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In this opinion article on the latest draft trading rules released by the National Energy Regulator of South Africa, renewable energy entrepreneur Frank Spencer warns that the proposed rules impose volume caps, broad non-bypassable charges, and structural barriers that will constrain generators and traders alike for years.

The National Energy Regulator of South Africa (Nersa) has published its revised draft Trading Rules for the bilateral trading market (Version 01, dated 12 April 2026) together with a consultation paper inviting stakeholder comment by 23 May 2026.

The rules deserve serious scrutiny from the entire electricity supply industry – not just licensed traders, but every independent power producer (IPP) with a wheeling contract, every aggregator, and every customer with embedded generation. Because these rules apply to all of them.

This is the second round of consultation, following the initial draft published in November 2025 and the subsequent public hearings in January 2026 at which Eskom raised significant objections. The revised rules run to 44 pages and set out a four-phase framework for the transition to retail electricity competition.

Applicability extends well beyond traders

Clause 3.1 makes the scope explicit. The rules apply to all licensed traders, all network service providers operating under distribution licences, all retailers operating under distribution licences, and, critically, all generators of capacity greater than 100 kW that are registered with Nersa, and involved in bilateral agreements supplying wheeled energy to consumers, whether directly or via traders.

An IPP with a direct wheeling power purchase agreement (PPA) to a customer faces the same volume restrictions, the same contestable customer thresholds, the same non-bypassable charge (NBC) framework, and the same reconciliation and reporting obligations as a licensed trader. Aggregators bundling multiple IPPs are in the same position. Volume restrictions are measured at the customer level: the aggregate of all third-party supply from all traders and generators combined must fall within the applicable cap (Clause 7.4.5).

Generators below 100 kW (covering most rooftop solar and small-scale embedded generation (SSEG) installations) are explicitly excluded. Their electricity "shall not be eligible for wholesale or retail electricity trading" (Clause 9.4.1).

The contestable market is extremely narrow

Phase 1 limits contestable customers to those with a Notified Maximum Demand (NMD) of at least 1 MVA, plus interval metering and Time-of-Use (TOU) tariff structures. This confines contestability to large industrial and commercial customers. All other customers (the overwhelming majority of South Africa's electricity consumers, including all low-voltage and prepaid customers below 1 MVA) are classified as captive and must continue purchasing exclusively from their incumbent distributor.

The threshold is not relaxed until Phase 3, when contestability extends to customers with a connection size of 100 kVA or more, and Phase 4, when all customers become contestable. But Phase 3 requires the South African Wholesale Electricity Market (SAWEM) to have been operational for a minimum of three continuous years, and Phase 4 requires a further three years after Phase 3 commencement. Given the uncertainty around SAWEM's go-live date (anticipated no earlier than Year 2 of Phase 1) full retail competition is realistically a decade or more away.

Volume restrictions: a six-year glide path starting at 20%

Even within the narrow contestable market, the rules impose volume restrictions on third-party supply. In Year 1, a contestable customer may source only 20% of its baseline consumption from third-party suppliers. The cap remains at 20% in Year 2, rises to 30% in Year 3, 40% in Year 4, and 50% in Year 5. Volume restrictions are removed entirely only in Year 6, contingent on non-bypassable charge thresholds having been met (Table 1, Clause 7.4).

The stated rationa...

The International Monetary Fund (IMF) says the war in the Middle East, which has precipitated an energy crisis similar in scale to the 1970s oil crisis, should spur countries to accelerate their adoption of renewable energy to strengthen their resilience to energy shocks.

Speaking at the release of the latest World Economic Outlook (WEO), chief economist Pierre-Olivier Gourinchas said the diversification of energy sources to protect economies from price hikes and supply disruptions was one of the key lessons from the 1974 crisis.

"It's very clear that the best way – and this is something a number of countries did already in the 1970s and many more countries will do now – is for countries to find ways in which they can diversify their sources of energy [and to] rely more on sources of energy that they can produce domestically. Often that means renewables and so we are likely to see a big push in that direction," Gourinchas said.

