Nersa's new net billing rules are a game-changer for South Africa's energy landscape!

South Africa's Net-Billing Framework: A Comprehensive Analysis of the New Energy Prosumer Landscape

Executive Summary

This report provides a comprehensive analysis of the net-billing framework recently approved by the National Energy Regulator of South Africa (NERSA), a landmark regulatory development poised to reshape the nation's electricity supply industry. Finalized in December 2024, these rules establish a formal mechanism to compensate electricity consumers who generate their own power, primarily through renewable sources like rooftop solar, and export their surplus to the national grid. This development is a direct and critical response to South Africa's protracted energy crisis, characterized by systemic load-shedding and escalating electricity tariffs, which have created a powerful impetus for decentralized generation.

The NERSA framework adopts a "net-billing" model, which treats electricity imported from the grid and electricity exported to the grid as separate financial transactions. Consumers, now termed "prosumers," are billed at the standard retail tariff for all energy they import, while receiving a credit for exported energy at a distinct, and typically lower, "export tariff." This approach was strategically chosen over the more consumer-favorable "net-metering" model to balance the need for incentivizing renewable energy adoption with the imperative of maintaining the financial stability of national utility Eskom and municipal distributors. The rules delegate significant authority to these distributors to design their own specific tariffs and technical requirements, subject to NERSA's approval and overarching principles of fairness and cost-reflectivity.

This delegation has resulted in a fragmented and complex implementation landscape. Eskom, the national utility, has mandated that all its grid-tied residential prosumers migrate to a "Homeflex" tariff. This is a sophisticated Time-of-Use (TOU) tariff that unbundles charges into separate components for energy, network access, and services, thereby ensuring all users contribute to fixed grid costs. In contrast, metropolitan municipalities have developed divergent and often more administratively burdensome approaches. The City of Johannesburg, for instance, has introduced significant fixed monthly charges and a mandatory switch to post-paid, TOU billing for prosumers, significantly altering the investment calculus. The City of Tshwane has established its own set of technical requirements and compensation rates. This creates a "postcode lottery," where the financial viability of a solar installation is heavily dependent on the prosumer's specific electricity distributor.

From the prosumer's perspective, the business case for investing in Small-Scale Embedded Generation (SSEG) is now fundamentally altered. The significant differential between high retail import tariffs and low export credit rates means that the primary financial benefit comes from maximizing on-site self-consumption of solar energy, rather than from exporting surplus power. This economic reality creates a strong incentive for the adoption of battery storage systems to time-shift solar energy from midday generation to evening peak consumption. While the framework provides regulatory certainty, prospective prosumers must navigate complex application processes and factor in not only hardware costs but also compliance fees and new, ongoing fixed charges on their utility bills. The South African Revenue Service (SARS) has provided clarity that credits earned under this system are not taxable income.

For utilities, the framework is a crucial tool to manage the existential threat that decentralized generation poses to their traditional, volume-based revenue models. By enabling the implementation of unbundled, cost-reflective tariffs with fixed charges, the rules help avert the "utility death spiral" and ensure that all grid users contribute equitably to the maintenance of the network infrastructure. This marks the beginning of a fundamental transition for distributors from being simple energy resellers to becoming sophisticated network service providers.

In conclusion, the net-billing framework is a pivotal step in the modernization and decentralization of South Africa's energy sector. While it presents significant implementation challenges, particularly regarding municipal consistency and administrative complexity, it lays the essential regulatory foundation for a future where millions of prosumers can contribute to the nation's energy security. The strategic outlook suggests a continued rise in solar and battery adoption, with the next major challenge shifting from financial compensation rules to the physical constraints of the electricity grid itself.

1. Introduction: A Paradigm Shift in South Africa's Energy Sector

1.1. Setting the Scene: The Imperative for Change Driven by the Energy Crisis

The introduction of a formalized net-billing framework in South Africa is not a standalone regulatory adjustment but a direct and necessary consequence of a deep, protracted national energy crisis. For over a decade, the country has been grappling with a structural deficit in electricity generation capacity, a situation primarily driven by the underperformance of an aging fleet of coal-fired power stations operated by the state-owned utility, Eskom. This systemic failure has resulted in the widespread implementation of rotational power cuts, known as "load-shedding," which has inflicted severe damage on the economy, disrupted daily life, and undermined investor confidence. The crisis has created a dual imperative for the South African government: first, to urgently alleviate the immense pressure on the national grid by adding new generation capacity from any available source, and second, to align its energy policy with international climate change commitments, which necessitate a transition away from a coal-dependent energy mix.¹

These twin pressures have catalyzed a series of policy reforms and tax incentives aimed at stimulating investment in renewable energy. The net-billing rules are a cornerstone of this reform agenda, specifically targeting the latent potential of decentralized, small-scale generation. The economic urgency for consumers to seek energy alternatives has been sharply amplified by relentless increases in electricity tariffs. NERSA's recent approval of a 12.7% average tariff hike for Eskom for the 2025/26 financial year is the latest in a series of steep price increases that have significantly eroded household and business finances.³ This sustained cost pressure has transformed rooftop solar photovoltaic (PV) systems from a niche, environmentally-driven choice into a mainstream, economically rational investment for a growing segment of the population seeking to mitigate exposure to Eskom's escalating costs and unreliable supply.³

