South Africa is entering a new chapter in its electricity landscape with the launch of a traded electricity market, a move that promises to bring consumers greater choice, price competition, and more reliable power supply.
This significant reform comes in the wake of persistent load shedding and decades of reliance on state-owned utility Eskom.
A New Market for Power
According to BusinessTech, Rand Merchant Bank (RMB) is playing a key role in supporting licensed electricity traders and investing in infrastructure upgrades.
The shift to a traded electricity market marks a fundamental change in how electricity is bought and sold in Africa’s most industrialised economy.
For over a century, Eskom was the primary source of power, but prolonged mismanagement and underinvestment culminated in record outages in 2023.
In response, government opened the sector to private companies. Allowing them to build power plants and sell electricity to the national grid.
The latest step has been the licensing of ten electricity traders by the energy regulator. Ushering in a competitive, market-based pricing model.
“It’s the beginning of a traded electricity market in South Africa,” said Judy Kobus, Head of Infrastructure Sector Solutions at RMB. “Consumers will now be able to choose their electricity supplier based on price.”
The first group of licensed traders includes Green Electron Market, Discovery Green, CBI Electric Apollo, Africa GreenCo, and Eskom’s own National Transmission Co.
Tackling High Electricity Prices
Electricity costs in South Africa have soared over the past 15 years.
According to the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University, electricity prices increased more than eightfold between 2008 and 2023.
Meanwhile, inflation during the same period was 215%.
Kobus believes the newly competitive market will alleviate some of this burden. “We expect the move to reduce the cost of energy,” she said.
RMB, which facilitated R40 billion in renewable energy projects in its last financial year.
It is also investing in grid upgrades to accommodate new generation capacity.
“We’ve engaged with government and clients on what this transmission rollout might look like, what type of support might be required,” Kobus added.
Building the Grid of the Future
South Africa’s transmission network has long been a bottleneck, limiting the development of renewable energy projects.
The government has launched a pilot project to build 1 164 kilometres of transmission lines.
This is part of a broader plan to roll out 14 218 kilometres of new power lines over the next decade, costing over R440 billion.
“We are bringing in international players with strong technical expertise in transmission lines,” said Kobus.
Emphasising on how RMB is helping to increase capacity and draw in foreign expertise.
However, RMB’s ambitions stretch beyond the power sector.
The bank is also exploring opportunities in South Africa’s struggling freight-rail network.
Kobus confirmed plans to help fund new rolling stock and support private sector involvement in parts of the rail system.
Do you think opening the electricity market to competition will help lower prices and improve reliability in South Africa?
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