“South Africa is entering a new era of electricity reform as the Electricity Regulation Amendment Act (ERAA) and the Market Code pave the way for the launch of the South African Wholesale Electricity Market (SAWEM) in April 2026. This transition from Eskom’s monopoly to a competitive, multi-market system is expected to transform tariffs, infrastructure investment, and private sector participation, though challenges remain around regulation and municipal roles.”
South Africa is entering a new era of electricity reform as the Electricity Regulation Amendment Act (ERAA) and the Market Code pave the way for the launch of the South African Wholesale Electricity Market (SAWEM) in April 2026. This transition from Eskom’s monopoly to a competitive, multi-market system is expected to transform tariffs, infrastructure investment, and private sector participation, though challenges remain around regulation and municipal roles.
South Africa’s energy sector is at a historic turning point. For decades, Eskom has dominated electricity generation, transmission, and distribution, operating as a vertically integrated monopoly. Now, with the Electricity Regulation Amendment Act (ERAA) in force and the Market Code nearing approval, the country is preparing to launch a competitive electricity market. This reform is widely regarded as the most significant structural change since Eskom’s inception in 1923.
Background: Why Reform Was Needed
- Load-shedding crises in the past decade exposed the fragility of Eskom’s monopoly.
- Debt burdens exceeding R400 billion made Eskom financially unsustainable.
- Global energy trends pushed South Africa to embrace renewables, decentralization, and private investment.
The ERAA, passed in 2024 and implemented in 2025, was designed to break Eskom’s monopoly and introduce competition, efficiency, and transparency into the electricity sector.
Key Features of ERAA
- Establishment of a Transmission System Operator (TSO) to manage system operations, market operations, and transmission.
- Expansion of NERSA’s regulatory mandate, giving it broader oversight of tariffs and capacity determinations.
- Introduction of willing-buyer, willing-seller arrangements, enabling competitive trading.
- Pathway for direct supply agreements between producers and consumers.
The Market Code and SAWEM
The Market Code, drafted in July 2025, sets operational rules for the South African Wholesale Electricity Market (SAWEM).
- Defines roles for Balance Responsible Parties and Market Participants.
- Establishes frameworks for Day-Ahead, Intraday, Reserve, and Balancing markets.
- Envisions a five-year transition, with SAWEM starting in April 2026 and reaching full operation by 2031.
This means that by April 2026, South Africa will begin trading electricity competitively, with private sector participation gradually expanding.
Transmission Regulations and Infrastructure
In October 2025, the government published Transmission Regulations that clarified how new transmission capacity will be procured.
- Introduced a build-operate-transfer model.
- Formalized value-for-money transmission service agreements.
- Provided a clear methodology for infrastructure procurement.
This regulatory clarity is expected to unlock billions in private investment in transmission infrastructure, a critical bottleneck for renewable energy integration.
Challenges Ahead
Despite optimism, several challenges remain:
- Tariff ambiguities: Questions persist about how tariffs will be approved and structured.
- Municipal roles: The South African Local Government Association (SALGA) has raised concerns about municipal authority in electricity distribution.
- Litigation risks: Potential court battles could delay implementation.
- Private sector onboarding: While the framework exists, private companies may only be admitted as functional market participants in later years.
Implications for Consumers
For ordinary South Africans, the reforms could mean:
- More stable electricity supply as competition incentivizes efficiency.
- Potentially lower tariffs in the long run, though short-term volatility is possible.
- Greater access to renewable energy, as private producers enter the market.
Global Context
South Africa’s reforms align with global energy trends:
- Europe liberalized electricity markets decades ago, leading to efficiency gains.
- Asia is experimenting with hybrid models combining state oversight with private competition.
- Africa: South Africa’s move could set a precedent for other African nations grappling with monopolistic utilities.
Conclusion
The launch of SAWEM in April 2026 represents a bold step into a new energy future for South Africa. While challenges remain, the reforms promise to reshape the electricity sector, attract private investment, and ultimately deliver more reliable power to millions of households and businesses.
