South Africa’s electricity sector is unique and complex, shaped by decades of infrastructure investment, evolving government policy, and an urgent need for cleaner, more reliable power. As the country continues to navigate energy shortages, ageing infrastructure, and climate commitments, it’s vital for businesses and consumers to understand the main types of energy providers that contribute to the country’s power supply – and why diversifying sources is no longer optional but essential.

The energy sector in SA includes various types of providers operating within a market that is transitioning from a state-owned monopoly to a more competitive system. The primary types of energy providers are the national utility, municipalities, Independent Power Producers (IPPs), and private alternative energy companies (self generation).

1. Eskom: The National Utility

Eskom remains the cornerstone of South Africa’s electricity supply. As the national utility, Eskom is responsible for the majority of electricity generation and owns and operates the country’s high-voltage transmission network.

In 2025, Eskom supplied approximately 90% of the electricity used in South Africa, with the balance coming from Independent Power Producers and smaller sources of generation. Whether electricity is supplied directly by Eskom or through a municipality, most of the power on the grid still originates from Eskom-owned generation assets, including coal, nuclear, hydro, pumped storage, and diesel plants. Eskom also plays a regional role, exporting a small portion of electricity, roughly 2–3% of total sales, to neighbouring countries in Southern Africa under long-standing bilateral agreements.

While Eskom’s challenges are well documented, it is important to recognise that the utility operates and maintains one of the largest and most complex electricity systems in the world, providing the backbone infrastructure that keeps South Africa’s economy running. In recent years, Eskom has made measurable improvements in maintenance planning, plant performance, and system stability, while also enabling the integration of renewable energy from Independent Power Producers into the national grid. Without Eskom’s transmission network and system operations expertise, large-scale private and renewable generation would not be possible in South Africa today.

2. Municipal Electricity Providers

Many local municipalities act as electricity distributors and suppliers to residential and business users within their specific service areas. They purchase electricity in bulk, primarily from Eskom, and then bill the end customer. Municipalities distribute roughly 40% of end-user electricity in the country, although Eskom still manages a larger share of distribution overall. Some municipalities also own small generation assets, but these are a tiny share of the overall supply. Municipal distribution networks vary widely in performance, with some facing financial and infrastructure challenges.

Historically, businesses connected to municipal networks could only buy electricity supplied by their municipality, which mostly came from Eskom. But with the introduction of virtual wheeling in 2025, these businesses can now purchase renewable electricity from private producers, using the same grid infrastructure while reducing reliance on Eskom power and lowering their carbon footprint – without any physical changes to their connection. Read more about this here.

3. Independent Power Producers (IPPs)

In recent years, the role of Independent Power Producers (IPPs) (like SOLA Group) has expanded steadily as South Africa opens up its power market. IPPs include companies that generate electricity from solar, wind, landfill gas, and other renewable sources, and sell that energy into the grid or directly to corporate buyers through contracts like Power Purchase Agreements (PPAs) with Eskom or directly with commercial customers. While Eskom dominates, IPPs collectively contribute a growing share, estimated to be 9% of total generation (as at 2025), primarily in renewable energy capacity.

IPPs are critical for decarbonising South Africa’s energy mix and reducing dependence on coal. Through wheeling and bilateral contracts, IPPs can supply businesses directly, unlocking opportunities for cost savings and sustainability, and also relieving pressure on the national grid in the long term.

4. Self-Generation and Embedded Generation (Private Companies)

South African industry and commercial enterprises are increasingly pursuing self-generation solutions, driven by the need to mitigate rolling blackouts (load shedding) and decarbonise operations. These include rooftop solar, gas turbines, and battery storage systems.

Benefits of self-generation include: reduced exposure to load shedding, lower long-term energy costs and improved sustainability profiles. While self-generation still makes up a modest portion of total supply, it is rapidly gaining traction, especially among energy-intensive sectors.

The National Energy Regulator of South Africa (NERSA) is the regulatory authority that oversees and licenses participants across the electricity, piped-gas, and petroleum pipelines industries.

The Future of Energy in South Africa

Did you know that Eskom is not the only provider of electricity for businesses in SA?

South Africa’s electricity landscape is shifting. Many South African businesses still assume that Eskom is their only option for electricity. In reality, energy market reforms allow companies to buy power from private Independent Power Producers (IPPs) and have it delivered through the national grid using a process called energy wheeling. This means your business can keep using the same electrical infrastructure, but the electricity itself can come from a clean, privately owned solar or wind plant instead of a coal-fired power station. For businesses looking to cut costs, reduce emissions, and improve energy certainty, this opens up an entirely new set of opportunities.

Eskom remains the largest single provider, but diversification is underway. The rise of IPPs, embedded generation, and evolving municipal roles signals a more resilient, competitive, and cleaner energy future.

Why Businesses Should Consider Power from an IPP (like SOLA)

At SOLA Group, we’ve been at the forefront of South Africa’s energy transition as an experienced IPP, due to our pioneering role in developing and building Africa’s first multi-buyer, and various other utility-scale solar wheeling projects. Our team specialises in developing and managing renewable energy projects that deliver reliable, clean power directly to businesses via the national grid.

Get in touch with SOLA Group today to explore how your business can benefit from buying power from a trusted green energy IPP.