Industry warns SA needs clear power reform plan to protect remarkable recovery

South Africa’s electricity reform process is showing progress, but industry leaders warn that without a clear Cabinet-endorsed roadmap, policy uncertainty could stall investment and long-term stability.

That’s according to the South African Electricity Traders Association, which released a new report outlining the steps the government should take to secure a reliable, least-cost power system.

Roadmap needed to guide reforms

CEO of Etana Energy and association representative Evan Rice said policy clarity is essential if the country wants to build on recent gains in generation performance and private-sector investment.

He said while improvements at Eskom and new generation projects were encouraging, multiple reforms still needed to be coordinated.

“We’ve had some really positive green shoots in the electricity industry over the last year or two,” Rice said.

“But there’s still a whole bunch of pieces that need to come together in parallel if we’re going to end up with a least-cost, reliable electricity system that can deliver the economic growth we need.”

Rice said a formal cabinet roadmap would ensure government endorsement across generation, transmission, distribution and the planned wholesale market expected later this year.

Pricing policy is a major gap

Rice identified electricity pricing as one of 10 key policy areas requiring urgent clarity in 2026.

While tariffs have risen sharply over the past decade and a half, he said, newer generation technologies are becoming more competitive, creating an opportunity to stabilise long-term costs.

However, he warned that major grid investment is still required to maintain reliability and connect new projects as ageing coal plants are retired.

“There’s still the need for significant investment in the grid at both transmission and distribution levels,” he said.

He added that the government must also address cross-subsidies through an updated pricing policy reflecting the changing structure of the electricity market.

Calls to strengthen regulation

Rice also highlighted the need to expand regulatory capacity as South Africa moves deeper into electricity market reform.

He said regulators globally often struggle during periods of major structural change, but international experience could help South Africa avoid repeating mistakes.

“We desperately need to beef up our regulatory capacity,” Rice said.

He suggested that international partners involved in the Just Energy Transition Partnership could assist with expertise and institutional support.

Transmission independence welcomed

Rice said the President’s State of the Nation commitment to a fully independent transmission company sends an important signal to investors and market participants.

“I think it is a very clear statement from the President,” he said, adding that Eskom had also indicated support for the direction.

But he cautioned that other parts of the system, particularly municipal distribution networks, still face chronic underinvestment and financial strain.

Rice said the association’s report identifies 10 coordinated reforms that must be implemented together if South Africa wants to unlock the full benefits of its evolving electricity policy.

“If we’re going to really reap the fruits of what’s looking to be a really beneficial policy direction,” he said, “those actions need to be implemented in a coordinated manner and in parallel.”

For more information, listen to Rice using the audio player below: