State-owned power utility Eskom has sparked debate with its latest tariff proposal, resulting in uncertainties for solar power users.
Solar energy company GoSolr co-founder Patrick Narbel points out that, although South Africa’s electricity system needs tariff reviews to ensure an efficient and fair energy system, there are risks with getting them wrong, including market distortion.
“Too much focus on variable charges encourages customers to cut consumption, overinvest in energy efficiency measures or ways to reduce their reliance on the grid beyond what is optimal.
“Additionally, too much focus on fixed charges takes away incentives for energy efficiency, leading to overconsumption, bloated infrastructure investments and higher costs for all,” he says.
Eskom has, in its latest multiyear price determination application, requested the National Energy Regulator of South Africa (Nersa) to approve a 36.15% electricity tariff hike for 2025/26, an 11.8% increase in 2026/27 and 9% in 2027/28.
In a separate application to Nersa, Eskom also proposed, in a revised retail tariff plan, a 183% increase in fees it charges some households for connecting to its grid.
These major structural changes to Eskom’s retail tariffs, including for customers with rooftop solar installations, will result in high increases in monthly costs for all users, GoSolr says.
Narbel suggests that a tariff structure that balances the books while encouraging smart energy use and minimising future costs would be the best solution. “Done right, it will brighten the outlook for all South Africans.”
Eskom claims that 73% of its costs are fixed, justifying a push to increase fixed charges. However, Narbel doubts whether this figure holds true, since generation costs are treated as variable in markets where generation and distribution are unbundled.
Transmission and distribution costs, meanwhile, are largely fixed but include smaller variable elements such as maintenance. Applying this global perspective suggests Eskom may be overstating its fixed costs, he says.
If fixed charges rise too much, customers could lose motivation to conserve energy or adopt green technologies.
“Instead of a fairer grid, we might end up with overconsumption, pricier infrastructure and sky-high bills,” Narbel states.
Solar users are feeling pressured as Eskom proposes a special tariff just for them, with higher fixed charges that feel more like a penalty than progress, and which eliminates an opportunity to send proper price signals to customers to adjust their consumption patterns in such a way that costs are minimised for all.
To some extent, this move risks discouraging solar adoption, which would be a big step backward for South Africa’s renewable-energy goals.
Narbel says solar customers already lighten the load on the grid by reducing demand. Instead of singling them out, Eskom should consider spreading its proposed changes across all users. “Better yet, why not tie fixed fees to actual peak usage for a sunnier, more equitable approach?”
GoSolr advocates for fair and inclusive tariff reforms that reduce infrastructure costs, spark energy efficiency and fuel renewable innovation, but Eskom, rather, wants to single out solar users with higher fixed charges, apply blanket rates to fixed fees rather than factoring in power use and have consumers foot the bill for specialised meters that benefit the entire grid.
“A transparent, forward-thinking tariff structure could energise South Africa’s grid and economic prospects. Let’s ensure tariff reforms protect progress, not monopolies, and give all South Africans a fair shot at powering their future,” Narbel notes.
He adds that Eskom’s proposal is not all negative, and with the right changes it could deliver a grid that is equitable and forward-thinking.
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