Cape Town is set to break its heavy reliance on Eskom, launching a plan to buy power from private traders in a bid to cut electricity costs and shield residents from rising tariffs. The City has issued a tender to procure 500MW of electricity from licensed energy traders and aggregators, with bidders required to offer prices below Eskom’s Time-of-Use tariffs.
Reducing Eskom Reliance
The move comes as the metro spends about 70% of its electricity tariff income on buying bulk power from Eskom, its single biggest cost driver. It also comes as residents brace for higher bills, with Eskom tariff increases of about 9% for municipal customers from July 2026 expected to push up costs, with some estimates suggesting monthly increases of R200 to R300.
According to the Department of Mineral Resources and Energy, the City’s latest intervention is being positioned as both a cost-containment measure and a long-term strategy to shield consumers from escalating prices. Mayoral Committee Member for Energy Xanthea Limberg said the tender marks a “pioneering step” to secure cleaner and more affordable electricity from the open market.
Benefits of the Plan
The plan signals a shift toward reducing reliance on Eskom, moving instead toward a more competitive electricity market involving private traders and aggregators. Under the model, the City will appoint a panel of approved traders, who will then compete in a secondary bidding process to supply electricity through Power Purchase Agreements of up to 10 years. Only traders licensed, or in the process of being licensed, by the National Energy Regulator of South Africa will be eligible, ensuring compliance and oversight.
The benefits of the plan include:
- Reduced reliance on Eskom
- More competitive electricity market
- Cleaner and more affordable electricity
- Long-term strategy to shield consumers from escalating prices
The City has for several years pushed to diversify its energy mix to limit exposure to price shocks and supply instability. That stance has increasingly put the metro at odds with regulators. Earlier this year, the City criticised decisions to approve Eskom tariff increases, arguing that consumers were being unfairly burdened.
