Cabinet's 29 July 2026 approval of South Africa's Revised Electricity Pricing Policy and the draft Electricity Sector Market Transformation Position Paper is the most consequential tariff reset in nearly two decades — and every C&I solar buyer must re-model grid-cost baselines, PPA discount rates, and contract structures before the public comment window closes.

Why the 29 July 2026 Cabinet Decision Is the Most Important Tariff Event in a Decade for C&I Solar Buyers

If you own or manage a commercial or industrial property in South Africa and you have been sitting on a solar or BESS investment decision, the clock just started ticking louder. On 29 July 2026, Cabinet approved the publication of the Revised Electricity Pricing Policy (REPP) and a draft Electricity Sector Market Transformation Position Paper for public comment. These are not administrative housekeeping documents. Together, they represent the most consequential reset of South Africa's electricity pricing architecture since the original 2008 Electricity Pricing Policy — and every grid-cost baseline, PPA discount rate, and long-term solar contract you are considering must be modelled against the framework they introduce.

What Cabinet Actually Approved: Two Documents, One Direction

1. The Revised Electricity Pricing Policy (REPP)

The proposed revision moves to update the 2008 Electricity Pricing Policy in a way that reflects developments in the electricity supply industry, including ongoing market reforms arising from the unbundling of Eskom and the implementation of the Electricity Regulation Amendment Act of 2024. The language of the Cabinet statement is precise about what this means for tariff structure: the policy provides tariff transparency through the unbundling of tariffs across generation, transmission, distribution and retail activities, thus consolidating regulatory arrangements for electricity pricing across the various pricing interfaces between generators, traders, the National Transmission Company South Africa (NTCSA) and distributors.

In plain terms: the bundled, opaque cents-per-kilowatt-hour rate that C&I buyers have historically used as a single benchmark for solar savings calculations is being systematically replaced by disaggregated, cost-reflective components. The policy also supports the introduction of cost-reflective tariffs while protecting vulnerable users and strategic economic sectors, but without naming those sectors. If your sector is not named among those protected, you must plan for full cost-reflective pricing.

2. The Draft Electricity Sector Market Transformation Position Paper

In a parallel reform initiative, Cabinet also approved the publication of the draft Electricity Sector Market Transformation Position Paper for public comment. The position paper outlines a framework to guide South Africa's transition from a predominantly state-controlled electricity system to a more competitive electricity market. The proposed reforms are aligned with the Electricity Regulation Amendment Act, 2024, and the government's Energy Action Plan.

The draft market transformation paper sets out a path for South Africa to move from a largely state-controlled electricity system to a more competitive market in line with the Electricity Regulation Amendment Act, 2024 and the Energy Action Plan. For C&I solar buyers, a competitive market means new trading counterparties, new wheeling corridors, and — critically — new reference prices that will anchor future PPA negotiations.

The Tariff Escalation Context: Why the Baseline Is Already Stressed

Before modelling the impact of the REPP, C&I buyers must understand the tariff trajectory they are modelling against. In the past five years alone, electricity prices have more than doubled for South African households due to the compounding effect of Eskom's tariff hikes. After years of double-digit increases, Eskom approved an 8.8% hike for 2026, which took effect in April, with another 8.8% increase coming for the 2027 financial year.

The announcement comes at a time when electricity tariffs as a driver of household and business energy costs have come to a head, with the National Energy Regulator of South Africa (Nersa) approving an 8.76% tariff increase for direct Eskom customers and 9.01% for municipal distributors. And the compounding does not stop there: following a December 2025 High Court judgment, NERSA was forced to redetermine Eskom's allowable revenue due to previous calculation errors. This has resulted in an additional R24 billion to be recovered. For small businesses, this means that while the 2025/2026 increase is locked at 12.7%, the projected increases for 2026/2027 and beyond have been revised upward, with compound costs expected to rise by over 35% in the next 24 months.

The Unbundling Shift: What It Means for Your Solar Savings Model

The single biggest modelling risk for C&I solar buyers right now is failing to account for the structural shift from energy-only pricing to unbundled, cost-reflective charges. The 2026/2027 Eskom tariffs have been adjusted in accordance with NERSA's MYPD6 decisions, issued on 30 January 2025 and 7 February 2026. These revised rates are effective from 1 April 2026 for Eskom direct customers and from 1 July 2026 for local authority (municipal) tariffs, with key adjustments made to the recovery of fixed costs through the Generation Capacity Charge (GCC) and service and administration charges.

This is the critical point: the structural overhaul introduces the Generation Capacity Charge (GCC), designed to recover the fixed costs of maintaining the national grid and backup power. For Small Power Users (SPU), your bill is increasingly split into three distinct components: the variable cost for units consumed (c/kWh), fixed network charges, and retail charges. Solar panels displace variable energy consumption — but they do not displace fixed capacity charges. The rise of rooftop solar among SMEs has triggered a defensive regulatory response. To combat "grid defection" and protect municipal revenue, utilities are shifting recovery toward high fixed charges.

