Looming Eskom tariff hike: Making sense of energy independence for South African businesses
Image: Supplied
The National Energy Regulator of South Africa recently approved average tariff increases of 12.74% for Eskom direct customers (effective April 1, 2025) and 11.32% for municipalities (effective July 1, 2025). These adjustments, coupled with structural changes to tariffs, including an overall increase in fixed charges and winter energy time-of-use peak energy charges for large industry, mining, and commercial customers, are forcing businesses to re-evaluate their energy strategies.
The current energy climate in South Africa presents both challenges and opportunities for businesses.
The reality of persistent tariff increases and the ongoing need for energy security means that relying solely on Eskom is no longer a viable long-term strategy for many industrial and commercial operations.
Businesses are also facing a threat of tariffs being added to goods they export to the EU and US, should those goods be produced through 'dirty' energy sources such as Eskom's coal station dominated generation portfolio. The Carbon Border Adjustment Mechanism (CBAM) tariff will increasingly drive businesses to switch to clean, renewable energy in their production process.
Internal competition between the manufacturers of solar panels in China is good news for local businesses, as this keeps driving down the cost of the panels. It makes going solar an entirely affordable option, but we recommend making this move only after careful consideration and planning.
Moving from grid-dependency to solar independence
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Next
Stay
Close ✕
The decision to move off-grid through solar PV is a strategic one, driven by several key factors: Cost certainty and savings: While the initial investment in a solar PV system is a significant consideration, it offers long-term cost predictability and substantial savings. Unlike volatile Eskom tariffs, solar energy provides a hedge against future price hikes. The upfront costs are increasingly offset by rapidly decreasing solar panel prices and various financing options, including power purchase agreements, green energy loans, and attractive tax incentives. Going the financing route enables businesses to receive immediate net-monthly savings with solar and lock in stable electricity price increases, without spending any money.
Energy security and resilience: A well-designed solar PV system, particularly a hybrid or off-grid solution with battery storage, provides a reliable and continuous power supply, mitigating the impact of outages, 'load reduction' and ensuring business continuity.
A well-designed solar PV system, particularly a hybrid or off-grid solution with battery storage, provides a reliable and continuous power supply, mitigating the impact of outages, 'load reduction' and ensuring business continuity. Environmental responsibility and brand reputation : Adopting solar demonstrates a commitment to sustainability and reduces a company's carbon footprint. This not only aligns with global environmental goals but also enhances brand reputation.
Adopting solar demonstrates a commitment to sustainability and reduces a company's carbon footprint. This not only aligns with global environmental goals but also enhances brand reputation. Increased property value and tax benefits: Investing in solar energy systems can significantly increase property value. SA Revenue Service (Sars) offers the 12B Solar Tax incentive for businesses investing in renewable energy, which enables a 27% rebate from Sars of the total cost of their solar system. Large Carbon Dioxide emitters also benefit by reducing their carbon tax, which will become increasingly more expensive from 2026 onwards, as phase 2 of the Carbon Tax Act comes into effect.
Key considerations for businesses:
Businesses considering the transition to solar need to assess the following:
Energy consumption profile: A detailed analysis of current electricity usage patterns is crucial to determine the optimal size and type of solar PV system.
System type:
Grid-tied systems: Connected to the Eskom grid, these systems reduce reliance on Eskom and can feed excess power back into the grid, potentially earning credits. They are generally the most cost-effective entry point.
Hybrid systems:
Combining solar panels with battery storage, these offer greater energy independence and backup during outages while still leveraging grid connection.
Off-grid systems:
These systems provide complete energy independence, eliminating reliance on Eskom entirely. They typically involve solar panels, significant battery storage, and often a generator as a backup. Financial investment and ROI: Businesses must evaluate the initial capital outlay against the projected energy savings and potential return on investment (ROI), which can be recovered over a relatively short period given the long lifespan of solar panels. Tax incentives: Sars offered several incentives to encourage solar installation, but the structure has changed and Cruise there is a real chance that they will fall away from the 1st April 2026. This puts a time pressure on installations to happen this year still, before incentives fall away potentially. Financing options: Explore various financing models, including outright purchase, power purchase agreements for zero upfront cost, lease-to-own options, and green energy loans from financial institutions. Professional assessment and installation: Engaging reputable solar providers. Solar ensures accurate system design, high-quality equipment, and professional installation, maximising efficiency and longevity.
The conversations around Eskom tariffs are louder than ever, and businesses are actively seeking solutions that offer stability and long-term economic sense.
