Eskom Advances Unbundling Strategy: Minister Approves New Structure for Power Sector Reform

December 9, 2025

Eskom has received ministerial approval for its revised unbundling strategy, marking a significant step toward restructuring South Africa's electricity sector. Electricity and Energy Minister Dr. Kgosientsho Ramokgopa has endorsed the plan that will transform Eskom from a vertically integrated utility into a holding company with multiple specialized subsidiaries.

The New Eskom Structure

The approved structure creates a holding company that will oversee five key entities:

• National Electricity Distribution Company of South Africa (NEDCSA)
• GenerationCo (GxCo)
• Eskom Green – a new subsidiary focused on renewable energy
• National Transmission Company South Africa (NTCSA) – already legally separated since July 2024
• A new independent Transmission System Operator (TSO) that will exist outside of Eskom

Under this arrangement, transmission assets will remain owned by NTCSA, which will continue operating as an Eskom Holdings subsidiary responsible for expanding and maintaining the national grid.

What This Means for South Africa's Power System

According to Eskom Group Chief Executive Dan Marokane, this restructuring aims to establish a competitive electricity market that will drive efficiency, diversity of supply, and ultimately more affordable electricity prices.

"We have chosen the framework that enables the fastest and most orderly transition," Marokane stated, emphasizing that this approach strengthens the level playing field for market participants while providing greater certainty for investors.

The power utility projects electricity demand to increase by 1.5% in the short term and 2% in the long term. To meet this growing demand while accommodating the variability of renewable energy, South Africa's generation capacity will need to expand from 66GW in 2024 to 107GW by 2034 – a 62% increase in just ten years.

Alignment with Electricity Regulation

The approved strategy aligns with the Electricity Regulation Amendment Act (ERAA), which establishes the framework for restructuring the electricity supply industry. A key element is the creation of an independent TSO within five years, with NTCSA continuing to perform transmission-related functions during this transition period.

NTCSA achieved a major milestone in July 2024 when it became a legally separated entity operating as an Eskom Holdings subsidiary. This initial unbundling laid the groundwork for the current phase of restructuring.

Key Components of the New Structure

The plan includes several strategic elements:

• The TSO will become a fully independent State-Owned Company managing electricity trading through the Market Operator and System Operations
• NTCSA will continue owning and expanding the high-voltage transmission grid, implementing a Transmission Development Plan that includes approximately 14,000km of high voltage lines
• NEDCSA will focus on strengthening distribution networks and will be unbundled once key solvency metrics are met – largely dependent on resolving the municipal debt crisis
• GxCo will operate as a dedicated generation company within the holding structure
• A separate TraderCo will operate alongside other licensed traders in a more open electricity market
• Eskom Green will develop multiple clean energy projects, initially targeting at least 2GW of capacity by 2026

Implementation Timeline

With ministerial approval secured, Eskom will implement these changes in a phased approach, with overall transformation targeted for completion by 2030. This gradual implementation allows Eskom and government to manage financial, legal, and operational risks while building the necessary skills, systems, and institutions for a competitive electricity market.

Eskom has committed to managing these changes responsibly, working with government, regulators, organized labor, municipalities, and other stakeholders through a structured engagement process designed to maintain power system stability throughout the transition.

Outlook

While Eskom's unbundling represents a fundamental shift in South Africa's electricity landscape, several challenges remain. The distribution entity's unbundling depends largely on resolving the municipal debt crisis, which has been a persistent problem for years. Additionally, the transition requires building significant new generation capacity during a period of continued supply constraints.

The success of this restructuring will ultimately depend on how effectively these separate entities can operate both independently and as part of a cohesive system, while simultaneously addressing South Africa's immediate electricity needs and long-term energy transition goals.

Key Terms Explained

• Unbundling: The process of separating Eskom into different businesses for generation, transmission and distribution of electricity, to enable competition and efficiency.
• NTCSA (National Transmission Company South Africa): The entity that owns and operates the national power grid, responsible for transporting electricity from power stations to distribution networks.
• TSO (Transmission System Operator): An independent entity that will manage the flow of electricity across the grid, ensure system stability, and coordinate the electricity market.
• ERAA (Electricity Regulation Amendment Act): Legislation that provides the legal framework for restructuring South Africa's electricity supply industry and creating competitive markets.
• GW (Gigawatt): A unit of power equal to one billion watts. For context, 1GW can power approximately 650,000 to 750,000 homes under typical conditions.
• Baseload Power: Electricity that can be produced consistently to meet minimum demand, typically from coal, nuclear or gas plants.