The ministerial approval of State-owned power utility Eskom’s revised unbundling strategy in December, which included the formal creation of its independent subsidiary Eskom Green, signals a major structural shift in South Africa’s electricity sector that will fundamentally alter the landscape for commercial and industrial (C&I) energy consumers.

Specialist engineering, procurement and project management contractor IMPOWER, a business-to-business energy solution provider, views the establishment of an independent Transmission System Operator (TSO) and the acceleration of competition as a critical opportunity for businesses to secure stable, cost-effective and green power solutions through private-sector solar adoption.

The unbundling separates Eskom into multiple entities, replacing the historic monopoly with a structure aiming for a competitive market by 2030.

According to IMPOWER’s business development executive Matthew Cruise, the introduction of a “truly independent TSO” is the most crucial element for private-sector investors.

“The TSO will operate on the basis of accepting the cheapest electricity first, bringing down the price for the end consumer over time,” he says.

“Previously, the transmission function, a subsidiary of Eskom, was a player and referee in the same game, creating an uneven playing field. The TSO removes that conflict of interest and is the hallmark of a developed, competitive electricity market, giving businesses real choice.”

The C&I sector – comprising retail centres, manufacturers, industrial parks and commercial properties – is currently driving the uptake of renewable energy in South Africa.

Cruise stresses that renewable contracts are now priced at roughly half of Eskom’s escalating grid tariffs, which have increased by about 190% since 2014.

Solar PV currently holds the largest share – at about 49.8% in 2024 – of the country’s utility-scale renewable energy market.

Amped Up

The Eskom unbundling is set to amplify this trend, providing three major benefits to C&I businesses considering private solar investment, says Cruise.

The first benefit is that the TSO’s mandate to procure the cheapest power first will introduce competitive pricing across the board, gradually stabilising or lowering tariffs for grid power in the medium to long term.

“However, private solar solutions remain the immediate route to price certainty. [Moreover], the TSO will first buy from the cheapest Independent Power Producers (IPPs), and in South Africa, private operators are typically much more cost-effective than State-owned entities, owing to lower operational costs and the absence of excessive supply contracts,” Cruise explains.

Secondly, the TSO is designed to be fully independent, reducing the risk of Eskom subsidiary, the National Transmission Company of South Africa (NTCSA), favouring Eskom generation assets, including the newly formed Eskom Green, for grid access.

The independent operation of the TSO facilitates and de-risks the process of energy “wheeling”, allowing a company to purchase power from a private IPP in a different location, injecting it into the grid, and receiving a credit for that power at its consumption point.

“This is essential for large enterprises with multi-site operations,” states Cruise.

Finally, the legal and institutional clarity provided by the unbundling, especially the establishment of the TSO, is expected to attract greater investment into the South African energy sector, further stimulating competition and capacity growth.

The NTCSA has already set out a Trans-mission Development Plan to build nearly 14 000 km of new transmission lines over the next ten years to accommodate new capacity, which is critical for renewable energy connection.

While the establishment of Eskom Green introduces a direct competitor to existing IPPs, Cruise notes that the new market structure will require even Eskom’s subsidiary to operate within a fairer, legal and regulatory backed system.

“The ultimate beneficiary of this competition will be the end consumer, businesses and households, who will have multiple options and a reduced reliance on a single provider,” he says.

IMPOWER advises C&I clients to accelerate their shift to decentralised solar and storage solutions now, as the cost of electricity from Eskom will only start coming down after three to five years.

“This will enable the business to capitalise on tariff savings that can free up capital for further investment and secure long-term energy resilience against grid instability and future tariff hikes,” concludes Cruise.