A structural shift is occurring in South Africa's residential complex model, which has long depended on a centralized electricity provider. The rising cost of electricity, changes in tariff structures, and the continuous decrease in the prices of solar modules and lithium-ion batteries are fundamentally changing the energy supply economics, weakening the arguments for maintaining grid dependence, according to Francois van Temmaat, co-founder and CEO of Sustainable Power Solutions (SPS).
According to Van Temmaat, the discussion for developers and Homeowners Associations (HOAs) has shifted from temporary backup power to achieving complete energy independence. He notes that while security was the main motivation during peak outages, the relative stabilization of the energy situation has caused the focus to shift to financial outcomes.
The solar energy company indicates that the financial incentive to abandon the grid is driven by two diverging trends. On one hand, utility companies are increasingly restructuring tariffs to protect revenue, often increasing fixed connection and maintenance fees even when variable energy consumption decreases. This trend aims to maintain a revenue base, making solar solutions that operate only during the day less attractive on a standard basis.
On the other hand, the cost of renewable energy components, particularly batteries, continues to follow a downward price trajectory similar to that previously observed with solar modules. Van Temmaat concludes that the combination of these two factors shows there is a point where self-generation becomes more economically viable than maintaining grid connection. This point has already been reached by some clients who have found that self-generation provides superior long-term financial predictability.
In her weekly bulletin for Business Leadership South Africa (BLSA), CEO Busisive Mavuso stated that 'municipal collapse,' affecting three of South Africa's eight metropolises, including Johannesburg, Mangaung, and Cape Town, is a direct result of leadership and accountability failures. She believes that local government politicians are largely part of the problem rather than contributing to finding solutions.
Mavuso recalls that during the 2021 municipal elections, she warned about the need for suitable people in municipalities, pointing out that the core issue is fundamental human resources, and that local government 'did not always have the right hands at the till.' However, she says politicians continued to focus on factional battles, power grabs, and private interests, resulting in service delivery suffering, which hits underdeveloped areas the hardest.
The portal MyProperty reports that lenders remain willing to finance qualified buyers, offering many 100% mortgage loans to applicants with good credit ratings. Nevertheless, today home affordability depends on much more than just meeting mortgage eligibility requirements. Over the past few years, municipal rates, fees, insurance, utilities, and general living costs have increased. The portal emphasizes that it has become even more important to buy a home within one's financial means.
Most financial experts advise limiting the monthly mortgage payment to approximately 30%–35% of net monthly income. Using the current average salary of around R21,200, this corresponds to a monthly mortgage repayment budget of approximately: 30% — R6,360 per month; 35% — R7,420 per month. This leaves sufficient funds in the employee's monthly budget to cover basic living expenses, savings, and unforeseen costs. MyProperty reminds readers that homeownership involves much more than just paying off a mortgage, requiring budgeting for: municipal rates and taxes, electricity and water, levies (when purchasing under sectional title or in a complex), homeowner's insurance, property insurance, maintenance and repairs, as well as communication, security, and other monthly payments.
Despite South African businesses potentially overcoming the toughest periods of power outages (loadshedding), rising electricity tariffs and infrastructure risks are creating a new energy challenge for supply chains.
As electricity tariffs increase and infrastructure risks persist, supply chain decisions continue to transform. For procurement and supply chain managers, the focus in 2026 has shifted from simply maintaining operations during power interruptions to managing the broader consequences of rising energy costs, grid failures, and long-term reliability issues.
The South African National Energy Regulator (NERSA) approved an 8.76% increase in electricity tariffs for direct Eskom customers and a 9.01% increase for municipal customers for the 2026/27 financial year. This places additional pressure on businesses already facing increased operational and logistical costs.
According to Paul Vos, Regional Managing Director of the Chartered Institute of Procurement & Supply (CIPS) Southern Africa, the nature of energy risk has changed. He noted that energy uncertainty has not disappeared but has evolved. Today, organizations are increasingly encountering infrastructure failures, service backlogs, and localized grid outages, especially at the municipal level, which are often less predictable than the power cuts themselves. From a supply chain perspective, this unpredictability generates significant operational risks.
The effects of this pressure are felt across the entire supplier network, as companies face rising electricity costs alongside increased transportation and logistics expenses. According to Vos, this creates a 'dual price pressure': suppliers bear higher energy and logistics costs simultaneously. As a result, procurement teams are observing greater price volatility, more requests for contract adjustments, and increased budgetary pressure.
Energy-intensive sectors remain the most vulnerable, including manufacturing, food processing, cold chain logistics, mining, chemical industry, and water supply, due to their reliance on accessible and reliable energy. Although many manufacturers have tried to offset increased costs through efficiency improvements, there are limits to how much pressure companies can withstand before these costs spread throughout the economy. Vos continued to note a gradual rise in prices for various goods and services, and ultimately, a significant portion of the cost increases related to energy will be passed on to consumers.
The changing energy landscape is forcing companies to rethink procurement strategies, placing greater emphasis on resilience rather than just cost. Businesses are increasingly diversifying suppliers, exploring regional sourcing opportunities, strengthening supplier relationships, and using scenario planning to prepare for potential disruptions.
Vos emphasized that procurement functions are transforming from transactional activities into a factor of ensuring sustainability. Energy risk is increasingly integrated into the supplier selection and sourcing process, alongside traditional evaluation criteria such as quality, delivery times, and price. Furthermore, renewable energy sources are becoming an integral part of business continuity planning as companies seek greater control over energy expenditures and supplies. Businesses are looking at options such as power purchase agreements, on-site solar generation, battery storage, and hybrid energy systems. For many organizations, the conversation about renewable energy has moved beyond being solely a sustainability initiative to becoming a strategy for business continuity and resilience.
Contract management is also gaining importance in a more volatile environment. Vos believes that procurement agreements must reflect changing conditions using tools such as energy-linked escalation clauses, agreed threshold pricing, open-book accounting models, risk-sharing mechanisms, and structured review periods. The goal is to ensure a fair and transparent distribution of risks across the supply chain.
CIPS Southern Africa believes that in the future, companies need to view energy risk as a strategic issue requiring coordination between procurement, finance, and operations teams. Short-term measures include assessing energy exposure within supplier networks, identifying vulnerable categories, and strengthening engagement with suppliers. Long-term strategies will require incorporating energy aspects into sourcing decisions, supplier partnerships, and overall operational planning. Vos concluded that energy is no longer just a matter of building operation; it has become a core supply chain risk requiring coordinated leadership from procurement, finance, and operations. Companies that embed resilience into their supply chains will be better prepared to manage rising costs, protect operations, and adapt to South Africa's changing economic environment.