The next nine months will be a very interesting period for solar installations in South Africa, as companies move to make use of available tax incentives before they potentially fall away.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
17 hours ago
- The Citizen
Latest petrol price increase puts SA consumers on backfoot again
With a fuel price increase hot on the heels of increases in rates and taxes in the metros, there seems to be no way out for consumers. The latest petrol price increase puts struggling South African consumers on the backfoot again after a few months of softer fuel prices, which also led to lower inflation as well as lower interest rates. Now geopolitical issues in the Middle East sent the oil price soaring again and South African consumers are paying the price. Hot on the heels of the small decrease in the price of petrol in June this year, the news of a substantial hike in the price of petrol from 2 July came as a shock to motorists across the country. South Africans were counting on a little relief at the pumps in July to ease the financial burden that has driven millions of households to the edge of despair. The July increase pushes the price of 95 Unleaded petrol up by 55 cents to R21.87 per litre and 93 Unleaded up by 52 cents to R21.79, while diesel increases by between 82 and 84 cents per litre. ALSO READ: Motorists warned to brace for hefty petrol price hike from midnight Major geopolitical factors that impacted the department of petroleum and mineral resources decision included the political seesaw that led to the Israel/Iran conflict and spiked the price of Brent crude oil by as much as 13% in the aftermath, leading to increases at the pumps. Thankfully, the rand remained surprisingly resilient in the face of the resultant market turbulence. Fuel price hike on top of increase in rates and taxes As if this is not enough reason to dash any last hope of a respite, Tuesday 1 July marked the start of the municipal financial year when local authorities increase rates and taxes. This means households in major metros across the country will see increases to monthly rates for electricity, water, sanitation, refuse removal and property rates they pay. South Africans can expect above-inflation hikes this year as cities continue to operate under strained conditions and energy experts are warning that households could see their bills shoot up anywhere between 30% and 80%, especially if their consumption is typically low. This is largely due to a new tariff structure being implemented by Eskom, which aims to align prices with the cost of supply and to reduce subsidies. ALSO READ: Here's how to manage household electricity usage as municipal tariff increases kick in Against this grim backdrop, the latest 2025 Energy Market Projections report, compiled by Cresco in collaboration with Standard Bank Corporate and Investment Banking, shows that while load shedding may have taken a backseat temporarily, a new energy crisis is looming if the country fails to build new capacity. According to the report, South Africa is not adding new energy generation capacity fast enough to prevent another severe electricity crisis when Eskom begins decommissioning its coal plants. Behind this is the fact that the country is not increasing its energy supply at a sufficient rate to facilitate faster economic growth, which means that any sharp pickup in activity will result in demand outstripping supply. Living increases force struggling consumers to use credit Neil Roets, CEO of Debt Rescue, warns with no end in sight to the volley of living cost increases, coupled with consumers already cutting back as much as they can, the latest fuel price increase will cut deeply into the little disposable income people still have left, if they have any to spare at all. 'In fact, along with the soaring electricity prices and the municipal rate hikes in July, millions of households will be forced towards financial disaster. This is a red flag that should not be ignored. Along with this, the salaries of South Africans fail to keep up with rising living costs, leading many to turn to debt simply to survive each month and buy the basics they need to survive.' This is echoed by insights from the latest BankservAfrica Take-home Pay Index (BTPI), which tracks approximately 3.8 million salary earners in South Africa. It revealed that the nominal average take-home pay decreased to R17 296 in May 2025, 1.3% lower than the R17 532 registered in April. ALSO READ: Take-home pay slides for third month with grim job opportunities and earnings South Africans can't afford to set money aside Roets points out that this marks a third consecutive month of decline in average nominal take-home pay, reflecting a muted economic environment with stalled growth and global shocks affecting investment decisions and confidence levels. Unsurprisingly, he says, this is also a major contributor to the country's escalating consumer debt crisis, with a recent Debt Rescue survey, conducted to measure the real plight of indebted consumers, showing that half of the participants polled (50%) cannot afford basic necessities like food, electricity, or fuel due to a lack of available funds. A full 50% said they have had to turn to credit to pay for these everyday needs in the past 12 months. Roets says this reflects the vicious cycle of poverty and debt that has become a way of life for millions of South African consumers, seriously impeding their and their families' survival. 'It is a bitter irony that this coincides with National Savings Month, a time meant to promote saving, yet many South Africans can barely cover essentials, let alone set money aside.'
