NERSA's Curtailment Rules Are Now Live: What the 3,000 MW Unlock Means for C&I Solar Contracts Signed Today

The Regulatory Shift That Changes Everything for C&I Solar in 2026

South Africa's commercial and industrial (C&I) solar market has entered a new era. After years of grid saturation strangling new connections in the Western and Eastern Cape, NERSA's approval of congestion curtailment as a constrained generation ancillary service is now operational — and its consequences for every Power Purchase Agreement (PPA) signed today are profound. For CFOs building energy cost models and property managers evaluating rooftop or ground-mounted solar proposals, understanding this framework is no longer optional. It is a fiduciary imperative.

What NERSA Actually Approved — And When It Kicks In

On 20 June 2025, NERSA published the reasons for its decision to approve the National Transmission Company of South Africa's (NTCSA's) application for congestion curtailment to be classified as a constrained generation ancillary service — a move first announced at a NERSA meeting on 29 April 2025.

In plain terms, the regulator has given NTCSA the legal authority to deliberately reduce the output of operating renewable energy plants when the grid is congested — in exchange for freeing up headroom to connect new generators that were previously locked out. The decision will allow NTCSA to facilitate additional grid connection capacity of 790 MW in the Eastern Cape and 2,680 MW in the Western Cape.

The GCCA Addendum had previously indicated that by accepting a reasonable share of no more than 10% curtailment, 3,470 MW of additional wind generation could be connected to the grid almost immediately. The approval is valid from 1 April 2025 to 31 March 2028, after which it will be reviewed.

Critically for C&I developers and offtakers, congestion curtailment will only be implemented from 2026 onwards, when the projects that take up the 3,470 MW of grid capacity start coming online. That timeline is now. Projects are commissioning. The curtailment clock has started.

Why the Grid Was Broken to Begin With

Constrained grid capacity has been one of the most significant hurdles affecting the rate of uptake of new generation capacity in the South African energy market, especially in respect of renewable energy. The consequences were stark: due to limited grid capacity availability in the Cape Provinces, only 1,000 MW of solar PV was awarded in April 2023 under Bid Window 6 of the REIPPPP.

According to NERSA's own Consultation Paper, curtailment as a congestion management mechanism means using the existing grid in the most optimal manner by accommodating more renewable energy sources in an already constrained network, while preserving infrastructure and grid reliability, in order to alleviate grid congestion.

The benefit of the congestion curtailment framework is that it maximises the use of the existing grid by making it possible for additional renewable energy sources to be connected, which will increase capacity, reduce the need for load-shedding and reduce the use of expensive open cycle gas turbines.

The Market Context: A Sector at Full Momentum

This regulatory shift lands in the middle of a solar boom. South Africa deployed 1.6 GW of solar in 2025, up from the 1.1 GW added in 2024, and cumulative capacity now likely exceeds 10 GW, maintaining the country's position as Africa's largest solar market.

While utility-scale remains the largest segment by installed capacity — driven by the REIPPPP — the commercial and industrial (C&I) market is arguably the strongest-performing relative to fundamentals. The numbers back this up: around 100 MW of solar projects between 100 kW and 1 MW, and approximately 250 MW of projects between 1 MW and 50 MW, have been registered since mid-2024.

The financial logic is undeniable. From 1 April 2025, Eskom implemented a 12.74% electricity tariff increase for direct customers, with municipalities seeing an 11.32% rise from 1 July 2025. Key C&I drivers include above-inflation tariff increases, carbon border adjustment mechanisms, energy cost management and operational continuity requirements.

The utility-scale pipeline is also accelerating, creating more supply-side pressure on the grid. Between late 2024 and the end of 2025, Bid Window 7 awarded a total of 3,940 MW of solar PV capacity — a critical milestone for the solar PV industry. The 2026 energy landscape is set to be defined by the commercial operationalisation of utility-scale projects, with capacity procured under the REIPPPP transitioning from construction to active grid contribution.

What "Up to 10% Curtailment" Actually Means for Your PPA

Here is where CFOs must pay close attention. The 3,470 MW unlock is not free. It is purchased through curtailment — the deliberate switching off of generating plants. Timing on the potential expansion of the scope of guaranteed curtailment is unclear, introducing significant uncertainty into the market. Congestion curtailment will include both private and public renewable energy power producers, and will apply to existing and future renewable energy projects.

The financial cost is real and has already been measured. At times of low electricity demand, renewable energy generation had to be reduced, leading to curtailment — resulting in additional costs, known as "deemed energy," which amounted to around R404 million in 2025.

Curtailment resulting from oversupply is excluded from this approval. The constrained generation ancillary service applies only to network-related constraints. This is an important legal distinction: curtailment events under this framework are specific, grid-triggered, and network-justified — not arbitrary commercial decisions by NTCSA.

