South Africa’s electricity system is being rebuilt while it is still in use. For decades, Eskom’s vertically integrated monopoly was the central nervous system of the economy: coal-fired power plants, a single transmission grid, and a tariff structure that cross-subsidised households and municipalities. That model has now buckled under the weight of mismanagement, corruption, ageing infrastructure and demand it can no longer reliably serve. The result has been years of rolling blackouts, a public collapse of confidence, and a reluctant consensus that the monopoly must be broken. Yet the experiment replacing it a competitive electricity market layered on top of a fragile grid is as risky as the failing system it is meant to supersede.

The Long Unravelling of a Giant

The story of South Africa’s power crisis is often condensed into a single term: load-shedding. Between 2014 and 2023, the country endured thousands of hours of scheduled outages, at times losing more than ten gigawatts of capacity during peak breakdowns. What was once marketed as one of the most reliable and cheapest electricity systems in the developing world became the biggest structural constraint on growth. Behind the headlines lies a series of decisions and omissions: delayed investment in new capacity, chronic maintenance backlogs, overreliance on an ageing coal fleet and a governance culture that blurred the line between technical oversight and political patronage.

Eskom’s balance sheet reflects that decay in numbers rather than metaphors. Debt stocks sit in the hundreds of billions of rand, maintenance needs are counted in tens of billions more, and the performance of core coal plants has drifted far below international norms. Where a well-run utility might expect the bulk of its fleet to be available more than four-fifths of the time, South Africa’s plants have in recent years hovered much closer to half. The institution that once symbolised modern industrial capacity now embodies the risk of centralised failure.

These indicators do not describe a utility that can be nursed back to its former dominance. They describe one that has lost its monopoly on both generation and trust.

From Monopoly to Market On Paper

The reform blueprint emerging from Pretoria envisions a different architecture: Eskom’s transmission business is to be separated into a national grid company, new independent producers will sell into a competitive wholesale market, large industrial users will be allowed to source power directly from generators, and municipalities will gradually shift from being captive buyers to active market participants. In other words, the future system looks more like the liberalised markets of Europe and Latin America than the vertically integrated models of the post-war era.

In practice, the shift is more improvised than linear. The national transmission company exists on paper but must still recruit people, build systems and establish its authority. Rules for market access are being written even as existing plants fail. The regulator is tasked with managing a transition in which tariffs must cover costs, signal investment and avoid political backlash in a society marked by deep inequality. It is a delicate balancing act: move too slowly, and the system remains stuck in a low-reliability equilibrium; move too quickly, and institutional capacity is overwhelmed.

The Grid: Old Wires for a New Economy

If the old story of South African electricity was about coal, the new one is about the grid. Renewable energy zones in the Northern and Western Cape offer some of the world’s best wind and solar resources, yet the high-voltage backbone that should connect them to industrial centres is incomplete, congested or simply missing. For years, transmission investment lagged behind both need and rhetoric, overshadowed by crises in generation and by the sheer political heat surrounding Eskom’s coal stations.

That neglect now constrains the transition more than the availability of panels or turbines. Project developers describe auctions where bidding is robust but grid connection is the binding constraint; banks complain that technically viable projects cannot be financed without certainty on access. The arithmetic is unforgiving: without a rapid build-out of new lines and substations, South Africa risks becoming a country with ample renewable potential and inadequate wiring the energy equivalent of a modern city served by a single, crumbling highway.

The Quiet Revolt on Rooftops and Factory Roofs

While political debate has oscillated between defence of the old model and promises of a new one, millions of South Africans have responded in a different way: by building their own power. From wealthy suburbs installing rooftop solar and batteries to large mining houses signing long-term contracts with independent producers, the country is seeing a decentralised shift that does not wait for policy to catch up. Estimates of privately installed capacity run to several gigawatts, and the curve is steep.

This quiet revolt has two contradictory effects. It reduces immediate pressure on the grid by relieving demand and provides a measure of resilience for those who can afford the upfront cost. At the same time, it erodes the revenue base of Eskom and municipal distributors, who depend on selling electricity at regulated mark-ups to cross-subsidise services. In the short term, the system muddles through. In the longer term, it raises an uncomfortable question: who will finance the public grid if the most creditworthy customers increasingly bypass it?

