KEY POINTS
- Nersa has launched two major consultations to support South Africa’s move toward a competitive electricity market.
- The frameworks focus on pricing reform, separating generation costs from broader system charges.
- Public input will shape how the country transitions to a wholesale electricity market under SAWEM.
South Africa’s energy regulator, the National Energy Regulator of South Africa, Nersa, has begun two major consultation processes that are expected to reshape how electricity is priced and traded as the country moves toward a competitive power market.
The consultations focus on the Wholesale Electricity Pricing Methodology and the Transitional Generation Pricing and Vesting Contract Framework, both of which are designed to support the gradual shift from a centrally controlled electricity system to a more liberalised market under the planned South African Wholesale Electricity Market (SAWEM). Nersa says the aim is to introduce clearer and more transparent pricing rules while still maintaining stability in the electricity system during the transition.
The Wholesale Electricity Pricing Methodology outlines how the core costs of electricity supply will be calculated and recovered across the system. It proposes a structured approach that ensures essential costs such as transmission services, capacity requirements, legacy contractual obligations, and embedded subsidies are properly accounted for and shared among market participants. The intention is to create consistent pricing principles that align with an emerging competitive market structure while maintaining fairness and financial sustainability in the sector.
The Transitional Generation Pricing and Vesting Contract Framework focuses specifically on the generation side of the future market structure. It introduces temporary rules to guide pricing during the transition period, but it does not define the full wholesale electricity price. Instead, it covers generation-related costs while excluding broader system components such as transmission charges, system operation costs, balancing mechanisms, and market operator fees. The framework is intended to reduce risks during the shift to a competitive market and ensure that the system evolves in an orderly and controlled manner
Timeline for public input
Nersa has opened both consultation processes for public participation, allowing stakeholders to submit written feedback before final decisions are made. Submissions on the Wholesale Electricity Pricing Methodology are due by June 26, 2026, with public hearings scheduled for July 1, while input on the Transitional Generation Pricing and Vesting Contract Framework is expected by July 6, 2026, with hearings planned for July 23.
The consultation papers also include structured questions to help guide responses from industry participants, policymakers, and other stakeholders involved in the electricity sector.
The proposed reforms form part of a wider restructuring of South Africa’s electricity industry, which has traditionally been run as a vertically integrated system dominated by a single utility.
The planned shift toward a wholesale electricity market is aimed at introducing more competition, improving transparency in pricing, and ensuring that electricity tariffs better reflect actual costs. According to Nersa, the transition is also intended to support financial sustainability in the sector, strengthen system reliability, and prepare the grid for a more market-driven environment where electricity is traded in a more open and competitive structure.
