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South Africa is thankfully surfacing from a period of prolonged electricity disruption that all but stripped the country of its ability to grow and create jobs for more than a decade. But this prevailing supply stability should not be taken to mean the risks have disappeared. There is a serious investment backlog across the value chain that is being masked by falling demand. In addition, supply stability is not fully concealing the sustainability pressures. On the demand side, these stresses are evident in the affordability crisis that is resulting in the closure of electricity-intensive enterprises, high rates of electricity theft, nonpayment of municipal debt to Eskom, and ongoing load reduction in poor areas. On the supply side, there are a number of new projects being built, but their scale is well below that which is needed. There are also serious grid-access delays for new projects, a stretched physical infrastructure, tussles over the way regulated tariff rules are being applied and increasingly muscular resistance to market reform. There are changes under way, supported by important adjustments to legislation. Yet, there does not appear to be a joined-up approach to managing these changes, and the gaps are being filled opportunistically. Such opportunism is facilitated by the fact that South Africa currently does not have a clear grasp of the centrality of electricity to future growth and development. Hence, the country has no clear vision for the electricity industry. Instead, there is an all-of-the-above approach, whereby electricity is viewed as but one component in a larger energy mix. This is only natural, as the approach is largely being shaped with reference to the past , not the unfolding future. Doubly so given current geopolitical dynamics, desirous of an energy past that, for various reasons, is no longer viable. Nevertheless, this lack of vision means that South Africa is at risk of missing yet another opportunity - one that is powerfully articulated in new research by global energy think-tank Ember, and titled 'The Electrotech Revolution'. At the heart of Ember's argument is that 'electricity is the king of energy'; that renewables electricity is replacing fossil electricity; and that electrotech such as solar, wind, batteries, heat pumps, electric vehicles, and digital solutions will progressively absorb end-user energy demand, including in transport, heating, buildings and industry. Ember argues that this shift is driven by physics, which gives electrotech an efficiency advantage over the burning of fossil fuels. By economics, as manufactured technologies such as solar PV get cheaper with scale, while commodities get more expensive to extract. And geopolitics, whereby countries will seek to shore up energy independence by exploiting domestic renewables resources. For South Africa, there are two other key takeaways. Emerging markets will have the lowest electricity costs, as they mostly lie in the Earth's 'sunbelt'. While the economic benefits for end-users of an electrotech such as a solar panel are a hundred times greater than the profits that flow to the manufacturer of that panel.

Engineering News editor Terence Creamer discusses government's interventions to tackle load reduction, which is highly disruptive to the lives of people living in areas where electrical overloading is common.

The CEO-led business partnership that is currently assisting the South African government with the implementation of turnaround initiatives in electricity, transport, crime and youth unemployment is considering adding a new workstream to focus on the recovery of the City of Johannesburg. Discovery CEO Adrian Gore, who is coordinating the partnership that is being implemented under the aegis of Business For South Africa (B4SA), said the decision to consider adding Johannesburg as an additional focus area was based on the importance of the city in raising overall growth and confidence. Highlighting the positive results that had been achieved in addressing loadshedding in particular, Gore said he was optimistic that the recovery of Johannesburg could benefit from a similar level of focus and support. Gore, who has been a leading figure in facilitating the partnership on the basis that it would help stimulate growth and job creation, and in changing the narrative about South Africa in a way that would attract domestic and foreign investment, described the current poor state of the country's economic hub as an obstacle to shifting investor sentiment. "There's low-hanging fruit, we think. "There's a lot of expertise and there's a lot of involvement in the city anyway from business - so can it be organised and structured in a way that's constructive? "We think that that needs to be investigated," Gore explained. Discovery, he noted, had filled hundreds of thousands of potholes, which had given him confidence that it was feasible to make a difference in the city. "Obviously there are some profound issues that will take a lot more time, but there is such a vast interest in the city, as the economic hub, that to see decline is very, very problematic." B4SA had already identified CEOs that could lead the workstream and was currently conducting an assessment of the prospect of adding Johannesburg as its fifth focal area, with a final decision likely in November. It comes ahead of what is poised to be a highly contested municipal election in 2026, with the Democratic Alliance (DA) having selected its former leader Helen Zille, who was a successful mayor of the City of Cape Town before becoming Premier of the Western Cape, as its mayoral candidate for Johannesburg. It also follows a spat that has arisen within the African National Congress, which currently leads a coalition government in Johannesburg, over President Cyril Ramaphosa's recent dressing down of the party's municipal councillors, where he suggested they could learn lessons from DA-led municipalities. B4SA's Martin Kingston stressed that should Johannesburg be added as a focal area it would do so in a way that avoided politics and focused on specific areas of implementation support. "We are not going to become involved in the politics. We've made that clear at all levels of government, including at a national level," Kingston said.

