Eskom vs. NERSA: The Trading Licence Lawsuit Suspension and What It Means for C&I Buyers Contracting Under the New Bilateral Rules Today

Eskom vs. NERSA: The Trading Licence Lawsuit Suspension and What It Means for C&I Buyers Contracting Under the New Bilateral Rules Today

South Africa's electricity reform narrative reached a critical turning point in February 2026 when Eskom, NERSA and five private electricity traders jointly agreed to suspend a High Court review application — a legal battle that had threatened to derail the country's transition to a competitive electricity market. For commercial and industrial (C&I) buyers evaluating power purchase agreements (PPAs), funded solar installations and battery energy storage systems (BESS) today, understanding this dispute — and its current status — is essential.

Background: How the Lawsuit Started

On 24 July 2025, Eskom Holdings SOC Ltd initiated application proceedings in the High Court seeking to review and set aside the decision of 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 under the Electricity Regulation Amendment Act, 2024, intended to enable greater competition, wheeling and trading as the system moves away from a vertically integrated monopoly.

In an affidavit supporting the application, Eskom senior manager for legal matters Mohlago Masekela argued the licensing decisions "form the beginning of a fundamental change of policy by Nersa that has not been the subject of public consultation and the implications of which appear not to have been explored by Nersa." Eskom also contended that the licences allow traders to "cherry pick" profitable customers without contributing to the cross-subsidies built into Eskom's regulated tariffs.

Electricity Minister Kgosientsho Ramokgopa intervened publicly and repeatedly. In August 2025, he urged Eskom to withdraw or at least stay its litigation, arguing that NERSA was fast-tracking the development of electricity trading rules and that parallel court action risked undermining confidence in the regulatory process. The minister's message was clear: policy reform should not be strangled by litigation.

The Suspension: What Was Agreed in February 2026

Following a period of constructive engagement and consultations between Eskom and the Trader Respondents, the parties 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 in an orderly and focused manner. The parties consider the stay to be in the broader public interest and supportive of South Africa's transition towards a competitive, transparent, and well-regulated electricity trading framework.

Critically for all market participants: such rules, once finalised and implemented by NERSA, will apply to all entities engaged in trading activities, including Eskom.

Where the Trading Rules Stand Now

The regulatory process that unlocked the suspension has been moving swiftly. NERSA published its revised draft Trading Rules for the bilateral trading market (Version 01, dated 12 April 2026) together with a consultation paper inviting stakeholder comment by 23 May 2026. This is the second round of consultation, following the initial draft published in November 2025 and subsequent public hearings in January 2026 at which Eskom raised significant objections.

The new rules will be implemented in two phases. Phase 1 allows transmission and high-voltage customers to source part of their energy from traders, while managing risks associated with early market opening and metering readiness for smaller customers. Licensed traders may also engage in import/export activities during this stage. Phase 2 will broaden participation to include more customers and introduce wholesale market trading alongside bilateral agreements and regional import/export.

The South African Wholesale Electricity Market (SAWEM) is expected to launch in the third quarter of 2026, pending the finalisation of the Market Code and related regulations. However, analysts have flagged that the revised rules appear to reflect substantial accommodation of Eskom's concerns, including tight volume restrictions, broad network base charges (NBCs) protecting the incumbent cost base, deferred virtual wheeling, and traders excluded from SAWEM.

What This Means for C&I Buyers Contracting Today

1. PPAs and Bilateral Contracts: Proceed, With Eyes Open

The new framework allows for multiple generators to sell to multiple off-takers, either through market platforms or power purchase agreements (PPAs). It removes the requirement that IPPs must sell to Eskom alone and creates legal recognition of private trading models, including virtual wheeling agreements. C&I buyers can therefore contract directly under bilateral PPAs today — but they should ensure that all agreements include regulatory change clauses that address the evolving trading rules.

2. Network and Use-of-System Charges Are Non-Negotiable

Customers will receive an invoice from the Network Service Provider (NSP) for total metered consumption at the full applicable tariff, while generators or traders will issue a separate invoice for wheeled energy delivered under bilateral agreements. NSPs will apply credits for wheeled energy based on approved wholesale rates for the relevant time-of-use periods, ensuring credits do not exceed actual consumption. Use-of-system charges, administrative fees, and fixed network charges remain payable in full to the NSP.

3. Funded Solar and BESS: The Business Case Holds

For commercial property owners considering funded solar or BESS installations, the suspension of Eskom's legal challenge removes the most immediate regulatory cloud. The licensed traders have entered into agreements with independent power producers (IPPs) and companies that will be end users of the electricity. This enables smaller businesses that cannot on their own enter into long bilateral power purchase agreements with IPPs to access renewable energy and thereby decrease their carbon footprints.

Only a small number of municipalities have adopted wheeling policies and approved wheeling tariffs, with progress largely concentrated in financially stable metros including Cape Town, George and Gqeberha. C&I buyers in these areas are best positioned to benefit immediately from competitive wheeling arrangements.

4. The Stay Is Not Permanent — Regulatory Risk Remains

The revised rules arrive in the context of Eskom's court challenge to the five trading licences granted by NERSA in 2025 — a challenge that was stayed, not withdrawn, in February 2026 pending finalisation of the regulatory framework. If the final trading rules do not adequately address Eskom's stated concerns, the litigation could resume. Industry participants continue to monitor the finalisation of the Market Code and bilateral trading rules, both of which remain essential to establishing confidence in the new market structure.

The SolarXgen Take

The suspension of Eskom's trading licence lawsuit is a meaningful green light for the C&I energy transition — but not an unconditional one. The bilateral trading rules now under consultation are the true test of whether South Africa's electricity market opens genuinely or merely in name. The revised Electricity Pricing Policy (EPP), still awaiting finalisation, is meant to reset the pricing architecture and align it with a competitive market. Without cost-reflective, unbundled tariffs, neither bankable private contracts nor fair competition can emerge.

For commercial property owners, the window to lock in funded solar, BESS and long-term PPAs at today's cost structures is open — and widening. SolarXgen structures all C&I agreements with full regulatory change provisions, ensuring that our clients are protected as the rules evolve toward a fully competitive market.