South Africa’s Power Market Reset Enters Critical Implementation Phase in 2026—Outlook

South Africa’s energy sector went through a major shift in 2025, and 2026 is now shaping up to be the year when these changes are tested on the ground. The most important development was the start of the Electricity Regulation Amendment Act on January 1, 2025. This law marked the end of South Africa’s long-standing electricity monopoly and opened the door to a competitive, multi-market power system. A key part of this reform is the creation of an independent Transmission System Operator, which will manage the national grid and buy power from different producers instead of a single state-controlled entity.

While 2025 focused on building the legal and policy framework, the real challenge will come in 2026 as the country begins implementation. One of the biggest milestones expected this year is the launch of the South African Wholesale Electricity Market in April 2026. This new market will run under a market code that clearly sets out how generators, traders, and other participants will buy and sell electricity. For the first time, private power traders will be able to operate in a structured wholesale market. Although it will take several years for this system to fully mature, the launch itself signals a clear move toward open competition and price discovery.

Another long-standing issue that saw progress in 2025 was the transmission bottleneck. For years, limited grid capacity has delayed new renewable energy projects, even when generation capacity was available. New transmission regulations released toward the end of 2025 now allow private companies to build and operate high-voltage transmission lines. This is a major shift, as the country needs more than 14,000 kilometers of new lines over the next ten years to support future energy demand. The first large-scale private procurement process for transmission infrastructure is expected to begin in the third quarter of 2026.

The year ahead will also see movement in other energy segments. The Gas Independent Power Producer Procurement Programme, which had remained stalled for a long period, was revived in late 2025. This programme aims to bring liquefied natural gas into South Africa to support energy security and grid stability. Final project submissions are due in May 2026, making this a key area to watch. At the same time, battery energy storage systems are no longer seen as optional. With solar and wind forming a growing share of the energy mix, batteries are becoming essential to manage supply fluctuations and help power producers meet delivery commitments.

Despite the progress, tensions remain. During 2025, Eskom raised objections to the rapid issuing of electricity trading licenses to private players. The utility warned about regulatory gaps and the risk of private companies focusing only on profitable customers. Some legal actions were paused to allow regulators time to refine the rules, but these disputes show the friction between the old monopoly structure and the new competitive market.

As 2026 unfolds, increased deal-making is expected across the sector. Local and international investors are likely to merge, acquire, and reorganize assets to stay competitive under the new rules. Emerging areas such as offshore wind are also moving closer to formal policy guidelines and project announcements. The overall success of South Africa’s energy transition will depend on how smoothly these reforms are implemented and how effectively both the government and private sector adapt to a more open and competitive electricity market.