Business leaders speak on South Africa's current energy transition priorities Engineering News & Mining Weekly has canvassed business leaders for their opinions on the priorities for South Africa's electricity sector, as well as what role the Energy Council of South Africa should play in helping the country and business navigate the unfolding energy transition. Below you can read the contributions of the of the following thought leaders: Absa Business Banking's Rashveer Manilal, African Clean Energy Developments & Energy Infrastructure Management Services' Yaseen Mahomed, Air Liquide's Lasad Jaouani, Etana Energy's Evan Rice, Mulilo's Jan Fourie, Nedbank CIB's Dhireshni Chowthee, Red Rocket's Matteo Brambilla, Seriti Green's Peter Venn, Siemens Energy's Thabo Molekoa and Stand Bank South Africa's Deerosh Maharaj. Absa Business Banking Rashveer Manilal Renewable Energy Sector Head South Africa's biggest energy challenge lies in its reliance on ageing, coal-based infrastructure, which is environmentally unsustainable. The rising cost of electricity and energy outages continue to undermine economic productivity, investor confidence and the daily lives of millions. At the same time, regulatory complexity and grid constraints hinder rapid adoption of alternative solutions. Within this challenge lies South Africa's greatest energy opportunity; a fast, just transition to renewables. With abundant solar and wind resources, the country is uniquely positioned to lead the continent in clean energy. Additionally, given our country's unique challenges, we consider gas to be an important transition fuel and we support the development of gas infrastructure, including gas-to-power plants, as it is a cleaner fuel source than coal and/or diesel and can support the build-out of renewable energy by providing baseload supply or hybrid options. Investing in decentralised generation, along with battery storage and grid modernisation, will not only stabilise supply - particularly for businesses and communities vulnerable to outages - but also stimulate local manufacturing, energy reliance and job creation within the green economy, which includes sectors such as renewable energy. At Absa Business Banking, we see energy security as both a national imperative and a catalyst for inclusive growth. Renewable energy is cheaper and cleaner than traditional coal-powered energy. That's why we are actively supporting our clients in financing embedded generation, energy efficiency upgrades and sustainable infrastructure. Over the past ten years, Absa has been a leading financier in renewable-energy installations across the country, in both the commercial and the utility-scale space. We also offer advisory support to help businesses navigate regulatory requirements and unlock the benefits of green investment. By aligning our financing solutions with South Africa's climate and development goals, we're helping to build a more resilient, low-carbon economy - one powered by innovation. African Clean Energy Developments & Energy Infrastructure Management Services Yaseen Mahomed Head of Business Development South Africa's biggest energy challenge is its reliance on an ageing, coal-heavy utility fleet and a constrained national grid. To ensure a just transition, we must urgently add reliable, clean capacity that balances social and environmental priorities. This challenge presents a major opportunity: unlocking South Africa's world-class renewable resources through innovative business models and grid expansion. By attracting private capital, diversifying offtake markets and accelerating decarbonisation, we can drive sustainable development. The rise of commercial and industrial procurement, alongside the REIPPPP, is already boosting investment, energy security and industrial competitiveness. The upcoming South African Wholesale Electricity Market will further liberalise the sector, enabling transparent, competitive private-sector participation. African Clean Energy D...

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has unveiled a new smart meter-led strategy to address the ongoing problem of load reduction, where the supply of electricity to poor communities is cut during peak periods to avoid infrastructure being damaged by overloading caused by illegal connections. The power cuts are indiscriminate and, thus, also affect households in those areas that pay their electricity accounts. Load reduction is currently affecting 1.6-million Eskom-connected households across 971 feeders, negatively affecting the quality of lives of some 8.5-million people. The figure for municipal households is still being compiled. The strategy, which will be implemented over the coming 12 to 18 months, has not yet been fully costed with Eskom still to launch a formal tender for the supply of the smart meters. However, Ramokgopa indicated during a briefing that he would be seeking Cabinet approval to use part of the R4-billion Integrated National Electrification Programme budget to fund the roll-out. The initiative is also distinct from the National Treasury's R2-billion programme to install 250 000 smart meters over a three-year horizon to 2027/28. This, under the so-called RT-29 transversal tender awarded to several service providers in 2023, namely African Metering Solutions, Cigicell, Conlog, Isandiso, Landis + Gyr, MTN and Vodacom. SMART METER TENDER Eskom acting group executive for distribution Agnes Mlambo did not entirely discount the prospect of piggybacking on the transversal tender. However, she indicated that Eskom was likely to launch its own commercial process given that it intended replacing 6.2-million meters with smart meters by 2029. No precise timeframe was provided for the launch of the tender, but Ramokgopa insisted that Eskom already had smart meters in hand to launch the programme. He expressed confidence that load reduction could be ended within 12 months, and again insisted that the cuts had nothing to do with Eskom's ability to supply, noting that the areas affected could be supplied with 530 MW. "We are generating substantially more than that … So, there is no relationship between our generation capacity and load reduction." Eskom had mapped all the areas being affected regularly by load reduction, with over 632 150 of the affected customers being in Gauteng, mostly in recognised informal settlements, followed by Limpopo (349 370 customers) and Mpumalanga (335 550 customers). The programme to eliminate load reduction would be carried out in phases, with the first phase to prioritise 291 feeders across multiple provinces between now and the end of March, followed by two more phases with the aim of wrapping up the programme by the end of March 2027. Ramokgopa acknowledged, however, that the pace of deployment would depend heavily on the success of community engagement processes. These would rely heavily on municipal ward councillors, mayors and, in rural areas, on traditional leaders. FREE BASIC ELECTRICITY Ramokgopa indicated the intention was also to couple the roll-out to the creation of credible indigent registers to ensure that those who were eligible for free basic electricity (FBE) received the benefit after their smart meter was installed. Currently, only 485 000 indigent households were receiving the 50 kWh FBE allowance, despite there being an estimated 2.1-million households potentially eligible for the allowance. Once a smart meter was installed, Ramokgopa indicated that the 50 kWh could be loaded monthly without the money having to first flow to municipalities, many of which were currently redirecting the allowance elsewhere. In addition, the size of the allowance could be increased under a new Electricity Pricing Policy that the Department of Electricity and Energy was in the process of updating. Ramokgopa said that the policy, as well as the FBE subcomponent, would be subjected to public participation, probably early in 2026. "We're going to open this for engagem...