The war, he added, "should spur faster adoption of renewable energy, which can strengthen resilience to energy shocks, improve energy security, and support the climate transition".

Asked about how the current crisis compared with previous shocks, he said it was comparable to the 1974 oil price shock.

"Our estimates right now is that if the conflict were to stop today, the oil shortfall for the year – including the fact that facilities have been damaged and it will take time for them to come back online even if everything were to stop today – is comparable to the shock from the 1970s in terms of how much oil has been withdrawn from the market on an annual average basis," he said.

"There are, however, two important differences compared to that shock. The first one is that the global economy is much less oil-dependent now than it was back then. There are many other sources of energy – renewables, nuclear and other things – and also the global economy has become much more efficient in terms of how much it needs oil to produce GDP."

A second source of resilience, Gourinchas said, was based on changes made to central bank policies since the 1970s, with the focus now being on reining in inflation rather than trying to support economic activity.

"That's a critical difference with the 1970s and it's something that is going to be important going forward," Gourinchas said, arguing that the main lesson from that period was not to act in a way that allowed an energy shock to turn into an ongoing inflation problem

Central banks had adopted frameworks that allowed them to focus on price stability and, because they were more independent, households and businesses also had an expectation that they would act on that mandate, keeping inflation expectations in check.

"So, while central banks can't do anything about the price of oil, they can do something about preventing the emergence of wage-price spirals and a de-anchoring of inflation expectations."

In its 'reference' scenario released with the WEO, the IMF is assuming that the war will be of a limited duration and scope, and that global growth will be 3.1% against the 3.3% forecast in January.

Under this reference case, the IMF is projecting an average oil price for 2026 of $80/bl, based on an assumption that there will be a resolution to the war that will support a reduction in energy prices in the second half of the year.

However, it also released 'adverse' and 'severe' scenarios with far less benign growth and inflation outcomes and Gourinchas indicated that the outlook was probably already somewhere in between the reference and the adverse scenario, with the latter scenario projecting growth of only 2.5% and inflation of 5.4%. The 'severe' scenario, meanwhile, pointed to global growth of only 2% and inflation of 6%.

"Every day that passes and every day that we have more disruption in energy, we are drifting closer to the adverse scenario," he warned.

Nevertheless, the IMF still felt that central banks could wait and watch before moving to raise interest rates.

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The International Monetary Fund (IMF) has cut its 2026 growth projection for the South African economy to only 1% from a January projection of 1.4%, as it warned that the outbreak of war in the Middle East threatened to throw the global economy off course and exact a high economic toll on many oil-importing countries.

The IMF has also reduced the growth outlook for sub-Saharan Africa to 4.3% from 4.6%.

South Africa relies heavily on fuel imports, including from countries unable to trade as a result of the ongoing disruption to shipping in the Strait of Hormuz, while recent movements in oil prices and the exchange rate point to yet more fuel price hikes in May, with particularly steep diesel hikes indicated.

Government moved to partially offset what would have been even steeper hikes in April by introducing a month-long R3/l reduction in the general fuel levy, while a Cabinet task team has been set up to assess short- and medium-term responses to security-of-supply risks and price shocks. However, there have been no public statements from the task team since the decision in late March to cut the fuel levy in April.

The IMF also cut its global growth outlook and raised its inflation projections in all three scenarios included in its World Economic Outlook released on April 14.

Global growth in its most benign 'reference' scenario is projected to be 3.1% against the 3.3% forecast in January, while inflation in the scenario is projected at 4.4% for 2026.

The reference scenario was released instead of the IMF's traditional baseline, and is predicated on the assumption that the war will have limited duration and that the disruptions will fade by mid-2026.

However, IMF chief economist Pierre-Olivier Gourinchas acknowledged the high level of uncertainty and warned that, in the absence of a swift resolution to the war, the world could drift daily towards scenarios that pointed to lower growth and higher inflation outcomes.

Under the IMF's so-called 'adverse scenario' growth is projected at 2.5% and inflation at 5.4%, while its 'severe' scenario pointed to global growth of only 2% and inflation of 6%.