Tariffs, Inequality and the Politics of Price

Nowhere is the intersection of energy and politics more visible than in electricity tariffs. Over the past decade, prices have increased far faster than inflation as utilities have sought to recover costs and pay down debt. For households and small businesses without access to private generation, electricity has become a volatile and sometimes unaffordable line item. For municipalities, electricity sales have long been a crucial source of own revenue; as more users self-generate, that model begins to crack.

The emerging risk is a two-tier energy system. On one tier sit households and firms with enough capital or credit to invest in solar and storage, insulating themselves from blackouts and tariff hikes. On the other sit millions who remain fully exposed to whatever combination of price increases, outages and service quality the transition produces. A reform that is technically sound but socially blind could deepen rather than alleviate South Africa’s already stark inequalities.

Winners, Losers and the Shape of the New Market

In the background of the transition, different constituencies are quietly calculating their likely positions in the new order. Large industrial users see an opportunity to secure long-term renewable contracts at predictable prices, reducing both energy costs and climate-related reputational risk. Renewable developers view grid unbundling as the key that unlocks a pipeline of projects that have sat in limbo. Financial institutions, wary after years of Eskom-related exposure, are cautiously returning through project-specific lending rather than utility-level balance sheet finance.

Others see mostly risk. Municipalities face the prospect of shrinking electricity surpluses and the fiscal stress that comes with it. Coal-dependent communities in Mpumalanga fear, with reason, that decarbonisation may arrive faster than credible alternatives for local jobs. Unions that represent Eskom workers worry that unbundling and private investment will translate into job losses and a weakening of labour’s bargaining position. The political economy of the transition is therefore not simply state versus market; it is an evolving contest between constituencies with very different timelines and tolerance for disruption.

Corruption’s Shadow Over the Transition

Any discussion of South African energy policy must contend with the shadow of corruption. The state capture era turned parts of Eskom’s procurement system into a machinery for extraction: inflated coal contracts, manipulated tenders and politically connected intermediaries. The risk in the current reform wave is not that such dynamics vanish, but that they migrate. Large transmission contracts, complex market-design consulting and new procurement lines for grid equipment all open fresh avenues for rent-seeking if oversight is weak.

That does not mean reform is doomed, but it does mean that institutional design matters. Transparent auction rules, clear separation between policy-making and procurement, and robust regulatory scrutiny are not technocratic luxuries; they are preconditions for ensuring that scarce investment ends up in steel and copper rather than in inflated invoices. A botched reform could leave South Africa with the worst of both worlds: a weakened Eskom, a partially functioning market, and a grid still riddled with governance failures.

A Regional System in Flux

South Africa’s power system has never been purely national. Through the Southern African Power Pool, it is connected to neighbours that export hydroelectricity, coal-fired power or surplus capacity when available. When Eskom falters, the ripple effects are felt in Mozambique’s project finance, Botswana’s coal ambitions and Namibia’s renewable integration plans. Conversely, a well-functioning South African grid can anchor a more integrated regional market, smoothing variability and providing scale for cross-border investments.

The transition now under way will therefore shape not only South Africa’s trajectory but the region’s. If the grid becomes more flexible, better interconnected and governed with a degree of predictability, it could underpin new industrial corridors and cross-border investments. If it remains congested and unstable, it will export uncertainty instead.

Breaking a Monopoly Without Breaking the System

The hardest part of South Africa’s energy transition is not closing old plants or commissioning new ones; it is managing the overlap between a dying monopoly and a nascent market. For a period, Eskom must remain strong enough to keep the system physically stable even as its dominance is eroded. The transmission company must grow rapidly without succumbing to the very governance weaknesses that undermined its parent. Regulators must allow prices to reflect costs while protecting the most vulnerable. And politicians must resist the temptation to treat every tariff decision or grid investment as a battlefield for factional struggles.

Success will not look like a perfectly liberalised textbook market. It will look like fewer and shorter blackouts, a gradual narrowing of the gap between those with backup power and those without, and a grid capable of absorbing the renewable capacity that investors are willing to finance. Failure would be easier to spot: a prolonged halfway house in which Eskom is too weak to anchor the system, the new market is too fragmented to replace it, and the country oscillates between crisis and patchwork fixes.

South Africa has reached a point where not changing the electricity system is no longer an option. The question that remains is whether it can change it in a way that preserves the grid while transforming the incentives around it. Breaking a monopoly is hard; doing so without breaking the system it once held together is harder still.