Urgent: Energy reform at risk as South Africa faces looming supply shortages

South Africa enters 2026 with a fragile but genuine improvement in electricity system performance. Eskom’s generation fleet delivered higher availability through much of 2025, unplanned outages declined, and diesel use was sharply reduced. These gains created breathing room in a system that had operated for years without margin. Yet the return of load-shedding remains a realistic risk, not because operational progress has stalled, but because structural reform remains incomplete.

Recent warnings from energy economist Anton Eberhard point to a fault line in the reform process. While operational discipline has improved, the institutional design choices now being made around transmission and market governance risk constraining the next phase of recovery. Short-term stability can obscure deeper weaknesses in the system’s ability to attract investment, expand capacity, and allocate grid access fairly.

At the centre of this concern lies the revised approach to unbundling Eskom. The original reform logic envisaged a fully independent transmission system operator, separated from generation and trading interests, with a clear mandate to expand the grid and provide non-discriminatory access to all producers. The current approach retains transmission within Eskom Holdings as a ring-fenced subsidiary.

This may appear administratively efficient, but it carries material consequences for how the system evolves. Transmission sits at the junction between policy intent and physical reality. Every new megawatt of generation, whether public or private, depends on access to the grid. Where the grid owner is also the dominant generator, conflicts of interest arise by design. Even where governance safeguards exist on paper, perception matters. Investors price risk not only on formal rules, but on who ultimately controls decisions when constraints tighten.

South Africa’s track record of decision-making within government and state-owned entities has heightened sensitivity to these risks. The electricity challenge has therefore shifted. The immediate crisis of insufficient generation has eased, but the binding constraint has moved to grid access and expansion. New generation projects are increasingly delayed by connection backlogs and uncertainty over who bears the cost and risk of grid build-out.

Without a transmission entity that can raise capital independently, plan over long horizons, and operate at arm’s length from generation interests, expansion slows. Retaining the transmission company within the Eskom group weakens its ability to raise capital at competitive rates, precisely when large-scale grid investment is required. The consequences are cumulative. Slower grid expansion limits the pace at which new capacity can come online. Reduced competition entrenches cost pressures. Delayed investment increases exposure to plant failures and maintenance overruns.

In such a system, load-shedding does not return because the fleet collapses overnight. It returns because supply growth fails to keep pace with demand and system flexibility erodes incrementally. Governance choices compound this risk. When policy oversight, asset ownership, and market rule-setting sit too close together, accountability blurs.

Under the current institutional arrangement, responsibility for policy, shareholder oversight of Eskom, and regulatory supervision converge within the same political authority. This concentration weakens market confidence, politicises disputes, and slows regulatory decision-making. These dynamics rarely appear immediately in operational statistics, but they shape behaviour across the sector and influence long-term outcomes.

None of this diminishes the significance of Eskom’s recent operational improvements. On the contrary, those gains make the present moment more consequential. Improved performance provides a window in which deeper reform can be completed without crisis pressure. It lowers emergency costs, reduces reliance on stop-gap measures, and creates space for structural decisions to be taken deliberately rather than reactively.

The risk lies in mistaking space for resolution. Operational recovery can stabilise a system, but it cannot substitute for institutional design that unlocks investment and competition. A power system that performs better today but remains structurally constrained will struggle to sustain that performance as demand recovers and the fleet continues to age. Load-shedding, in this context, is not a binary outcome. It is the visible expression of accumulated constraints.

Whether it returns depends less on last year’s availability figures than on whether the reform path resolves conflicts of interest, accelerates grid expansion, and restores confidence in market governance. South Africa has demonstrated that improvement is possible. The question now is whether reform keeps pace with recovery. The answer will determine whether recent gains mark the beginning of consolidation or another temporary reprieve before familiar pressures re-emerge.

Thomas Garner holds a Mechanical Engineering degree from the University of Pretoria and an MBA from the University of Stellenbosch Business School. Thomas is self-employed focusing on energy, energy related critical minerals, water and communities. He is a Fellow of the South African Academy of Engineering and a Management Committee member of the South African Independent Power Producers Association.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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