Import duty investigations in South Africa are currently taking an average of 27 months to complete - more than four times the official target of six months, and with the oldest open tariff probe standing at 64 months, or nearly six years. These findings are contained in the seventh and latest yearly analysis conducted by XA Global Trade Advisors and published in a report ominously titled 'The Tariff Zombies' that shows that 80% of open cases are older than six months. The report also highlights the growing size of the investigation backlog being faced by the International Trade Administration Commission of South Africa (Itac), with more cases being added yearly than are being finalised. CEO Donald MacKay says that clearing the backlog will require decisions to be made expeditiously to either approve duty changes or reject them, as further delays will result in the "zombie" applications that contain outdated information crowding out current applications. Such delays have material implications for businesses that approach Itac for relief, including for the enterprise itself, but also for jobs and for consumers. He warns that there has also been a change in the reason for the delays, with Itac now taking longer (18 months on average) to complete investigations. Whereas previously a large portion of the delay could be attributed to the lag between the completion of investigations and the receipt of Ministerial approvals. While acknowledging that such investigations are complex, MacKay argues that even the most complicated tariff investigation should never take 18 months to complete. The report also raises concern over the lack of duty reviews, which is resulting in "evergreen protection", in some instances for products that are no longer even produced locally. "Between July 2024 and June 2025, South Africa imported under 3 607 tariff codes that attracted a duty, meaning South Africans would have paid an eye-watering total of R103-billion in duties. "Of these duties, 3 377 tariff codes were last reviewed before 2005 and accounted for duties of R 96.8-billion. "This means that in the last 20 years (2006 to 2025), only 230 tariff codes have been reviewed, which is only 6.4% of the tariff codes that attract a duty," the reports states. In addition, instead of making duty reduction applications, MacKay says companies are being encouraged to seek rebates. "This does not fix the underlying problem, allowing import duties to remain evergreen and adds complexity and additional administrative actions. "Itac needs to establish if there are still local manufacturers, and if there are not, remove the duties," he avers.

Two well-established South African renewables companies - African Clean Energy Developments and EIMS Africa - have officially combined to form a new large-scale independent power producer (IPP) known as Anthem. The consolidation also coincides with the introduction of new shareholders into the entity, which has historical ties to the Old Mutual-linked African Infrastructure Investment Managers' (AIIM's) IDEAS Fund, which remains the majority shareholder in Anthem. The entity's shareholding now also includes the black economic-empowered Mahlako Energy Fund, and Norfund, which together hold 15%, and with scope to increase that interest to 30%. Norfund, which is the Norwegian government's development investment fund, has confirmed a R1.5-billion equity investment into Anthem. With 2.7 GW of wind, solar PV and hydro in production, under construction or near to financial close, the combined entity has between 12% and 15% of South Africa's current IPP market. Its portfolio of 27 projects includes the 67 MW Umoya Wind Farm, reportedly the first utility scale wind project to reach financial close in 2012 under the South African government's renewables procurement programme. It also includes projects developed on the back of private power purchase agreements, however, such as the 69 MW Msenge Emoyeni Wind Farm, a pioneering private offtaker facility supplying Sasol, as well as the Castle Wind Farm, which is described is the largest private-offtake wind farm, with 89 MW contracted to supply Sibanye-Stillwater. Anthem currently generates over 2 400 GWh yearly, with an additional 1 350 GWh to come online in 2026. 11 GW PIPELINE CEO James Cumming reported at Anthem's launch that the entity had an immediate goal of growing its capacity to 6 GW by 2030 off the back of an 11 GW project pipeline. He also indicated that it would pursue hybrid battery energy storage systems (BESS) at some of its power stations and would assess standalone BESS investments, particularly ones that could assist it in being a balance responsible party as envisaged for participation in the upcoming South African Wholesale Electricity Market, or SAWEM. Anthem had no intention of becoming an aggregator or a trader, with Cumming indicating that it would remain a pure-play IPP focused on project development, construction and operation. But it might consider seeking a trading licence should that emerge as a requirement for full participation in SAWEM. It will, thus, also not participate in the upcoming procurement of independent transmission projects and will develop grid infrastructure only to connect its own projects. As an IPP it will pursue growth within the Southern African Development Community (SADC) region, over and above the hydro and solar PV projects it has already developed in Eswatini. Cumming said that its growth ambitions would require the raising of additional capital and, thus, he did not discount the prospect of a future listing of Anthem, or a further broadening of its shareholder base. Chairperson Sean Friend, who was also AIIM's chief investment officer for SADC, forecast that Anthem would have a material impact on the region's energy landscape, owing to its significant large-scale projects already under way, and its strong growth pipeline. Anthem currently employs 80 people and aims to expand its employee base incrementally as it adds additional capacity and takes over more of the operations and maintenance functions at its facilities. COO Ryan Hammond highlighted the growth in the scale of the projects being pursued by the company, arguing that while 140 MW wind farms were once viewed as large-scale, Anthem was currently developing and building projects that would be larger by a factor of five. "As a long-term owner and operator with deep local expertise, we are committed to building a sustainable energy future - delivering progress and prosperity for people across South Africa and the region in years to come," Hammond said, highlighting the emplo...

