Eskom has formally created a new renewable energy subsidiary, Eskom Green, as part of its unbundling process – a move aimed at accelerating the utility’s expansion into South Africa’s fast-expanding clean energy sector.
Government hopes to complete the unbundling by 2030. A phased approach will allow Eskom and the state to manage financial, legal and operational risks while building the skills, systems and institutions required for a more open and competitive electricity market.
Energy minister Kgosientsho Ramokgopa gave the green light for the next stage of separation and the revised unbundling strategy on Tuesday. It supports the development of the future structure of South Africa’s electricity supply industry as defined by the Electricity Regulation Amendment Act.
Eskom said in a statement late on Tuesday that the structure will comprise a new holding company with four subsidiaries – Eskom Green, the National Electricity Distribution Company of South Africa, GenerationCo (GxCo) and the National Transmission Company South Africa (NTCSA). In addition, a new and independent Transmission System Operator (TSO) will be established outside of the utility.
Eskom Green will develop multiple clean energy projects, with an initial pipeline of at least 2GW of capacity by next year. It will operate independently while remaining accountable to Eskom, allowing for greater governance agility, competitive market positioning and enhanced access to public-private partnerships, said Eskom.
It forms part of Eskom’s broader commitment to reduce carbon emissions and other air pollutants. Under the Paris climate agreement, South Africa has pledged that the country’s greenhouse gas emissions will be between 350Mt and 420Mt CO2-eq by 2030. South Africa’s carbon emissions are significant and primarily driven by its heavy reliance on coal for electricity via Eskom’s power plants.
‘Orderly transition’
Eskom said that under the revised strategy, transmission assets remain owned by the NTCSA, which operates as a subsidiary of Eskom. It received approval from energy regulator Nersa for its market operator licence last month.
Eskom CEO Dan Marokane said on Tuesday that the utility chose an unbundling framework that allows for the “fastest and most orderly transition”.
“This approach strengthens the level playing field for market participation and provides greater certainty for investors bringing much-needed capacity into the system,” he said.
Read: Big step forward in opening South Africa’s electricity market
“Growing the electricity marketplace requires expanding supply, with demand projected to increase by 1.5% in the short term and 2% in the long term. Given the variability of renewable energy, South Africa will need to grow generation capacity from 66GW in 2024 to 107GW by 2034. When the system grows, it creates space for all players, public and private, to contribute to South Africa’s energy future.”
Eskom said its approach allows for an orderly transition to the future market structure by retaining NTCSA as the transmission asset owner within Eskom, while the transmission company is established. This is in line with the amendment act that supports the development of a competitive wholesale electricity market.
- As part of the next stage of Eskom’s unbundling, the TSO will become a state-owned company. It will report under the regulatory framework of Nersa. The amendment act anticipates the establishment of the TSO within the next five years.
- Eskom said its distribution company will strengthen distribution networks and be unbundled once key solvency metrics are met, and this will be largely dependent on a solution to municipal debt crisis. The total municipalities owe Eskom rose by 71% to R94.6-billion from R55.3-billion in the 12 months to end-March 2025.
- GxCo will operate as a dedicated generation company within the new holding structure.
- A separate TraderCo will operate alongside other licensed traders in a more open electricity market.
NTCSA CEO Monde Bala said the TSO will be fully independent of the transmission company and Eskom to provide transparent and unbiased access to the transmission network.
“This is the best solution to provide confidence and trust to attract other players to invest in transmission infrastructure, by enabling fair access to the grid,” Bala said.
“This will enable energy security and remove Eskom from the potential conflict of interest that may exist in relation to its dual role of being a generator and owner-operator of the transmission grid.”
He said that granting independent power producers non-discriminatory access to the transmission grid is expected to boost investor confidence and attract greater investment in developing low-carbon and renewable energy generation projects.
The TSO will operate the integrated power system and balance supply and demand in real time. It will establish and manage a transparent, non-discriminatory electricity trading platform in compliance with market codes and rules issued by Nersa, Bala said. This is to ensure competitive trading between generators, traders and customers.
Read: Nersa plan ushers in major shift in South Africa’s electricity market
It will also act as the buyer of electricity from generators, including Eskom through GxCo and Eskom Green, and independent power producers.
It will be in charge of facilitating power purchase agreements and support ancillary services such as frequency control and voltage regulation to maintain system reliability. – © 2025 NewsCentral Media
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