Electricity costs out of control in South Africa

Eskom’s cost to generate electricity has more than doubled over the past decade, which has seen South Africans pay significantly more for electricity.
This was revealed by Electricity and Energy Minister Kgosientsho Ramokgopa, who said this rise in costs was driven by factors like infrastructure investments, maintenance of ageing plants, fuel costs, and operational expenses.
Ramokgopa was responding to a Parliamentary question from the DA’s Edwin Baptie. The minister said that Eskom’s cost of electricity generation has risen significantly over the past two decades.
“When adjusted for inflation, these costs have escalated, contributing to higher tariffs for consumers,” he said.
For instance, in 2014, a typical Eskom customer using around 800 kWh per month paid approximately R1,055.40.
By 2024, the same consumption cost about R2,948.98 — more than double what it cost 10 years ago.
The minister said this significant increase reflects both nominal increases and underlying cost pressures.
Energy analyst Chris Yelland from EE Business Intelligence told Daily Investor that high electricity prices are one of Eskom’s biggest threats.
Since 2007, electricity prices in South Africa have risen by 927%. Therefore, Eskom’s request for a 36% price increase, made in 2024, to cover the rising cost of producing electricity was met with severe opposition.
Eskom requested total revenues of R446 billion for the 2026 financial year, R495 billion for 2027, and R537 billion for 2028.
The proposed average price hikes for Eskom’s direct customers are 36.15% from 1 April 2025 to 31 March 2026.
For the subsequent years, the utility is seeking increases of 11.81% from 1 April 2026 to 31 March 2027 and 9.10% from 1 April 2027 to 31 March 2028.
While this request has not yet been approved, South African households, businesses and the government have spoken out against it.
This incredible rise in prices has priced many South Africans out of being able to afford electricity. These high price hikes also present a threat to Eskom.
While many households switched to rooftop solar and other alternative energy sources over the past few years to avoid Eskom’s power cuts, many also saw it as a way to avoid the utility’s high prices.
This has seen Eskom’s sales steadily decline over the past decade, putting pressure on the utility to raise prices to ensure its revenue growth can cover increased operating costs.
This can result in a death spiral for the utility, where its raised prices force customers to find alternative energy sources, necessitating even more price hikes to avoid a loss.
“The consequences to Eskom are increasing levels of non-payment by municipalities who can’t collect the money from people that can’t afford to pay and also debt and non-payment,” Yelland warned.
Plans to cut costs

Ramokgopa said in his response that the Ministry of Electricity is actively working to reduce the inflationary pressure on end consumers through various initiatives.
One of the key interventions under consideration is the review of the Free Basic Electricity (FBE) policy, which currently provides 50 kWh of free electricity per month to indigent households.
He said the ministry is exploring an increase in the allocation to between 150 and 200 kWh, ensuring that more households can meet their basic energy needs without additional financial burden.
In addition, the ministry is driving efforts to expand the use of cost-effective renewable energy through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
This initiative can make a notable impact on prices, as renewable energy sources can be significantly less expensive than electricity from Eskom.
Eskom’s tariffs for direct customers increased by 12.74% for the 2024/2025 period.
While specific costs vary based on customer category and usage, residential customers consuming 600 kWh per month are now paying approximately R1,491.06 monthly, equating to about R2.49 per kWh.
When it comes to the REIPPPP, which has successfully reduced renewable energy costs over successive bid windows, solar photovoltaic projects have achieved prices as low as 56 cents per kWh and onshore wind projects at approximately 62 cents per kWh.
The minister added that Eskom’s financial recovery plan is also a cornerstone of efforts to stabilise the utility’s financial position and restore its capacity to operate sustainably.
“A key component of the plan is the significant reduction of Eskom’s debt burden through government-backed initiatives and operational efficiencies,” he said.
“By addressing legacy debt stemming from historical inefficiencies and corruption, the plan will allow Eskom to re-enter the debt capital markets in a much stronger financial position.”
“This improved standing will enable Eskom to secure funding at lower interest rates, thereby reducing the overall cost of borrowing.”
He explained that lower financing costs directly translate to the containment of Eskom’s cost-reflective tariff, ensuring that electricity prices remain within the affordability limits of end consumers.
“Ultimately, this strategic focus on financial stability will not only restore Eskom’s credibility with investors but also alleviate upward pressure on tariffs, creating a more sustainable electricity supply environment for all South Africans,” he said.
This article was first published by Daily Investor and is reproduced with permission.