Power Sector Reform and Regulation
Unbundling Eskom, liberalising the power sector and reforming the distribution industry lays the foundation for reliable, affordable, and clean energy.
Project Highlights
SAGEN supports NECOM and the NTCSA in their consultation process on the South African market code with relevant stakeholders, such as NERSA, DMRE, DPE, NT and the Presidency.
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Relevant Publications
FAQ
What does “power sector reform” mean?
Power sector reform refers to the structural, regulatory and institutional transformation of a country’s electricity system. In South Africa, this encompasses three interconnected reform tracks: first, the extensive unbundling of Eskom and the establishment of a competitive electricity market; second, the fundamental reform of municipal electricity supply; and third, the modernisation and expansion of electricity grids to accommodate an increasing share of variable renewable energy. The legal basis for this reform has already been created with the amendment of the Electricity Regulation Act (ERA). The overarching goal is an electricity system that is better aligned in terms of competitiveness, security of supply, and climate compatibility.
Why is the electricity market reform necessary?
South Africa’s electricity system has been characterised by regular and, in some cases, massive power outages. The institutional, legal, regulatory and technical conditions for a competitive electricity market have not yet been fully created. A cost-effective restructuring of the electricity supply system is needed to create conditions for greater economic growth and to enable an accelerated expansion of renewable energy. Transparency in the sector is increasing through the unbundling of Eskom, the strengthening of the role of the National Energy Regulator of South Africa (NERSA) and the introduction of a competitive electricity trading platform. These reforms are necessary for South Africa to achieve its climate targets and to ensure a reliable and affordable electricity supply for its population.
What is the Electricity Distribution Industry (EDI) reform, and how is SAGEN contributing to it?
The Electricity Distribution Industry (EDI) reform refers to the fundamental reform of the electricity distribution industry in South Africa, which includes municipalities and Eskom Distribution. The difficult financial and capacity situation of many municipalities has a negative impact on the planning, expansion, operation and maintenance of distribution networks and thus on security of supply and customer satisfaction. The reform aims to enable selected cities and municipalities to fulfil their supply mandate for their citizens more efficiently and economically through comprehensive institutional, financial and technical restructuring. SAGEN supports the EDI reform by advising selected cities and municipalities on cost-of-supply analysis, cost-covering tariff design and institutional restructuring, and by supporting them in meeting the criteria for participation in the Metro Trading Services Reform.
Key Results
7033 MW of Capacity Registered with NERSA:
Resulted from pivotal support to Operation Vulindlela, specifically through the amendment of Schedule 2, which facilitated necessary changes and boosted renewable energy installations.
Dashboard of how many municipalities have submitted cost of supply studies
Through collaboration with Sustainable Energy Africa (SEA), assisted 40 municipalities in developing their Cost of Supply (COS) studies, significantly improving cost management and efficiency in the municipal energy sector.
Number of trainings conducted
Over 10 workshops conducted and served as crucial platforms for stakeholders to engage in key topics such as developing the market code, establishing the wheeling framework for electricity transmission regulations, and refining the electricity pricing determination methodology.
ERA Amendment Bill
The passing of the ERA Amendment bill marks a significant milestone in the reform of South Africa’s electricity sector, paving the way for a more efficient and sustainable power system.Through collaboration with Sustainable Energy Africa (SEA), assisted 40 municipalities in developing their Cost of Supply (COS) studies, significantly improving cost management and efficiency in the municipal energy sector.