South African companies, municipalities, and households are rapidly abandoning Eskom in favor of self-generation and private power agreements, marking a major shift in the country’s energy landscape. What began as a survival strategy against rolling blackouts has now grown into a structural transformation that could permanently weaken Eskom’s grip on South Africa’s electricity sector.
The evidence is clear: South Africa is experiencing one of its fastest-ever transitions away from a single power utility. Businesses are installing rooftop solar, municipalities are negotiating private electricity supply, and corporations are signing power purchase agreements (PPAs) with independent producers.
Data from the South African National Energy Regulator shows that rooftop solar installations surged by 349% between March and June 2023, climbing from 983 MW to 4,412 MW. This explosive growth has already eroded Eskom’s daytime electricity demand and reduced the utility’s revenues.
At the same time, municipalities like Midvaal in Gauteng are openly pursuing public–private partnerships (PPPs) to replace Eskom as their official power supplier, while major companies such as Nestlé, Pick n Pay, Anglo American, Sasol, and Seriti Resources are investing in their own solar and wind generation.
Also read: How South Africa Can Unlock 53 GW of New Power If It Builds 14,000 km of Transmission
Why Companies Are Ditching Eskom
1. Unreliable Supply
Eskom’s rolling blackouts, locally known as load shedding, have become one of South Africa’s biggest economic bottlenecks. Unplanned outages and maintenance delays have left businesses scrambling for alternatives. For many companies, uninterrupted electricity is no longer negotiable.
2. High and Rising Tariffs
Electricity tariffs have risen steeply in recent years, with Eskom seeking increases to cover its ballooning debt and operating costs. Many businesses now find it cheaper in the long term to invest in their own solar or wind systems than to remain tied to Eskom’s tariff hikes.
3. Technological & Policy Shifts
The rapid fall in renewable energy costs and the government’s liberalization of private generation, allowing projects up to 100 MW without licensing, have made it easier for companies to invest directly in energy solutions. This has opened the door for PPAs and wheeling arrangements, allowing firms to buy renewable energy from independent producers.
4. Financial Sustainability
Companies and municipalities see energy independence as a way to stabilize their finances. For example, Midvaal Municipality argues that moving away from Eskom will improve creditworthiness, infrastructure reliability, and service delivery.
Who Is Leading the Charge?
Nestlé and Pick n Pay
These household names are rolling out large-scale solar installations at factories and distribution centers, aiming to reduce both costs and reliance on Eskom. For multinationals, this aligns with global sustainability commitments as well as local operational security.
Mining Giants
Mining companies like Anglo American, Sasol, and Seriti Resources are investing billions into renewable energy projects. Seriti, one of South Africa’s largest coal suppliers, is even constructing wind farms to directly power its mining operations, an ironic but strategic move given Eskom’s dependence on coal.
Municipal Pioneers
Midvaal’s proposed 20-year PPP could become a blueprint for other municipalities. If successful, it will represent one of the most direct rejections of Eskom’s monopoly in decades.
Independent Energy Traders
New platforms such as EXSA and Ampli Energy are stepping in to facilitate energy wheeling, transmitting renewable energy from independent producers directly to corporate clients. This bypasses Eskom’s retail model while still using its transmission infrastructure.
Private Power on the Rise
South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has already delivered 123 projects generating about 6,200 MW, roughly 5% of the country’s electricity. While modest in national terms, this is growing fast.
In the third quarter of 2023 alone, 908 MW of private generation capacity was registered, 71% solar, representing R17.3 billion in private investment. These figures suggest that the private sector is filling the void left by Eskom’s failure to deliver reliable power.
What This Means for Eskom
The migration away from Eskom is not just a temporary response to blackouts, it poses a structural risk to the utility’s future:
- Revenue Decline: As more households and businesses reduce consumption, Eskom’s sales shrink, leaving it with less revenue to cover debt and operations.
- Debt Pressure: Eskom’s debt remains among the highest of any utility globally. Losing customers worsens its financial instability.
- Municipal Risk: Many municipalities rely on electricity sales for revenue. As businesses and households self-generate, municipal finances also come under strain.
- Grid Dependency: While Eskom still controls transmission, it faces a funding gap of around $21 billion to modernize and expand the grid, money it currently doesn’t have. Without upgrades, renewable projects could stall even as demand for private power rises.
While the exodus from Eskom is accelerating, challenges remain:
- Grid Bottlenecks: Many renewable projects face delays due to limited transmission capacity in areas rich in solar and wind resources.
- Regulatory Uncertainty: Although private generation rules have loosened, investors still complain of red tape and slow approvals.
- Energy Inequality: Wealthier companies and households can afford solar, while poorer communities remain dependent on Eskom’s unreliable supply.
- Political Resistance: Eskom is a state-owned enterprise, and its unbundling or weakening has political implications. The government must balance reform with protecting state assets.
Also read: Last-Mile Connectivity Lights Up Rural Kenya as REREC Expands the Grid
What to Watch Next
- Municipal Power Shifts: If Midvaal succeeds, other municipalities may follow suit, accelerating Eskom’s decline as South Africa’s default supplier.
- Corporate PPAs: Expect more headline deals as major corporations lock in renewable supply agreements to shield themselves from rising tariffs.
- Transmission Investments: The future of South Africa’s energy market hinges on whether Eskom and the state can secure funding to expand the national grid.
- Energy Trading Platforms: Firms like EXSA and Ampli could become major disruptors, reshaping how electricity is bought and sold.
