Government plans to introduce a new financing model aimed at unlocking private-sector investment in municipal energy efficiency projects as part of broader efforts to strengthen struggling local electricity systems.
The initiative was outlined by Deputy Electricity and Energy Minister Samantha Graham-Maré during the Department of Electricity and Energy’s 2026 Budget Vote debate on May 12.
According to Graham-Maré, the department will introduce an energy savings performance contracting model under its Energy Efficiency and Demand Side Management Programme.
The model intends to allow municipalities to leverage private-sector investment to implement energy efficiency upgrades while reducing long-term operating costs.
“This approach is part of a broader blended finance strategy,” Graham-Maré said. “We need to unlock additional private investment in municipal energy infrastructure and efficiency improvements.”
According to the department, participating municipalities will continue implementing projects such as public lighting retrofits, upgrades to municipal buildings and water infrastructure as well as municipal energy management systems.
The announcement comes amid growing pressure on municipal electricity distribution systems – many with ageing infrastructure, maintenance backlogs, technical and non-technical losses, revenue collection challenges and infrastructure theft.
“Energy reform cannot succeed if local distribution systems continue to weaken,” Graham-Maré said.
Alongside the financing initiative, government has also initiated the piloting of district energy councils in four districts although the department did not identify the pilot areas during the debate.
The councils will aim to gather municipalities, Eskom, businesses, agriculture, ratepayer organisations and other stakeholders in structured platforms focused on co-ordination, problem solving and local energy planning.
Government said the broader initiative is part of efforts to strengthen municipal electricity governance, modernise local energy systems and improve co-ordination across electricity distribution networks.
