South Africa Overhauls Electricity Pricing Framework to Boost Industrial Competitiveness
South Africa is moving to overhaul its electricity pricing framework in a major reform aimed at improving price transparency, increasing market competition and providing businesses with greater certainty over energy costs.
The revised Electricity Pricing Policy, published for public comment, updates a framework introduced in 2008 when Eskom dominated the electricity market.
The sector has since changed significantly, with Eskom being restructured, independent power producers expanding their role and new electricity-market reforms taking effect.
A key element of the proposed framework is the unbundling of electricity tariffs across generation, transmission, distribution and retail.
This would make the costs associated with each part of the electricity supply chain more transparent and allow customers to better understand how their electricity charges are calculated.
The reforms also support a transition towards cost-reflective electricity tariffs, under which prices more closely reflect the actual cost of supplying power.
The policy is intended to provide clearer price signals for generators, traders and large electricity users while creating a more predictable environment for investment.
For energy-intensive industries such as mining, metals processing and manufacturing, greater certainty over electricity costs could be important when making long-term investment and production decisions.
The proposed changes would also allow businesses greater flexibility in sourcing electricity as South Africa moves towards a more competitive electricity market.
Customers could potentially purchase power from alternative suppliers while paying regulated and transparent network charges for using the electricity grid.
Another proposal is the publication of a 10-year electricity price outlook, giving businesses and investors a longer-term view of potential electricity costs.
Such visibility could assist companies in planning capital-intensive projects, assessing operating costs and negotiating long-term power supply arrangements.
The government is also considering broader negotiated pricing agreements for energy-intensive industries.
While mining has previously benefited from arrangements of this nature, the proposed framework could establish more consistent rules for other strategic industrial users.
The reforms come after years of significant electricity price increases. Eskom’s directly supplied customers received an 8.8% tariff increase in July 2026, while electricity supplied through municipalities increased by an average of about 9%.
The revised policy seeks to balance cost-reflective pricing with the need to protect vulnerable consumers and strategically important economic sectors.
It is also intended to support investment in new generation capacity and electricity infrastructure by creating a clearer and more predictable pricing environment.
The pricing reforms form part of South Africa’s broader transition towards a more competitive electricity market following the Electricity Regulation Amendment Act, 2024.
The government is also developing a market transformation framework aimed at increasing participation by private generators and traders.
If implemented effectively, the new pricing structure could give industrial users greater visibility over energy costs while encouraging competition and investment across the electricity value chain.
The proposals remain subject to public consultation, meaning the final framework could change before implementation.
For South Africa’s mining and industrial sectors, however, the reform represents an important step towards addressing electricity pricing, investment certainty and long-term competitiveness.