A deeper analysis of the policy's context reveals that the net-billing framework functions as a significant policy lever, strategically designed to outsource a portion of the national generation capacity burden to the private sector and individual households. The state's protracted struggle to commission new utility-scale power plants in a timely manner has necessitated a shift in strategy. By creating a formal, regulated pathway for compensation, the government is actively incentivizing private capital—from individual homeowners to large commercial enterprises—to be invested in distributed generation assets. This framework is therefore not merely about ensuring fairness for existing solar owners; it is a strategic instrument to stimulate widespread, decentralized private investment in the country's generation infrastructure, effectively offloading a portion of the state's responsibility and capital expenditure requirements onto the market.

1.2. The Rise of the 'Prosumer': From Passive Consumer to Active Grid Participant

The structural failures of the traditional, centralized energy model have given rise to a new and increasingly influential actor in the electricity ecosystem: the "prosumer." This term describes an entity that has transcended the historical role of a passive electricity consumer to become an active participant that both consumes energy from and produces energy for the grid.⁵ The proliferation of Small-Scale Embedded Generation (SSEG), overwhelmingly dominated by rooftop solar PV installations, has been a grassroots response to the energy crisis. This trend has fundamentally altered the dynamics of the grid, creating bidirectional power flows where a one-way street once existed.

The emergence of the prosumer represents a disruptive force, challenging the century-old utility business model built on centralized generation and unidirectional distribution. This shift necessitates a new regulatory and technical paradigm to manage the complex interactions between millions of small-scale generators and the legacy grid infrastructure. The net-billing framework is the formal recognition of this new reality. It is a move towards a more democratic, decentralized energy model where consumers are not just ratepayers but are acknowledged and rewarded for their contribution to overall energy stability and generation capacity.³ This evolution marks a profound change in the fundamental relationship between the utility and the end-user, from a simple provider-customer dynamic to a more complex, symbiotic partnership.³

1.3. Overview of NERSA's Intervention and the Dawn of a Formalized Compensation Framework

As the central regulatory authority for the electricity, piped-gas, and petroleum pipelines industries in South Africa, NERSA is mandated to manage this transition.⁶ The approval of the national net-billing framework in December 2024 marked the culmination of a long-awaited and highly anticipated regulatory process.³ This was not a unilateral decision but the product of extensive development and consultation involving key stakeholders, including the National Energy Crisis Committee (NECOM), which was established to coordinate the government's response to the power crisis.⁸ The framework's primary purpose is to move beyond the ad-hoc, inconsistent, and often non-existent compensation mechanisms that previously governed SSEG and to establish a clear, national set of principles for how prosumers are credited for the excess electricity they export to the grid.

The timing of the framework's approval, coinciding with the announcement of another significant Eskom tariff hike, creates a powerful "push-pull" dynamic that appears to be a deliberate policy design. The "push" factor is the high and rising cost of grid electricity, which makes the savings from self-generation increasingly attractive. The "pull" factor is the new, formalized ability to receive a tangible credit for surplus generation, which improves the overall return on investment for a solar installation. This synchronicity of a punitive price signal from the utility and an enabling regulatory signal from the regulator is engineered to accelerate the adoption of SSEG far more effectively than either factor could achieve in isolation. This report provides a comprehensive analysis of these new rules, their complex implementation by Eskom and major municipalities, and their far-reaching financial, technical, and strategic implications for the future of energy in South Africa.

2. Deconstructing the NERSA Net-Billing Rules

The formal "Net-Billing Rules" document published by NERSA serves as the foundational legal and regulatory instrument governing the compensation of prosumers in South Africa.⁵ It establishes a set of high-level principles and mandates that licensed electricity distributors—primarily Eskom and the country's municipalities—must adhere to when developing their specific prosumer tariffs and connection agreements. A detailed deconstruction of this document is essential to understanding the framework's intent, scope, and limitations.

2.1. Core Objectives: Balancing Interests and Encouraging Renewable Adoption

The rules explicitly state a tripartite set of objectives that guide the entire framework. The primary and most immediate goal is to empower licensed distributors to establish and implement tariffs, terms, and conditions that formally allow prosumers within their supply areas to export surplus power back into the distribution network.⁵ This objective moves the practice of grid-tied generation from a regulatory grey area into a formally sanctioned activity.

The second objective is broader, aiming to create a "robust regulatory environment" that enables NERSA to effectively oversee, monitor, and regulate a rapidly evolving and increasingly complex electricity industry.⁵ This acknowledges that the rise of decentralized generation requires enhanced regulatory capacity to manage new challenges related to grid stability, tariff equity, and technical standards.

