The energy regulator Nersa intends to restrict the use of fully automated trading on South Africa's new wholesale electricity market for the first five years of its operation. This proposal is contained in an 87-page draft regulatory framework for the platform where participants will trade on the South African Wholesale Electricity Market (Sawem).
Nersa published this document for public consultation under the title 'Electricity Trading Platform Regulatory Framework.' The draft specifies that algorithmic trading systems used by market participants to submit bids and offers without manual verification must not interact with the trading platform during the initial phase of Sawem's operation. This initial phase is defined as the period from commercial launch up to five years.
This restriction will exclude the participation of software traders and large buyers accustomed to automatically reacting to price changes in mature energy markets. However, participants and the system operator will retain the ability to connect to the platform via its Application Programming Interfaces (APIs).
Nersa stated that the review of this ban will be based on the market's operational experience and the maturity level of the trading platform's risk control systems. The consultative document asks stakeholders whether this constitutes a 'suitable transitional measure.' The draft acknowledges that automated systems 'can increase market efficiency and responsiveness,' but warns that without proper governance, they could pose threats to market integrity, competition, and operational stability.
Licenses Are Insufficient
The National Transmission Company of South Africa (NTCSA), which Nersa licensed as the market operator in November 2025, cannot simply activate the platform. The draft states that holding a Market Operator (MO) license alone does not grant permission to commence commercial operations through the trading platform.
Instead, the platform must undergo six accreditation stages: design approval, factory acceptance testing, integration testing, market simulation, pilot operation, and commercial approval. Nersa has the right to combine, cancel, or adjust these stages, and it must approve every algorithm responsible for market clearing, dispatch planning, and calculations before it is implemented or modified.
The platform must be available 99.9% of the time during trading hours, undergo independent penetration testing—simulating attacks to identify security vulnerabilities—at least once a year, and store core market data for at least five years. In the event of a critical incident, such as a failure during trading hours, immediate notification to Nersa and a switch to manual processes within one hour are required. Even changing the cloud provider or data center is considered a 'material change' that must be reported to Nersa in advance and may require its approval.
Data exchange between the market operator and the system operator, currently housed within NTCSA, is governed by isolation and segregation requirements in the market operator's license.
Launch Postponed to 2027
Sawem was originally scheduled to launch on April 1, 2026. Later, NTCSA postponed the launch to the third quarter of 2026. This target has also been adjusted: according to last week's report from Engineering News, the market is now planned to begin operations in April 2027, and NTCSA is preparing a market monitoring unit prior to the launch.
Rules for bilateral electricity trading are also being refined. Following objections from Eskom to Nersa's first draft published in November 2025, the regulator released revised rules for comment in June, later extending the deadline to September 28. Eskom CEO Dan Marokane stated in July that the rules were nearly ready, but they have not yet been finalized.
The deadline for submitting written comments on the trading platform framework program expires at 4:00 PM on October 31. A virtual public hearing is scheduled for November 19, with registration closing at 4:30 PM on November 12.