A decline in electricity production and consumption in South Africa could hamper Eskom's income generation operations, according to Minerals Council South Africa (MCSA) economist Andre Laurens, who discussed the country's electricity update for April and May 2026.
The latest April data from Stats SA indicates a continued decline in electricity generation in South Africa.
downward spiral
Seasonally adjusted real electricity generation in April 2026 declined by 8.7% year-on-year, reflecting a continued contraction in annual terms in recent months.
On a month-on-month basis, output declined further by 1.7%.
The key point is that despite the absence of load shedding, both power generation and consumption continue to trend downwards.
Electricity generation in April 2026 was 14.7% below the pre-COVID (2019) average, highlighting the extent of the structural decline in demand and supply.
January to April (year-on-April), power generation was 6.4% lower than the same period last year.
For the 12 months to April 2026 (May 2025 to April 2026), production was 4.7% lower than the previous 12-month period.
“The year-on-year contraction, coupled with generation levels well below pre-Covid benchmarks, suggests that weak underlying demand, possibly reflecting lower industrial activity in the economy, remains a defining feature of the power landscape.
“This will put pressure on Eskom’s revenues and does not support single-digit tariff increases in the future,” says Lawrence.
Smelter's promise
But all is not lost, as Lawrence points out, there are early signs that industrial demand may be starting to recover.
Ferrochrome smelters operated by Glencore-Merafe and Samancore Chrome may come back to power subject to approval of changes to their negotiated pricing agreements (NPAs), which could lead to increased power consumption.
“Importantly, while the system is relatively agile, Eskom has indicated that it has retained approximately 2,000 MW of capacity in cold storage that can be brought back online with relative ease if demand increases.
“This available buffer suggests that additional load from smelters can be accommodated without compromising system stability,” the economist says.
market correction
Electricity utilities are also opening themselves up to a new electricity market framework, and the scale of policy reform currently underway is remarkable.
This is occurring alongside increasing pressure on existing industrial customers, many of whom are facing significant financial stress and may be unable to continue operations without electricity tariff relief.
Against this backdrop, a number of key policy and regulatory processes are currently progressing through the public consultation framework of the National Energy Regulator of South Africa (Nersa).
These processes reflect a broad restructuring of both market design and pricing arrangements with significant implications for generators, traders, and large industrial consumers.
“The scale and pace of policy reform signals a fundamental change in South Africa’s electricity market,” says Lawrence.
“While these reforms are necessary to enable a more competitive and efficient system, they bring a period of uncertainty to market participants.
“Especially for energy-intensive users, rising electricity costs and evolving pricing structures are posing a major risk to operational viability.
“In this context, the key challenge is to balance reform with affordability and competitiveness.
“Maintaining system stability while ensuring that industrial users remain viable will be critical to supporting macroeconomic recovery and growth.”
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