South Africa’s electricity pricing model is increasingly shifting away from energy consumption and towards fixed network charges, raising concerns about the long-term economics of rooftop solar, energy efficiency and distributed generation.
This is according to the latest Light Paper released by residential solar provider GoSolr, arguing that the country’s electricity crisis has evolved from one centred on supply shortages into what it describes as an affordability crisis driven by tariff restructuring, rising fixed charges and municipal pricing inconsistencies.
According to the report, the most significant structural change is the increasing recovery of utility costs through fixed charges rather than volumetric electricity sales. Eskom’s retail tariff plan has progressively increased the share of costs recovered through fixed components such as service charges, administration fees and generation capacity charges.
The paper argues that this weakens the financial incentive for households and small businesses to reduce consumption or invest in rooftop solar and battery systems as consumers continue paying substantial monthly charges regardless of electricity usage levels.
GoSolr warned this could create tension between municipal revenue recovery and South Africa’s broader energy transition objectives.
“The system is sending the wrong signals, rewarding inefficiency and punishing progress,” said GoSolr CEO Andrew Middleton.
The report highlights growing disparities between municipal tariff structures, citing the City of Cape Town’s smaller fixed fee increases and optional time-of-use tariffs as a more balanced approach while warning that some Johannesburg residential customers face fixed charges exceeding R1 700 per month before electricity consumption costs are added.
GoSolr further argued that South Africa’s electricity pricing structure increasingly reflects the cost of maintaining grid infrastructure, system losses, theft, non-payment and emergency diesel generation rather than simply the cost of electricity consumed.
The paper follows Eskom’s latest tariff restructuring process, which introduced higher fixed and capacity-related charges as part of the utility’s approved 2026/27 tariff adjustments.
According to GoSolr, South Africa risks discouraging distributed generation at a time when additional embedded generation capacity could help relieve pressure on the national grid and reduce infrastructure strain.
The company called for greater tariff transparency, standardised embedded generation rules, clearer separation between infrastructure and consumption costs and reforms to municipal funding models that currently depend heavily on electricity trading revenue.