The third and most critical objective is to provide distributors with "clear pricing principles" for setting sustainable prosumer export tariffs and import charges. The rules emphasize that this must be done in a way that "balances the interests of both Distributors and Prosumers".⁵ This principle of balance is the cornerstone of the entire framework, signaling a deliberate policy choice to mediate the inherent tension between a prosumer's desire for maximum compensation and a utility's need for revenue stability.

2.2. Key Definitions and Eligibility Criteria for Prosumers

The NERSA document provides precise definitions that are crucial for interpreting the framework's mechanics.

Net-billing is formally defined as a compensation method where a customer's grid-tied generation system is synchronized with the grid. Compensation for any exported electricity is calculated using a specifically designed "export tariff." Critically, the definition clarifies that "The customer is still charged the full tariff for energy consumed and capacity provided".⁵ This clause explicitly separates the acts of buying and selling (or crediting) electricity, forming the main distinction from net-metering systems.

A Prosumer is defined as an electricity customer who operates a generation facility connected to the distribution network, thereby functioning as both a consumer and a producer of electrical energy.

Eligible Generation Technologies are not prescriptively defined by NERSA. Instead, the rules delegate this authority to the individual distributor, who "shall determine the types of eligible generation technologies in line with its network characteristics and environmental targets of South Africa".⁵ While this provides flexibility, it also opens the door to inconsistency across different supply areas. The framework is intended to be technology-inclusive, with documents referencing a wide range of renewable sources, including solar, wind, hydro, geothermal, biomass, biogas, and biofuel, as being eligible under the scheme.²

2.3. Technical Standards and Generation Capacity Limits

To ensure the safety and stability of the distribution grid, the NERSA rules establish clear technical boundaries and capacity limits for prosumer installations.

Distributors are given the responsibility to determine and enforce two types of export limits: the maximum amount of energy that a single prosumer facility can export, and the aggregate limit of total export capacity allowed across their entire distribution network or within specific subsections of it. These limits must be scientifically determined based on the technical ratings of upstream electrical infrastructure (such as transformers and power lines) and the stability requirements of the power system, as determined by detailed technical studies.⁵

Furthermore, the rules impose a definitive upper limit on the size of any single distributed generator connecting under this framework. The generation capacity of a prosumer's facility is not permitted to exceed the lower of two values: a) the customer's main electricity supply circuit breaker's current rating (converted to kilovolt-amperes, or kVA), or b) a hard cap of 1000 kVA (or 1 MVA).⁵ This capacity ceiling is significant as it ensures the rules apply to a wide range of installations, from typical residential rooftop systems (5-15 kVA) through to large commercial and small industrial operations, while excluding utility-scale power plants which are governed by different regulations.

All connections are required to be in full compliance with national technical standards, with a specific reference to the NRS 097 series of standards.⁵ This series is the primary technical code in South Africa governing the grid connection of embedded generation, detailing requirements for safety, power quality, and equipment certification to prevent harm to the network or personnel.

2.4. Guiding Principles for Distributor Tariff Design: The Mandate for Fairness and Cost-Reflectivity

The most consequential section of the NERSA rules outlines the principles that distributors must follow when designing their prosumer tariffs. This section forms the regulatory core of the framework and is the basis upon which NERSA will approve or reject a distributor's proposed tariff structure.

The foundational mandate is that every distributor must design an export tariff for all its prosumers, and this tariff is subject to final approval by NERSA.⁵ This ensures that no distributor can simply refuse to compensate prosumers. The compensation itself is explicitly defined as a

credit for exported energy, which is to be used to offset the prosumer's current or future electricity bills.³ The rules do not provide for direct cash payments, instead framing the grid's role as a form of "virtual battery" where energy credits can be stored for later use.¹

The most critical and legally significant principle is the prohibition against unfair cross-subsidization. The rules state that in designing the export tariff, the distributor must ensure that it does not:

i) "discriminate or allocate disproportionate or unjustified burdens or cross-subsidies to prosumers"; and

ii) "create additional disproportionate or unjustified burdens or cross-subsidies to the tariffs of customers that are not Prosumers".5

This dual principle is a preemptive measure designed to protect the financial integrity of the utility model. The second clause, in particular, provides the legal foundation for utilities to implement tariff structures—such as unbundled bills with fixed charges—that are designed to recover network costs from prosumers. The argument, which this clause legitimizes, is that if prosumers do not pay their share of fixed grid costs, those costs are unfairly shifted onto the remaining non-prosumer customers, creating a prohibited cross-subsidy.

