South Africa Moves Towards Deregulating Its Electricity Industry


South Africa progresses in its efforts to establish a competitive electricity market as legislation laying out the framework moves forward. The Electricity Regulation Act Amendment Bill, aimed at opening the national power grid to private generators, received approval from the national assembly on Thursday. This bill paves the way for the formation of an independent transmission system operator, setting the stage for the eventual establishment of an electricity trading platform.

South Africa’s energy landscape, long dominated by Eskom, faces a transformative shift. Struggling with operational challenges and needing state bailouts, Eskom’s monopoly is fading. Mineral Resources & Energy Minister Gwede Mantashe announced the government’s move to introduce competition in the electricity sector, allowing for the deregulation of embedded generation. This paves the way for anyone to participate in power generation. Additionally, plans to divide Eskom into distinct transmission, generation, and distribution entities are underway. Beyond grid liberalization, private power developers are now exempt from licensing requirements, and there’s a concerted push to procure clean energy sources, signaling a departure from coal reliance.

According to a recent policy brief by the Power Futures Lab at the University of Cape Town, establishing an independent transmission company that oversees both system and market operations is crucial for shielding the core of the power system from Eskom’s financial challenges. This move also aims to ensure equitable and transparent access to the grid and energy markets. The bill is awaiting approval from the national council of provinces before reaching President Cyril Ramaphosa for final approval. While it garnered support from all political parties except the Economic Freedom Fighters, who view it as akin to privatizing Eskom.




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