South Africa powers up: New electricity market set to boost choice and cut costs

Key topics:South Africa launches competitive electricity trading marketRMB backs energy traders and grid expansion projectsR440B needed for 10-year power line rollout across the country.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. .By Adelaide Changole.South Africa is on the cusp of starting a traded electricity market that will give consumers a choice of power products along with a range of pricing options, according to a top investment bank. Africa’s most industrialized economy has relied on state-owned Eskom Holdings SOC Ltd. for the bulk of its electricity supply for more than a century. Mismanagement and underinvestment at the utility led to record outages in 2023, causing government to allow private companies to build power plants of any size to meet their own needs and to sell to the grid.Now the country has opened the market to licensed traders, an area FirstRand Ltd. unit Rand Merchant Bank is backing.“It’s the beginning of a traded electricity market in South Africa,” Judy Kobus, head of infrastructure sector solutions at RMB, which is providing financing solutions to traders, said in an interview in Johannesburg.South Africa’s energy regulator has so far licensed 10 traders, who will create a market-orientated pricing structure that will allow consumers to choose their own electricity supplier based on price. Among them are closely held Green Electron Market, Discovery Green, CBI Electric Apollo and Africa GreenCo, as well as Eskom’s own National Transmission Co. RMB also expects the move to reduce the cost of energy. Electricity pylons near the Eskom Holdings SOC Ltd. Kendal coal-fired power plant in Mpumalanga, South Africa.Electricity prices in South Africa increased more than eightfold between 2008 and 2023, data from the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University near Cape Town shows. Inflation over that period was 215%, it said..Read more:.Power shift: How Act’s amendments ushers in new era for electricity in SA – Webber Wentzel.RMB’s Infrastructure Sector Solutions, which facilitated 40 billion rand ($2 billion) of renewable energy projects in its last financial year, also plans to invest in upgrades to the grid to boost connection capacity. South Africa’s constrained transmission network has limited the number of renewable power plants that can be built.“We’ve engaged with government” and clients on “what this transmission rollout might look like, what type of support might be required,” said Kobus. “We are also crowding in international players who are very experienced on the technical side of transmission lines and so forth, and looking to bolster the capacity that the country has.”The government is looking for investors to help build 1,164 kilometers (723 miles) of transmission lines in a pilot phase as part of a bigger project that will see the rollout of 14,218 kilometers of power lines over the next decade at a cost of more than 440 billion rand..The RMB division is also planning to invest in South Africa’s dilapidated freight-rail lines by supporting the procurement of rolling stock and financing the concessioning, Kobus said. South Africa’s coalition government is seeking as much as 3.2 trillion rand from the private sector by 2030 to help upgrade roads, ports and other infrastructure to expand the economy that’s grown at less than 1% a year on average for more than a decade. Outside of South Africa, RMB is eyeing a broad range of deals. In the past year, it closed airport transactions in Senegal and Ghana and railway deals in Nigeria and Tanzania. It also expects to close a terminal deal in Namibia soon, Kobus said.“Ports, railway, and also airports, have been quite a theme in the broader continent, she said, adding that RMB is seeing “a lot of opportunities in the transport sector specifically.”.© 2025 Bloomberg L.P.

South Africa powers up: New electricity market set to boost choice and cut costs

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