Engineering News editor Terence Creamer talks about what led to the recent resignation of five members of the South African Nuclear Energy Corporation (Necsa) board; Electricity and Energy Minister Kgosientsho Ramokgopa's continued confidence in the Necsa executive team; and the

Electricity and Energy Minister Dr Kgosientsho Ramokgopa says a new board will be appointed at the South African Nuclear Energy Corporation (Necsa) before the middle of October, replacing the current board which has been inquorate for weeks following a slew of resignations. Speaking during a meeting convened by the Portfolio Committee on Electricity and Energy specifically to discuss the governance crisis at Necsa, the Minister said the resignations had coincided with preparations for the appointment of a new board in January, but that the process would now be accelerated. Names of potential candidates had been short listed and would be presented at an upcoming Cabinet subcommittee meeting, before being presented for Cabinet approval at its next meeting. The Minister said he was not intending simply to fill the vacancies but would instead announce an entirely new board, which could include some current members in the interest of retaining institutional memory. The process should be completed within three weeks, with the usual Cabinet schedule having been shifted out by a week as a result of the upcoming Heritage Day public holiday, which falls on a Wednesday - the day typically reserved for Cabinet subcommittee or Cabinet meetings. In the interim, governance authority had been delegated to CEO Loyiso Tybashe, who, together with CFO Precious Hawadi, was at the centre of the salary disputes that resulted in the board resignations. Some board members had raised questions about the way salary increases had been implemented by Tybashe, resulting in an internal audit being instituted. The audit reportedly raised concerns about whether the board had been provided with accurate financial information by the executives when seeking to prove there was sufficient budget for the increases. When the board sought to place Tybashe on precautionary suspension, he opposed the action legally, while Necsa chairperson David Nicholls refused to sign the notice and resigned. However, Ramokgopa refused to accept his resignation, and Nicholls remains in place, having subsequently expressed his full confidence in Tybashe, who withdrew his legal action at the Minster's request. A separate anonymous complaint sent to the Minister alleges that the relationship between Nicholls and Tybashe is too close, highlighting that the two individuals had travelled overseas together. The Minister told the portfolio committee that he had requested a subcommittee of the board to investigate the complaint, but no report had been delivered prior to the resignations. The Minister also did not accept the board's move to suspend the CEO, arguing that it was his prerogative, and requested a meeting to seek clarity. The resignations of five board members, including the shareholder representatives from the Department of Electricity and Energy itself, then followed, leaving the board inquorate. Ramokgopa did not disguise his irritation with the board members who had resigned and even went so far as to suggest that their fixation on the salary issue was because too few of them had genuine nuclear or scientific backgrounds. "So, you'll see that the board that's going to be appointed is going to have a presence of scientists, people who are going to help us to steer this [organisation] in the right direction," Ramokgopa said. The Minister also insisted that a financial and operational turnaround was under way at Necsa, arguing that this would be evident in the group's upcoming financial results to Parliament. He added that the results would also include an unqualified audit from the Auditor-General South Africa. The board crisis comes only weeks after the Minister appeared before the portfolio committee for a separate emergency meeting into an error made by the National Energy Regulator of South Africa, which resulted in a settlement with Eskom, which is now entitled to recover R54-billion in additional revenue through higher electricity tariffs.

With preparations under way for the launch of the South African Wholesale Electricity Market (SAWEM) in 2026, new research highlights how decisions on the future regulated tariff structure, including the Megaflex bulk user tariff, could affect the market's objectives of advancing competition and catalysing further investment. Conducted by financial advisory services firm Cresco, the analysis has been prepared in response to both approved changes to Eskom's retail tariff plan by the National Energy Regulator of South Africa (Nersa) in early 2025, as well as possible future changes that could result in shifts in the composition of the tariff in relation to the variable and fixed cost components and time-of-use adjustments based on demand and energy supply changes. The approved changes are already having negative savings implications for consumers under the prevailing regulated-tariff regime, but will also hold significant implications for investors, producers and consumers when the SAWEM is launched. In an interview with Engineering News, Cresco executive director Robert Futter and associate director Olga Suchkova explained that, while a rebalancing of the tariff structure is required to more accurately reflect the cost structure for Eskom Distribution and the National Transmission Company South Africa (NTCSA), moving beyond certain reasonable thresholds could entrench Eskom's dominance and undermine future investment. The fixed-cost component has already increased from between 8% and 12% to closer to between 16% and 22%, depending on load or offtaker consumption profiles. However, there are indications that Eskom would like the fixed component to rise markedly, with figures of between 50% and 80% having even been mentioned. These indications have not clarified whether such a ratio would be limited to the NTCSA, which is largely a fixed-cost business, or whether they also include Eskom Generation, where the costs are mostly variable. These regulated tariff changes would also affect the SAWEM, where the hourly day-ahead wholesale price will be set at the system marginal price (SMP), which is equal to the marginal costs of the last unit in the merit order required to satisfy the demand. Suchkova explains that, in the initial phase of South Africa's market liberalisation, the SMP will initially be set during off-peak periods by the coal plants and during periods of peak demand by the expensive diesel-fuelled open-cycle gas turbines (OCGTs). All generators receive the same clearing price, regardless of their individual bid prices, as SAWEM will operate under a uniform pricing system. Therefore, generators with lower marginal costs will earn "inframarginal rents", reflecting the difference between the clearing price and their marginal costs. Cresco's theoretical forecasting and scenario analysis shows that, under a high fixed cost ratio, the SMP price will be low, which could appear attractive to consumers. However, it will also disincentivise investment by independent power producers (IPPs), as the inframarginal rents would be too low to justify the investment. Should the SAWEM fail to catalyse investment, Eskom's market dominance, which will be above 80% at the market's launch and mostly be hedged, will be entrenched, while the incentive to lower costs and increase productivity will decrease, as a large percentage of revenue is guaranteed. In addition, security of supply could also be threatened, as significant investment is required in the coming years, especially to replace decommissioned coal capacity. Incentivising other types of dispatchable generation is also key to enabling the system operator to have different tools to manage a decarbonising grid, Futter adds. He warns that there could also be unintended consequences for customers, with low load factor customers, such as households or small firms, having to pay a significant portion of the bill as a fixed charge, which could drive some off-grid. It could also result in w...

