Municipal electricity distributors have emerged as a central reform priority as South Africa moves towards a more competitive electricity market with industry stakeholders warning that progress may depend as much on distribution reform as on new generation capacity.
The issue was highlighted during the launch of the latest South Africa Electricity Traders Association report, Policy to Power: Ten actions to deliver green, accessible and secure electricity, released on February 17 in collaboration with research firm Krutham. Panellists noted that municipal distribution reform is becoming a decisive implementation challenge as electricity reform shifts from policy design to execution.
According to Andrew Taylor, Head of Trading and Co-Founder of NOA Group, the reform landscape has moved beyond policy intent towards delivery and coordination. “The challenge today is no longer policy intent. The challenge is now one of delivery,” he said, warning that reforms risk progressing too slowly or unevenly without stronger alignment across the sector.
Taylor described the municipal distribution environment as a critical constraint, noting that municipal distributors manage more than 40% of the electricity grid while many face significant financial strain. “Without stabilising this distribution environment, competition remains theoretical,” he said, adding that failure to address distribution challenges could deepen inequality in electricity access and market participation.
Krutham Research Manager Matthew Le Cordeur said South Africa’s transition from a monopoly electricity system to a competitive multi-market structure aims to attract private investment and lower costs but cautioned that fragmented institutional execution remains a key risk. “Municipal financial stress and weak distribution networks are already limiting wheeling arrangements and broader market expansion,” he said.
Lameez Hyman, Senior Analyst: Infrastructure and the Just Energy Transition at Krutham, suggested that municipalities may need to be placed on a more financially sustainable footing, including potential ring-fencing of electricity revenues, before participating fully in competitive markets. Alternative participation models, such as trader panels, are being explored by some metros to overcome barriers that have slowed municipal independent power programmes, she added.
Etana Energy CEO Evan Rice said distribution reform requires urgent attention alongside investment in generation and transmission. “Even if progress continues elsewhere in the value chain, failing municipal infrastructure could become the sector’s Achilles heel,” he said, warning that uneven distribution capability could limit the benefits of electricity reform and create unequal economic outcomes across regions.
Industry participants indicated that the success of South Africa’s electricity reform process may ultimately depend less on the pace of new power plant construction and more on whether municipal distributors can adapt quickly enough to support a functioning competitive electricity market.
