{"id":91241,"date":"2026-05-14T17:22:46","date_gmt":"2026-05-14T17:22:46","guid":{"rendered":"https:\/\/outliereditor.co.za\/?p=91241"},"modified":"2026-05-15T13:05:19","modified_gmt":"2026-05-15T13:05:19","slug":"outlier-renew-16-trading-electrons","status":"publish","type":"post","link":"https:\/\/outliereditor.co.za\/index.php\/2026\/05\/14\/outlier-renew-16-trading-electrons\/","title":{"rendered":"Outlier Renew #16:\u00a0Trading electrons"},"content":{"rendered":"\n
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The South African Wholesale Electricity Market (SAWEM) is a hot topic. As Saul Musker, the chief director of strategy and delivery support in the Presidency, said this week in a webinar about SAWEM, we are in the midst of \u201cthe most significant reform in the energy sector in South Africa\u2019s history\u201d. We\u2019re rapidly moving away from relying on Eskom \u2013 a \u201cvertically integrated monopoly\u201d \u2013 to having a competitive electricity market.<\/p>\n\n\n\n

We did get off to a slow start, said Musker. More than 100 countries have already unbundled their electricity utilities. But there\u2019s no turning back now.<\/p>\n\n\n\n

Two things stood out for me in the webinar: firstly the role of electricity traders was explained, showing just how much the electricity market has and will change, and secondly, a representative from Eskom Green explained its role in SAWEM (the recording\u00a0<\/a>is on EE Business Intelligence\u2019s YouTube channel).<\/p>\n\n\n\n

Shift from bilateral to trader-led deals<\/h2>\n\n\n\n

We already have more than 7GW of independent power capacity supplying wind and solar electricity to the grid through the government\u2019s renewable procurement programme (REIPPPP), introduced in 2011. Eskom takes up those electrons via long-term power purchase agreements, usually 20 years.<\/p>\n\n\n\n

Despite its success, the programme has structural limitations. The single-buyer model means that Eskom is the sole buyer for every contract. This creates a ceiling on the volume of investment the programme could absorb, since all financial risk ultimately flows back to Eskom and, by extension, to the state.\u00a0<\/p>\n\n\n\n

In 2021, the licensing threshold for generation was raised from 1MW to 100MW, then in 2022, the threshold was removed entirely, which meant any generator could build and sell electricity without a licence, removing the most significant regulatory barrier to private investment.<\/p>\n\n\n\n

Developers moved quickly into bilateral power purchase agreements between a single generator and a single large off-taker, typically large commercial and industrial energy users, mining companies, or manufacturers with sufficient scale and sophistication to enter into long-term energy contracts.<\/p>\n\n\n\n

In 2023, most of the private utility-scale projects (those above 5MW) that reached financial close did so under direct contracts between a generator and a single large off-taker, said Wayne Cowie, CEO of electricity trader EXSA. According to Krutham\u2019s Policy to Power report produced for the South African Energy Traders Association earlier this year, 2.6GW of the renewable energy projects that reached financial close between 2023\u20132025 were backed by electricity traders.<\/p>\n\n\n\n

Traders have unlocked a category of project that could not be financed under the bilateral model: projects where customer demand existed, but where no single off-taker was willing or able to commit to a 20-year contract.<\/p>\n\n\n\n

Where a bilateral deal is a one-to-one relationship between a generator and a buyer, a trader aggregates many generators and many buyers. This changes the risk profile. For example, traders typically buy power from generators under long-term agreements, while offering shorter, more flexible contracts to their customers. They buy from different generators that use different technologies and in different geographies, so if a generator has an issue, or there is a weather event, or grid constraints, the electricity supply to customers doesn\u2019t have to be disrupted. The trader sits between the generator and the customer, absorbing risk on both sides.<\/p>\n\n\n\n

The role of Eskom Green<\/h2>\n\n\n\n

Eskom Green has been approved by the National Treasury as a ring-fenced subsidiary of Eskom Holdings, Khutso Sekgota, Eskom Green\u2019s general manager for business development, said in the webinar.<\/p>\n\n\n\n

It will focus on renewable energy \u2013 solar PV, wind, hydro, pumped storage, batteries and green hydrogen \u2013 and has approximately 14GW of projects in development. It is prioritising the \u201crepowering\u201d of Eskom\u2019s retiring coal power stations, such as Hendrina and Camden, with commercially viable renewable investments, said Sekgota.<\/p>\n\n\n\n

Most importantly, Eskom wants to be an equal market player in the competitive energy market operating under the same rules as independent power producers, he said. A private sector partnership framework is being developed to enable co-investment. The message was intended to reassure the market that Eskom Green is not a mechanism to reverse liberalisation, but an equal participant within it.<\/p>\n\n\n\n

New private power projects<\/h2>\n\n\n\n

Private power projects registered with Nersa are inching close to 20GW, according to the latest information released by Nersa yesterday. In the first four months of 2026 alone, 132 new projects with a combined capacity of 1.34 GW were registered.<\/p>\n\n\n\n

Six projects of 100MW or more have been registered so far this year. Four are solar projects and two are wind. Three are in the Free State, two in the Northern Cape and one in the North West. The projects are:<\/p>\n\n\n\n