Finally, the rules mandate procedural fairness, requiring that distributors treat all applications for connection in an "open and transparent manner that ensures non-discriminatory treatment for all applicants".⁵

While NERSA has set these high-level principles of fairness and cost-reflectivity, the rules deliberately delegate the most critical details—such as the actual export tariff rates, the structure of import tariffs, specific technical requirements, and the administrative application processes—to the discretion of the more than 180 municipal distributors and Eskom. This creates a deeply fragmented regulatory landscape. A prosumer in an Eskom-supplied area will face a completely different set of financial and administrative realities than one in Johannesburg, Cape Town, or Tshwane. The result is a "postcode lottery," where the economic viability and practical difficulty of installing a grid-tied solar system depend heavily on the specific rules and capacity of the local distributor, rather than a single, predictable national standard. This fragmentation introduces significant market uncertainty and complexity for consumers, installers, and investors alike.

3. The Global Context: Net Billing vs. Net Metering and Feed-in Tariffs

South Africa's decision to adopt a net-billing framework was a deliberate policy choice made within a global context of varying compensation models for distributed energy generation. Understanding the key differences between net billing, net metering, and feed-in tariffs is essential to appreciating the strategic rationale behind NERSA's regulations and their implications for both prosumers and utilities.

3.1. Net Metering: The One-for-One Credit Model

Net metering is arguably the simplest and most consumer-friendly compensation mechanism. Under this model, a single, bi-directional electricity meter is used to record the flow of energy in two directions. When a household consumes more electricity than its solar system produces, the meter spins forward, drawing power from the grid. When the system produces more electricity than the household consumes, the surplus power is exported to the grid, and the meter spins backward.¹¹ At the end of the billing period, the customer is billed only for their "net" consumption—the difference between the total energy imported and the total energy exported.¹³

The defining feature of a true net metering system is that each kilowatt-hour (kWh) of exported energy is credited at the full retail price of electricity. This creates a one-for-one exchange: a kWh exported to the grid is worth exactly the same as a kWh imported from the grid later.¹⁴ This model effectively allows the prosumer to use the grid as a large, free energy storage system, banking excess solar energy generated during the day to offset consumption at night or on cloudy days.¹⁴ While this structure provides a powerful incentive for early adoption of solar PV, it is heavily criticized by utilities, who argue that it overcompensates prosumers by crediting them at a retail rate that includes fixed costs for grid maintenance, transmission, and administration—costs which the utility still incurs. In South Africa, although the concept was widely discussed, most municipalities actively resisted its implementation due to well-founded fears of significant revenue erosion.¹⁰

3.2. Feed-in Tariffs (FITs): The Premium Incentive Model

A Feed-in Tariff (FIT) is a distinct policy instrument designed to aggressively accelerate investment in specific renewable energy technologies. Unlike net metering or net billing, which are primarily billing mechanisms, a FIT is a direct incentive program. It typically offers eligible renewable energy producers a long-term contract (often 15-25 years) to sell the electricity they generate to the grid at a guaranteed, cost-based price per kWh.¹⁶

This guaranteed price is often set above the retail electricity rate, particularly in the early stages of a technology's deployment, to ensure a profitable return on investment and attract capital. FITs are often differentiated by technology, size, and location, offering higher rates for newer or more desirable technologies like solar PV to stimulate their growth.¹⁶ This model usually requires "gross metering," where two separate meters are installed: one to measure all the electricity consumed from the grid, and another to measure the total amount of electricity generated and exported by the renewable energy system.¹¹ The customer is billed for all their consumption and paid separately for all their generation. South Africa previously implemented a version of this for large-scale projects, known as the Renewable Energy Feed-in Tariff (REFIT), but the program was later replaced by a competitive bidding process.¹⁷

3.3. Net Billing: South Africa's Chosen Path of Separate Tariffs

Net billing, the model officially adopted by South Africa, represents a hybrid or intermediate approach that combines elements of the other two systems. Like net metering, it typically uses a single bi-directional meter to separately measure all energy imported from the grid and all surplus energy exported to the grid.¹¹

However, the crucial distinction lies in the valuation of these energy flows. Under net billing, imports and exports are treated as two separate and distinct financial transactions.¹⁰ Energy imported from the grid is billed to the prosumer at the standard retail tariff, which includes all associated costs of generation, transmission, distribution, and administration. Surplus energy exported to the grid, however, is credited to the prosumer's account at a completely different, specifically designed "export tariff".⁵ This export rate is invariably lower than the retail rate and is often calculated based on the utility's "avoided cost" (the cost it would have incurred to generate or purchase that kWh from another source, like Eskom) or a wholesale market price.¹¹ The NERSA rules firmly establish this model for South Africa, stating that "the customer is still charged the full tariff for energy consumed" while compensation for exports is calculated using a separate export tariff.⁵

3.4. Strategic Implications of Adopting a Net Billing Framework

South Africa's selection of the net-billing model was a strategic decision reflecting a careful balancing of competing policy objectives. By choosing net billing over net metering, policymakers have prioritized the financial sustainability of the country's utilities. The model inherently protects the utility's revenue base by ensuring that it does not compensate prosumers at an inflated retail rate for exported energy. This prevents the significant revenue erosion that has been a major concern for municipalities and Eskom.¹⁰

