Eskom’s unbundling plan has been revised to include a fourth subsidiary, Eskom Green.
Eskom’s unbundling plan has been revised to include a fourth subsidiary, Eskom Green, as the utility hopes to complete the process by 2030.
Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, approved Eskom’s revised unbundling strategy, marking a further step in the restructuring of South Africa’s electricity supply industry in line with the Electricity Regulation Amendment Act (ERAA).
Municipal debt
However, municipal debt owed to Eskom remains a concern affecting the unbundling of the distribution division.
About R105 billion is owed to Eskom, and in November, the entity confirmed to the portfolio committee on electricity and energy that roughly R62.2 billion of that would likely be written off under new Distribution Agency Agreements (DDA).
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Eskom split
Eskom will be split into four under a revised unbundling strategy announced on Tuesday.
Eskom announced that Ramokgopa approved the Eskom Board-endorsed structure for a separate utility, which will comprise a new holding company with the following subsidiaries:
- National Electricity Distribution Company of South Africa (NEDCSA).
- GenerationCo (GxCo).
- Eskom Green – a new subsidiary to house Eskom’s renewable energy business.
- National Transmission Company South Africa (NTCSA) – legally separated in July 2024, formerly Eskom Transmission.
Affordable electricity
The decision to unbundle Eskom has been hailed as a major step in the electricity sector, which will eventually make electricity more affordable.
Eskom said a new, independent Transmission System Operator (TSO) will also be established outside the utility.
“With the minister’s approval of the refined strategy, Eskom will proceed with implementation in a carefully sequenced manner, with overall transformation aimed for completion by 2030.
“This phased approach allows Eskom and government to manage financial, legal, and operational risks while building the skills, systems, and institutions required for a more open and competitive electricity market,” Eskom said.
Competitive electricity market
Under the revised unbundling strategy, transmission assets remain owned by the National Transmission Company South Africa (NTCSA), a subsidiary of Eskom, which will continue to expand and maintain the national grid.
“Today’s announcement by the minister represents a significant step forward in establishing a competitive electricity market in South Africa, supported by the rule of law while maintaining strong public oversight of the power system and its assets,” said Eskom Group Chief Executive, Dan Marokane.
“This marks the next stage of the groundwork to enable more affordable and competitive pricing by driving competition, efficiency, and diversity of supply, ultimately stabilising South Africa’s electricity system.”
Consumers
Marokane said Eskom recognises the urgency of reform to benefit consumers and that, among all options for Eskom’s next stage of unbundling, it is the most urgent.
“We have chosen the framework that enables 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.
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“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,” Marokane said.
Restructuring electricity
The approved strategy aligns with the ERAA, which establishes the framework for restructuring the electricity supply industry and creating an independent TSO within five years. Under the ERAA, NTCSA continues to perform transmission-related functions during the transition.
The TSO will oversee system and market operations, central purchasing, and non-discriminatory access for all market participants, supporting the development of a competitive wholesale electricity market as required by the ERAA.
Eskom warned that NEDCSA will strengthen distribution networks and be unbundled once key solvency metrics are met, largely dependent on a solution to municipal debt, which has soared to R105 billion.
Eskom Green
Eskom Green will be the utility’s wholly owned renewable energy subsidiary, serving current and future customers, accelerating its participation in the renewables sector.
The subsidiary will develop multiple clean energy projects, initially supported by a pipeline targeting at least 2GW of capacity by 2026.
“This structure also provides strategic certainty for lenders and bondholders, supporting financial stability while the reforms are implemented and the electricity system continues to operate reliably,” Eskom said.
Eskom Green will operate independently while remaining accountable to Eskom Holdings, enabling greater governance agility, stronger competitive market positioning, and improved access to public-private partnerships.
Management
Eskom said it will manage these changes responsibly, in partnership with government, regulators, organised labour, municipalities, and all relevant stakeholders.
The utility said a “structured engagement process is underway” to keep stakeholders informed, safeguard power system stability, and support employees throughout the “unbundling journey.”
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