The Challenge

Unsustainable Municipal
Electricity Margins

South African municipalities face a critical challenge: the traditional electricity trading model leaves almost no margin for sustainable operations and infrastructure investment.

Razor-Thin Margins

With Eskom bulk purchase at R2.39/kWh and municipal selling at R2.65/kWh, municipalities earn only R0.26 per unit - a margin of just 9.8%.

Rising Eskom Tariffs

Annual tariff increases of 12-13% from Eskom squeeze margins further, while NERSA limits municipal price increases to only 5-7% per year.

Infrastructure Pressure

Low margins mean municipalities cannot invest in grid maintenance, renewable integration, or service delivery improvements.

The Margin Squeeze Visualized

Net Margin Gap

R0.26/kWh

Only 9.8% margin

Traditional Model Economics

Revenue per kWhR2.65

Eskom Cost per kWhR2.39

Net Margin per kWhR0.26

The Bottom Line

For every 12,614 kWh of electricity traded, the municipality earns only R3,313.20 under the traditional model - barely enough to cover administrative costs.

R0.26

Margin per kWh

Traditional Model

9.8%

Profit Margin

Before Costs

12.7%

Eskom Increase

2024/25 Tariff

5.5%

NERSA Cap