What this means for your PPA discount rate: A PPA priced purely as a discount to the bundled c/kWh rate may overstate savings if fixed charges represent an increasing share of your total grid bill. Your developer must model the split between avoidable (energy) and unavoidable (capacity/network) charges under the REPP framework — and build escalation assumptions into each component separately.

Five Decisions Every C&I Buyer Must Make Before the Public Comment Window Closes

1. Re-Baseline Your Grid Cost Now — Not After the Policy Is Finalised

The public comment period is your window to understand what the final unbundled tariff structure will look like. The publication of both the revised Electricity Pricing Policy and the draft Electricity Sector Market Transformation Position Paper for public comment provides stakeholders, industry participants and the public with an opportunity to provide input before the reforms are finalised. Do not wait for the final gazette. Commission a tariff-disaggregation audit of your current bill now, isolating generation, transmission, distribution, and retail components. This becomes your pre-REPP baseline.

2. Stress-Test Your PPA Against Both Scenarios: Protected and Unprotected Sectors

Cabinet said the policy supports cost-reflective tariffs while protecting vulnerable users and strategic economic sectors. Until those sectors are named in the final policy, your financial model must run two scenarios: one where your sector receives some form of tariff relief, and one where you face full cost-reflective pricing. The gap between these two scenarios should determine your maximum willingness-to-pay for a long-term PPA.

3. Pressure-Test Your Developer's Escalation Assumptions

Any solar developer presenting you with a 20-year PPA must explicitly disclose the grid tariff escalation rate embedded in their savings projections. Given South African electricity tariffs have increased at an average of 12–15% per year over the past decade, a developer using 6–8% grid escalation is flattering the payback period. Ask for sensitivity tables at 8%, 10%, and 12% annual grid cost escalation across both energy and fixed charge components separately.

4. Evaluate Wheeling and Self-Generation Options Under the New Market Framework

The new pricing policy is intended to update the 2008 Electricity Pricing Policy to reflect developments in the electricity supply industry. Key developments include the unbundling of Eskom, a more diversified energy mix, and independent power producers entering the market. As the market opens, wheeling arrangements — where renewable energy generated at one site is delivered to another via the national grid — become commercially viable at scale. Work continues towards establishing an independent state-owned entity responsible for electricity transmission and market operations, which will be the counterparty for these wheeling agreements. Structure your solar contracts now to include wheeling optionality as that entity comes online.

5. Engage the Public Comment Process — It Protects Your Commercial Interests

The Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, is expected to brief the public on the implementation timetable and possible temporary relief measures for energy-intensive sectors. The comment window is a direct channel for C&I property owners to influence how the GCC phase-in, TOU (Time of Use) structures, and retail charges are calibrated. Engage individually and through industry bodies. The final tariff architecture — the one that determines whether your 20-year PPA is accretive or a liability — will reflect who showed up.

The NERSA Registration and Section 12B Dimension

Most South African solar installations — residential SSEG, small commercial, and even many large commercial systems — fall below the 1 MW threshold and do not require NERSA registration. The relevant compliance for these systems is through Eskom or the municipal SSEG process. NERSA's direct role becomes relevant for larger commercial and industrial projects, third-party PPA structures, and IPP developments. As the REPP formalises new pricing interfaces, the compliance pathway for third-party PPA structures — the most common financing model for C&I solar — will evolve. Confirm with your legal and technical advisors that your proposed PPA structure is compatible with the emerging regulatory framework before signing a heads of agreement.

On the tax side, the Section 12B tax incentive remains the most significant financial benefit for business clients: a 125% first-year deduction on qualifying solar PV generation assets, with no upper limit on system size for the business incentive, applying to systems generating income or used in income-generating activities. This incentive does not depend on the REPP outcome — but the savings it enables are magnified the higher the grid tariff rises, making the case for acting now, before the next round of cost-reflective increases takes effect.

The Bottom Line for Commercial Property Owners

The documents do not liberalise the market or weaken Eskom's position overnight. Instead, they begin the consultation process for reforms designed to reshape how electricity is generated, transmitted, traded and priced over the coming years. That measured pace is precisely the danger for buyers who are waiting for "certainty" before committing. The direction of travel is unambiguous: tariffs will become more cost-reflective, fixed charges will grow as a proportion of your bill, and grid electricity will cost more in real terms in 2028 than it does today. Every year you delay, the grid becomes more expensive and the payback period on a solar investment gets shorter.

The public comment window is not just a regulatory formality — it is the last point at which the tariff architecture is still malleable. Model your grid costs now, engage the process, and structure your solar contracts for the market that the REPP is building — not the one that existed in 2008.

SolarXgen Advisory: SolarXgen is offering complimentary REPP tariff-impact assessments for qualifying commercial properties above 200 kW of connected load. Contact our C&I advisory team to schedule a session before the public comment window closes.