Under its reference case, the IMF is projecting an average oil price for 2026 of $80/bl, based on an assumption of a resolution that will help bring down energy prices in the second half of the year.

"Very clearly with every day that passes where we don't have a resolution, where the flow of oil and gas is limited through the Strait of Hormuz, we are moving away from that scenario," Gourinchas said during a media briefing.

Earlier the IMF together with the World Bank and the International Energy Agency also cautioned that fuel and fertiliser prices could remain high for a prolonged period even if regular shipping flows resume through the Strait of Hormuz, owing to the damage to infrastructure as a result of the conflict.

The IMF also stressed that, while the growth and inflation revisions under its reference case seemed relatively modest at the global level, the impacts would not be evenly spread.

The toll would be most pronounced in the Middle East region and in more vulnerable economies elsewhere, especially commodity-importing emerging markets and developing economies.

Research Department division chief Deniz Igan said that, ahead of the war, many economies in sub-Saharan Africa were benefitting from resilient global growth and higher non-oil commodity prices.

"Now with the war, we have reduced global growth, softer prices for non-oil commodities and also worsened terms of trade for oil importers … and on top of that the region is also facing significant challenges from declining foreign aid, with bilateral aid cuts ranging from 16% to 28% in 2025 and we project that trend to continue," Igan explained.

As a result growth has been downgraded for the region by 0.4 percentage points cumulatively for 2026 and 2027, while median inflation in sub-Saharan Africa is projected to rise from 3.4% in 2025 to 5% in 2026.

"That reflects the higher...

Mulilo says Middlepunt PV plant to supply cheapest REIPPPP-procured electricity

South African independent power producer Mulilo reports that its 337 MWdc Middlepunt solar PV plant will deliver electricity at R458/MWh when it enters into commercial operation in the coming 24 months – the cheapest electricity procured to date under South Africa's public bidding rounds.

Located near Welkom in the Free State, Mulilo CEO Jan Fourie reports that the R4.4-billion project is also the first project procured under Bid Window 7 of the Renewable Energy Independent Power Producer Procurement Programme, or REIPPPP, to have advanced to financial close.

During Bid Window 7, the initial aim was to procure 5 000 MW of new renewables capacity, but 3 940 MW was ultimately procured in 2025 across 18 PV projects only, with grid constraints having prevented any new wind project awards.

With a contracted export capacity of 240 MWac, Middlepunt has concluded a 20-year power purchase agreement with the National Transmission Company South Africa, and construction is under way.

Once in operation, the PV facility is expected to supply about 770 GWh yearly into the national grid when it is connected through the Everest Main Transmission Substation.

"The electricity supplied to the South African grid is priced at R458/MWh (approximately $27/MWh) . . . [It] ranks among the most affordable green energy available anywhere in the world," Fourie says.

The financial close announcement follows a recent R15-billion investment pledge made by Mulilo at the South Africa Investment Conference in March.

It also comes after the company announced that its 76 MW/304 MWh Mercury Battery Energy Storage System project, located near Viljoenskroon in the Free State, had achieved financial close.

"The successful close of the Middlepunt Solar project further contributes to Mulilo's strategic ambition of delivering 1 GW of new generation capacity per year, and forms part of our growing portfolio across wind, solar and battery energy storage technologies."

Mulilo, whose shareholders include Copenhagen Infrastructure Partners and Norfund, reports that it has a development pipeline exceeding 30 GW.

The Reatile Group and Perpetua are the project's empowerment partners, alongside a local community trust.

Mulilo lists the project's financial, legal, technical, and insurance advisers as being Standard Bank, Absa, Nedbank, PepperTree Capital, Bowmans, Fasken, and DKVG, Arup and Marsh.

Engineering News editor Terence Creamer discusses the ambitious target set for South Africa's freight rail sector, as well as the release of a draft rail masterplan for public comment.

Eskom and ferrochrome producers strike 62c/kWh deal, with Nersa process to follow

Electricity utility Eskom has announced the conclusion of a much-anticipated 62c/kWh electricity tariff deal with ferrochrome producers Glencore-Merafe Chrome Venture and Samancor Chrome.

