A major electricity tariff shock is looming as South Africa reopens the fallout from the flawed NERSA determination of Eskom's allowable revenue under the current multi-year price determination (MYPD6). The dispute stems from a revenue “mistake” originally identified by Eskom in its court papers, valued at R107-billion, and initially resolved through a draft settlement between Eskom and NERSA of R54-billion. That settlement was later set aside by the courts due to inadequate public consultation, forcing the Regulator to reopen the matter. Following the court-ordered reset, Eskom's revised claim has now escalated to R76-billion, triggering a fresh consultation process with an unusually compressed timetable. Municipalities have warned that they are being asked to comment on complex tariff impacts with limited time, despite facing direct downstream consequences through municipal electricity tariffs. Compounding the pressure, Eskom is also entitled to recover a further R40-billion from earlier court-ordered clawbacks, bringing the total expected revenue recovery to approximately R106-billion over the next few financial years. Relative to Eskom's 2024/25 revenue base of about R340-billion, clawing back R106-billion implies an additional electricity price increase of roughly 30%, spread across 2026/27, 2027/28 and subsequent years, before accounting for inflation or any new cost pressures. Much of this increase is expected to flow through to municipal tariffs, intensifying affordability risks for households and businesses alike. The looming adjustment sits uneasily alongside public messaging from Energy & Electricity Minister Kgosientsho Ramokgopa and Eskom CEO Dan Marokane about future plans to stabilise or even reduce electricity prices. With demand already weakening and revenue risks mounting, the credibility and sustainability of South Africa's electricity pricing framework is once again under sharp scrutiny.

Between 1 January and 25 January 2026, Eskom's recorded residual energy demand was about 11% lower than for the same period in 2025, intensifying concerns over the long-term sustainability of the utility's cost base, tariff trajectory and revenue model. While recent improvements in operational performance have reduced load shedding, Eskom now faces a different challenge: weakening demand for its grid-supplied electricity. Analysts point to sustained “demand destruction”, driven by a combination of economic, price and technological factors that show little sign of reversing. Weak economic growth and prolonged industrial stagnation have curbed electricity demand across mining, manufacturing and commerce. At the same time, sharply rising electricity prices have shifted customer behaviour. Rapidly rising electricity prices are improving the business case for alternative energy sources such as gas for cooking and heating, solar water heating, wind power, solar PV and battery energy storage for self-generation and wheeling. Higher tariffs have also strengthened the business case for energy-efficiency investments. In parallel, the closure or curtailment of energy-intensive industries - including aluminium, steel and ferro-alloy smelters - has removed large, stable loads from the system, often permanently. These trends are reinforced by longer-term structural changes in the South African economy, which is shifting away from heavy, energy-intensive industry toward a more services-oriented economic base with lower electricity intensity. The result is a growing mismatch between Eskom's largely fixed cost structure and a shrinking sales base. As volumes decline, Eskom must recover its revenue requirement from fewer units sold, placing upward pressure on tariffs and risking a self-reinforcing cycle of higher prices and further demand erosion. The challenge now confronting policymakers and regulators is whether Eskom's current tariff methodology and cost structure remain fit for purpose in an electricity system undergoing rapid and irreversible change.

South Africa's energy-intensive ferrochrome industry has secured emergency electricity tariff relief, following approval by the National Energy Regulator of South Africa (NERSA) of interim discounted tariffs for a period of one year for selected smelters supplied by Eskom. The temporary intervention, framed as a jobs-saving and competitiveness measure, follows sustained pressure from industry, labour unions and government amid mounting concerns over smelter closures, retrenchments and declining ferrochrome production. Media reports indicate that the approved relief equates to tariff reductions of about 35%, translating into electricity prices in the range of about R0.87 per kWh, pending the outcome of a longer-term cost-based tariff review. The Department of Energy & Electricity has publicly welcomed the decision, arguing that the relief is necessary to stabilise an industry facing structurally high electricity costs, weak global demand, and competition from lower-cost producers in China and elsewhere. Labour has likewise backed the intervention, warning of large-scale job losses should smelters be forced to curtail operations or shut down. However, the decision has exposed deep discomfort within the regulatory system and raised unresolved questions about who ultimately carries the cost of the relief. Eskom has declined to state clearly how the revenue shortfall will be funded, while NERSA members have reportedly expressed concern about the lack of transparency in Eskom's application and the potential cross-subsidisation implications for other customers and taxpayers. Critics warn that the interim relief risks setting a precedent for sector-specific bailouts through electricity pricing, at a time when Eskom's overall revenue requirement, municipal tariffs, household affordability and taxpayers are already under intense strain. Attention is now turning to whether a durable, rules-based solution can be found that balances industrial policy objectives with cost reflectivity, regulatory credibility and fairness across the electricity system.

