The Electricity-Price Debate Is Only Half the Conversation

As South Africa rethinks how electricity is priced, businesses should look just as closely at how much power they actually need to buy

South Africa is once again confronting the question of electricity affordability. Government’s draft Revised Electricity Pricing Policy has put the structure and affordability of electricity firmly back on the agenda, as South Africa reviews a pricing framework first adopted in 2008 against a very different electricity market.

For businesses already under pressure from rising operating costs, the timing is significant. NERSA has approved an average electricity-price increase of 8.83% for 2027/28, following the 8.76% increase for Eskom direct customers this financial year.

But the electricity-price debate addresses only half the equation. While companies have little control over the price of each kilowatt-hour, they have considerably more influence over how many kilowatt-hours they need to buy.

That distinction matters because electricity consumption can easily become an accepted cost of doing business. In established factories, warehouses and processing facilities, equipment and systems can remain in place for years without their energy consumption being regularly reassessed. Facilities expand, operating hours change and technology improves, yet the electricity bill is often treated as one large unavoidable overhead. What a business has always consumed can gradually become confused with what it actually needs to consume.

Eskom’s latest annual results add weight to the discussion. Total electricity sales declined by 6.2% to 178 TWh in the year to March 2026, while industrial sales fell by 9.7 TWh, or 22.5% year-on-year. Eskom attributes declining demand to factors including weak industrial demand, embedded self-generation and energy-efficiency gains.

That does not mean South African industry has suddenly become dramatically more efficient. The figures reflect a much broader structural change in electricity demand. But they reinforce the need for businesses to look not only at where their electricity comes from and what it costs, but at how much they actually need to consume.

Look at demand before adding supply

Much of the corporate energy conversation in recent years has focused on supply. Solar, wheeling, battery storage, embedded generation and alternative procurement have become serious boardroom considerations as businesses seek greater resilience and cost certainty.

These solutions can play an important role, but there is a logical question that should come first: does the business need all the electricity it is currently consuming?

This is not about reducing production or asking an industrial operation to do less. It is about identifying consumption that adds little or no productive value. Which systems are running simply because they always have? Which assets have not been reassessed in years? Where has technology improved significantly since equipment was installed?

Every electricity-price increase makes those questions more commercially relevant. If a business removes unnecessary consumption today, it avoids paying for those units at the current tariff and reduces its exposure to future tariff increases for as long as that reduction remains in place.

That makes energy efficiency an operating-cost and competitiveness issue, not simply a sustainability exercise.

Lighting is one practical example. Across large industrial sites operating for extended hours, older lighting systems can form part of a continuous base load. Because they still perform their basic function, their consumption may attract little management attention.

The question is not whether a company should ‘buy LEDs’. It is whether the existing system is consuming materially more electricity than necessary to deliver the required result. If it is, the difference can be measured, costed and assessed against the investment required to remove it. The same principle applies more broadly across an operation.

Focus on what the business can control

The obvious obstacle is capital. Efficiency projects still have to compete with production equipment, maintenance, expansion and other priorities, particularly in a difficult industrial environment. But a lack of available capex should not automatically end the conversation.

Some efficiency interventions can be structured so that the cost of the upgrade is supported by the operating savings it creates. What matters is whether the commercial case can be measured clearly: what does the system consume today, what will it consume afterwards, what is the financial difference and how long will that saving continue?

That turns efficiency into a management decision rather than a technology purchase.

South Africa needs a serious debate about electricity pricing. Affordable and predictable power is fundamental to industrial competitiveness, investment and economic growth. The draft pricing policy itself reflects the changing structure of the electricity market and seeks to provide a framework for electricity prices, tariffs and charges in that evolving environment.

But business leaders should not wait for that national debate to be resolved before examining what sits within their own control. They cannot determine the tariff NERSA ultimately allows, but they can question inefficient systems, measure avoidable consumption and decide whether there is a commercially sensible way to remove it.

The next electricity-price increase will make every necessary kilowatt-hour more expensive. It will do exactly the same to every unnecessary one.

Before asking what electricity will cost next year, businesses should first ask how much of it they genuinely need to buy.

That is the part of the electricity-price conversation they can start changing now.