The Citizen
19 hours ago
- The Citizen
New electricity tariff structure explained for Ekurhuleni residents
The electricity tariff structure is regulated by the National Energy Regulator of South Africa (NERSA), requiring municipalities to review tariffs annually and conduct a Cost of Supply (CoS) study every five years. 'The latest tariff adjustments are in line with these requirements and reflect the findings of Ekurhuleni's most recent CoS study,' said CoE spokesperson Zweli Dlamini. Two main tariff options for residents For residential customers, the City offers two main tariff structures: 1. Tariff A: Inclined Block Tariff (IBT) This is split into two categories: Category A1 (Approved Indigent and Deemed Indigent Households): Best suited for low-consumption households. Customers receive 50kWh of free basic electricity (FBE) per month . No basic monthly charge applies. Category A2 (Non-Indigent, Low Consumption Customers): Does not include free basic electricity. A basic monthly charge will apply for the 2025/26 financial year: Single-phase supply: R109.78 per month Three-phase supply: R203.89 per month The City explained that this basic charge assists in recovering the costs of distributing electricity, maintaining infrastructure, and ensuring ongoing repairs. 2. Tariff B: Residential This option is suitable for medium to high consumption households and has been in place since 2018. It also includes a monthly basic charge: Single-phase supply: R109.78 per month Three-phase supply: R203.89 per month Residents encouraged to apply for indigent support Customers can choose the tariff option that best suits their consumption patterns but are required to remain on the selected tariff for a minimum of 12 months before switching. The City urged qualifying residents to apply for the indigent social package to benefit from subsidies and free basic electricity under Category A1. Keeping increases reasonable while ensuring reliability 'In setting tariffs for the new financial year, the City considered all factors within its control and aimed to keep increases reasonable and affordable while ensuring a continued and reliable electricity supply to residents.' 'We remain committed to transparency, regulatory compliance, and serving the best interests of our community,' said Dlamini. For further details on the City's electricity tariffs, residents are encouraged to visit the City of Ekurhuleni's official website or contact their nearest customer care centre.
IOL News
2 days ago
- IOL News
Eskom cracks down on fraudulent electricity tokens with new security upgrades
Eskom intensifies efforts to secure its prepaid electricity token system following the OVS breach, aiming to restore public trust and strengthen operational resilience. Image: Timothy Barnard /Independent Newspapers Eskom has announced decisive new actions to protect its customers following a major breach of its Online Vending System (OVS), which was exploited to generate and distribute fraudulent prepaid electricity tokens. The breach, revealed in Eskom's full-year 2024 financial results released in December, exposed critical weaknesses in both the physical and cybersecurity layers of the utility's infrastructure. The fraudulent activity, which threatened to undermine public trust in Eskom's prepaid electricity system, prompted an immediate and robust response from the state-owned utility. 'We uncovered weaknesses in physical and cybersecurity components on our OVS system,' said Monde Bala, Eskom's Group Executive for Distribution. Eskom has since launched a comprehensive review and intervention strategy to address these security gaps and strengthen its operations against future threats. 'Earlier this year, Eskom successfully strengthened the protection of its current systems against potential threats. All system enhancements are managed through a robust Change Management process that spans all divisions, ensuring consistent oversight and control,' explained Len De Villiers, Eskom's Chief Technology and Information Officer. To address the vulnerabilities that allowed the token fraud to occur, Eskom has reinforced its physical infrastructure and limited both physical and digital access points. Eskom has also strengthened internal controls to combat electricity theft and enhanced monitoring capabilities to ensure greater transparency and timely detection of suspicious activities. In parallel, Eskom has been working closely with law enforcement agencies to support ongoing investigations and ensure accountability. As part of this effort, internal employees who have been implicated have been placed on precautionary suspension pending further review. Furthermore, Eskom has engaged an external IT firm to strengthen in-house capabilities and improve risk management. The utility has also fast-tracked the acquisition of a new, secure vending system designed to replace the compromised OVS and prevent similar incidents in the future. Throughout this process, Eskom has maintained regular reporting to its board, which continues to provide oversight of all remediation efforts. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading 'We are fully aware of the challenges that have emerged within the OVS environment, and we have taken clear steps to address them. Our focus is on restoring trust, strengthening our systems, and ensuring that our customers can rely on a secure and efficient service," said Eskom's Group Chief Executive, Dan Marokane. "This is not just a technical fix, it is part of a broader commitment to transparency, operational excellence and accountability.' While the investigation into the token fraud continues, Eskom has pledged to share the findings once the process is concluded and the appropriate time for disclosure has been determined. In the meantime, the utility has called on customers and stakeholders to remain vigilant and report any suspicious activity related to prepaid electricity tokens. As Eskom moves forward with its efforts to protect its infrastructure and rebuild public confidence, it reassures South Africans that their electricity, and their trust, remain top priorities. IOL