South Africa's Just Energy Transition Partnership (JETP) and broader climate finance programme has been thrust into fresh controversy following public comments by Energy & Electricity Minister Kgosientsho Ramokgopa questioning the cost and terms of external funding pledges during the World Economic Forum in Davos. The Minister's comments came even as Rainer Baake, the German Special Envoy: Just Energy Transition Partnership South Africa, was visiting South Africa for JETP finance progress and government commitment assessments. The JETP - originally agreed at the 2021 COP climate summit as a roughly $8.5-billion package of concessional loans, grants and guarantees from the UK, EU, France, Germany and others - was designed to support South Africa's shift away from coal dependency while cushioning the social and economic impact of decarbonisation. Despite some climate finance disbursements and renewed international backing, Minister Ramokgopa publicly described the existing JETP terms as “not competitive” with capital markets, suggesting that grid expansion and other power system priorities could require alternative funding sources. Crucially, Ramokgopa emphasised that South Africa will “pick the projects to benefit from the funds” and pursue only capital that is deemed affordable and aligned with national priorities, a stance that signals discomfort with current loan conditions and debt exposure risks. European partners, including Germany and the UK, have reaffirmed their financial support and even increased commitments - with Germany raising its total own pledge to approximately €2.68-billion - despite the United States' earlier withdrawal. The exchange underscores a growing policy tension: balancing South Africa's urgent need for transition finance against concerns about cost, conditionality and broader fiscal flexibility. Decisions in the coming months will be closely watched by investors, development partners and domestic stakeholders alike.

South Africa's long-promised restructuring of Eskom has entered a more openly contested phase, with sharp public exchanges revealing deep differences over whether current reforms will genuinely unlock competition and grid expansion. Eskom CEO Dan Marokane and Chairman Mteto Nyati argue that the utility's revised unbundling model offers a “balanced, practical and financeable” pathway to an independent Transmission System Operator (TSO), without destabilising Eskom's highly leveraged balance sheet or triggering lender consents and cross-default risks. Eskom maintains that operational independence of the TSO, alongside regulation, is sufficient to ensure fair grid access while preserving financial stability. But energy economist Prof. Anton Eberhard has pushed back forcefully, warning that creditor complexity risks becoming a convenient brake on structural reform. While acknowledging Eskom's balance-sheet constraints, Eberhard argues that retaining transmission assets within Eskom Holdings undermines the credibility of reform at a moment when transmission capacity - not generation appetite - is South Africa's binding constraint. At the heart of the dispute is whether an independent TSO that operates the system but does not own the grid can realistically mobilise capital at the scale and speed required. With renewable projects increasingly stranded by grid congestion, Eberhard warns that insufficient transmission investment risks renewed supply shortfalls from the early 2030s. Nyati has dismissed critics as attempting to dictate Eskom's end state, insisting the utility's approach reflects global insights and serves the public interest. Eberhard counters that global best practice points in the opposite direction: transmission as a natural monopoly should be structurally separate from generation to avoid conflicts of interest. As government, regulators and creditors weigh Eskom's proposals, the debate has sharpened a central question: does the revised unbundling model accelerate grid expansion and competition - or does it defer the hardest part of reform under the banner of pragmatism?

Governance failures in South Africa's municipal electricity utilities are compounding power outages that have left residents and businesses in key metros frustrated and exposed systemic weaknesses in service delivery. In the City of Tshwane, parts of South Africa's capital including Pretoria's inner city and Pretoria East have again been plunged into darkness, with fingers pointing at Eskom this time round, amid ongoing infrastructure fragility, with power outages blamed on theft, vandalism and inadequate maintenance capacity. These disruptions exacerbate a broader crisis in municipal electricity governance and delivery, reflecting chronic under-investment and operational strain. Meanwhile in Nelson Mandela Bay Municipality, residents have endured repeated power cuts and associated water outages, prompting civic groups to slam the metro for failing to maintain essential services. Severe weather, vandalism of key grid infrastructure and flooding have knocked out critical 132 kV lines, affecting widespread areas and leaving many without power for extended periods. Overlaying these operational breakdowns are governance and corruption concerns, raising questions about accountability within municipal energy entities. The convergence of technical outages, crime-related infrastructure damage and governance failures highlights the urgent need for deeper reforms in how metros oversee electricity distribution.

Renewed momentum in major gas developments in Mozambique has raised hopes for longer-term energy supply diversification in Southern Africa, even as recent disruptions underscore persistent operational and security challenges that could have knock-on impacts for Sasol's industrial gas customers and regional price volatility. On 29 January 2026, TotalEnergies announced full restart of onshore and offshore activities linked to its multi-billion-dollar liquefied natural gas (LNG) project in northern Mozambique. After months of preparatory work and community engagement, the more than $20-billion development is being relaunched to accelerate production and processing, with an eye toward stabilising supply and unlocking export capacity. However, recent severe weather has exposed the fragility of gas supply flows into South Africa, underscoring how climatic events and logistical constraints can materially affect gas availability. For South Africa's industrial gas users, sustained access to competitively priced gas is core to continued operation. Any supply interruption has the potential to feed through into input cost inflation, production curtailment and broader price volatility in energy-linked sectors.

South Africa's energy landscape delivered a strong positive signal at the start of 2026, with a surge in new generation capacity registrations pointing to growing investor confidence and an expanding supply base for the national grid. NERSA reported that it had registered plans for 147 new renewable energy generation facilities in the fourth quarter of the 2025/26 financial year, adding almost 1960 MW of capacity to the pipeline with an estimated R33.39-billion in potential private investment. Solar photovoltaic technology dominated the registrations, riding on South Africa's abundant solar resource and appealing renewable energy economics for investors. Of the 147 facilities, the majority were grid-connected, with 76 projects planned to feed into Eskom's transmission network, while 71 projects link directly into municipal distribution networks. Faster regulatory processing, growing capital inflows and strong solar project pipelines point to a more resilient future supply foundation and enhanced energy security.