Engineering the future
South Africa’s electricity sector – what to expect in 2026 Mzukisi Kota, Mlungisi Mahlangu, Jason van der Poel (Partners), Kiera Bracher, Sabeeha Loonat and Junaid Nyker (Associates) at Webber Wentzel
The authors, from left: Mzukisi Kota, Mlungisi Mahlangu, Jason van der Poel (Partners).
2 025 presented key trends signalling a fundamental reset in South Africa’s electricity sector, and 2026 is the year in which many of these reforms are expected to begin taking practical e ect. With market rules nearing finalisation, infrastructure procurement advancing and new technologies gaining prominence, 2026 will test how well the sector can move from preparation to implementation. ERAA: moving towards a competitive electricity market The Electricity Regulation Amendment Act 38 of 2024 (ERAA) came into force on 1 January 2025, marking the formal start of South Africa’s shi from a vertically integrated monopoly to a competitive, multi-market electricity sector. The act establishes the Transmission System Operator (TSO) which will have responsibility for system operation, market operation and transmission operation, and be the central purchasing authority. This represents the most significant structural reform in the sector since Eskom’s inception a hundred years ago. The ERAA expands NERSA’s regulatory mandate, introduces broader ministerial discretion on new capacity determinations, and opens a pathway for willing-buyer-willing-seller arrangements through competitive trading. However, some ambiguities around tari approvals and the definition of ‘direct supply agreements’ create early interpretive challenges. 2025 served as the structural turning point enabling South Africa’s transition towards a competitive electricity market. 2025 also revealed critical institutional tensions around municipal roles, tari oversight, and ministerial discretion. SALGA’s concerns over municipal reticulation led to the delay on certain ERAA definitions, and potential litigation remains on the horizon. Market Code to unlock competitive electricity trading The latest dra of the Market Code, published in July 2025, contains dra operational rules for the South African Wholesale Electricity Market (SAWEM) to be administered by the Market Operator within the TSO. It defines the roles of Parties, Balance Responsible Parties, and Market Participants, and establishes the framework for Day-Ahead, Intraday, Reserve, and Balancing markets. The five-year transition timeline targets a market start
date of April 2026, with full operation by 2031. Final approval of the Market Code is expected early in 2026, enabling SAWEM’s planned April 2026 launch and allowing participants to begin formal market registration and onboarding. There is a possibility that the launch may be delayed, and private sector participants are likely only to be admitted as functional market participants in years to come. Transmission regulations and new infrastructure A major breakthrough in 2025 was the publication of the Transmission Regulations on 31 October, providing long-awaited clarity on how new transmission capacity will be procured under ministerial determinations. The regulations formalise a build-operate-transfer model, introduce value-for-money transmission service agreements and provide a clear methodology for how private transmission infrastructure developers will recover their costs. This regulatory step is critical to breaking state monopoly on grid infrastructure and enabling private sector investment in grid expansion – a necessity given the 14 500 kilometres of new high- voltage lines identified as needed in the next ten years, in the Transmission Development Plan, and the 1 164 kilometres of new lines already determined for procurement through the first phase of the Independent Transmission Infrastructure Procurement Programme, for which an RFP is expected in the third quarter of 2026. The Gas Independent Power Producer Procurement Programme Aer many delays and what seemed to be a false start, the Gas IPPPP appears to have been resuscitated and is set to be one of the more significant events in the energy market in 2026. The Gas IPPPP was initially launched by government in December 2023 and has been largely stalled over the past two years. The Department of Electricity and Energy has made key revisions to the Request for Proposals and relaunched the procurement process in October 2025, with a submission deadline of 29 May 2026. The revisions address some of the key issues identified by the market as hurdles to the likely bankability of projects and significantly increased the likelihood of a viable anchor for the entry of imported LNG into the South African market. Interestingly, while it is widely accepted that this procurement is a key enabler for the import of gas and the construction of the required infrastructure, the participation of domestic gas resources is not excluded, and this could enable some commercialisation of domestic gas opportunities over time.
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MARCH 2026 Electricity + Control
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