Electricity Price Increases In South Africa: Everything You Need To Know

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Why is the price of electricity increasing?

South Africa’s electricity prices are climbing for several reasons, with Eskom at the centre of it all. Eskom, the country’s primary electricity supplier, is facing significant financial and operational challenges. The company has struggled with ageing infrastructure, rising fuel costs, and substantial debt.  

Here are the key factors contributing to the electricity price increase:

• Eskom’s Financial Struggles: Decades of mismanagement and corruption have left the company in financial distress.
• Ageing Infrastructure: Many of Eskom’s power plants are outdated, requiring expensive maintenance and repairs.
• Transition to Renewable Energy: As part of the global shift toward greener energy, South Africa is investing in solar and wind energy, which involves upfront costs.
• Fuel Costs: Eskom still relies heavily on coal, which has become more expensive due to global supply chain issues and environmental regulations.

This combination of factors has led to continuous requests for tariff increases to ensure Eskom can cover its operational costs

Impact of electricity price increases on consumers

While there has been an extended period with no load-shedding, the rising cost of electricity reveals the energy distributor’s new approach to the energy crisis. The cost of electricity in conjunction with the inflated cost of living, is pricing consumers out of being able to use and consume electricity. In turn reducing the load on national energy supply and consequently reducing load shedding.

It is also important to note that the power relief on the grid is due in a large part to renewable energy reduction in South Africa. According to a news article by MyBroadBand, it was stated that “The increase of roughly 3,000MW in self-generated capacity in the past one and a half years has helped keep load-shedding to comparatively lower levels in early 2024 than in 2023”. 

The electricity price increase is hitting consumers hard, particularly in a time when many South Africans are already dealing with economic challenges. Households are seeing their electricity bills surge, leading to difficult choices between powering their homes and covering other essential expenses.

Here’s how the price hikes are affecting different groups:

• Households: Families are facing higher monthly electricity bills, forcing many to cut back on consumption or look for alternative energy solutions. This is especially tough for low-income households.
• Small Businesses: For small and medium-sized businesses, rising energy costs mean increased operational expenses. Some businesses are struggling to remain profitable, particularly in energy-intensive industries like manufacturing and retail.
• Large Industries: Larger corporations, especially in the mining and industrial sectors, face higher production costs. This may lead to price increases for goods, ultimately impacting the consumer market.
• Load Reduction Impact: Targeted load reduction exacerbates the issue, causing businesses to lose productivity and incur additional costs from backup power systems.

For most, the rising prices are more than just an inconvenience—they’re a financial strain with long-term implications.

Action Plan: 5 ways to prepare for the rising electricity costs

With electricity prices increasing, many South Africans are seeking ways to reduce their dependence on the grid and lower their energy bills. The good news is that there are several strategies you can implement to mitigate these rising costs.

Here are 5 practical steps to take:

1. Use Energy-Efficient Appliances: Switching to energy-efficient appliances, such as LED lighting, energy-efficient refrigerators, and smart thermostats, can reduce your electricity consumption.
2. Government Incentives: Keep an eye out for government subsidies or tax incentives for renewable energy investments, which can help offset the initial cost of solar installations.
3. Energy-Saving Habits: Simple changes like turning off lights when not in use, unplugging devices, and using energy-efficient settings on appliances can make a difference over time.
4. Invest in Solar Energy Solutions: Solar power is becoming an increasingly viable option for homes and businesses. Unsure how many solar panels you need? Read our blog for our top tips. By installing solar panels, you can generate your own electricity and significantly reduce your reliance on Eskom.
5. Battery Storage: Combining solar panels with solar battery storage allows you to store excess energy and use it during periods of load shedding or at night, further reducing costs.  In our blog you can learn more about if you need battery storage for your home.

By implementing these measures, you can better control your energy expenses and protect yourself from future price increases.

Solar energy as a solution: How Soly can help!

As electricity prices continue to rise, switching to solar energy offers a long-term solution for South Africans looking to reduce their energy bills. Soly specialises in helping both residential and commercial customers transition to solar power, offering a range of services designed to make the switch as smooth and cost-effective as possible.

Here’s how Soly can help you combat the electricity price increase:

• Solar Panel Installations: Soly provides high-quality solar panel systems tailored to your energy needs, allowing you to generate your own electricity and rely less on the grid.
• Battery Storage Solutions: By combining solar panels with battery storage, you can store excess energy during the day and use it at night or during load shedding, further reducing your reliance on Eskom.
• Custom Solutions for Homes and Businesses: Soly offers customised solar solutions, whether you’re a homeowner looking to cut down on energy bills or a business owner aiming to maintain operations during power cuts.

Keep on reading:
Buy residential solar panels | Get commercial solar panels

• Cost-Effective Solar Leasing: For those who want the benefits of solar power without the upfront costs, Soly offers leasing options. This allows you to enjoy immediate savings on your electricity bill without the high initial investment.
• Expert Consultation and Maintenance: Soly’s team of experts will guide you through the entire process—from consultation to installation and maintenance—ensuring your system runs efficiently and delivers maximum savings.

By making the switch to solar energy with Soly, you not only save on electricity costs but also contribute to a more sustainable future.

FAQs

Did Eskom increase the price of electricity?

Yes, Eskom has announced regular price increases over the past years, with a new significant hike of a proposed increase of up to 44% in electricity tariffs expected in the near future.

What electricity prices in South Africa are increasing?

Eskom’s bulk electricity tariffs are increasing, impacting both residential and commercial consumers. This is a result of inadequate infrastructure and mismanagement of finances within the business.

What is the price per kilowatt in South Africa?

As of 2024, the average electricity price from Eskom is around R2.20 to R2.50 per kilowatt-hour, but this can vary based on the specific tariff and municipality. The closer you live to a power station, the less you pay per unit of electricity, while those further away face higher tariffs. According to our solar expert, the average residential electricity cost is R3.50 per unit based on his consultations. Typically, commercial properties pay less and this drives down the overall average of kilowatt-hour pricing.

How many units is R500 electricity?

The number of units you can purchase for R500 depends on the current tariff rate. For example, at a rate of R2.20 per kWh, you would get about 227 units.

The bottom line: Will electricity prices continue to rise in the future?

Eskom’s financial struggles, combined with the ongoing need to upgrade infrastructure and invest in renewable energy, suggest that electricity prices are unlikely to stabilise soon. The National Energy Regulator of South Africa (NERSA) has approved l price hikes, and Eskom continues to request additional increases to meet its financial needs.

Here are some key factors shaping the future of electricity prices in South Africa:

• Eskom’s Debt: With billions of Rands in debt, Eskom is likely to continue seeking tariff increases to cover operational and maintenance costs.
• Investment in Renewable Energy: The government’s push toward a greener energy grid means additional investment in national renewable projects, which could impact future electricity pricing.
• Load Reduction and Reliability Issues: Frequent load reduction  results in higher operational costs for both Eskom and businesses, further contributing to potential price increases.
• Government Intervention: There are ongoing discussions within the government about ways to stabilise electricity prices, including increased investment in energy infrastructure and potential subsidies for consumers.

With the current trajectory of electricity price increases, many South Africans are concerned about what the future holds. With Eskom claiming the credit of ‘ending loadshedding’, it minimises the country’s collective effort to reduce electricity usage and their active role in investing in renewable, independent energy.

While it’s clear that prices are expected to rise in the coming years, consumers can take action now by adopting alternative energy solutions like solar power to reduce their long-term expenses. While it’s not the responsibility of civilians to create their own reliable energy supply, independence from the grid proves to be a cornerstone of safeguarding against a monopoly energy supplier.