Eskom's Legal Challenge Against Private Trader Licences: What It Means for C&I Wheeling Deals Signed Today

Eskom's Legal Challenge Against Private Trader Licences: What It Means for C&I Wheeling Deals Signed Today

South Africa's commercial energy market has been navigating one of its most consequential legal and regulatory disputes in years — and for commercial and industrial (C&I) property owners considering solar, battery energy storage systems (BESS), or wheeling power purchase agreements (PPAs), understanding the current status of Eskom's court challenge is essential before signing anything.

Background: What Happened and When

On 24 July 2025, Eskom Holdings SOC Ltd initiated application proceedings in the High Court seeking to review and set aside the decision of the National Energy Regulator of South Africa (NERSA) to grant five electricity trading licences, namely those issued to Green Electron Market (Pty) Ltd, CBI Electric Apollo (Pty) Ltd, GreenCo Power Services (Pty) Ltd, Discovery Green (Pty) Ltd, and NOA Group Trading (Pty) Ltd.

These licences were a logical progression in South Africa's evolving electricity market framework in terms of the Electricity Regulation Amendment Act, 2024, intended to enable greater competition, wheeling, and trading as the system moves away from a vertically integrated monopoly.

Traders, also referred to as aggregators, are essentially middle-men between independent power producers and end-users. They enter into agreements with multiple generators and sell to multiple customers with diverse energy requirements, at a margin to compensate them for taking some of the risk. This enables especially smaller businesses to access renewable energy despite being unable to take the full production of a specific independent power producer or enter into a 20-year off-take agreement.

Eskom's Core Argument

Eskom's stated rationale for the legal challenge centred on the subsidy framework and the sequencing of reform. According to Eskom Group Chief Executive Dan Marokane, the granting of trading licences to new market entrants enables subsidy-contributing customers to evade contributing towards billions of rands in subsidies — which is why new, fair-trading rules are required first. Until new trading rules are finalised, all market participants are required to operate under the existing regulatory framework to preserve the rule of law, maintain public oversight, and avoid unintended consequences for customers and municipalities. Proceeding with reform without clear and enforceable rules risks creating uncertainty over obligations, subsidies and consumer protection mechanisms.

The "Stay" Confusion and Market Uncertainty

The litigation created significant confusion. During Eskom's 2025 financial results presentation on 30 September 2025, CEO Dan Marokane announced publicly that Eskom had placed a "stay" on its review application to allow NERSA's process on the development of trading rules to proceed. However, a directive issued by the Gauteng Division of the High Court on 31 October 2025 stated, in plain and unambiguous language, that Eskom had since confirmed to the court that it is proceeding with its review application.

The impact was immediate and measurable. The uncertainty created was already negatively impacting billions of rands of investment decisions, financial closure of projects, and the conclusion of power purchase agreements with independent power producer generators and off-takers.

Where Things Stand Now: The Agreed Stay (February 2026)

The good news for the market arrived in late February 2026. Following a period of constructive engagement and consultations between Eskom and the Trader Respondents, the parties have now jointly agreed to stay the review application. This agreement does not constitute a withdrawal of the review application, but rather a procedural stay, pending the finalisation of the applicable regulatory framework. This decision reflects a shared intention to allow space for the ongoing regulatory processes relating to electricity trading rules and market design to proceed.

The parties consider the stay to be in broader public interest and supportive of South Africa's transition towards a competitive, transparent, and well-regulated electricity trading framework. Engagement between stakeholders will continue through the appropriate regulatory channels. Such rules, once finalised and implemented by NERSA, will apply to all entities engaged in trading activities, including Eskom.

NERSA's Draft Trading Rules: The Road Ahead

NERSA published the draft Electricity Trading Rules and a consultation paper, with a virtual public hearing scheduled in January 2026. The draft rules outline a phased opening of trading, starting with transmission and high voltage customers, and set out licensing, reporting, metering data access, reconciliation, settlement and supplier switching protocols.

Once licensed, traders will be recognised as independent market participants and may enter into use of system agreements for wheeling power. These measures are designed to ensure transparency, compliance, and a level playing field for all participants in the new market structure. NERSA's anticipated timeline for formally gazetting the new trading rules was set out following the influx of interest in trading and legal opposition, with June 2026 being the anticipated date that the rules would be formally gazetted.

What This Means for C&I Property Owners, PPAs, and BESS Today

For commercial property owners, fund managers, and C&I off-takers considering wheeling PPAs or funded solar-plus-BESS solutions right now, the landscape carries both opportunity and residual risk:

• Wheeling deals remain viable — but choose counterparties carefully. The five licensed traders named in Eskom's review application are legally operating under valid NERSA licences. The agreed stay means the application is not being actively prosecuted, but the case has not been withdrawn. PPAs and wheeling agreements signed with licensed traders today are exposed to the theoretical risk of the stay being lifted if NERSA's trading rules process stalls.
• Funded solar and on-site BESS carry the lowest regulatory exposure. Behind-the-meter solar PV and battery storage solutions — whether funded via an energy-as-a-service (EaaS) model or a direct PPA with an on-site generator — are insulated from the trader-licence dispute entirely. These structures do not depend on a trader licence and remain the most bankable, risk-mitigated path to energy cost certainty for C&I users today.
• Wheeling via traders unlocks scale. A trading licence enables a trader to aggregate energy from its own renewables generators and other independent power producers and supply it to Eskom- or municipal-connected customers across the country, offering far greater flexibility by allowing customers access to a mix of utility-scale solar PV, wind and battery storage from multiple generation facilities, without the complexity of contracting with multiple generators.
• Due diligence on PPA force majeure and regulatory clauses is non-negotiable. Until the NERSA trading rules are gazetted — expected around June 2026 — any C&I wheeling PPA should include robust regulatory change and force majeure provisions that address the possibility of the High Court application being reinstated or new licensing requirements being imposed.
• BESS amplifies value regardless of the trading outcome. Battery energy storage systems enhance the economics of both on-site and wheeled renewable energy by smoothing demand charges, providing backup, and — once the SAWEM market matures — enabling future participation in ancillary services markets.

The SolarXgen View

The agreed stay is a meaningful step forward for South Africa's energy transition. The Electricity Regulation Amendment Act, which came into force on 1 January 2025, was the result of years of public engagement and parliamentary debate, and entrenches the legal foundation for competitive electricity markets and affirms the legal standing of electricity traders. The regulatory direction of travel is clear.

For C&I clients signing deals today, SolarXgen recommends prioritising bankable, behind-the-meter solar and BESS structures as the anchor of any energy strategy, layering in wheeling solutions only with licensed, creditworthy trader counterparties and robust contractual protections. The market is opening — but it is not yet fully open.

Bottom line: Eskom's legal challenge has been stayed, not withdrawn. NERSA trading rules are due for gazetting around June 2026. Funded solar and BESS remain the most resilient C&I energy structure available today, while wheeling PPAs offer compelling upside with careful contracting.