Grid energy is becoming a luxury people can’t afford

As Eskom pushes for record-breaking tariff increases, many households are concerned that they won’t be able to afford their monthly utility bills.

Not long after South Africans acclimated to a shocking 12.74% tariff hike in April, the electricity provider announced an additional 36.1% increase for next year, followed by 11.81% and 9.1% respective increases for the next two years after that. This means that in the four years from 2024 to 2027, customers will experience a 70% increase in electricity costs.

An average household paying R3,000 a month prior to the proposed 36.1% tariff increase will see their charges jump to nearly R4,000 in 2025. That figure will rise to nearly R5,000 by 2027. 

But this is part of a much larger issue, because additional moves by Eskom and certain municipalities will see prices increase even further.

Eskom has also proposed eliminating the Inclining Block Tariff (IBT) system. Currently, low-usage households benefit from discounted rates under the IBT — a lifeline for families using minimal electricity. Without this system, these households will pay the same rate per unit as high-usage customers, significantly increasing their financial burden. 

In addition, the Time-of-Use (TOU) tariff system is becoming a fixture in municipalities such as Ekurhuleni, the City of Johannesburg and the City of Cape Town as more households install smart meters, which are necessary to track real-time consumption. 

The TOU rates vary based on the time of day, with off-peak charges going as low as R1.54, and peak hour charges reaching as high as R9.10 a kilowatt-hour in the winter when electricity usage is higher. That equates to a nearly 500% difference between what someone would pay in the lower-usage afternoon periods versus peaks in the morning and at night.

These are by no means incremental increases. Converting from the IBT system to a standard rate will already mark a substantial shift for most households. Add in a switch to the TOU after the installation of a smart meter or moving to a new home, and new electricity costs may deliver a bigger shock to the system than many families will be able to manage.

Finally, average fixed cost rates will also increase by 36.1%% for post-paid users next year. That means consumers will be coughing up R1,253.38 a month before they’ve even switched on a light in their homes. For the average household, these adjustments could mean paying several thousand rand more every year for the same level of consumption.

Faced with these price hikes, solar energy becomes more attractive. Hybrid solar systems, which combine rooftop panels and battery storage with limited grid dependency, help offset electricity usage during peak times. These systems allow households to avoid the highest TOU charges while reducing overall reliance on Eskom’s grid. 

For areas like Ekurhuleni, Johannesburg and Cape Town, where winter peak-hour tariffs can top R9 per kilowatt-hour under the TOU system, the best approach is to charge solar batteries during the day or from the grid at night, and programme the system to switch to battery power during peak hours. This way, households can avoid paying steep tariffs during peak hours.

Eskom is inadvertently helping drive the global sustainable energy movement by rapidly pricing South Africans out of the grid energy market. 

Rein Snoeck Henkemans is the chief executive of Alumo Energy.