Eskom Is Being Replaced as Private Power Takes a Bigger Role in South Africa

South Africa's latest Integrated Resource Plan (IRP) shows that private-sector electricity generation is expected to outpace both government-procured independent power projects and new generation capacity planned by Eskom over the coming years.

The shift comes as Eskom prepares for the retirement of around 8GW of coal-fired generation capacity between 2029 and 2030.

To fill the gap, a pipeline of approximately 13GW of private generation capacity is expected to come online by 2029. These projects have already secured permits and licensing and are at advanced stages of securing grid access.

By comparison, government programmes are expected to procure around 5.7GW of additional capacity during the same period, while Eskom has approximately 4.4GW of committed new capacity.

The country's energy transition is therefore increasingly being driven by private investment.

Why private power is growing

South Africa's energy crisis and years of load-shedding have encouraged businesses and households to look for alternatives to Eskom.

Rooftop solar, private renewable-energy projects and power purchase agreements have become increasingly common, particularly among businesses that need reliable electricity to operate.

The trend has also contributed to a decline in Eskom's electricity sales. Earlier analysis showed that Eskom's electricity sales had fallen significantly from their 2015/16 peak as businesses and households increasingly turned to alternative energy sources.

The change does not necessarily mean that Eskom is disappearing. Instead, it points towards a future in which electricity generation is shared between Eskom and a growing number of private producers, while Eskom's role in the electricity system continues to evolve.

A major shift for South Africa's energy market

The move towards private generation represents one of the biggest structural changes in South Africa's electricity market in decades.

For businesses, more private generation could mean greater access to reliable electricity and less exposure to Eskom-related supply disruptions.

For Eskom, however, the growing number of customers generating their own electricity presents a significant challenge. As some of its largest and most reliable-paying customers reduce their dependence on the utility, Eskom's electricity sales and revenue base could come under further pressure.

At the same time, the retirement of ageing coal stations means South Africa needs enough new generation capacity to prevent a return to electricity shortages.

The country's future energy system is therefore likely to look very different from the one South Africans have known for decades, with private companies playing an increasingly central role in keeping the lights on.