For a C&I buyer signing a 10–20 year PPA today, a potential 10% curtailment factor translates directly into a revenue and energy-delivery gap. If your model assumed 100% availability of contracted generation, you may be building on a flawed financial foundation.

CFO Alert: A 10% curtailment assumption on a 1 MW rooftop PPA generating approximately 1,500 MWh per year at a blended avoided cost of R2.50/kWh represents a potential annual exposure of ~R375,000 in undelivered energy value. Over a 15-year contract term, that is a R5.6 million discrepancy — before accounting for tariff escalation.

The New Electricity Trading Rules: A Parallel Shift

The curtailment framework does not exist in isolation. South Africa's electricity sector is on the brink of significant transformation as NERSA unveiled its draft Electricity Trading Rules. While an unofficial draft was published towards the end of October 2025, the document was replaced on 24 November 2025 with the final draft and a Consultation Paper.

The new rules apply to traders, network service providers, registered generators supplying wheeled energy through PPAs, as well as licensed importers and exporters engaged in cross-border trading. The New Rules will be implemented in two phases, with Phase 1 allowing 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.

The South African Wholesale Electricity Market (SAWEM) was expected to be launched on 1 April 2026, though concerns around potential market bias have emerged. For private renewable energy developers, especially solar PV investors, this creates a complex operating environment — with Eskom positioned simultaneously as a partner, a competitor, and the primary gatekeeper to grid access.

Practical Recommendations for CFOs and Property Managers

1. Audit Every PPA for Curtailment Language — Before You Sign

Any C&I solar contract signed from today forward must explicitly address curtailment. Insist that your legal and technical advisors review force majeure clauses, deemed energy provisions, and compensation mechanisms. A contract silent on curtailment leaves the financial risk entirely with you, the offtaker.

2. Model a Curtailment Discount Into Your ROI

Do not model solar savings on 100% generation availability. Use a conservative 8–10% curtailment discount in your financial model, particularly for projects with grid export components in the Western and Eastern Cape. This ensures your board-approved business case is stress-tested against regulatory reality.

3. Prioritise Behind-the-Meter and BESS Solutions

Curtailment rules apply to grid-connected generation. Behind-the-meter solar installations that consume generation directly are far less exposed to NTCSA dispatch instructions. Similarly, pairing solar with Battery Energy Storage Systems (BESS) provides a buffer — stored energy can be deployed during curtailment windows without revenue loss. The presence of storage can help minimise the impacts of grid curtailment, making a project a more attractive investment proposition as more of the electricity generated is used in some manner.

4. Favour Developers With NERSA Registration and Grid Access Certainty

While the project pipeline is robust, the singular priority for 2026 remains grid modernisation and expansion — as the sector currently faces a paradoxical constraint where the industry is ready to build and capital is available, but access to grid remains limited. Ask your developer directly: Is your grid connection application approved? Under which allocation rules? What is your curtailment compensation entitlement?

5. Leverage the Market Opportunity Created by the Unlock

The 3,000+ MW unlock is ultimately bullish. More generation coming online means greater competition among solar developers, downward pressure on PPA tariff rates, and a larger pool of proven project developers entering the C&I market. A bigger market means more competition, better prices, more product choice, and more certified installers operating across the country. CFOs who act now — with properly structured contracts — will lock in favourable rates before the next wave of demand drives prices up again.

6. Watch the SAWEM Transition Closely

The new wholesale electricity market and trading rules will reshape how wheeled energy PPAs are structured. Existing PPAs and Electricity Supply Agreements signed during Phase 1 will remain valid, with traders required to comply with the Market Code. Ensure any long-term PPA includes a market-transition clause that protects your pricing and delivery terms through the SAWEM implementation.

The Bottom Line

NERSA's curtailment framework is a rational, if imperfect, solution to a genuine infrastructure crisis. It unlocks significant new generation capacity — up to 3,470 MW — in grid-constrained regions, enabling the next wave of renewable energy development that South Africa urgently needs. Curtailment as a congestion management mechanism means using the existing grid in the most optimal manner by accommodating more renewable energy sources in an already constrained network, while preserving infrastructure and grid reliability.

But for C&I solar buyers, the regime introduces a new risk layer that simply did not exist in contracts signed two years ago. The 10% curtailment threshold is a planning assumption, not a guarantee. Your PPA must account for it. Your financial model must stress-test it. And your developer must be able to demonstrate how they will manage around it.

At SolarXgen, we build curtailment risk management into every C&I contract we structure — from behind-the-meter consumption optimisation to BESS pairing and contractual deemed-energy protections. In the new regulatory landscape, that is not a premium service. It is the baseline standard.

The 3,000 MW unlock is real. Make sure your contract captures the upside — without inheriting the downside.