Engineering News editor Terence Creamer discusses the preparations that are under way for the launch of the South African Wholesale Electricity Market, or SAWEM.

The National Transmission Company South Africa (NTCSA) has provided a detailed breakdown of the steps being taken in preparation for the launch of the South African Wholesale Electricity Market (SAWEM) - a key evolutionary step in the development of a fully competitive electricity supply industry in South Africa. The aspirational launch date of April 1, 2026, remains in place, but NTCSA senior manager for market operations Keith Bowen has again underlined that the timeline faces several risks. It is especially reliant on several approvals by the National Energy Regulator of South Africa (Nersa), which will be made only after public consultations have been finalised and the regulatory members had applied their minds to the far-reaching changes being proposed. Speaking during a webinar hosted by EE Business Intelligence, Bowen said the first major regulatory milestone would be Nersa's September 30 public hearings into the NTCSA's application for a market operator licence. The licence would need to be issued before the NTCSA could submit a proposed Market Code to Nersa for its approval. The Market Code will govern the purchase and sale of electrical energy by participating generators, consumers and traders, while also setting the trading, settlement and system balancing rules needed for the functioning of the market platform. The latest version of the code will be subjected to a final round of consultations on September 11, but the NTCSA expects approval in January or February. This, owing to the fact that it will be in a position to submit the Market Code to Nersa for approval only once it has its operator licence, which is expected to be secured in mid-November. Nersa would also need to approve the wholesale tariff framework, while the so-called 'vesting contracts' between the NTCSA and Eskom Generation and Eskom Distribition would need to be finalised. These contracts are considered to be a necessary transitional step from a monopoly market to one premised on competition, but could also have substantial implications for the success or otherwise of the SAWEM and for future investments if not carefully concluded. TECHNICAL PREPARATIONS Bowen said that, internally, the NTCSA was making the technical preparations required to launch the trading platform and was also in the process of recruiting and training staff in preparation for SAWEM's launch. A trading portal for bids, offers and scheduling should be ready for testing by November, with financial and settlement systems due by March. The NTCSA has also launched a three-day SAWEM School to prepare other market participants - including traders, IPPs and large consumers - and is considering adding additional training days, as the current programme is heavily oversubscribed. Graduation from the SAWEM School has been made mandatory for any participant in the market and the course has been designed to offer participants insight into the future market structure, including the roles and responsibilities of each participant. The course exposes participants to issues such as the financial settlement processes, credit management, and risk mitigation, and includes expert-led case studies and simulations that reflect real-world market scenarios. Despite the obvious risks to the timeline, Bowen said the NTCSA was pressing ahead to keep momentum. "We don't want to take our foot off the accelerator. This market is essential for building a competitive, transparent and sustainable electricity sector in South Africa." This sentiment was strongly backed during the Webinar by Bredesen Consulting CEO Hans-Arild Bredesen, who has more than 30 years of international experience in the design and implementation of power markets and trading arrangements, and who has been participating in the development of the SAWEM Market Code. Arguing that, while the reform process often appeared overwhelming, it was necessary to "take a leap of faith" and launch the market, particularly given that South Africa's ele...

Another dispute may be looming between Eskom and the National Energy Regulator of South Africa (Nersa). This one, over the regulator's decision to approve ArcelorMittal South Africa's (AMSA's) applications for six-year negotiated pricing agreements (NPAs) for its Newcastle and Vanderbijlpark operations. In a statement, Nersa noted that Eskom had rejected the applications made by AMSA in September and October last year on the basis that the utility did not agree that they met the criteria for such tariff relief. However, following a petition by the steel group to Nersa, the Energy Regulator approved the applications at its meeting of August 28, asserting that "on a balance of scales AMSA's applications met the eligibility criteria prescribed in the Interim Long-Term NPA Framework". That framework was published by the then Department of Mineral Resources and Energy in September 2020 and listed the qualifying criteria for companies wishing to apply for NPAs, including one stipulating that their electricity load profiles should be greater than 70%. Eskom currently has 11 active NPAs, which have all been approved by Nersa, including the prices to be charged. These lower tariffs are subsidised by Eskom's standard tariff customers and in the current financial year the estimated subsidy amount is R18.8-billion. Nersa said that, following a comprehensive assessment of AMSA's application, the Energy Regulator concluded that AMSA had "substantially complied" with the prescribed criteria. However, it also stressed that the Energy Regulator had not approved a reduced tariff, but that its determination enabled AMSA to approach Eskom to negotiate a lower tariff. "It will be AMSA's decision to approach Eskom, following the Energy Regulator's decision, to apply for and negotiate a favourable tariff," full-time regulator member responsible for electricity regulation Nomfundo Maseti said in a statement. "Nersa's role is to implement and enforce the NPA Framework provisions. This means that Nersa does not intervene in price or tariff negotiations on behalf of customers," she added. Nersa also indicated that it would publish its reasons for decision (RfD) in due course. Prior to the approval Eskom had rejected AMSA's NPA applications, but the State-owned utility typically waits for RfDs before deciding whether to pursue reviews of Nersa's decisions. Eskom had indicated to AMSA and Nersa previously that, unlike the other NPAs that had been approved, the Newcastle and Vanderbijlpark applications failed to meet the criteria outlined in government's NPA framework. The key criteria not met, in Eskom's view, included the 70% load factor requirement, and the fact that electricity comprises a relatively small percentage, or less than 10%, of AMSA's total operational cost base. Eskom calculates the electricity intensity of a ton of steel at less than 1 MWh. The utility is concerned that other industrial companies could apply for NPA's should a precedent be set by the fact that AMSA only met the single criteria of its yearly consumption being greater than 80 GWh. If all such customers were given NPAs, Eskom calculates that the subsidy for the 2026 financial year would have been R62-billion and 25% of the standard tariff revenue. Given that the subsidy would be repeated yearly, extending NPAs could dwarf the recent R54-billion settlement which arose after Nersa acknowledged errors in its calculation of Eskom's regulatory asset base during the most recent tariff adjudication. The adjudication was preceded by hearings at which several Nersa regulator members raised major concerns about NPA subsidies. That said, the NPA development also comes as pressure on South Africa's industrial capacity grows, as well as after AMSA recently placed its Newcastle furnace into care and maintenance. Discussions are reportedly continuing with government on possible ways to reopen the mill and sustain AMSA's long products business, which the JSE-listed group plans to wind dow...

