SA's energy crisis worsens due to aging infrastructure and overregulation

Key topics:Overregulation threatens South Africa’s solar energy expansionEskom’s reliability declines as coal plants age and sales dropRooftop solar users face high compliance costs and restrictions.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Myles Illidge.While South Africa’s power system has somewhat stabilised, solar energy company GoSolr has warned that the country faces an energy crisis deeper than load-shedding.This is according to its fourth Light Paper, which warned that overregulation and policy inconsistencies in the energy sector threaten the country’s progress in growing renewable energy capacity.“We are being over-regulated. In the last year, a raft of new policies and announcements have been introduced,” said GoSolr.It highlighted that regulators are penalising private solar users in South Africa. National policies require households to get a sign-off from a registered engineer for rooftop solar installations.“Consumers are being punished for trying to find better alternatives, despite our national energy provider not being able to keep up with demand,” it adds.“Instead of encouraging South Africans to invest in or consider alternative energy options, which would alleviate pressure on the grid, over-regulation is penalising us and putting further hurdles in our way.”GoSolr said it was unlikely that South Africa had seen the last of load-shedding, and policies that effectively penalise people for seeking alternatives pose a significant threat to future energy security.According to GoSolr CEO Andrew Middleton, the country risks regressing despite its progress regarding renewable energy adoption.“Our research shows that while other countries are accelerating their solar transitions, we are being held back by a tangle of regulations that penalise, rather than encourage, solar adoption,” said Middleton.The solar power firm pointed out that the Energy Availability Factor (EAF) is around 57%, against Eskom’s goal of 70%.“This is worse than 2024, and approaching 2023, which was a crisis year,” it stated.Despite Eskom’s significant improvements over the past year, the utility’s coal-fired power plants are ageing and prone to breakdowns, making reliability a major concern.The average age of Eskom’s coal-fired plants is 41 years, with a maximum lifespan of approximately 60 years. Therefore, equipment is prone to failure, resulting in capacity losses.According to Middleton, Eskom’s extensive financial issues and generation shortfalls mean it can’t currently, and likely will never again be able to produce enough energy to meet South Africa’s needs.Therefore, a crisis looms if South Africa can’t add sufficient capacity quickly enough, whether through renewables, gas-fired plants, or nuclear power..Eskom death spiral.Eskom faces an existential crisis in South Africa. The combination of customers moving to renewable generation and its substantial annual price hikes resulted in it selling less electricity each year.The power utility’s latest annual results revealed electricity sales had declined by 3% year over year — a trend expected to continue as more private sector renewable projects come online.According to Impower energy expert Matthew Cruise, Eskom’s electricity sales have declined substantially in the past decade, from 219,979GWh in 2015/16 to 183,311GWh in 2023/24.This trend appears to have accelerated in recent years. The intense load-shedding experienced in 2022 and 2023 led many residents to install solar power systems.Many businesses also choose to go off-grid by installing rooftop solar or signing power purchase agreements with private players to meet their electricity needs.This is a significant risk to Eskom, as the customers who can afford to install rooftop solar are also those who likely could reliably pay for the electricity they use.Therefore, many of Eskom’s customers who could pay for reliable electricity are not contributing to the utility’s revenue collection or have significantly reduced their reliance on the power utility.“Even if Eskom’s power stations were fully functional, it would still face declining energy use because customers are leaving the grid,” said Cruise.Moreover, experts have said that Eskom’s new tariffs for rooftop solar and registration requirements actively incentivise households to abandon the utility altogether.Some Eskom Direct customers impacted by the crackdown on solar installations reported being quoted between R27,000 and R50,000 to comply with previously undisclosed and unenforced regulations.According to EE Business Intelligence managing director and energy expert Chris Yelland, Eskom’s requirements for extra equipment and sign-offs give customers nothing in return.Many households have already spent considerable amounts installing solar power systems to reduce their reliance on the utility.“Let’s say they paid R150,000 and now Eskom says to them: you need to now pay another R30,000,” said Yelland.These customers can either choose to spend the R30,000 on Eskom’s requirements to continue using grid power when needed, or they can spend the money upgrading their system to go completely off-grid.For example, R30,000 could be spent on increasing battery storage or installing a generator to provide power during the extensive gloomy periods when these customers would need the grid.“People will say to Eskom: Go ahead. I want nothing further to do with you,” said Yelland. This article was originally published by MyBroadband and has been republished with permission.

SA's energy crisis worsens due to aging infrastructure and overregulation

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