The State-owned company also reiterated that the concluded agreements remained subject to approval by the National Electricity Regulator of South Africa (Nersa).

In a statement, Eskom said the agreements had been negotiated between the Eskom Smelter Task Team and the two ferrochrome producers, both of which had been pursuing retrenchment processes at their smelters in parallel, citing high electricity prices as the main impediment to sustaining operations.

Glencore-Merafe had twice postponed the termination date for its Section 189 retrenchment process to allow the negotiations to continue.

In a statement, Glencore-Merafe confirmed that it had provisionally accepted the offer, subject to certain clarification points and conditions.

The conditions were not immediately provided, but it was indicated that the deal would be for five years.

The ferrochrome venture described the development as an important milestone in relation to the revised terms and conditions of the proposed tariff.

"Eskom's submission of the proposed tariff and revised terms and conditions to Nersa brings the industry closer to achieving a more sustainable operating environment," the venture added in its statement.

The final acceptance remained conditional upon the wider ferrochrome industry agreeing to the final terms and conditions and subsequent approval by Nersa, however.

Eskom indicated that Nersa was expected to conduct a public consultation process on the agreements in due course and indicated previously that the terms and conditions would be made transparent during that process.

However, Eskom also said the dissemination of specific agreement details fell under Nersa's purview, and the extent of such disclosure would be governed by its internal protocols and regulatory limitations, in line with the need to respect the commercial confidentiality of Samancor Chrome and Glencore–Merafe Chrome.

"Given the significance of this matter for employees, communities, and the broader ferrochrome sector, the Venture requests that the regulatory process be treated as urgent, with a target of completion within 30 days," Glencore-Merafe said.

"To align with the regulatory timeline, the termination date of the Section 189 process has been extended to 11 May 2026," it added.

Eskom said the tariff intervention improved its liquidity without requiring higher tariffs, additional borrowing, or further government support."

The utility had indicated previously that the initial revenue shortfall of about R10-billion would be met through the envelope provided under the R230-billion debt-relief package extended to it by the National Treasury.

Eskom said the deal also provided it with predictable sales volumes for up to the next five years and protected public investments made in the utility, as well as its ability to support reindustrialisation and economic growth.

Eskom Group CEO Dan Marokane added that without the success of Eskom's turnaround over the past three years, it would not have been in a position to support the ferrochrome industry or prevent job losses.

"Eskom will continue to work tirelessly with intergovernmental teams, labour, producers and stakeholders to balance Eskom's financial sustainability and regulatory responsibilities so that it can play its part in delivering electricity to drive economic growth," Marokane said.

Meanwhile, Eskom said that it recognised that the entire ferroalloy and iron and steel segments were experiencing sustained pressure and indicated that these sectors would be prioritised for amended negotiated pricing agreements ahead of other smelter sectors.

"For these segments, pricing will be determined through a structured, bottom-up assessment that takes into account the ...

Big container recovery required if South Africa is to meet 250-million tons rail target

Meeting the South African government's target of moving 250-million tons of freight yearly on rail by 2030 will be achieved only if there is a significant recovery in general freight volumes, which in turn requires a large rise in container volumes, a leading macrologistician argues.

GAIN Group director Professor Jan Havenga calculates that to close the gap between the volumes currently being achieved of about 160-million tons and the target that has been set will require "nearly half" of those volumes being met through containers.

The recent recovery in volumes, he points out, has been led largely by an increase in volumes on the bulk coal and iron-ore corridors, with the recovery in general freight having been underpinned by a strong rise in manganese.

Once manganese is stripped out from the figures, general freight volumes on rail have actually fallen, Havenga highlights.

"To get to 250-million tons, it must come from the general freight business and increasingly in the form of container freight," he explains, with the bulk corridors expected to contribute 145-million tons and general freight 105-million tons to the target.

However, while the commodity corridors are closing in on matching their 145-million-ton yearly contribution, the general freight business is nowhere near meeting its 105-million tons contribution, having delivered less than 40-million tons last year.

