Electricity prices in South Africa continue to climb, reflecting structural pressures across the country’s power system rather than short-term market fluctuations. For instance, Eskom direct customers saw a 12.74% increase in tariffs for 2024/25, with further increases of 8.76% and 8.83% approved for 2026/27 and 2027/28 respectively. These increases have consistently outpaced inflation, which has hovered around 5-6% for over a decade.
Rising tariffs are being shaped by maintenance costs at ageing coal plants, investment requirements for new infrastructure, and the precarious financial position of Eskom, which carries a debt burden of over R400 billion.
Utilities across the world face similar challenges during energy transitions. In South Africa’s case, however, legacy infrastructure constraints make tariff adjustments particularly sensitive for households and industrial users alike.
Coal-fired power stations still supply approximately 80% of electricity generation nationally. Maintaining these facilities requires significant capital expenditure as components age and efficiency declines. The average age of Eskom’s 15 coal-fired plants is now 42 years, exceeding their typical design life of 30-40 years.
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This aging fleet contributes to a low Energy Availability Factor (EAF), which was around 57-58% in early 2025, significantly below the historical norm of over 70% . At the same time, new renewable generation must be integrated into the grid, creating additional transmission investment requirements. South Africa needs an estimated R440 billion over the next decade to expand its transmission infrastructure to accommodate these new energy sources.
These parallel cost pressures affect pricing structures. Industrial consumers are increasingly signing private renewable power purchase agreements to manage exposure to tariff increases. This shift is gradually changing how electricity demand interacts with the national grid.
Global fuel price volatility is also influencing costs. Although renewable generation reduces exposure to imported fuels over time, legacy thermal generation continues to shape short-term electricity pricing dynamics across the system.
Regulators are balancing multiple objectives. Tariffs must support infrastructure investment while remaining affordable for households already facing rising living costs. This creates a complex policy environment where pricing decisions carry both economic and social implications. Electricity pricing trends will likely remain central to South Africa’s broader energy transition strategy over the coming decade.
By Thuita Gatero, Managing Editor, Africa Digest News. He specializes in conversations around data centers, AI, cloud infrastructure, and energy.
