NERSA Moves to Reshape SA Power Sector With New Market Rules and Licensing

One of the most consequential announcements is the approval of a Market Operator licence for the National Transmission Company South Africa (NTCSA).

South Africa’s electricity landscape is poised for a historic transformation following a series of bold regulatory decisions announced by the National Energy Regulator of South Africa (NERSA). At a media briefing on Thursday, the regulator confirmed new measures that formally set the country on the path toward a competitive electricity market, a fundamental shift from the long-standing vertically integrated model dominated by Eskom.

These decisions, NERSA said, reflect “the significant changes expected within the electricity sector” and align with amendments to the Electricity Regulation Act of 2006, which mandate the creation of a competitive market within the next five years.

Establishing the Market Operator: A Major Milestone

One of the most consequential announcements is the approval of a Market Operator licence for the National Transmission Company South Africa (NTCSA). This step legally empowers the NTCSA to manage the future market where multiple generators will compete to supply electricity.

The Market Operator will be responsible for:

• Facilitating power trading

• Managing market settlements

• Ensuring transparent, fair competition between electricity producers

• Overseeing market operations as South Africa transitions away from a single-buyer model

This licensing marks a significant milestone in the unbundling of Eskom, under which the NTCSA already operates as the independent transmission entity.

Grid Capacity Allocation Rules: Ensuring Fair Access

NERSA highlighted the approval of the Grid Capacity Allocation Rules, formalised on 12 November 2025, as a crucial intervention to address long-standing constraints in connecting new renewable and traditional energy projects to the grid.

The rules aim to:

• Guarantee fair, transparent, non-discriminatory access to grid infrastructure

• Improve planning certainty for developers and investors

• Prevent speculative or inactive projects from tying up grid capacity

• Improve the optimal use of existing grid assets

• Guide future grid expansion and investment

For years, grid congestion has been one of the biggest obstacles to bringing new energy capacity online—particularly in renewable-rich provinces such as the Eastern and Northern Cape. The new rules are expected to unlock faster connections, reduce application backlogs, and streamline queue management.

NERSA says this will accelerate access for bankable, shovel-ready projects, boost investor confidence, and ultimately support South Africa’s long-term energy security.

Electricity Market Advisory Forum (EMAF) Launched

To ensure inclusion, transparency and expert oversight, NERSA also approved the creation of the Electricity Market Advisory Forum (EMAF). This multi-stakeholder body will advise the regulator on several critical aspects:

• Development of Market Rules

• Oversight of the Market Code

• Support for regulatory guidance as the electricity market matures

• Assessing the readiness of stakeholders, including municipalities, traders, IPPs, and system operators

NERSA described EMAF as a proactive governance tool that will help establish a robust regulatory environment for the emerging market.

The forum will also assist the regulator in licensing the Market Operator, reviewing market performance, and identifying potential risks in the transition process.

A Fundamental Shift in South Africa’s Energy Future

South Africa’s electricity reforms represent the most significant restructuring of the sector in decades. The move toward a competitive market is expected to usher in:

• More players generating and selling electricity

• Reduced reliance on Eskom’s struggling generation fleet

• Increased investment in renewable energy

• Greater innovation and efficiency

• Market-driven pricing and transparent operations

• A modernised grid to accommodate diverse energy sources

The shift will also align South Africa with global best practices, where liberalised electricity markets have improved reliability, increased competition, and attracted billions in private-sector investment.

Building Investor Confidence

NERSA emphasised that these reforms are designed to create a clearer regulatory environment that attracts investors. Improving certainty, eliminating speculative projects, and streamlining grid access are expected to remove barriers that have historically slowed energy development.

By accelerating the integration of bankable projects and creating space for smaller producers, the new system aims to stabilise electricity supply and support economic recovery.

Laying Foundations for the Next Five Years

NERSA said its decisions reflect deliberate and strategic planning to ensure full market readiness by the time the competitive electricity model goes live. Over the next five years, stakeholders can expect:

• Finalisation of Market Rules

• Implementation of the Market Code

• Increased transparency in grid planning

• Gradual expansion of trading platforms

• More accountability in grid access and allocation

• Strengthened regional and municipal participation in market operations

With South Africa still recovering from years of load shedding and generation shortfalls, these reforms are widely seen as essential to unlocking long-term energy security.