In the wake of the global fuel shortage, diesel and petrol prices rose in May, marking the highest increase on record in years. Coupled with this, Eskom implemented substantial electricity price hikes from April 2026. For South African businesses, these indicate a rapidly approaching crisis: a severe fuel shortage, with predicted record-high price hikes, as well as rapidly increasing electricity costs – all amid a significant overhaul of our current energy landscape.
The current global energy shock is a clear and present danger to profitability and stability. Commodity-heavy users such as manufacturing, heavy industrials, mining, logistics and utility-scale operations will be especially impacted. But the constraints on the bottom line will be felt by all local companies, as operational input costs will soar across the board.
Business leaders must no longer classify energy as an operational cost, but rather a strategic risk. And the most effective way to hedge against this risk is to reduce dependency on fossil fuels and lock in price certainty. By switching to affordable, predictable renewable energy solutions, businesses can build a defence against volatile, rising fuel costs to secure their financial future.
Economic fragility threatens business sustainability
Economists warn that the ongoing war in the Middle East – and subsequent oil shortages – could see fuel prices rise cumulatively by approximately R7.20 per litre for petrol and almost R14 per litre for diesel over the next three months, leading to longer-term pain for businesses.
These hikes are severely destabilizing for businesses. Werkmans recently penned a note explaining that fuel is a uniquely systemic input, as it supports logistics, distribution, production, and service delivery across much of the economy. When it increases, the firm explains that businesses feel the pressure immediately through increased operating costs, as there is no wiggle room to defer without significant operational consequences. Conversely, when other operating costs increase, they can often be postponed for a period to buy some much-needed time for contingency plans.
The fuel shortage has hit in an environment where businesses already have limited liquidity cushions, exposing weaknesses and accelerating them quicky. In addition to this, price volatility derails effective planning. In this context, the risk of widespread insolvency and reduced competitiveness is very real. Coupled with this, the biggest enemy to business profitability is volatility.
While big business in South Africa is keenly aware of the risk of being dependent on diesel, moves toward alternatives have not always been quick enough. But the current shortages have further exposed this vulnerability, highlighting the need for cost certainty wherever possible.
Renewables offer a practical hedge against energy constraints
From loadshedding to ongoing fuel price volatility with every geopolitical shock, South Africa is well-versed in energy security concerns. But the crisis has inadvertently also made more progress in terms of energy transition than years of policy advocacy, making the economic benefits of renewable energy evident to businesses and homeowners. With diesel costing upwards of R20 per litre, and 9% increases on unreliable electricity from the grid, solar power generation can be accessed commercially in some cases for below R1 per kWh. Globally, Irena Advisory cites that 85% of new renewable power is cheaper than fossil fuel alternatives.
Energy transition is therefore no longer an ESG cost to sleep easy at night, but a critical financial hedge. According to Eskom data, rooftop solar PV increased by 190% over 3 years to Dec 2025. And this was motivated almost exclusively by load shedding impacts, not environmental considerations.
Energy wheeling an attractive commercial tool
Critically for businesses, energy traders offering renewable solutions that combine wind or solar with battery storage are increasingly able to offer a reliable electricity supply and consistent pricing, often at a lower cost than most fossil fuel generation.
This is done through the process of energy wheeling, where companies buy customised solar and/or wind kWh and have it delivered across the grid to their sites. While businesses can deal directly with an IPP to do this, contracting directly with an energy producer is a complex contractual and administrative undertaking for a company. Energy traders move into the middle by entering into long-term agreements with multiple IPPs to bulk-buy power for on-selling, thereby assuming certain risks on behalf of the end consumer and providing another route to market for IPPs.
For big business who face direct production losses from Eskom outages and unpredictable supply, wheeling offers improved energy security and reduced operational risk. Wheeled energy from solar and wind producers – often with storage capacity – is bundled according to customized business needs to ensure a reliable power supply.
In addition to the business benefit of a predictable power supply, wheeling offers an increasingly important aspect – price certainty and competitiveness. Many energy traders and market participants attempt to achieve kWh rates substantially below Eskom/municipal industrial tariffs, with some case studies demonstrating that wheeled PPAs can be significantly cheaper. While this is contingent on how the PPA is negotiated, the business’s existing tariff band, and wheeling charges, savings of up to 50% can be realised.
Critically, wheeling offers a solution to the current energy cost volatility by offering long-term protection against tariff creep. When companies sign a wheeling agreement, they secure steady energy costs during the contract period and protect themselves from unexpected price hikes approved by NERSA. This eliminates volatile fuel and tariff risks, giving CFOs a long-term planning horizon. Although recent tariff decisions suggest future increases might be less steep, ongoing financial challenges at Eskom make it unlikely that electricity prices will decrease.
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