Table of Contents
Key Points
- Eskom challenges Nersa’s licenses, citing a lack of consultation and regulatory rules in South Africa’s evolving power market.
- Discovery Green’s deal with Southern Sun raises concerns over private traders bypassing Eskom’s redistributive obligations.
- Eskom argues private energy traders threaten grid stability and cherry-pick profitable clients without supporting municipal debts.
South Africa’s state-owned power utility, Eskom, has gone to court to stop electricity trading licenses granted to Discovery Green — the renewable energy arm of Adrian Gore’s Discovery Group — along with five other private firms. Eskom argues the move puts the national grid at risk and opens the door to unfair competition.
The case, filed at the Gauteng High Court, takes aim at the National Energy Regulator of South Africa (Nersa), which approved the licenses. Eskom claims the regulator pushed the approvals through without proper rules in place or input from the public. According to the utility, the new traders are being allowed to cherry-pick its most profitable customers while sidestepping the responsibility of supporting municipalities struggling with unpaid electricity bills.
Landmark policy shift sparks Eskom’s pushback
The dispute comes shortly after Discovery Green signed a 10-year power purchase agreement with hospitality group Southern Sun to supply renewable energy to seven flagship hotels across the country. The deal will channel wind and solar energy through the national grid to properties including the Arabella Hotel & Spa and Drakensberg Sun Resort.
Eskom claims such agreements, under the current regulatory vacuum, could destabilize South Africa’s electricity system. Legal executive Mohlago Masekela said in filings that Nersa’s approvals constitute a “fundamental change in policy” and may “upend the entire landscape of electricity provision.” Eskom says the system’s integrity is at risk if traders can operate freely in profitable areas, undermining the utility’s ability to recover costs or maintain service in less attractive markets.
The utility argues that the current trading regime lacks mechanisms to manage tariffs, market access, or overlapping supply in the same regions — a violation of existing distribution rules. Eskom estimates municipal debt owed to it has exceeded R100 billion ($5.5 billion) and insists traders should help shoulder the burden through mandated cross-subsidies.
Rules trail South Africa’s energy liberalization
Founded in 1992 by Adrian Gore and Barry Swartzberg, Discovery has grown into one of South Africa’s most diversified financial groups. Gore, who owns 12.96 percent of the firm, remains bullish on long-term growth, expecting returns above inflation plus 10 percent without needing fresh capital.
The court fight highlights tensions between Eskom’s survival and South Africa’s push to open its energy market. It pits the struggling state utility against nimble private players like Discovery Green, backed by one of the country’s top corporate groups.
Though Nersa admits trading rules remain incomplete, it continues to issue licences — including to Discovery Green, GreenCo Power Services, and Green Electron Market. More applications will be reviewed on July 30. Eskom warns unregulated trading could destabilize the grid and may expand its legal action. The case could set a crucial precedent for balancing liberalisation with the utility’s financial stability.