The net-billing approach also provides a more accurate and defensible price signal. It correctly reflects the underlying economics that the value of raw energy supplied to the grid by a prosumer (the utility's avoided cost) is intrinsically lower than the value of fully-delivered energy consumed by that same prosumer, as the latter includes the significant costs of maintaining the entire grid infrastructure and administrative apparatus.¹⁴

This policy choice is a direct result of lessons learned from international energy markets. In many countries that initially offered generous net metering policies, utilities later faced financial distress and engaged in contentious political and regulatory battles to roll back those benefits, creating market instability and angering early adopters. By establishing a more financially sustainable, albeit less lucrative for the prosumer, net-billing framework from the outset, South African regulators are attempting to avoid this "boom-bust" cycle. They are creating a more predictable and stable foundation for the long-term, sustainable growth of decentralized generation, balancing the need to encourage solar uptake with the critical imperative of ensuring the ongoing viability of the national electricity system.

Table 1: Comparison of Compensation Models

Feature	Net Metering	Net Billing	Feed-in Tariff (FIT)
Compensation Rate	Full Retail Rate (1-for-1 kWh credit)	Below-Retail Export Tariff	Guaranteed Premium Rate (often above retail)
Billing Mechanism	Netting of consumption (single meter reading)	Separate import/export transactions	Gross metering of all generation
Metering Requirement	Single bi-directional meter	Single bi-directional meter	Two separate meters (import and export)
Primary Beneficiary	Prosumer	Balanced (Utility/Prosumer)	Producer/Investor
Policy Goal	Encourage rapid early adoption	Sustainable, cost-reflective growth	Rapidly scale specific technologies
SA Status	Largely unimplemented due to revenue concerns	Officially Adopted Framework (2024)	Previously used for large-scale projects (REFIT)

4. Implementation Analysis I: Eskom's National Approach

As the national power utility and the direct electricity supplier to a significant portion of South Africa's residential, commercial, and industrial customers, Eskom's implementation of the net-billing rules sets a national precedent. Eskom has integrated the net-billing framework into a broader, fundamental restructuring of its retail tariffs, a process designed to modernize its pricing, ensure fair cost recovery, and adapt to an increasingly decentralized energy landscape.

4.1. The Homeflex Tariff: A Mandatory Shift for Grid-Tied Prosumers

The centerpiece of Eskom's new approach for residential prosumers is the Homeflex tariff.¹⁹ This is not an optional program but a

mandatory tariff for any residential customer with a grid-tied SSEG system who wishes to export power to the grid.²⁰ For other urban residential customers without embedded generation, moving to Homeflex remains a voluntary choice. The stated rationale behind the Homeflex tariff is to create a more cost-reflective pricing structure that accurately mirrors the different costs associated with providing electricity services. This move is explicitly aimed at adapting to the changing energy environment and, crucially, avoiding the unfair cross-subsidies that can arise when prosumers on traditional tariffs do not contribute fully to the fixed costs of the grid.⁴

4.2. Unbundling the Bill: Analyzing Energy, Network, and Service Charges

A defining characteristic of Eskom's new tariff philosophy, embodied in the Homeflex tariff, is the "unbundling" of the electricity bill into its constituent cost components. This replaces the traditional, single "per kWh" charge with a multi-part tariff that separately accounts for the different services a customer receives. The key components are:

• Energy Charges (c/kWh): This is the variable component for the actual electricity consumed. Under Homeflex, this is structured as a Time-of-Use (TOU) tariff, with different rates for Peak, Standard, and Off-Peak periods. These rates also vary between high-demand (winter) and low-demand (summer) seasons, sending strong price signals to consumers about the cost of generation at different times of the day and year.²⁰

• Network Capacity Charge (R/day or R/month): This is a fixed daily or monthly charge based on the size of the customer's grid connection (i.e., their Notified Maximum Demand or NMD). This charge is designed to recover the capital and maintenance costs of the physical distribution network (poles, wires, transformers) required to serve that customer.²⁰

• Service and Administration Charge (R/day or R/month): This is another fixed charge intended to cover the costs of customer-facing services such as metering, billing, and administration.²⁰

Eskom has clearly stated that this unbundling is essential for ensuring fair and equitable cost recovery from all users of the grid. It specifically prevents a scenario where customers with solar generation, who significantly reduce their energy consumption (the variable component), avoid contributing to the fixed network and service costs, thereby shifting that burden onto non-solar customers.⁴ Recognizing the potential for "bill shock," Eskom is implementing these new fixed charges in a phased manner. The Generation Capacity Charge (GCC) and the residential service and administration charges began their phase-in at a fraction of their full value in April 2025 and will be incrementally increased over a three-year period to reach their fully cost-reflective level.²³ This politically astute, gradualist approach aims to mitigate public resistance by allowing consumers time to adapt, while still achieving the long-term objective of a fully unbundled and sustainable tariff structure.

4.3. The Gen-Offset Tariff: Calculating Compensation for Exported Energy

The specific mechanism through which Eskom compensates prosumers under the net-billing framework is the Gen-offset tariff.²³ When a Homeflex customer exports surplus energy to the grid, the value of that energy is calculated using the rates specified in this tariff. The accumulated credit is then used to offset the charges on their monthly electricity bill.