Transnet CEO Michelle Phillips reports that negotiations are under way to conclude contracts with the first 11 private train operating companies (TOCs) that have qualified to take up slots on the network, but the entities have indicated that it could take between 12 and 36 months thereafter for them to begin operating. Speaking at the State-owned group results presentation in Johannesburg, Phillips said that access to rolling stock would be a key determinant of the pace at which these TOCs could enter the network and reported that Transnet was, thus, prioritising the establishment of a LeaseCo. This LeaseCo, which would be set up as a public-private partnership, would make available surplus Transnet rolling stock to the TOCs. Phillips said potential partners for the LeaseCo were in the process of being shortlisted following a prequalification process and that a request for proposals would be issued soon to select a partner with the capital, skills, refurbishment and leasing capacity needed to launch the venture. Transnet would not demand a majority equity stake in the entity, which Phillips described as a potential "game changer" in accelerating the entry of TOCs onto the network in a bid to lift rail volumes to the stated target of 250-million tons yearly by 2030. The first 11 TOCs expect to move 20-million tons yearly once they are operational, while the Transnet Freight Rail Operating Company is targeting yearly volumes of 180-million tons. In the 2024/25 financial year, Transnet reported rail volumes of 160.1-million tons, up from the 151.7-million tons reported in the previous financial year, but still well below the 226.3-million record of 2017/18. The TOCs would enter the network at their own risk, and would thus be affected not only by significant maintenance backlogs, but also by ongoing theft and vandalism, which interrupted services and caused derailments. Transnet chairperson Andile Sangqu stressed that the group, which had hitherto monopolised the rail system, was committed to opening up the network. The Transnet Infrastructure Manager, or TRIM, had been a key step in the vertical separation of the rail business, while a Network Statement was now in place, and was being updated yearly, to outline what slots were available and the tariffs for using the network. "We have introduced and welcomed competition into the rail network," he said, arguing that this would unlock growth in other sectors, including mining. Public private partnerships also feature more generally in Transnet's 'Recovery for Growth' strategy, which is guiding the current phase of an ongoing turnaround plan at a company that is trading with the support of R146-billion in government guarantees and which has debt of R144.78-billion. While protracted litigation continues to delay a propose partnership at the Durban Container Terminal Pier 2, Phillips reported progress on several other private sector participation (PSP) projects, including: A PSP to expand the Richards Bay dry bulk terminal from 18.5-million tons to 26-million tons, the tender for which will be issued this year;The Ngqura manganese export corridor PSP, which will also allow for the decommissioning of the existing terminal at Port Elizabeth, and which will go out to tender between January and March next year; and The container corridor PSP, the tender for which is planned after April next year. Transnet is also assessing responses to a request for information for PSP infrastructure projects across various other rail corridors and at its ports making further requests for proposals likely over the coming two years. Internally Transnet is expecting to sustain yearly capital expenditure at a R25-billion level with most of the investment to be directed towards the maintenance and modernisation of existing infrastructure and equipment across the rail and port systems. During the 2024/25 financial year, capital expenditure rose from R16.9-billion to R24-billion. The group also recorded a fi...

Engineering News editor Terence Creamer discusses the reaction to a R54-billion behind-closed-doors settlement agreement between the National Energy Regulator of South Africa (Nersa) and power utility Eskom, which will result in Eskom's electricity tariffs increasing by more than

