Eskom nailing solar users in South Africa

Eskom’s new retail tariff plan (RTP) spells bad news for rooftop solar users in South Africa, who could eventually see price hikes of over 75% compared to their current bills.

This is because of a restructuring of tariffs across the group’s packages, and the removal of the inclining block tariff (IBT), which has a generally negative effect on low-consumption households—like solar users.

The impact is particularly pronounced on the Homepower packages, which are targeted at middle- to high-income households in the country.

Nersa’s approval of Eskom’s RTP) restructures the power utility’s tariffs and introduces new fixed network charges.

According to independent energy analyst Pieter Jordaan, Eskom’s solution to the problem of more customers shifting away from typical electricity consumption to alternative sources is the introduction of new fixed charges.

As these users—often more affluent—turn to alternative power, their consumption decreases, adding costs to those customers who remain.

While these alternative energy users use less Eskom energy, they remain connected to the grid, and the utility has to account for this and ensure that energy is available when they need it.

This was also the cause for the removal of the incline block tariff (IBT) under the new structure.

The IBT was designed to benefit low-income, low-consumption energy users but instead ended up giving “uneconomic incentives for customers installing embedded generation,” Eskom said.

Eskom has argued that due to the migration to solar power by wealthy customers, it was losing the additional premium income needed to subsidise poorer customers.

By ‘front-loading’ its tariffs, it hopes to recoup this loss, Jordaan said.

Now all Eskom customers will be hit with fixed non-generation costs relating to transmission, distribution and consumer account administration, which Jordaan says has been “escalated substantially”.

Nersa only only allowed 20% of Eskom’s proposed fixed tariffs to be phased-in this year.

Once fully phased in, by 2027/28, the RTP will push bills far beyond Nersa’s three-year general hike of 26.1%, Jordaan said.

An analysis done by Jordaan shows that a middling consumer (using 600kWh per month) on the Homepower 4 package will see their electricity bills climb over 28% in 2025 due to the changes.

The further two phases of 30% in 2026/27 and and 30% in 2027/28—plus the 5.36% and 6.19% general tariff increases granted for those years—will push electricity bills far higher.

Once the full RTP changes kick in over the next three years, price hikes will average over 75% versus the 2024/25 rates, he said.

Bad news for solar users

Energy expert Chris Yelland previously pointed out that the tariff changes will have a disproportionately negative effect on low-income households, as the tariff structure frontloads the increases on low consumption.

Put another away, when analysing the impact of the changes, higher consumers of electricity tend to be the net beneficiaries of the changes as they would often see their bills coming down.

According to Jordaan, this appears to be directly targeting solar users in South Africa, who will invariably become low consumers of Eskom electricity as they shift to their own generation.

“The RTP relief afforded by the relaxation of the IBT will have a minimal positive impact on most consumers as the tariffs were strategically frontloaded to lock in revenue at lower consumption—especially from customers invested in solar self-generation,” he said.

A breakdown of typical charges and increases shows that solar users on these packages will see the sharpest increases by a long shot.

Notably, solar users are also in the firing line with a wider clampdown by Eskom to ensure that all solar installation are registered with the utlity or local municipalities.

Solar users will have until March 2026 to register their intallations without having to pay fees—however, doing so after the deadline will carry additional costs.

One small solace in the numbers is that households will no longer have to contend with even higher prices due to the planned VAT hikes.

Had the ANC’s original plans gone through, South Africans would have seen VAT increase to 16% over the next two years, adding even more to the already-burdensome price hikes.

Due to legal action taken by the DA and EFF, National Treasury and Parliament had settled out of court to set aside the approved fiscal framework.

The state will now table a new budget later in May without the VAT hike.