2026: Five developments we will be watching in South Africa’s electricity market

2026 will be another decisive year for South Africa’s electricity sector, testing whether the reforms of recent years will translate into a more liberal energy market, more grid capacity and faster project delivery.

With this in mind, this blog focuses on the five key themes and developments our team indicated they will be tracking in 2026.

We give particular attention below on market reform through the South African Wholesale Electricity Market (SAWEM) and the delivery of the Transmission Development Plan (TDP). We then discuss grid access rules, permitting processes, and the growing role of energy storage.

In last year’s retrospective, we flagged the introduction of the South African Wholesale Electricity Market (SAWEM) as a major development. At that time, we explained how SAWEM is intended to move SA away from a single-buyer model towards a more competitive market, with generators and traders able to transact power freely. For EPCs, this is relevant because it will ensure that large projects continue to be built even though most energy intensive users already have their own large wheeling generators. Over time, trading will play an important role in enabling shaped supply, allowing large projects to remain viable and energy users to supplement self-generation with flexible, portfolio-based power.

Another positive effort has been the reportedly oversubscribed SAWEM School, launched by NTCSA to prepare market participants with practical training on balancing, settlement, compliance and risk management. Certification through this programme will be necessary for stakeholders to participate once the market goes live.

In 2026 SAWEM will be implemented and the market is expected to start operations in phases from 1 April. While this is an important milestone, it is worth noting that the market will take time to develop and we’re unlikely to see full trading until probably 2030.

With all this in mind, we will be watching:

Finalisation of the Market Code and Market Rules:

• A key piece of groundwork led by NERSA are the Market Rules, Market Code (latest draft, at the time of writing, here) and trading arrangements needed to support SAWEM’s launch. This includes scrutiny of how competition, market surveillance and enforcement are handled in a context where Eskom remains both a partner and dominant participant (more on this below). Public hearings, submissions and final approvals by NERSA are expected in the first quarter of 2026.

Competition and Eskom’s role:

• Stakeholders are watching how Eskom’s market participation is managed within SAWEM design. Because Eskom remains the dominant incumbent, careful design of rules around market share, pricing transparency and grid access will be critical for private investment confidence. 
• Progress on Eskom’s unbundling, including the operational separation of the transmission entity and the ramp-up of Eskom Green, will also shape how credible and competitive the market feels to private participants.

Municipal market liberalisation and revenue:

• Alongside national market reform, municipal market liberalisation will remain important, particularly around behind-the-meter procurement, wheeling PPAs and emerging smart-grid initiatives. In relation to SAWEM, municipal debt may influence financing guarantees needed to participate in the market.
• We welcome more mechanisms such as token-based municipal wheeling models (see Meridian Economics), which aim to accommodate greater private generation and wheeling, but which also reflect the pressure municipalities face to retain revenue.

Last year we highlighted the vital role of the Transmission Development Plan (TDP) in enabling South Africa’s energy transition. The TDP sets out the long-term blueprint for expanding the grid to accommodate new renewable generation, address bottlenecks and unlock capacity that has been stranded by infrastructure constraints. The plan, most of which will be rolled out by Eskom via the NTCSA, envisages about 14 500 km of new transmission lines and more than 130 000 MVA of transformer capacity by 2034, with much of the work front-loaded in the next few years to integrate the growing pipeline of wind and solar projects into the system.

Last year the government completed a global market-sounding exercise for Independent Transmission Projects (ITPs) that drew strong interest from developers, investors and system designers. A Ministerial Determination formalised the scope of Phase 1 transmission lines across key corridors, and draft transmission regulations were published for public comment, signalling legislative and procedural clarity. 

This year, we’ll be watching:

• ITP procurement: Seven international-led consortia were prequalified in 2025 to bid for the 1,164km, $1 billion, build programme. The request for proposals (RfP) is expected in the second half of this year, and the performance of these bids will be an early indicator of private delivery on grid infrastructure.
• A Credit Guarantee Vehicle (CGV) is expected to be operational by mid-2026, with seed capital from National Treasury and anticipated participation from development finance partners. The CGV is designed to improve bankability for large-scale transmission investment and is essential for private-sector participation in the TDP.
• The predictability of future bid windows and the clarity of regulatory frameworks will determine how smoothly the broader 10-year build-out unfolds. Procurement transparency, risk allocation, and cost-recovery mechanisms remain areas where implementation will be watched closely.
• Local participation: How localisation requirements are implemented in practice, and balanced against delivery risk, financing requirements and timelines, will also be an important factor in determining the pace of rollout. 2026 will provide an early indication of how procurement frameworks balance local participation and equity objectives with the need for international experience and financing capacity.

Finally, we will be closely watching to see how Phase 1 progress will help to unlock transmission capacity in regions with stranded renewable energy projects.

Late last year’s publication of the Grid Capacity Allocation Rules (GCAR) replaced a first-come, first-served approach with a readiness-based framework that prioritises projects with demonstrable progress.

We will be watching how consistently the readiness criteria are applied, whether speculative projects fall away as intended, and whether credible projects are able to move more predictably through grid access milestones. Early signals around queue transparency, capacity reservation discipline and the treatment of missed milestones will be particularly important.

Permitting and approval timelines remain one of the most practical constraints on project rollout. For many projects, delays centre around the pace and predictability of environmental approvals, land processes and grid-related decisions. Encouragingly, there are indications that the Department of Forestry, Fisheries and the Environment (DFFE) and provincial authorities are improving turnaround times for environmental impact assessment approvals.

In 2026, we will be watching Cost Estimate Letter (CEL) turnaround times closely, as well as whether the improvements seen in parts of 2025 become more consistent. Better coordination across environmental, land and grid processes will be critical in reducing delays as build programmes scale.

We will also be monitoring how biodiversity offsets and long-term stewardship requirements are integrated into permitting frameworks under SAREM and the Just Energy Transition, and how financial provisioning is handled to ensure project viability over the long term.

We predict that battery energy storage systems (BESS) will continue to grow as a key design choice for a growing share of projects, for three reasons.

First, more businesses that have already invested in renewables are likely to add batteries behind the meter to create shaped, load-specific solutions. In some cases, this enables partial or functional defection from the grid, where customers prioritise certainty, resilience and cost control.

Second, batteries are increasingly being deployed as part of off-grid and weak-grid hybrid solutions, where they play a direct operational role in stabilising supply and reducing liquid-fuel dependency. JUWI’s GCO project in Senegal is a good example: a 20 MWp solar plant paired with an 11 MWh battery system, designed for industrial demand and improved production stability.

Third, South Africa is also moving steadily into a phase of large-scale, grid-supporting storage. Public procurement under the Battery Energy Storage IPP Procurement Programme has continued.Meanwhile, Eskom’s own BESS rollout is positioned as a grid-strengthening intervention to support greater renewable integration. As storage deployment scales, clarity around market roles, including the positioning of Eskom Green alongside private developers, will be important for maintaining confidence and fair competition.