The B20 South Africa task force on energy has unveiled three recommendations that will be presented to the G20 government leaders when they gather for their yearly meeting in Johannesburg in November. The recommendations include mobilising energy transition finance at greater scale and speed, supporting industrialisation across the energy value chain, and unlocking investment in critical energy infrastructure. In an interview with Engineering News, B20 South Africa energy mix and just transition task force chairperson Daniel Mminele, who is also Nedbank chairperson, underlined the importance of transition funding, arguing that it all "begins with financing". The task force report, which was overseen by Mminele together with 12 co-chairs drawn from leading African and international energy, finance, industrial and advisory companies, specifically called for international financing for just energy transitions to be expanded by more than seven times by 2040, from $45-billion to $330-billion. "Emerging economies continue to face steep borrowing costs and limited access to capital for energy transition projects. "What is needed now is a shift toward financial models that are scalable, affordable, and aligned with national priorities," he said, while also stressing that the B20 agreed that there could be no one-size-fits-all approach to national transitions. Mminele also highlighted the view taken by B20 South Africa that the transition presented an opportunity to expand industrial capacity, with the task force arguing that the global value unlocked through industrialisation across sustainable energy value chains should be grown by five times to $11-trillion by 2040. Having previously overseen the crafting of South Africa's Just Energy Transition Investment Plan, Mminele said the recommendation gelled with South Africa's own vision to expand green industries, while also supporting skills development to cushion workers and communities affected by the shift away from coal. Notwithstanding the rise of protectionism - particularly out of the US, which will take over the G20 Presidency from South Africa at the end of the year - the task force report also recommended that resilient energy-sector supply chains could be built through improved market integration and enhanced trade partnerships. The report also emphasised the need for an expansion and modernisation of energy infrastructure to increase access to reliable electricity and enhance the climate resilience of energy infrastructure. Specifically, it argued that yearly investments into grid infrastructure should be doubled over the coming five to 25 years to $780-billion and that 80-million kilometres of grid infrastructure be modernised and/or installed by 2040. The energy mix and just transition reports was one of eight reports, containing 30 recommendations in total, handed over by B20 South Africa Sherpa Cas Coovadia to International Relations and Cooperation Minister Ronald Lamola on September 4. The others deal with digital transformation, employment and education, finance and infrastructure, industrial transformation and innovation, integrity and compliance, sustainable food systems and agriculture, and trade and investment. In the lead-up to the G20 Summit in November, which will be the first gathering of its kind in Africa, B20 South Africa plans to engage with governments, multilateral institutions and business leaders to build momentum around the recommendations. "This is Africa's global moment," Coovadia said. "We invite the world to engage with these recommendations, collaborate with us and join us in leading change."

Having rolled-out 67 000 smart meters across eight pilot municipalities in 2024/25 as part of an effort to improve revenue management at municipalities that owe Eskom billions in outstanding arear debt, the National Treasury reports that more than 77 780 such meters are expected to be installed across 11 municipalities this year. It was reported earlier in 2025 that municipality arear debt owed to Eskom had breached the R100-billion mark. Deputy director-general for intergovernmental relations Ogalaletseng Gaarekwe reports that the aim is to install 250 000 meters over a three-year horizon to 2027/28, with indirect grant funding of R2-billion having been approved for the programme. The 19 municipalities currently accredited for the smart-meter scheme are drawn from the 71 municipalities that are also participating in a separate debt-relief initiative; one that enables them to write off legacy debt owed to Eskom by meeting various conditions, including a ringfencing of payments owed to the utility and keeping their current accounts up to date. The first eight municipalities selected for the R500-million smart-meter pilot in 2024/25, were among those with the largest outstanding debts owing to Eskom, and included Bela-Bela, Dihlabeng, Emalahleni, Kgetlengrivier, Makana, Modimolle-Mookgophong, Naledi, and Sol Plaatje. MUNICIPALITIES IN FOCUS Ten of the second cohort have been drawn from the best performers in meeting the conditions of the debt-relief programme, while one is under national intervention, and they include Amahlathi, Cederberg, Dawid Kruiper, Endumeni, Enoch Mgijima, Kannaland, Mogale City, Matzikama, Ramotshere Moiloa, Raymond Mhlaba, and Ubuntu. No metropolitan councils have been included but National Treasury local government budget analysis director Sadesh Ramjathan reports that such councils are entitled to access the service providers selected under its transversal tender for smart meters, known as RT-29, should they have funding to do so. The service providers selected under RT-29, which was overseen by the National Treasury's chief procurement officer in 2023, include African Metering Solutions, Cigicell, Conlog, Isandiso, Landis + Gyr, MTN and Vodacom. These service providers are installing accredited meters that are manufactured locally and, while electricity metering is being emphasised, the RT-29 transversal tender also includes smart water meters. Some R650-million has been set aside for 2025/26, R800-million for 2026/27 and R836-million for 2027/28. None of the municipalities receive funding directly for the smart meters, with the selected service providers being paid only once there is evidence that the meters have been installed and fully integrated into the beneficiary municipality's revenue management system. Replicas of these municipal back-office revenue management systems have been created at a monitoring centre housed at the South African National Energy Development Institute, or Sanedi, which has also been appointed as the project manager for the programme. EARLY ANALYSIS POSITIVE Ramjathan says it is premature to provide firm information on whether municipalities where smart meters have been installed are meeting the objectives of improved revenue management, higher revenues and reduced arrear debt owing to Eskom. However, he reports that the initial analysis arising from two municipalities - Bela-Bela and Sol Plaatje - is promising. Adjustments have also been made to the way implementation takes place since the pilot, with a far greater emphasis being given to higher levels of community engagement ahead of any actual installations taking place. This, in an effort to persuade those showing resistance to the meters that the technology is not simply about recovering higher revenues, but also includes customer benefits such as an improved service, greater billing accuracy and transparency, with customers able to monitor their consumption in real time on their cell phones. The smart meters are ...

