When darkness falls on South Africa, it is not always the setting sun but the flick of a switch at Eskom.
For more than 15 years, load shedding has been a constant feature of daily life, turning factories silent, trapping commuters in traffic lights, and leaving households without power for hours.
Despite countless promises of reform, the rolling blackouts have become a stubborn scar on the country’s economy.
Now, a bold experiment is unfolding.
Eskom, the state utility long accused of being both too dominant and too inefficient, is opening its doors to the market.
From establishing a standalone renewable subsidiary to allowing private companies to buy power directly, South Africa is inching towards liberalising its renewable energy sector.
The question is whether this shift will finally break the cycle of blackouts or if it will only scratch the surface of a much deeper crisis.
South Africa’s dependence on Eskom is unlike anything seen elsewhere on the continent.
The utility generates more than 90% of the country’s electricity, with coal providing the bulk of the supply.
For decades, this centralised model worked, as low-cost coal fed a fast-growing industrial base. But by the early 2000s, the warning signs were clear.
The utility failed to invest in new generation capacity while demand rose sharply. At the same time, corruption scandals, cost overruns, and mismanagement plagued new power plant projects such as Medupi and Kusile.
As ageing coal plants became less reliable, Eskom struggled to keep the lights on. Load shedding, once considered an emergency measure, has become the default tool for balancing supply and demand.
By 2022, South Africa had endured over 200 days of rolling blackouts, the worst year on record. The economy lost billions in output, small businesses struggled to survive, and public anger mounted.
The government has since faced mounting pressure to rethink Eskom’s dominance and bring in private investment to diversify supply.
A new subsidiary for a new era
In April 2025, Eskom published an Invitation to Tender (ITT) to create a renewable energy subsidiary. The subsidiary will operate independently, free from the bureaucratic drag of the parent company.
By allowing greater governance agility and competitive positioning, the hope is to attract global expertise and investment.
The requirements are strict. Interested partners must show experience in establishing renewable companies, structuring Public-Private Partnerships, and managing Independent Power Producer models.
They must also demonstrate the ability to raise finance for large-scale projects.
This design reflects a recognition that Eskom alone cannot fund or deliver the scale of renewable projects needed.
If successful, the subsidiary could unlock billions of dollars in investment. But it also raises questions.
Will Eskom truly allow its offspring to operate independently, or will politics creep back in?
And will private partners have enough confidence in South Africa’s regulatory environment to commit long-term capital?
Direct offtake deals with businesses
Another significant move has been Eskom’s launch of the Renewable Energy Offtake Programme.
For the first time, the utility is letting commercial and industrial users buy power directly from its renewable subsidiary through long-term contracts.
The first phase offers 291 megawatts of solar photovoltaic capacity, with deals stretching between 5 and 25 years.
Power is expected to flow by late 2027. For companies battered by years of blackouts, this is a chance to secure a predictable supply and reduce reliance on diesel generators.
Eskom Chief Executive Dan Marokane described the programme as part of the company’s turnaround strategy.
“We are not only focused on ending load shedding but are also building a sustainable and competitive company,” he said.
This is a crucial signal.
It shows Eskom is no longer clinging to monopoly control but is willing to integrate market mechanisms.
By letting businesses secure their own renewable supply, Eskom reduces pressure on the central grid while aligning with global decarbonisation targets.
The politics of liberalisation
The shift towards a liberalised renewable market is not just technical. It is deeply political.
For decades, Eskom has been a source of patronage and political leverage.
Efforts to break its monopoly have often faced resistance from unions worried about job losses in coal mining and politicians wary of losing control over a strategic asset.
Yet the pressure is mounting.
South Africa’s climate commitments, combined with investor demands for cleaner energy, are forcing the government’s hand.
International partners, from the European Union to the United States, have pledged billions under the Just Energy Transition Partnership, but much of the funding depends on regulatory reforms that allow private players greater space.
Liberalisation is therefore not a matter of choice but survival. Without it, South Africa risks losing investment, worsening unemployment, and further erosion of public trust.
The role of private sector demand
One reason liberalisation may succeed is the growing appetite among private firms for green energy.
Mining companies, which account for a large share of electricity use, are under pressure from global buyers to clean their supply chains.
