Big lie about Eskom

Eskom chairman Mteto Nyati said there is a widely held misconception that companies are moving away from the power utility. This is not true.

There is a widely held belief that Eskom may enter a death spiral and is pricing itself out of the market, with cheaper solar alternatives taking over.

The issue rose to prominence again after the National Energy Regulator of South Africa (Nersa) published Eskom’s multi-year price determination.

Eskom is applying for total revenues of R446 billion for FY2026, R495 billion for FY2027, and R537 billion for FY2028.

The proposed average price increases for Eskom direct customers are 36.15% from 1 April 2025 to 31 March 2026.

After that, Eskom wants to hike prices by 11.81% from 1 April 2026 to 31 March 2027 and 9.10% from 1 April 2027 to 31 March 2028.

Nersa will now consult with stakeholders on Eskom’s revenue application as part of its decision-making process.

These big price increases make it attractive for companies and households to install solar PV with battery backups to serve their electricity needs.

Independent energy expert Mohammed Madhi previously explained that Eskom is shooting itself in the foot with the above-inflation electricity price increases.

Renewable electricity prices, like solar PV, decrease year-on-year while Eskom’s prices increase.

“We have already reached the point where renewable electricity prices are cheaper than Eskom’s rates,” he said.

He added that baseload power through renewable energy will be cheaper within the next year than Eskom’s baseload pricing.

“If Eskom continues with its price increases, nobody will need its baseload electricity eighteen months from now.”

Companies and households will be able to install renewable energy with battery backup, which produces cheaper electricity than Eskom.

This means that Eskom is pricing itself out of the market, making it more attractive for South Africans to produce their own electricity.

Eskom chairman Mteto Nyati responds

Eskom chairman Mteto Nyati told Biznews that people mistakenly believe there is a massive move away from the power utility.

“People may wish it is the case. However, the reality is that most businesses expect base load power to come from Eskom,” he said.

There is a move towards renewable energy, like solar PV. However, most of these businesses still rely on Eskom.

Nyati said many South African businesses and industry organisations ask Eskom to present to them.

He explains that many companies are reviewing their planned energy investments, especially in the challenging economic environment, where many have limited funds.

If Eskom can reliably supply electricity to them, they will reconsider their investment in renewable energy projects.

Nyati said many company boards realise that Eskom is the best route if it can supply them with reliable and affordable electricity.

He added that their current priority is to drive down costs at Eskom, which will impact their electricity prices in future.

“We are not pricing ourselves out of the market. We are conscious of the cost and we are increasingly moving into renewable energy,” he said.

Nyati said that as more renewables come online, electricity prices will be driven down and Eskom will remain competitive.

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This article was first published by Daily Investor and is reproduced with permission.