The economy has relied on state-owned Eskom 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 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 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 shows. Inflation over that period was 215, it said.