Retailers and manufacturers face similar demands.
By 2023, companies like Anglo American and Sasol had already begun building their own renewable projects outside Eskom’s framework.
The government later lifted the cap on self-generation projects, allowing firms to develop plants above 100MW without a licence.
This unleashed a wave of investment, with hundreds of projects registered.
Eskom’s new offtake programme adds another layer by enabling direct purchases rather than self-build.
This flexibility could accelerate renewable adoption across industries. If large users secure their own supply, Eskom can focus on stabilising the grid for households and smaller businesses.
Despite these reforms, coal remains the elephant in the room. More than 80% of South Africa’s electricity still comes from coal.
The fleet of power stations is old, inefficient, and heavily polluting. Retiring them too quickly risks deepening blackouts, while keeping them alive undermines climate goals.
Eskom’s leadership has acknowledged this dilemma. Chairperson Mteto Nyati said the company aims to be assertive in renewable generation but must also ensure grid stability. This is why Eskom is investing in gas-to-power projects, particularly in Richards Bay, as a backup when renewables fluctuate.
The reality is that South Africa cannot switch off coal overnight. A managed transition is essential, balancing climate commitments with economic realities.
The challenge lies in sequencing — ensuring enough renewable capacity and storage comes online before coal exits.
Can liberalisation end load shedding?
The heart of the question is whether a liberalised renewable market can solve the load shedding crisis.
The answer lies in recognising that load shedding is not just about megawatts but about timing, reliability, and governance.
Renewables like solar and wind can add capacity quickly, but their variability creates challenges.
Without sufficient storage or backup, the grid can still fall short during peak demand. This is why Eskom is pairing renewable expansion with gas and storage projects.
Liberalisation can ease the burden. By enabling private investment, Eskom can add capacity faster than it could alone.
Direct deals with businesses reduce strain on the central grid. Independent governance of the renewable subsidiary may also cut red tape and improve efficiency.
Yet liberalisation is not a silver bullet.
Grid infrastructure remains weak, with transmission bottlenecks slowing the integration of new projects.
Corruption risks linger, and regulatory uncertainty can deter investors. Unless these systemic issues are addressed, new capacity may not translate into a reliable supply.
Lessons from abroad
South Africa is not alone in facing these dilemmas.
Countries like Kenya have successfully attracted private investment into renewables through Independent Power Producer models. The Lake Turkana Wind Power project, backed by international financiers, is now one of Africa’s largest wind farms.
In contrast, Nigeria’s attempt to liberalise its power sector has been plagued by weak regulation, poor transmission, and financial shortfalls.
Despite unbundling its utility, the country still struggles with low supply and frequent blackouts.
These examples suggest that liberalisation can succeed only if paired with strong institutions, clear contracts, and investment in grid infrastructure.
South Africa has advantages, including a relatively sophisticated grid and a strong industrial base, but it must overcome political resistance and governance flaws.
The future outlook
Looking ahead, South Africa’s energy mix is set for dramatic change.
Eskom has set a goal of bringing 2GW of renewable projects to construction readiness by 2026 and scaling up to 32GW by 2040, including ventures in green hydrogen.
If achieved, this would mark one of the fastest transitions on the continent.
The private sector will play a central role.
Mining, retail, and manufacturing firms are already shifting to renewables, both to secure supply and to meet global climate standards.
International financing, tied to South Africa’s Just Energy Transition Partnership, will further push this momentum.
But the politics of coal will not disappear. Unions will resist closures, communities dependent on mining will need alternatives, and policymakers will face competing pressures.
A just transition will require not only new power plants but also new jobs, retraining programmes, and social safety nets.
A liberalised renewable market will not, on its own, end South Africa’s load shedding crisis. But it could mark the beginning of the end.
By opening space for private investment, diversifying supply, and creating governance structures outside Eskom’s troubled legacy, the country can accelerate its transition.
The road will be long and fraught with challenges. Grid upgrades, storage solutions, and political will are all essential.
Coal cannot disappear overnight, and liberalisation cannot replace the need for strong institutions.
Yet for a country weary of darkness, the promise of a competitive renewable market offers a glimmer of hope. If South Africa gets it right, the lights may finally stay on.