"If you look 30 years into the future, the railways will be a container railway by 2055, or it will not be," Havenga avers, an argument premised on a demand model that the GAIN Group has been running for 20 years, and which enables it to model future freight demand patterns.

In addition, a failure to secure rail-friendly general freight has resulted in congested road corridors, and is contributing to inefficiencies that are costing the South African economy an estimated R450-million daily.

The upshot is that national logistics costs as a percentage of GDP are already too high at about 11.6% and are far worse when logistics costs are measured as a percentage of transportable GDP at nearly 54%.

Havenga estimates that some 100-million tons of freight that should be on rail – including mined commodities used domestically and destined for export markets, as well as intermediate and finished manufactured goods – is currently "missing" from the rail system.

In addition, the value of the cargo carried in containers far exceeds that which moves on the bulk corridors.

Describing South Africa as a "spatially challenged" country, where the landmass is large relative to the size of the economy, creating higher demand for transport services, Havenga argues that three integrated actions are needed to address the high cost of freight logistics, namely:

A rebuilding of the rail network to support not only import-export corridors, but also domestic general-freight corridors linked to consolidation hubs;Greater collaboration across the transport ecosystem, with a keener focus on container planning; andCoordinated spatial planning for freight villages.

"The network should have between 20 and 30 nodes serving major production and consumption areas," he argues.

Similar models have been implemented in countries such as Uzbekistan and India and Havenga argues that, in the South African context, it could yield cost savings of R100-billion in more efficient long-haul and last-mile logistics.

In addition, it could sustain South Africa's regional logistics relevance, notwithstanding the ongoing shift away from the north-south corridor to ones that are increasingly connecting the interior to ports on the east and west coasts.

"The biggest gap currently is in general freight rail and there is still no clear plan to recover it despite the good efforts of the National Logistics Crisis Committee.

"If government wants to meet its 250-million-ton target it has to recognise that nearly half of what is mi...

South Africa's post-collision repair sector is entering a period of structural strain that could have far-reaching implications for insurers, manufacturers and consumers alike, warns the South African Motor Body Repairers' Association (SAMBRA).

SAMBRA says that sustained economic pressure on small and medium-sized motor body repairers (MBRs) is beginning to erode the foundations of the country's automotive repair ecosystem.

At the centre of the repair industry sits an interdependent value chain, explains the association.

Original-equipment manufacturers (OEMs, or car manufacturers) define repair specifications; motor body repairers execute these repairs to exacting standards; and insurers fund the claims process that enables restoration.

When aligned, this model protects vehicle safety, brand integrity and insurance claims stability.

However, according to SAMBRA national director Juan Hanekom, the balance between these elements is tightening.

"Most motor body repairers in South Africa are independent micro and small enterprises.

"They are required to make significant capital investments in equipment, training and compliance to meet modern OEM standards, yet they operate in an environment of increasing cost containment and margin compression.

"This gap is where the pressure is intensifying."

Modern vehicles have evolved dramatically in recent years, explains Hanekom.

Advanced driver-assistance systems, lightweight composite materials, complex structural designs and new-energy-vehicle technologies have transformed what was once a largely mechanical repair function, into a highly technical, calibration-intensive discipline, much like trading the hammer for a computer.

Correct repair now demands specialised tooling, continuous upskilling, dedicated infrastructure and strict adherence to manufacturer protocols.

"The technical threshold continues to rise," says Hanekom. "But the economic model underpinning repairs has not always evolved at the same pace. For small businesses, that creates a sustainability challenge."

At the same time, insurers are navigating their own pressures, such as rising claims frequency and severity, inflationary input costs and heightened consumer sensitivity around premiums.

In this constrained environment, cost control becomes a priority.

However, the sustained downward pressure on repair margins, combined with extended payment cycles and rising compliance obligations, are all placing strain on repair capacity.

"The industry must recognise that repair capacity is not infinite," cautions Hanekom.

