As farmers turn to their own generation systems to handle rising electricity costs, households are left struggling, often having to cut back on buying food.
By Jasper Raats, senior journalist at African Farming and Landbouweekblad
The extended period South Africa has enjoyed without load shedding since May has little to do with Eskom’s efficiency and more to do with the number of households and businesses investing in their own renewable energy generation, according to Nedbank’s latest ‘Energy Tracker’ report.
The report shows that demand for energy has fallen below the 2019–2021 average and has remained there. In July this year, peak demand was 3,3% lower than in July last year, and 5,9% below the average before the crisis period.
On the supply side, Eskom maintained planned maintenance at roughly 12% of installed capacity on average in the first half of 2025, pushing the energy availability factor (EAF) to 59%. Yet unplanned outages as a percentage of installed capacity still averaged 28,6% during that time.
Registrations for small-scale embedded generation increased by 474% between December 2022 and December 2024, and solar PV installations by 138%.
A Squeeze on Household Budgets
The pace at which South Africans are disconnecting from the national power grid is placing an increasing financial burden on the remaining consumers who still depend on Eskom. Agriculture is one of the industries rapidly investing in alternative energy generation, with the Land Bank and commercial banks eagerly providing financing to support their clients’ sustainability, says Henning Holm, energy expert at HolmStone energy company.
Meanwhile, the burden is growing heaviest on those who can least afford it.
Since the April tariff increase, the largest hikes have affected households that use the least power, whereas customers with higher Eskom consumption have seen smaller increases, energy analyst Chris Yelland said in an interview with Jimmy Moyaha of Moneyweb.
“In that sense, I think these residential tariffs can be considered to be anti-poor,” Yelland said, as they result from the scaling down of certain cross-subsidies – where larger consumers subsidised smaller ones, urban customers subsidised rural ones, and wealthier customers subsidised the poor. Now that these cross-subsidies are being reduced, the poor, who were previously protected, will end up paying more or facing larger percentage increases than bigger consumers.
Also read: Rising electricity costs is a growing threat to SA agriculture
Secret Settlement Following Mistakes
Moreover, it now appears that energy regulator Nersa has reached a settlement with Eskom that could cost electricity consumers billions more through higher electricity tariffs. Moneyweb reports that Nersa confirmed in a statement on Wednesday that it has entered into a settlement with Eskom for R54 billion following a dispute over a calculation error made in determining the utility’s revenue for the current and next two financial years.
This follows a previous secret settlement for R40 billion after similar legal issues, which has not yet been officially disclosed to the public.
According to calculations by former Eskom pricing expert Deon Conradie, tariff increases – if all recovered in one year – could exceed 25%. Although the increases will be spread over several years, the cost will ultimately be passed on to consumers.
A Squeeze on Household Budgets
Consumers are already struggling to make ends meet, says agricultural economist Prof Johan Willemse. As energy analyst Chris Yelland noted, those who can least afford it are being hit the hardest. “Where I live,” Willemse says, “more and more people are helping their domestic and garden workers to buy small solar systems, because electricity has become so expensive that they can no longer make ends meet,” Willemse adds.
According to Statistics South Africa, Willemse says, a large part of the country’s working class spends about 40% of their income on food. “You can’t live without electricity, and now there’s less and less money left for food. The clearest example was the prices of beef and mutton, which stayed flat for five years – until the end of last year – because consumers simply couldn’t afford an increase. The only reason prices started rising this year is because supply has dropped significantly.”
What worries him most, however, is that consumers can no longer afford even staple foods such as maize flour and bread. “When we ask what people are eating, the answer is almost always that they are eating less, because they can afford less.”
Paying for a Failed System
Holm stresses that it is not the farmers’ fault that Eskom’s electricity has become so unreliable that they can no longer operate their farms sustainably on Eskom power. Nor is it their fault that electricity has become so expensive that alternative energy investments are increasingly difficult to finance.
“The problem is that farmers are still paying for a failed system,” he says. “Even though many now generate their own power with solar and battery storage, large parts of their businesses remain tied to the energy market – from diesel to fertiliser. With many South Africans struggling to buy food, let alone luxuries such as mutton and prime beef cuts, avocados and nuts, more and more farmers are turning to exports to hedge against the volatility of the local economy.”
‘Free Market Competition Will Restore Balance’
Holm says that with Eskom’s monopoly over the energy market, coupled with its inability to provide affordable electricity, the state has created a vicious cycle that can only be broken by opening up the market in South Africa. Willemse agrees.
“Eskom owns the network, and my proposal is that independent suppliers should be allowed to sell electricity directly to consumers via that network,” Holm says. “Consumers would then be free to buy power from suppliers of their choice, while paying Eskom a tariff for using the grid. Free market competition will quickly restore balance in the energy market.”
He acknowledges that government will always have a social responsibility towards the poor, who cannot afford electricity even at free-market rates and will therefore need subsidies. “So there will always have to be some generation capacity within a state institution like Eskom, and private power will have to subsidise it through some form of tax. That’s just how the world works. No one disputes that we have a social responsibility to one another, but what we’re doing now is unaffordable for everyone.”
Holm says the government’s fear that electricity will become unaffordable in a free market is nothing more than scaremongering. “In history, there has never been a year when the cost of renewable energy went up – it continues to fall every year. That, combined with Eskom’s escalating tariffs, is exactly why so many people are now disconnecting from the grid.”
