responsible for maintaining and expanding the national grid, while the TSO takes over system operations, market operations, central purchasing, and non-discriminatory access for all generators.
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Eskom Group Chief Executive Dan Marokane described the Minister’s approval as “a significant step towards a competitive electricity market grounded in the rule of law and strong public oversight.” He added that the chosen model provides the “fastest and most orderly transition” while giving investors essential certainty as South Africa seeks to add new generation capacity.
The stakes are high. With short-term demand growth forecast at 1.5% and long-term growth at 2%, the country must expand installed capacity from 66GW in 2024 to 107GW by 2034. The expected surge in variable renewable energy makes robust grid expansion and transparent market access non-negotiable.
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The ERAA mandates the creation of an independent TSO within five years. NTCSA’s legal separation in July 2024 marked a foundational milestone, and the newly approved strategy provides clarity for lenders, bondholders, and developers navigating the still-evolving policy landscape.
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A modernised power architecture for South Africa
Eskom’s multi-year transition aligns with international market models but remains adapted to South Africa’s realities: maintaining baseload supply, protecting vulnerable customers, ensuring universal access, and delivering a just transition.
Key elements of the next phase include:
- TSO SOC Ltd to operate independently, enabling transparent grid access and market trading aligned with global norms.
- NTCSA to continue rolling out the Transmission Development Plan, including 14,000 km of new high-voltage lines.
- NEDCSA to take over distribution once municipal debt challenges
- GxCo to operate as a standalone generation entity within the holding structure.
- TraderCo to participate in an increasingly open electricity marketplace.
- Eskom Green to accelerate renewable energy deployment, with a minimum 2GW pipeline targeted by 2026, supporting Eskom’s decarbonisation and pollution-reduction commitments.
The establishment of Eskom Green is particularly noteworthy. As South Africa’s power system transitions, the subsidiary offers the utility a more flexible platform to attract investment, pursue joint ventures, and compete in the fast-growing renewables sector.
Phased implementation through to 2030
Eskom will now begin a sequenced implementation plan, with full transformation targeted by 2030. The utility says it will work with government, regulators, labour, municipalities, and other stakeholders to safeguard system stability and support employees affected by restructuring.
The Minister’s approval reinforces government’s commitment to the ERAA and its broader objective: a transparent, competitive, and investment-friendly energy market capable of driving reindustrialisation, securing new generation, and stabilising electricity prices over time.
Author: Bryan Groenendaal
