Understanding South Africa’s Energy Challenge in 2026
Even though the country has moved past the worst of load‑shedding, electricity prices keep climbing. This adds extra strain on businesses that are already dealing with higher operating and logistics costs.
What the Latest Tariff Increases Mean
In March 2026, the National Energy Regulator of South Africa (NERSA) approved:
- 8.76 % rise for Eskom direct customers
- 9.01 % rise for municipal customers
These adjustments push the 2026/27 financial year’s electricity bills higher, squeezing company budgets further.
Why Procurement Teams Feel the Pressure
From Load‑Shedding to Everyday Unpredictability
Paul Vos, regional managing director of CIPS Southern Africa, notes that “energy insecurity has not gone away; it has evolved.”
Today’s disruptions are less about scheduled blackouts and more about:
- Infrastructure outages
- Maintenance backlogs
- Local network glitches, especially at municipal level
These unpredictable events create real risks for supply chains.
The Ripple Effect Across Supplier Networks
Electricity tariffs are outpacing inflation, while fuel costs stay high for transport, logistics and backup power. Vos calls this a “double cost burden”:
- Suppliers face higher energy bills
- They also see higher logistics expenses
- Result: more price volatility, frequent contract tweaks, tighter budgets
Industries that feel the squeeze most include:
- Manufacturing
- Food production and processing
- Cold‑chain logistics
- Mining
- Chemicals
- Water infrastructure
- Other energy‑intensive sectors
Many firms have absorbed some of the rise through efficiency tweaks, but there’s a limit. Eventually, higher costs trickle down to customers and consumers.
Eskom’s Recent Performance Snapshot
Eskom reports steady improvements:
- Energy Availability Factor (EAF) from April 1 – June 18 2026 reached 63.54 %, up from 63.24 % the week before and significantly above 58.08 % in the same period last year.
- That’s a 5.46 % year‑on‑year gain and a 9.49 % (≈4.8 GW) improvement compared with three years ago.
- Higher generation output and lower diesel use have helped.
These gains point to progress in Eskom’s turnaround plan, yet the grid still feels pressure.
Shifting Procurement Toward Resilience
Beyond Cost‑Cutting
Firms are now treating energy risk as a strategic issue, not just an operational hiccup. Key tactics gaining traction:
- Supplier diversification
- Nearshoring and regional sourcing
- Scenario planning
- Enhanced cost modelling
Vos explains that procurement is evolving from a transactional role to a resilience factor, with energy risk now weighed alongside quality, delivery and price when choosing suppliers.
Renewable Energy as a Business Continuity Tool
More companies are looking at:
- Power Purchase Agreements (PPAs)
- On‑site solar generation
- Battery storage systems
- Hybrid energy models
For many, renewables are no longer just a sustainability badge—they’re a way to cut grid dependence and lock in long‑term cost certainty.
Updating Contracts for a Volatile Market
Vos advises that procurement agreements need to reflect today’s uncertainty. Useful mechanisms include:
- Energy escalation clauses
- Agreed price thresholds
- Open‑book cost models
- Risk‑sharing arrangements
- Structured review periods
The goal is to spread risk fairly and keep everything transparent throughout the supply chain.
Making Energy Insecurity a Strategic Priority
Short‑Term Actions
- Run energy risk assessments across the supplier base
- Pinpoint high‑risk categories
- Boost engagement with key suppliers
Long‑Term Moves
- Embed energy considerations into category strategies
- Forge stronger supplier partnerships
- Align sourcing decisions with broader energy‑transition goals
As Vos puts it, “Energy is no longer just a question of equipment; it has become a key supply chain risk requiring coordinated leadership across procurement, finance and operations.”
Conclusion
South Africa’s energy landscape may have moved past the worst of load‑shedding, but rising tariffs, unpredictable outages and fuel price swings continue to test businesses. For procurement and supply‑chain leaders, the response must go beyond simple cost‑saving. By treating energy risk as a strategic concern—using diversified sourcing, renewable solutions, smarter contracts and cross‑functional collaboration—companies can build the resilience needed to thrive despite an evolving power environment.