The Energy Intensive Users Group (EIUG) has called for a reopening of the most recent electricity tariff determination, arguing that a R54-billion behind-closed-doors settlement between the regulator and Eskom has created fresh price-path uncertainty. This uncertainty was also being amplified by the fact that the liquidation schedule for several regulatory clearing account (RCA) allowances, also running into billions of rands, had not yet been finalised. These RCA approvals entitle Eskom to claw back revenue foregone in previous periods in future tariffs. The EIUG is made up of South Africa's largest industrial and mining companies, which collectively consume about 40% of the country's electricity, while employing more than 650 000 people in entities that collectively generate 20% of South Africa's GDP. In some cases, electricity costs constitute up to 40% of their production costs, and tariff hikes and volatility over the past two decades have been major factors contributing to some operations shutting down or cancelling investments. Several large resources firms have also initiated retrenchment processes in recent weeks, especially in the ferrochrome, steel and iron-ore sectors. The EIUG noted an eightfold rise in Eskom's average electricity price from 2008 to 2024, from 19.9c/kWh to 165.43c/kWh, while electricity sales dropped by nearly 20% from 224 TWh to 183 TWh. Demand from large industrial and mining companies fell by 23% over the same period, while the number of customers in the sector declined by 709, or 17%. The immediate trigger for EIUG's call for a reopener, however, is the shock out-of-court settlement between Eskom and the National Energy Regulator of South Africa (Nersa), which acknowledged errors in its calculation of tariffs for the 2025/26, 2026/27 and 2027/28 financial years under the sixth multiyear price determination, or MYPD6. The first R35-billion of the settlement amount would be liquidated in the latter two financial years, resulting in an electricity tariff hike of 8.76% on April 1 next year instead of the 5.36% approved in January, and 8.83% in the following year, instead of 6.19%. The balance of the amount would be recovered by Eskom in subsequent financial years, but no liquidation schedule has been provided by the regulator. On April 1 this year, electricity tariffs rose by 12.74% in line with the MYPD6 determination. However, the EIUG highlighted several RCA approvals, some also the result of legal action against Nersa by Eskom, which could result in even bigger hikes over the coming years. This included the RCA balance of R8.1-billion already declared for the 2021/22 financial year, with Eskom in the process of finalising its 2023/24 RCA application. The EIUG noted that both the R54-billion settlement and the outstanding RCAs would increase the tariff by more than 4% over the original MYPD6 decision, and were thus sufficient to reopen the MYPD6. "Such a review may reset the base and afford the industry a starting point for a predictable price path," EIUG CEO Fanele Mondi said, arguing that the MYPD6 decision of January had "brought a glimmer of hope" that the country was moving away from high increases and uncertainty. He also raised serious concern over the way Nersa had gone about reaching the settlement with Eskom. "[This] behind close doors settlement of R54-billion is a complete shock to consumers. "It is not only about the quantum of the additional revenue but also about a lack of transparency on a decision that has fundamental consequences for consumers who have to bear this settlement," Mondi said. He expressed particular concern that the implementation period had not been consulted, despite its material consequences for customer that were already facing serious financial constraints. "Making matters even worse is that some operations already see as high as 19% increase against the 12.74% Nersa decision [for the 2025/26 financial year] due to the changes in the Retail Tariff Plan." ...

A public hearing into the National Transmission Company South Africa's (NTCSA's) application for a market operator licence will be hosted by the National Energy Regulator of South Africa (Nersa) on September 30. The licensing of the NTCSA as the independent market operator is viewed as a key milestone for the launch of the South African Wholesale Electricity Market (SAWEM), which has been tentatively set for April next year. Another important milestone will be the approval of the Market Code, which is expected to be submitted to Nersa for its approval after a final consultation session to be held on the draft Market Code, which is set to take place on September 11. The launch of the SAWEM itself is viewed as another step in the creation of a competitive electricity market in line with the Electricity Regulation Amendment Act, which came into force earlier this year. Although full competition is unlikely at its inception, the launch of SAWEM is anticipated to reinforce the structural transition under way. This, from an industry structure hitherto dominated by Eskom and a vertically integrated industry structure to one that progressively opens to include generation competition, and the participation of aggregators and traders. These structural changes also hinge on the unbundling of Eskom's generation, transmission and distribution entities into separate businesses and progress here is reportedly uneven, with only the NTCSA currently operating with its own board and executive team. However, the NTCSA remains a subsidiary of Eskom Holdings and there is some uncertainty over whether the transmission assets will be transferred to the NTCSA as it emerges as the independent Transmission System Operator envisaged in legislation. Nevertheless, preparations for the launch of the SAWEM are continuing, and a SAWEM School has been set up to expose future participants to day-ahead and intra-day trading and the market-balancing components. Graduation from the SAWEM School has also been made mandatory for participation in the market once it is launched. In a statement, Nersa confirmed that it received the NTCSA application for a market operator licence on July 25 and that the licence was required in addition to the transmission, trading and import/export licences already approved in favour of the NTCSA. "If approved, this licence will empower the NTCSA to operate the future electricity trading platform, ensuring its administration is conducted fairly and transparently," Nersa said. The deadline for the submission of comments and objections has been set as September 22 and the hearing is scheduled to take place virtually between 9:30 and 13:00 on Monday, September 30. The closing date for registration to participate in the public hearing is September 25, at 16:30. The hearings come as Nersa is also moving to finalise rules for traders by November and amid heightened scrutiny of the regulator, following its acknowledgement that it made errors in the calculation of Eskom's most recent three-year tariff application. After Eskom approached the courts to have the decision reviewed, Nersa and Eskom entered into settlement negotiations, which were concluded behind closed doors and in the absence of public hearings. On August 28, Nersa confirmed a settlement amount of R54-billion and announced that Eskom's electricity tariffs would rise as a result by 8.76% on April 1 next year instead of the 5.36% approved previously, and by 8.83% instead of 6.19% in 2027/28.

Engineering News editor Terence Creamer discusses some of the hot-button issues in the steel sector, including the preliminary determination of steel tariffs; questions about the future of ArcelorMittal South Africa’s longs business; and concern from metals firms about a lack of