Consumers are reaching a breaking point with rising electricity costs. In South Africa, the move towards a liberalised market is framed as the ultimate solutions. However this silver bullet is unlikely to lower prices through competition alone.
To achieve a stable and fair energy future, stakeholders must navigate a complex landscape of structural reform and pricing reality. The central questions are how to open the market and whether it will have the stability to prevent collapse.
Add to the melee that South Africa is grappling with, is a psychological hangover from the era of extremely cheap power. Speaking with ESI Africa in May 2025, Kay Walsh, president of the South African Association for Energy Economics, explained: “The reality is that we had extremely cheap electricity about 15 years ago; that’s no longer the case. I think we’re starting to move towards a more cost-reflective level.”
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Inflexion point from cost advantage to cost pressure
Electricity tariffs in South Africa have risen to levels broadly comparable with international benchmarks. Estimates for 2025 indicate average residential tariffs of R3.4–R3.5 per kWh, commercial tariffs at R2.8–R2.9 per kWh, and industrial tariffs near R2.3 per kWh, based on published market summaries compiled by EcoFlow using municipal and utility tariff schedules.
In comparison, average residential electricity prices in the US are about $0.19 per kWh, according to international price comparisons published by CallMePower. Commercial and business tariffs in North America average $0.15–$0.16 per kWh, according to datasets compiled by GlobalPetrolPrices. On this basis, South African residential tariffs in 2025 were similar to US averages when converted to dollars, while industrial tariffs remain slightly lower in nominal terms.
Electricity prices in the EU are higher overall. Euronews reporting indicates an average household electricity price of about €0.25 per kWh across the EU, with significantly higher levels in some member states. These figures place European household tariffs above those prevailing in South Africa on a nominal basis.
Globally, average residential electricity prices are about $0.16–$0.1 7 per kWh and business tariffs around $0.16 per kWh, according to comparative datasets published by GlobalPetrolPrices. These benchmarks suggest that South Africa’s residential tariffs are now above the global average, while industrial tariffs remain close to international norms depending on contract structure and customer category.
Regional comparisons compiled by CallMePower indicate average electricity prices of about $0.14 per kWh across Africa. South Africa now sits above the continental average, reflecting sustained tariff adjustments over the past decade and a half.
WATCH Reasons behind electricity price increases in South Africa
How to achieve equitable tariffs
Nqobile Gumbi, Senior Advisor in Planning and Scheduling at the National Transmission Company of South Africa (NTCSA), unveiled a framework in a position paper titled Towards Equitable Tariff Systems in Africa: A Proposed Framework for Energy Sector Reform in the Sustainable Transition Era at the 2025 CIGRE Southern Africa Regional Conference.
The paper was co-authored by Gumbi, Deon Conradie, Pricing Analyst (External Consultant), and Dr Bongani Khonjelwayo, Middle Manager, Economic Regulation, Eskom. The study analysed tariff structures and policy outcomes in South Africa, Kenya and Nigeria, with benchmarking from Morocco and Rwanda. Through these case studies, the research examines how different policy designs influence affordability, renewable uptake and financial stability in each context.
Lessons from Morocco and Rwanda
Morocco adopted a centralised, state-driven approach, achieving near-universal access and large-scale renewable projects through stable tariffs and strong public–private partnerships.
Rwanda, by contrast, pursued a decentralised pay-as-yougo model, linking subsidies to income levels and achieving one of Africa’s fastest electrification rates, particularly among low-income households. “Different paths, same principle,” states Gumbi. “Policy consistency and targeted affordability drive successful reform.”
The Five-Pillar Framework
The paper suggests a five-pillar equitable tariff framework to guide national regulators and regional power pools”
- Equity-centred design. Introducing targeted subsidies and income-based support mechanisms.
- Dynamic pricing. Encouraging time-of-use structures and real-time pricing to manage demand.
- Renewable incentives. Stabilising feed-in tariffs and expanding net-metering access.
- Regional harmonisation. Promoting cost-sharing principles across regional power pools.
- Smart infrastructure. Leveraging blockchain and smart metering for transparent, auditable billing and peer-to-peer energy trading.
Incentives and roadmap implementation
To drive adoption, the framework includes three layers of incentives:
- Financial incentives such as blended finance, risk guarantees and renewable tax credits.
- Regulatory incentives, including harmonised standards and dynamic reviews tied to system conditions.
- Technological and institutional incentives focused on smart metering, blockchain integration and capacity building for regulators.
Of interest Why utilities are shifting to smart tariffs and prepayment systems
Implementation is structured in phases
- Short term (1–2 years): Pilots and data collection.
- Medium term (3–5 years): Regional harmonisation of cost-reflective models.
- Long term (5+ years): Cross-border blockchain-enabled trading and equity-based tariff convergence. ESI
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