"If independent repairers begin to reduce investment, scale back operations, or exit the market, the consequences will ripple across the value chain, resulting in longer turnaround times, regional access gaps, increased claims inflation and greater systemic risk."

Unlike large dealership networks, many MBRs are regionally embedded small businesses employing skilled artisans, apprentices and support staff.

They provide critical repair access in smaller towns and peri-urban areas where alternative capacity is limited.

Their sustainability is, therefore, not only a commercial matter, but an economic as well as safety consideration.

"When compliant repair capacity shrinks, consumers feel it first," says Hanekom.

"Vehicles remain off the road longer, service levels decline and the risk of substandard repairs entering the system increases. Ultimately, this becomes a consumer safety issue.

"It is only when industry comes together and acknowledges the challenges the interdependent value chain are facing, that meaningful and sustainable solutions can be found," notes Hanekom.

He stresses that the industry must acknowledge its shared interdependence.

OEMs rely on compliant repairs to protect brand integrity.

Insurers rely on stable, high-quality repair networks to manage claims risk.

Repairers rely on realistic economic structures to sustain investment.

Weakening any corner of that triangle destabilises the whole, says Ha...

Engineering News editor Terence Creamer discusses some of the key themes of this year's South African Investment Conference and what the investment commitments that have been made indicate about the prospects for domestic and foreign direct investment.

Green energy features prominently at 2026 investment gathering

Investment commitments by South African and international renewables investors featured prominently at the sixth South Africa Investment Conference, with combined pledges of more than R50-billion announced.

In addition, green energy also featured strongly in an energy-related investment prospectus released by government at the event, where a new R2-trillion investment target was set for the period to 2030.

Overall, pledges of R415-billion across 81 individual projects were announced involving businesses operating in 12 sectors, from mining and manufacturing to agro-processing, transport, renewable energy and information technology.

The largest green-energy commitment was made by South African independent power producer (IPP) Mulilo, which released details of investments with a combined value of R15-billion.

Mulilo said the capital would fund the development of three large-scale solar PV projects and a battery energy storage system that would, together, deliver 716 MW in grid-tied electricity.

Mulilo was also actively progressing a 30 GW pipeline with the goal of adding one gigawatt yearly of additional electricity supply.

Large commitments were also announced by other prominent South African IPP investors such as Anthem Energy (R10.2-billion), Seriti Green (R10-billion), and NOA (R9.9-billion), as well as Enel Green Power (R9.8-billion) of Italy.

In addition, green economy and renewables investment commitments were announced by Hosano Energy (R5-billion), Mzansi Energy (R3-billion), Parsons Power Park (R2.8-billion), Shaurya Steel (R200-million), and Tinna Mbodla Rubber (R100-million).

In his address, President Cyril Ramaphosa said the renewables investments represented a vote of confidence in South Africa's "rapidly transforming energy sector".

He argued that regulatory reforms in the electricity sector had unlocked a significant and growing pipeline of investment, with more than 220 GW of renewable-energy projects in development, and 36 GW already in the grid connection process.

"Over the next five years, we will add massive new solar, wind and battery storage capacity to transition our economy towards cheap green energy and sources at scale.

"We are now moving rapidly to establish a competitive wholesale electricity market and to complete the unbundling of Eskom through the establishment of a fully independent transmission operator.

"At the same time, we are moving to enable private investment in expanding our transmission network through independent transmission projects," Ramaphosa said.

Meanwhile, Electricity and Energy Minister Dr Kgosientsho Ramokgopa released what he termed an 'investment prospectus' that provided a snapshot of the generation- and grid-related investment opportunities emerging in the electricity sector.

The document states that South Africa's Integrated Resource Plan 2025 outlines a coordinated infrastructure programme that will entail investments of about R2.23-trillion, aimed at ensuring security of supply.

"The plan provides for the addition of about 105 GW of new generation capacity by 2039, fundamentally reshaping the country's energy mix.

"Renewable energy capacity alone is expected to increase from approximately 17 GW today to more than 45 GW by 2030, supported by a steady build rate of around 5 GW per annum," the document reads.