The recently approved Eskom tariff increase of 8,76% for direct customers, effective April 1, may appear manageable on paper. In practice, however, the impact on commercial and industrial users is likely to be significantly more severe, says Brandon Horn, Head of Commercial at SolarAfrica.
The headline percentage does not fully reflect how electricity costs are structured. For large users, the increase is not limited to energy charges alone. Network costs, legacy charges and other structural components continue to place upward pressure on total electricity bills. As a result, the real cost impact often exceeds the nominal tariff increase.
Our modelling shows that a large electricity user consuming around 1 000 000 kWh per month could see its annual electricity costs increase by roughly R2,17 million. This estimate is based on typical consumption patterns for customers in this range and highlights how even a single-digit percentage increase can translate into substantial absolute cost increases.
Time-of-use pricing further amplifies this effect. During high-demand winter periods, peak charges could rise by close to 60c/kWh. For a 24/7 operation, this could add approximately R200 000 per month during these periods alone. Businesses with load profiles concentrated in peak periods are therefore disproportionately affected.
These increases come at a time when many South African businesses are already facing rising input costs across transport, logistics and production. Electricity is not an isolated cost line item; it feeds directly into the broader cost base. The result is a compounded cost environment that is increasingly difficult to absorb without either passing costs on to customers or reducing operational expenditure elsewhere.
The current tariff trajectory also highlights a broader structural issue: reliance on a single electricity source with consistently rising and increasingly complex cost components introduces significant risk for large users. As tariffs evolve, the gap between headline increases and actual expenditure is becoming more pronounced.
In this context, businesses are increasingly looking at ways to manage cost exposure and improve resilience. This includes a combination of on-site generation, battery storage and participation in wheeling and energy trading arrangements. These options are not without their own complexities and cost considerations but they offer an alternative to full exposure to regulated tariff increases.
Importantly, when evaluating these alternatives, it is necessary to consider the full spectrum of electricity costs – not only the headline tariff increase. A narrow focus on percentage adjustments risks underestimating the true financial impact of electricity supply.