A critical and technically nuanced detail of this mechanism is how the credit is calculated and applied. Eskom's official tariff documents clarify that the energy credit provided for exported electricity explicitly excludes the portion of the standard energy charge that is designed to recover the phased-in Generation Capacity Charge (GCC) and the Service and Administration charge.²³ In simpler terms, even when a prosumer is exporting power, they are still implicitly contributing to the fixed costs of the system. This sophisticated design ensures that the principle of cost recovery is maintained, preventing prosumers from "netting out" their contribution to the system's fixed costs.

The structure of the Homeflex tariff is a powerful tool not just for cost recovery, but for actively shaping consumer behavior and technology adoption. By exposing prosumers to extremely high energy charges during peak demand periods (e.g., winter evenings), Eskom creates a potent financial incentive for them to invest in battery storage. A prosumer without a battery would generate cheap solar power during midday (an off-peak or standard period) but would still be forced to import expensive grid power during the evening peak. By adding a battery, that same prosumer can store their low-cost solar energy and deploy it during the high-cost peak period, dramatically maximising their savings.²⁰ This market-driven incentive for battery adoption is highly beneficial for Eskom, as it helps to flatten the national demand curve, reduces the strain on the grid during critical peak hours, and lessens the need for the utility to operate its own expensive and carbon-intensive peaking power plants. The tariff structure, therefore, is actively turning a potential grid challenge (intermittent solar feed-in) into a grid asset (dispatchable, stored energy).

4.4. Eskom's SSEG Registration Drive and Compliance Mandates

Alongside the new tariff structures, Eskom has launched a major public campaign to enforce the registration of all SSEG systems connected to its network. The utility has emphasised that all grid-tied installations, including typical household solar setups up to 50 kW, must be officially registered with either Eskom or NERSA.³ This is justified on the grounds of safety and grid stability, as an increasing number of unregistered systems feeding power into the network can pose risks to maintenance personnel and compromise the technical performance of the grid.

To encourage compliance, Eskom has set a firm deadline of March 2026. Customers who fail to register their systems by this date may face penalties or be forced to disconnect from the grid. As a significant incentive for early adoption, Eskom is waiving a number of associated fees for customers who register before the deadline. This includes the application fee, tariff conversion costs, and the cost of the smart bi-directional meter, which could collectively save a household over R9,000.³ The formal application process for Eskom-supplied customers requires providing details of the existing Eskom account, submitting detailed technical documentation about the proposed system, obtaining the necessary NERSA registration, and signing an amended supply agreement with the utility.²⁶

5. Implementation Analysis II: The Municipal Mosaic

While Eskom provides a national framework for its customers, the majority of electricity users in South Africa's urban centers are supplied by their local municipalities. Under the NERSA rules, each of these municipal distributors is tasked with developing and implementing its own net-billing tariffs and application processes. This has led to a "mosaic" of different approaches, with significant variations in cost, complexity, and consumer-friendliness. An analysis of two of the country's largest metropolitan municipalities, Johannesburg and Tshwane, reveals the divergent paths being taken at the local level.

5.1. Case Study: City of Johannesburg (City Power)

The City of Johannesburg's distributor, City Power, has adopted an approach to net billing that is characterised by significant tariff restructuring and a highly detailed, multi-stage application process.

Tariff Structures and Fixed Charges

City Power's implementation is marked by a fundamental shift in its billing philosophy, particularly for its large base of prepaid customers. The approved tariffs for the 2024/25 financial year and the proposed tariffs for 2025/26 introduce substantial fixed monthly charges for all customers, including those on prepaid meters who historically only paid for the energy they consumed.²⁷ These are unbundled into a "service charge" and a "capacity charge," which together can amount to over R550 per month for a standard residential prepaid user, before any electricity is even consumed.³⁰

Furthermore, it is a mandatory requirement for any customer wishing to connect an embedded generation system to migrate to a conventional (post-paid) Time-of-Use (TOU) tariff structure.³⁰ This move away from the simpler inclining block tariffs or prepaid systems serves two purposes for the utility. First, it exposes prosumers to price signals that reflect the time-varying cost of electricity, encouraging them to align their consumption with periods of lower system demand. Second, and more critically, the mandatory switch to a post-paid account ensures the utility's ability to bill for and collect the new fixed monthly charges, which is technically difficult on older prepaid metering systems. This is a crucial mechanism for revenue assurance, guaranteeing a baseline income stream from every connected property, thereby directly countering the revenue loss from reduced volumetric sales caused by solar adoption.

