Eskom's FY2027 Tariff at 8.76%: Why the MYPD6 RAB Redetermination Creates a Compounding Cost Trap for C&I Buyers Still on Grid Supply

Eskom's FY2027 Tariff at 8.76%: Why the MYPD6 RAB Redetermination Creates a Compounding Cost Trap for C&I Buyers Still on Grid Supply

South Africa's commercial and industrial (C&I) electricity buyers face a worsening cost trajectory after NERSA formally approved an 8.76% average tariff increase for Eskom direct customers, effective 1 April 2026 — and confirmed a further 8.83% increase to follow in April 2027. For property owners and businesses still wholly reliant on grid supply, the structural forces behind these numbers are more alarming than the percentages alone suggest.

What NERSA Actually Approved — and Why It's Higher Than Expected

This was not a routine annual adjustment. After first setting rate increases in January 2025, NERSA admitted errors in calculating Eskom's tariffs for the 2025/26 to 2027/28 financial years and reached a settlement with Eskom in July. When the two parties tried to have the settlement made an order of court, the High Court in Pretoria threw it out in a December 2025 ruling. Judge JJC Swanepoel found that the secret settlement had unlawfully excluded the public from a decision that directly affects every electricity consumer in the country.

NERSA undertook a component-by-component recalculation of Eskom's Generation Regulatory Asset Base (RAB), using the same information Eskom originally submitted in its MYPD6 application, while applying the methodology strictly. The regulator settled on R54.7 billion in additional allowable revenue, to be phased in over three years: R12 billion in 2026/27, R23 billion in 2027/28, and R19.7 billion in subsequent years.

The overall impact on tariffs is a 3.4% increase in 2026/27 and 2.64% in 2027/28 — added on top of the base increases. Originally, the increase was determined to be 5.36% for 2026/27, which, combined with the additional 3.4%, totals 8.76%. For 2027/28, it rises from 6.19% to 8.83% with the added 2.64%.

Importantly, prices for municipal bulk purchases are adjusted by 9.01% effective 1 July 2026 — meaning tenants and businesses on municipal accounts face their own escalation, arriving on a different cycle.

The Compounding Cost Trap: A Long-Term Pattern

The 8.76% figure does not exist in isolation. In recent years, tariff increases have been relentless: 15.63% in 2021/22, 9.61% in 2022/23, 18.7% in 2023/24, 12.7% in 2024/25, and 12.74% in 2025/26. Between 2007 and 2024, Eskom tariffs rose by approximately 937% against general inflation of 155% over the same period — meaning electricity has become roughly six times more expensive in real terms.

The RAB redetermination makes this trajectory structurally worse. The additional revenue recovery has been structured in phases: R12 billion in 2026/27, R23 billion in 2027/28, with the remaining R19.7 billion to be recovered beyond the current MYPD6 period. This means the RAB correction will continue inflating tariffs after FY2028 — a compounding tail that extends well beyond the current regulatory cycle. There is no near-term ceiling in sight.

Furthermore, the fixed portion of the Generation Capacity Charge (GCC) is increased from 20% in FY2026 to 30% in FY2027 — shifting more cost into unavoidable fixed charges that C&I customers cannot reduce through efficiency alone.

What This Means for Commercial Property Owners

For landlords, property funds, retailers, manufacturers, and logistics operators still on full grid supply, the implications are direct:

• Lease and occupancy cost pressure: Rising electricity charges feed directly into triple-net lease costs, utility recoveries, and GLA-based service charge budgets. Tenants will push back harder at renewal.
• Asset value erosion: Buildings with high grid dependency carry growing energy cost risk that is increasingly visible in due-diligence processes and yield valuations.
• Municipal lag effect: Customers purchasing electricity from municipalities will need to await communication from their municipalities — and municipal mark-ups mean the effective increase for many C&I buyers will exceed the Eskom headline figure.
• No retrospective relief: NERSA confirmed that no retrospective tariff adjustments will be applied for the 2025/26 financial year, in line with the High Court ruling — but the forward-looking accumulation of RAB recovery is locked in.

The Solar, PPA and BESS Alternative: Why the Window Is Now

Against this backdrop, the commercial case for funded solar, PPAs and Battery Energy Storage Systems (BESS) has never been stronger — or more time-sensitive.

According to the Centre for Renewable and Sustainable Energy Studies (CRES), around 5.6 gigawatts of C&I embedded generation capacity had been installed in South Africa by January 2026 — reflecting a market that has already begun the migration away from grid dependency.

Electricity tariffs keep rising beyond inflation, grid supply remains uncertain in many areas, and businesses are under increasing pressure to manage both cost and operational risk. At the same time, the cost of energy technologies has come down significantly, particularly for battery energy storage systems (BESS).

Under a Power Purchase Agreement (PPA) model, zero capex solar means you host a solar PV generating asset but do not pay for the asset. Unlike a take-or-pay PPA, in a pay-for-performance PPA, you pay only for verified kWh delivered at an agreed R/kWh tariff, so savings can be realised immediately from commissioning. Corporate PPAs spanning 10 to 20 years present an energy cost savings opportunity for corporate buyers, with rates offered considerably lower than the historically escalating Eskom tariffs.

The role of battery storage is expanding very fast. While it remains important for backup in some cases, more businesses are now using batteries for cost optimisation and reductions — including arbitrage: storing energy when it is cheaper or generated on-site, and using it during higher-cost periods.

South Africa's Section 12B tax incentive, which allows businesses to deduct the cost of qualifying renewable energy assets, remains one of the most compelling business-case drivers for commercial solar investment in the country.

The SolarXgen View

The MYPD6 RAB redetermination is not a once-off correction — it is a structural repricing of South Africa's electricity infrastructure that will compound through every future MYPD cycle. C&I buyers who delay transitioning to funded solar and BESS are not simply paying today's tariff: they are absorbing an escalating base that grows faster than inflation, faster than revenue, and faster than most business energy budgets can absorb.

A well-structured PPA or funded solar-plus-BESS solution locks in a known, inflation-linked rate far below Eskom's trajectory — converting an open-ended grid liability into a predictable, bankable energy cost. For commercial property owners, this is no longer a sustainability decision. It is a financial one.

Contact SolarXgen to model your site's grid cost exposure under the MYPD6 trajectory and receive a funded solar or PPA proposal with zero upfront capital required.