South Africa’s energy sector is undergoing a monumental shift.
From a long-standing state-owned monopoly, we’re moving towards a more diversified and competitive market. It’s a complex environment, but understanding the key players makes it much clearer. Let’s explore who’s who and how they all fit together.
The architects of policy: Government & frameworks
At the top, we have the government bodies shaping the future of energy:
- Department of Electricity and Energy (DEE): Recently established on 30 June 2024 (after separating from the Department of Mineral Resources and Energy), the DEE now solely focuses on energy policy. Its role is to regulate, transform, and promote a sustainable and affordable energy sector.
- Integrated Resource Plan (IRP): Think of the IRP as South Africa’s energy blueprint. This ‘living document’ outlines our national electricity demand and supply, detailing generation and expansion programmes.
- Just Energy Transition Partnership (JETP): This is a significant multinational initiative. International partners, including the EU, France, Germany, the UK, and the Netherlands, are financially supporting South Africa’s decarbonisation efforts, particularly the phase-out of coal. The JETP drives crucial reforms, focusing on social justice concerns like job displacement and equitable energy access.
The core operators: Powering and delivering electricity
These are the entities directly involved in generating, moving, and supplying electricity to you:
- Eskom Holdings SOC Ltd: Eskom is South Africa’s primary electricity utility, historically responsible for electricity generation, transmission, and most distribution. Eskom is central to the entire system. All wheeled energy, whether from independent generators or traded by companies like EXSA, relies on Eskom’s transmission and, in many cases, distribution infrastructure.
- Independent Power Producers (IPPs): These are private companies that generate electricity, increasingly from renewable sources like solar and wind farms. IPPs are vital for diversifying our energy mix and attracting private investment, approved for a significant portion of future power generation capacity. They connect to the national grid or municipal networks and play a key role in increasing green energy supply.
- Municipalities: Over 180 municipalities across South Africa hold licences to distribute electricity within their local areas. They purchase electricity, often from Eskom, and deliver it directly to residents and businesses. Their role is evolving, with new legislation allowing them greater flexibility in directly procuring power from IPPs or licensed traders.
- Electricity traders (like EXSA): This is where companies like EXSA come in. We are licensed entities that buy electricity directly from generators, and then sell it to end-users such as corporates, industrials, and SMEs. We don’t necessarily own the power plants or the national grid, but we leverage them. Our role is to simplify the complex process of renewable energy procurement by aggregating power from multiple sources, managing risks, and offering tailored, flexible contracts to suit your specific energy needs.
The rule keepers & enablers: Regulators & legislation
Ensuring fair play, safety, and orderly development are these crucial bodies and laws:
- National Energy Regulator of South Africa (NERSA): NERSA regulates the electricity, piped-gas, and petroleum pipelines industries. Their core functions include issuing licences (like EXSA’s electricity trading licence), setting and approving tariffs, and enforcing compliance.
- National Nuclear Regulator (NNR): This body provides essential oversight for nuclear safety at facilities like Koeberg Power Station.
- Grid and Distribution Codes: These are the essential technical rulebooks for the electricity system. The South African Grid Code governs the operation and connection requirements of the high-voltage national grid, ensuring its security and reliability. The South African Distribution Code sets the rules for operating on the local, low-voltage networks – the grids run by municipalities or Eskom’s Distribution division. As a licensed electricity trader, EXSA must adhere to both of these codes, a critical aspect that assures orderly and compliant operations.
- A New Market Code & Trading Rules: While the existing codes govern the technical side, a new Market Code and new Trading Rules are now being finalised to govern the commercial side. These will define how all participants – from generators to traders – buy and sell electricity in a competitive environment, ensuring fair and transparent financial settlements.
- Electricity Regulation Amendment Act (ERAA): Effective 1 January 2025, this landmark legislation is transforming the electricity sector from Eskom’s monopoly to an open, competitive market. It allows private enterprises like EXSA to participate directly, giving consumers more choice of electricity providers. The Act also mandates the establishment of an independent Transmission System Operator (TSO) which will manage the grid and facilitate this open market.
- Electricity Pricing Policy (EPP) & tariff adjustments: South Africa is actively reviewing its electricity pricing framework. NERSA approves tariff adjustments to ensure cost recovery and grid sustainability, with ongoing efforts to make electricity more affordable.
The supporting network: Industry stakeholders
Beyond the core operational players, a robust network of organisations supports and influences the energy sector:
- Energy Council of South Africa: A CEO-led initiative acting as the “collective, unified voice of the energy sector,” driving alignment for a sustainable energy future and Net Zero by 2050.
- South African National Energy Development Institute (SANEDI): Tasked with reviewing the electricity pricing framework to reduce costs and improve energy access, and exploring how lower renewable energy costs can offset coal-based generation.
- Energy efficiency bodies: Organisations like the Southern African Energy Efficiency Confederation (SAEEC) promote energy efficiency, offer audits, and assist with compliance and incentives.
- Consumer advocacy groups like the National Consumer Commission (NCC) and the Consumer Goods and Services Ombud (CGSO) provide general consumer protection, which becomes even more vital as the energy market opens up and consumers gain more choice.
- Other industry associations such as the South African National Energy Association (SANEA) which fosters collaboration among diverse energy stakeholders.
- Other industry associations such as the South African National Energy Association (SANEA), which fosters collaboration among diverse energy stakeholders; the South African Electricity Trading Association (SAETA), which is dedicated to supporting electricity traders; the South African Wind Energy Association (SAWEA), which promotes the interests and growth of the wind power value chain; and the South African Photovoltaic Industry Association (SAPVIA), which focuses on developing and growing the country’s solar PV market.
Your Guide to a Brighter Energy Future
This dynamic environment is steadily moving towards a more diverse, secure, and sustainable energy future. Understanding these interconnected roles helps to demystify the system and shows how each player contributes to the bigger picture.
At EXSA, we operate at the heart of this evolving landscape. As a long-standing NERSA-licensed electricity trader, we leverage our expertise to simplify this complex environment for you, providing seamless, sustainable, and cost-effective renewable energy solutions. We’re here to help you make sense of it all and power your business forward.
Ready to explore how EXSA fits into your energy journey? Contact us today to learn more about our renewable energy solutions.