The Prosumer Application and Approval Gauntlet

The process for a Johannesburg resident to legally connect a solar system to the grid is notably complex and administratively intensive. It involves a sequence of steps across multiple municipal departments and requires significant technical documentation:

1. Initial Application: The process begins not with City Power, but with the City of Johannesburg (CoJ) itself, where the applicant must visit a walk-in center to submit an "Application for Electricity Supply" and obtain a formal Notification Number.³³

2. Technical Submission: The applicant must then submit a comprehensive application package to City Power's SSEG department. This package must include numerous technical documents, such as a detailed Single Line Diagram of the installation, datasheets for the inverter and panels, the inverter's NRS 097 compliance certificate, a site layout plan, and a valid Certificate of Compliance (CoC) from the installer.³⁴

3. Network Study: For larger systems (exceeding 350 kVA), a formal Grid Impact Study is mandatory and must be conducted at the applicant's expense. The study's findings must be approved by City Power's Planning Evaluation Committee to ensure the proposed system will not negatively affect the local grid.³⁴

4. Metering and Billing Conversion: Upon approval, the customer must pay for the installation of a smart, bi-directional meter capable of separately measuring imported and exported energy. As noted, this is coupled with a mandatory conversion from a prepaid to a post-paid account.³³

5. Final Commissioning: The final step involves the physical testing and commissioning of the installed system, which must be witnessed and formally approved by City Power officials before the system can be legally energised and connected to the grid.³³

This extreme administrative complexity and the associated costs act as a significant non-financial barrier to entry for SSEG. While national policy aims to encourage solar adoption, this "bureaucratic friction" can be interpreted as a de facto policy tool used by a financially strained municipality to moderate the rate of solar uptake and thereby protect its critical electricity revenue streams. This creates a fundamental conflict between the national goal of accelerating generation capacity and the local imperative of financial self-preservation.

5.2. Case Study: City of Tshwane

The City of Tshwane has also established a formal process for the connection of embedded generation, which, while still detailed, appears more streamlined in its public-facing requirements compared to Johannesburg.

Technical Compliance and Grid Connection Requirements

Tshwane's SSEG policy is built around a clear set of technical standards and system size categories, referencing national codes like NRS 097-2-3 for systems up to 350 kVA.³⁶ The policy explicitly defines key safety requirements, such as "anti-islanding," which ensures a prosumer's system automatically disconnects from the grid during a power outage to protect municipal workers.³⁶

The application process requires the submission of a detailed application form, along with supporting technical documents like single-line diagrams and inverter test certificates, to a dedicated municipal email address (sseg@tshwane.gov.za).³⁷ The city reserves the right to require a grid impact study at the applicant's cost for systems larger than 350 kVA or those that do not meet the criteria for a "simplified connection".³⁶

Tariff Analysis and Export Compensation Rates

The City of Tshwane's approved tariffs for the 2025/26 financial year include an average electricity rate increase of 10.2%.³⁹ For prosumers, the tariff structure includes a specific credit tariff for excess energy exported to the grid. While rates are subject to annual revision, historical documents for the 2024/25 period indicated a credit rate of 78.51 c/kWh for exported energy and a wheeling tariff of 92.67 c/kWh.⁴¹ These rates would be applied against the standard residential import tariffs, which for 2025/26 range from 297.90 c/kWh for the first block of consumption up to 409.48 c/kWh for consumption above 650 kWh.⁴² Like other distributors, Tshwane's framework also makes provision for fixed monthly charges for embedded-generation customers to ensure recovery of network-related costs.⁴¹

Comparing the Prosumer Experience

The experiences in Johannesburg and Tshwane starkly illustrate the fragmented reality of net billing implementation in South Africa. While both municipalities are moving towards cost-reflective tariffs with fixed charges and require rigorous technical compliance, the administrative pathways, specific costs, and tariff structures differ significantly. A prospective prosumer in Johannesburg faces a multi-agency application process and a mandatory switch to a complex post-paid TOU tariff with high fixed charges. In Tshwane, the process appears more centralised within a single department, but the financial outcome is still dictated by a unique set of import and export tariffs. This municipal mosaic underscores the "postcode lottery" effect, where a prosumer's financial return and administrative burden are determined not by a uniform national standard, but by the specific policies of their local electricity supplier.

Table 2: Comparative Analysis of Prosumer Tariffs (FY2025/26)

Distributor	Tariff Name	Import Rate (c/kWh)	Export Credit Rate (c/kWh)	Monthly Fixed Service Charge (Rand)	Monthly Network Capacity Charge (Rand)	Notes
Eskom	Homeflex	TOU Rates Apply (Seasonal & Time-Dependent)	Gen-Offset Tariff Rate	Phased-in R/day charge	Phased-in R/day charge based on supply size	Mandatory for grid-tied SSEG. TOU rates create strong incentive for battery storage.
City of Johannesburg	Residential TOU	TOU Rates Apply (Seasonal & Time-Dependent)	~65-80 (Based on older data, subject to update)	R244.20 (Proposed for Prepaid High)	R237.30 (Proposed for Prepaid High)	Mandatory switch to post-paid TOU tariff. High fixed charges apply even to former prepaid users.
City of Tshwane	Domestic Standard	Inclining Block Rates (297.90 - 409.48)	~78.51 (Based on 2024/25 data)	Applicable fixed charges as per tariff schedule	Applicable fixed charges as per tariff schedule	Prosumers pay standard import tariff blocks and receive a separate credit for export.

