The future of private electricity trading in South Africa

A step towards a sustainable and inclusive energy future 

South Africa’s energy landscape is undergoing a transformative shift, driven by the urgent need for reliable and sustainable energy amidst ongoing power shortages and rising electricity costs, writes Irshaad Wadvalla, Head of Sustainability. The opening of municipal grids to allow for private electricity trading represents a crucial evolution that could radically reshape how energy is produced, distributed and consumed. 

Trading milestones 

Key legislative reforms have laid the foundation for this transition toward a more decentralised and inclusive energy future. Major change came in August 2021 with the amendment of Schedule 2 of the Electricity Regulation Act 2006, which increased the threshold for embedded generation from 1 MW to 100 MW, without requiring a license. This enabled businesses, mines and industrial users to invest in more significant self-generation and private energy trading with fewer regulatory hurdles. 

Further reforms took place in 2022 when municipalities were permitted to procure energy from independent power producers, opening the door for localised energy markets. Municipal feed-in tariffs for small-scale embedded generation, particularly rooftop solar, started to emerge, allowing individuals to feed excess electricity back into local grids. It has been reported that the City of Cape Town’s Cash for Power Programme has paid out over R50 m to businesses and households since 2022 under this initiative. 

Additionally, the Electricity Regulation Amendment Act 38 of 2024 paved the way for a more competitive electricity market by facilitating the unbundling of Eskom, which encouraged private sector participation and allowed for a National Transmission System Operator to oversee democratised access to the grid.  

The City of Cape Town took strides by opening its grid to energy traders in March 2025, following a year-long wheeling pilot project. As a market leader in logistics development and an award winner in sustainability practices, Equites was one of three participants in this pilot and remains a partner to the City in this ongoing initiative. Other municipalities which have implemented similar models include George Municipality and Nelson Mandela Bay. 

A ministerial determination under the Electricity Regulation Act 2006 in March 2025 now makes provision for private sector participation in building transmission infrastructure in key corridors, further stimulating the independent electricity market. 

Global precedents 

Although a somewhat novel framework locally, a number of other countries offer valuable lessons. Chile liberalised its energy sector in the 1980s and has a mature solar market where private generators trade electricity with consumers. 

Germany’s Energiewende programme aimed to transform its energy mix by supporting private power producers. Through power purchase agreements, decentralised trading models empowered consumers to become “prosumers”. 

Australia has also embraced private trading using virtual power plants, where rooftop solar and battery systems are aggregated and traded on energy markets. In the United Kingdom, regulatory frameworks have also allowed small generators and consumers to trade electricity in real-time using smart grids and smart-metering technology. 

Localised impacts  

By encouraging private electricity trading and minimising barriers to entry, for example, through lower use-of-system charges and subsidised grid access, municipalities can stimulate wider participation. Increased investment in renewable energy technologies could create new job opportunities in installation and maintenance, while a more competitive energy market may lower energy costs. With the decentralised nature of private trading, power outages and disruptions can also be minimised, creating a more resilient energy system. 

A significant social benefit is the potential for increased access to affordable energy in marginalised communities. Rural areas, townships and informal settlements could also generate their own electricity and participate in local energy markets, driving economic inclusion. 

Another aspect is that businesses are increasingly having to take control of their carbon emissions. The wheeling model enables offtakers that do not have the necessary infrastructure to use renewable energy, helping them to meet their sustainability goals. 

What’s next? 

Private electricity trading and open municipal grids represent more than just an energy reform—they are instruments of economic empowerment, sustainability and resilience. Enabled by recent legislative breakthroughs and inspired by global best practices, South Africa is poised to transition from a centralised, monopolistic model to a more dynamic, diversified and decentralised energy future. With continued policy momentum and collaborative governance, this model holds the key to powering South Africa’s next phase of growth—one that is cleaner, fairer and far more inclusive. 

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