South Africa’s electricity sector is headed for a critical implementation phase in 2026 as regulatory and structural reforms introduced over the past year start to take effect, says law firm Webber Wentzel.
A report by the firm on the energy outlook says 2025 marked a turning point in the country’s long-running effort to reform the sector, with important legislation, market rules and procurement frameworks introduced to support a shift away from a vertically integrated monopoly towards a more competitive electricity market.
At the centre of the reform agenda is the Electricity Regulation Amendment Act, which took effect on January 1 2025. The act provides the legal basis for restructuring the electricity sector and establishes a transmission system operator to run the national grid, oversee the flow of electricity in real time, and manage the emerging electricity markets.
The act also expands the role of the National Energy Regulator of South Africa (Nersa) and enables electricity trading through willing-buyer, willing-seller arrangements.
According to Webber Wentzel, the legislation represents the most significant restructuring of the electricity sector in decades, though some areas, including tariff approvals, the role of municipalities, and the interpretation of direct supply agreements, remain subject to further clarification.
Transmission front and centre
Transmission expansion is a priority for enabling new power generation that can be connected to the national grid. The report notes that South Africa will need about 14,500km of new high-voltage power lines over the next decade to accommodate planned generation projects, particularly for renewable energy.
The first phase of the Independent Transmission Infrastructure Procurement Programme covers 1,164km of new lines. A request for proposals is expected in the third quarter of 2026, marking the start of private sector participation in expanding the national grid.
Gas back in focus
According to the report, gas-fired power is back in the mix after the independent power producer procurement programme, launched in 2023, was revived after delays. The programme aims to secure gas-fired generation that can provide flexible power, supporting the system as renewable capacity grows.
The department of electricity & energy revised a request for proposals in October 2025, addressing earlier concerns about project bankability. Bids are due by May 29.
Though imported liquefied natural gas is expected to play a central role, the report notes that domestic gas resources are not excluded, potentially enabling local development.
M&A on the cards
The authors of the report anticipate an increase in mergers & acquisitions and partnerships as companies position themselves for a more competitive electricity market. International and regional investors are likely to look for scalable entry points, while established players reassess their portfolios and exposure to market price risk.
The law firm adds that the success of South Africa’s electricity reforms hinge on regulatory certainty, timely delivery of infrastructure and effective co-ordination among institutions.
“For the first time in decades, the country is moving towards a power sector that functions as a genuine market, and 2026 may prove pivotal in determining how well these reforms are implemented,” the report states.
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