Eskom in trouble: Why South Africans are ditching the power giant

Eskom

Cape Town – Eskom is reportedly facing mounting challenges as South Africa’s economy shifts away from energy-intensive industries like mining and manufacturing toward less electricity-dependent sectors such as banking and insurance.

According to Daily Investor, the Council for Scientific and Industrial Research (CSIR) revealed last week that electricity demand has been steadily declining for over a decade, with a 3% drop recorded in 2024 alone.

Rising electricity prices — averaging an 11% annual increase — have further pushed households and businesses to reduce consumption or seek alternative power sources.

The decline in demand is largely driven by the rapid expansion of private solar photovoltaic (PV) installations by businesses and households.

Engineering News reported that Eskom estimated over 6 GW of privately owned solar capacity had been installed by September 2023, spurred by the country’s persistent loadshedding crisis.

Eskom’s financial situation continues to deteriorate as its customer base shrinks, forcing it to raise tariffs, which in turn drives more users away. Over the past decade, electricity prices have risen at an average annual rate of 11%, more than double the average inflation rate of 5%.

With a 12.74% price hike set for April 2025, the average tariff will reach 195.93c/kWh, up from 117.50c/kWh in 2014 (adjusted for inflation).

Large industrial consumers, who were once reliable payers, are either scaling back operations or switching to independent energy sources, posing a significant threat to Eskom’s financial sustainability.

Daily Investor noted, “With large electricity users, such as miners and manufacturers, reducing their operations in South Africa or switching to alternative energy sources, Eskom is effectively faced with a declining customer base.”

Energy analyst Chris Yelland has suggested that Eskom must reinvent itself, improve efficiency, and adapt to a competitive electricity market under the new Electricity Regulation Act.

“We are busy creating a competitive electricity market. There is a new Electricity Regulation Act that allows for an open market, and that is going to be the new playing field,” Yelland was quoted as saying.

“The whole intention is to dismantle Eskom’s monopoly because it is failing us. We can see Eskom losing its dominance and its 95% share of the generation market,” he added.

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