The recent proposal by Eskom for a 44% increase in electricity prices over the next three years, starting April 2025, could pose a significant challenge to South Africa’s energy market reform, particularly impacting renewable energy adoption and integration. As the country celebrates over 150 days of uninterrupted power supply – in contrast to the frequent power outages of recent years – this proposed increase has reignited debates on the future of energy security in South Africa.
“Open Access Energy, in collaboration with Specno, has emphasised that while Eskom’s justification for the hike hinges on covering generation, transmission, and distribution costs, the move could potentially hamper the progress made in promoting a liberalised and diversified energy market. This market transformation, which gained momentum following President Ramaphosa’s 2021 announcement lifting the licensing threshold for private electricity generation to 100 MW, was a critical step in encouraging private investments and easing pressure on Eskom’s grid,” shares
Daniel Novitzkas, chairman at Specno.
“However, without addressing the underlying reticulation issues in the energy distribution and management system, a number of policy shifts may not fully deliver on their promise. While renewable energy sources such as wind and solar are substantially cheaper than traditional baseload generation from coal and other fossil fuels, the benefits can be nullified by inefficiencies in energy transactions and incorrect billing” adds Novitzkas.
Gerjo Hoffman, CEO at Open Access Energy (OAE), noted that renewable energy IPPs currently offer a project pipeline of approximately 133 GW, and their energy is around 30% cheaper than Eskom’s wholesale price. The anticipated hike could see a greater number of municipalities and consumers turning to IPPs for more cost-effective energy solutions. However, the challenge lies in ensuring that these transactions are accurately managed and billed.
Novitzkas, though, remains hopeful: “In response to these challenges, South Africa’s energy market has seen technological advancements with the development of local software solutions such as Amptera and Energypro. These platforms, developed by a Cape Town-based tech company OAE, offers a streamlined solution for energy producers and buyers, providing real-time transaction capabilities while mitigating the risks of incorrect billing. The George Local Municipality has already piloted Amptera, showcasing its potential to enhance energy transaction management at the municipal level.
President Cyril Ramaphosa has previously acknowledged the potential of these technological innovations in supporting the government’s vision for a diverse and inclusive energy market.
The success of renewable energy integration and the achievement of South Africa’s energy transition goals hinge on the alignment of policy, technology, and market readiness. Solutions like Amptera and Energypro offer the potential to minimise disruptions caused by billing discrepancies, and create a level playing field where municipalities and consumers can engage directly with IPPs.
“The proposed Eskom price hike has thus put a spotlight on the need for a robust and efficient energy distribution network. By embracing software innovations and supporting municipal-level solutions, South Africa can continue to diversify its energy mix, reduce dependence on fossil fuels, and achieve energy security without burdening consumers with unsustainable cost increases,” concludes Novitzkas.
The upcoming NERSA hearings will be a critical juncture for stakeholders to address these concerns and propose strategies that balance Eskom’s financial sustainability with the broader goals of a liberalised and consumer-friendly energy market.
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