Electricity trading in South Africa, as Etana Energy CEO Evan Rice explained recently, is at once active and in transition. Just how active is reflected in a report commissioned by the South African Energy Traders Association and compiled by research firm Krutham.

The report includes results from a survey conducted in February, showing that of the 4.7 GW of private-contracted power projects to have reached financial close in the period from 2023 to end-2025, projects with a combined nameplate of 2.6 GW, representing 56% of this category of projects, were underpinned by contracts with eight traders.

The results also show how the momentum is building, with most of the more than 1 GW in new projects to have achieved financial close in 2025 having been backed by trader offtake commitments. This is a significant shift from only two years earlier, when the majority of the 2.1 GW that reached financial close in 2023 were in the form of bilaterals between independent power producers (IPPs) and large consumers. The trend looks poised to continue, with the traders surveyed indicating that they have an 18 GW pipeline of advanced projects.

In a context where South Africa requires significant generation investment ahead of the retirement of aged coal capacity in 2030, the fact that trader-linked projects are proceeding and the pipeline is strong is significant. Without offtake commitments from traders, many projects would otherwise need to wait for procurement under a government-led procurement programme, or would have to navigate a shrinking list of single offtakers willing to enter into multidecade power purchase agreements.

In other words, traders are already playing an important role in closing supply/demand gaps by providing the security of demand required for an IPP to proceed with a utility-scale venture by aggregating smaller customers that could never secure such a deal individually with an IPP.

Yet, electricity trading is also very much in transition, as was on clear display during recent hearings hosted by the National Energy Regulator of South Africa (Nersa) into trading rules.

At the hearings, Eskom and the South African Local Government Association, which are wary of traders, raised several technical, commercial and legal problems with the rules. In the background, too, is Eskom’s case against Nersa’s licensing of five traders in 2024, which remains live notwithstanding Eskom’s commitment to engage constructively with the regulator’s consultations for setting the rules that are fair and balanced. Eskom also used the recent hearings to explicitly state that it reserved its legal rights in relation to the rules under deliberations, while calling for a workshopping process to overhaul the framework.

Ultimately, it will be crucial for South Africa to land on a solution that takes Eskom’s legitimate concerns into account. But without placing unworkable constraints on the role of traders in efficiently matching supply and demand in a way that unlocks private balance sheets, provides visibility of the true cost of energy (separated from any policy-related costs), and leverages competition to achieve the lowest cost of electricity possible.