Discovery Green: How electricity reform and market shifts are shaping renewable energy in 2026

Electricity reform, evolving wheeling models, grid constraints and changing cost dynamics are influencing how large energy users source renewable power.

Johannesburg, 10 February 2026 – South Africa’s renewable energy market is entering a new phase in 2026 as electricity reform moves into implementation, wheeling models mature, and grid access tightens. For large energy users, including mining and other energy‑intensive industries, these shifts are materially changing how renewable power is accessed, priced and delivered, placing energy procurement firmly at the centre of cost certainty and operational resilience.

Electricity reform moves from policy to implementation

After years of policy development, 2026 marks the point at which electricity reform begins to change procurement mechanics in practice. Clearer governance structures and participation rules are reducing regulatory uncertainty and enabling decision makers to act with more clarity and confidence.

While the proposed South African Wholesale Electricity Market (SAWEM) remains in development, the most immediate impact for large energy users is coming from the maturing wheeling framework, with clarified participation rules, standardised processes across utilities, and the rise of trader‑led, portfolio‑based models that simplify contracting and balance risk.

“These developments are expanding access to supply and enabling companies to act now, without relying on future market structures,” says Andre Nepgen, CEO of Discovery Green. “For our clients, and other large energy users, the wheeling rules, not future market constructs, are what matter right now. As trader-led models scale, businesses can secure renewable power with greater flexibility and less complexity, aligning supply to their operational needs while managing risk through aggregation. This is redefining how electricity is priced, traded and integrated into energy strategies.”

Trader‑led wheeling becomes the default model

The wheeling market is entering a new phase of maturity. In 2026, trader‑led models are expected to become the dominant commercial model, as the market moves beyond one‑to‑one bilateral agreements toward more aggregated, portfolio-based solutions.

Under this model, licensed traders sit between independent power producers (IPPs) and end‑users, coordinating supply and demand across portfolios, managing volume and balancing risk, and assuming much of the administrative and operational complexity historically carried by buyers.

“Trader‑led wheeling is what allows renewable energy to function as a scalable market rather than a collection of independent, bespoke transactions,” Nepgen explains. “Aggregation is what turns renewable energy from a risk into a predictable system that works for business. This evolution marks a critical step in the sector’s maturation, enabling flexibility, resilience and scale that were previously difficult to achieve.”

Rising solar costs and tariffs reset assumptions about timing

For more than a decade, the renewable energy sector operated on the assumption that technology costs, particularly solar, would continue to fall. In 2026, that assumption is being tested with upward price pressures including global input inflation and shifts in Chinese export policies pushing hardware costs up.

For years, China artificially suppressed global solar prices through massive VAT export rebates. That era ends with China expected to remove the 9% VAT export rebate on solar modules and wafers from April 2026. Most 2026 contracts now include "policy adjustment clauses" that automatically hike prices the moment the rebate disappears.

Global supply‑side pressures are making matters worse. The sheer volume of global installations has strained the supply of the physical materials needed to build solar panels. For example, Silver, a critical component on the solar cell that collects electricity, has hit record high prices, nearly doubling in two years. This, combined with the movement to high-efficiency N-type panels which require significantly more silver exacerbates the issue.

Despite the recent strength of the Rand, even this is no longer enough to offset dollar-denominated logistics and hardware increases. With solar panels, inverters, and batteries all priced in USD, the 10–15% hike in global factory-gate prices is overwhelming any marginal gains in the Rand’s exchange rate.

At the same time, electricity tariffs remain volatile. Following its review of Eskom’s R54.7 billion revenue redetermination, NERSA has confirmed tariff increases of 8.76% from April 2026, followed by a further 8.83% in April 2027, effectively around CPI plus 5% in each of the next two years. This is on the backdrop of a decade in which tariffs rose by approximately 180%.

“Waiting for renewable energy costs to fall is no longer a reliable strategy,” says Nepgen. “Early movers are far better positioned to secure favourable pricing and protect long‑term project economics.”

Grid access tightens in South Africa’s key renewable regions

Grid capacity has become the most significant constraint on South Africa’s renewable energy expansion. There is a resource mismatch. Seventy-five percent of all private renewable applications are for either the Eastern, Western or Northern Cape. However, these resource-rich areas are grid-saturated, having officially reached 0GW of remaining firm capacity and a backlog of 53GW worth of renewable energy projects because there is nowhere for the power to go.

While the National Transmission Company South Africa (NTCSA) is introducing congestion curtailment as an interim capacity‑unlock mechanism, allowing controlled output reductions of around 4%, this is a partial solution to a much larger challenge. Although curtailment could enable additional projects to connect, potentially unlocking approximately 1,580MW of wind capacity by 2028, demand for new grid connections continues to outpace the system’s ability to accommodate them.

South Africa needs to build ~14,500 km of new high-voltage lines by 2034. The NTCSA has secured R112 billion for the next five years, but the bottleneck isn't just money, it's the speed of execution. To reach this target, we will need to increase construction speed five-fold.

“Grid progress is now as important as price,” Nepgen notes. “A strong resource site alone is no longer sufficient. What matters is whether there is a credible path to connection and a realistic delivery timeline, grid access is fast becoming a competitive differentiator.”

Innovation amidst constraint to accelerate and expand renewable energy adoption

As operational constraints intensify, innovation will become essential to the next phase of renewable energy adoption. Limitations such as grid congestion and the current structure of virtual wheeling (which restricts access to customers in municipalities in good financial standing) are narrowing the addressable market for large‑scale renewable solutions.

In response, innovation in renewable energy wheeling, portfolio structuring and risk management is expected to increase, as market participants seek new ways to unlock pathways to scale, broaden access, and serve a wider South African client base within an increasingly constrained system.

Why 2026 marks a narrowing window for strategic action

As reform, constraint and innovation converge, the margin for indecision is shrinking.

“Passive observation is no longer a viable energy strategy,” Nepgen concludes. “In a market shaped by both opportunity and constraint, long‑term resilience depends on acting early and moving decisively before the window narrows further.”