Eskom’s electricity prices among most expensive in the world

South Africa once had among the most affordable electricity prices in the world, but multiple above-inflation increases from 2008 have pushed the country onto the more expensive end of the scale in 2024.

In South Africa’s first year as a democratic country, Eskom proudly promoted itself as the world’s lowest-cost electricity producer. At that point, Eskom was charging around 10.32 cents per kWh.

Between 1994 and 2007, the power utility’s annual tariff increases were roughly in line with inflation, which meant that South Africans continued to enjoyed dirt-cheap electricity.

In 2004, Eskom even reduced the tariff from 16.09 cents to 16.04 cents.

Since 2008, Eskom has implemented numerous double-digit price hikes, the biggest being a 31.3% increase in April 2009.

However, despite massive increases over the following years, Eskom’s electricity prices were still among the lowest in the world in 2019.

According to GlobalPetrolStats data, South Africa had the 72nd most affordable prices out of 141 countries, with an average electricity tariff of 12 USD cents.

However, the picture has changed drastically in the past five years, with several more annual tariff hikes well beyond the rate of South Africa’s inflation.

Eskom’s tariffs have been hiked by an average of 12.1% per year between April 2019 and April 2024, while the average annual inflation over the same period stood at 5.1%.

GlobalPetrolPrices’ most recent data showed that out of 147 countries, South Africa’s average tariff for households only ranked as the 95th most affordable, a drop of 23 spots.

Its analysis includes all components of the electricity bill, including the cost of power, distribution, and taxes.

It draws its data directly from Eskom and the National Energy Regulator of South Africa (Nersa).

It calculated an average household electricity tariff of around R3.29 by September 2023, working out to 18 USD cents.

Looked at from the back of the pack, South Africa has the 53rd most expensive power in the world, just barely escaping the bottom third with the worst electricity tariffs.

The average electricity tariff for households in the analysed countries was US$0.156, about 16.7% cheaper than South Africa’s average electricity tariff.

Big changes looming for South Africa’s electricity tariffs

South Africa’s electricity tariffs are poised for a big shake-up in the coming years

The National Council of Provinces (NCOP) recently passed the Electricity Regulation Act (ERA), legislation that seeks to reform South Africa’s electricity industry and introduce an open market for electricity trading.

The ERA will effectively bring an end to Eskom’s monopolistic control over electricity generation and distribution and see it taking on a participatory role alongside private players.

A key part of this process is the creation of the Transmission Systems Operator (TSO) to replace the Eskom System Operator TSO will act as a wheeler and dealer of electricity.

The bill will also strengthen Nersa’s power, which will give it the ability to license entities to implement the competitive market.

While Nersa will conduct regulatory oversight during the transition to a competitive market in South Africa, it will no longer need to regulate pricing.

Instead, Nersa will be tasked with setting and approving tariffs, which must allow licensees like Eskom and independent power producers to recover their costs and earn a reasonable return.

The graph below from GlobalPetrolPrices compares South Africa’s electricity tariffs with 146 other countries.