Note: All Rand values are typically exclusive of VAT. Municipal tariff data is based on proposed or recently approved figures for the 2024/25 and 2025/26 financial years and is subject to change. Export credit rates for municipalities require confirmation from the latest approved tariff schedules.

6. The Prosumer Perspective: A Financial and Practical Assessment

For individual households and businesses, the decision to invest in a solar PV system is a significant financial and logistical undertaking. The new net-billing framework provides regulatory clarity but also introduces a new set of variables that must be carefully assessed. This section examines the practicalities of becoming a prosumer, from the initial business case to navigating the application process and understanding the full spectrum of costs and tax implications.

6.1. The Business Case for Residential and Commercial Solar Installation

The financial attractiveness of a rooftop solar installation under the net-billing framework is driven by two primary sources of value: savings from reduced electricity purchases and credits from exported surplus energy.

The upfront capital cost remains a significant consideration. For typical residential systems, the all-in cost, including hardware and installation, can range from approximately R82,750 for a smaller 5kW system to over R158,000 for a larger 8kW system with battery storage.⁴³ Hybrid systems, which include batteries, generally cost between R115,000 and R120,000 for a 5kW setup, while simpler grid-tied systems without batteries can be sourced for between R55,000 and R60,000.⁴⁴

The return on this investment is calculated through a combination of bill reduction and export credits.

1. Bill Reduction (Self-Consumption): This is the most significant financial benefit. Every kWh of solar energy that is generated and consumed on-site directly displaces a kWh that would have been purchased from the utility at the high retail import tariff. Given that import tariffs can exceed R3.00/kWh during certain times or in higher consumption blocks, the value of self-consumed energy is substantial.⁴

2. Export Credits: Surplus energy not consumed on-site is exported to the grid and credited at the distributor's specific, lower export tariff (e.g., in the range of 65-80 c/kWh).³²

The large spread between the high cost of imported electricity and the low credit value for exported electricity creates a crucial economic dynamic: the financial viability of a solar installation is now far less dependent on the volume of sunshine and far more dependent on the prosumer's ability to maximize their self-consumption. Every kWh of solar energy consumed directly on-site is worth three to four times more to the prosumer than a kWh exported to the grid. This economic reality creates a powerful incentive for behaviors and technologies that align consumption with generation. This includes simple measures like running high-load appliances (geysers, pool pumps) during peak sunlight hours, and, most importantly, it fundamentally strengthens the business case for investing in battery storage. A battery allows the prosumer to capture low-value surplus energy generated midday and time-shift it for use during the evening, displacing the most expensive peak-hour grid electricity. Consequently, the investment decision for solar is now intrinsically linked to the investment decision for batteries.

6.2. Navigating the Application Process: A Consolidated Checklist

The administrative process of becoming a legally compliant prosumer can be daunting. While specific requirements vary by distributor, the core steps and documentation are broadly consistent. The following checklist consolidates the common requirements into a practical, phased workflow for prospective prosumers.

Table 3: Consolidated SSEG Application and Registration Checklist

Phase	Step	Details
1. Pre-Installation & Application	[ ] Appoint a qualified, accredited installer	Ensure the installer is reputable and certified (e.g., has PV Green Card accreditation).
	[ ] Initiate Application with Distributor	Obtain a Notification Number (CoJ) or start the SSEG application process with Eskom/Tshwane.
	[ ] Submit Core Application Form	Complete the distributor's official application form with all property and owner details.
	[ ] Submit Technical Documentation	Provide a Single-Line Diagram (often requiring sign-off by an ECSA-registered professional), Inverter & Panel Datasheets, and NRS 097-2-1 Compliance Certificates for the equipment.
	[ ] Await Technical Assessment	The distributor will review the application for technical compliance and assess the potential impact on the local grid before granting approval to proceed with installation.
2. Installation & Commissioning	[ ] Complete Physical Installation	The accredited installer carries out the physical installation of the solar PV system.
	[ ] Obtain Certificate of Compliance (CoC)	A registered electrician must issue a CoC for all electrical work performed, certifying it complies with SANS 10142 standards.
	[ ] Submit Commissioning Report	The installer must complete and submit a formal commissioning report to the distributor, confirming the system has been tested and operates as designed.
	[ ] Schedule & Pass Site Inspection	The distributor may require a final inspection of the installation by their own officials to verify compliance before final approval is granted.
3. Finalisation	[ ] Sign Amended Supply Agreement	The prosumer must sign a new or amended contract with the distributor that includes the terms and conditions for embedded generation.
	[ ] Install Bi-Directional Meter	Pay for and arrange for the distributor to install a smart, bi-directional meter that can separately measure energy import and export.
	[ ] Confirm Tariff Conversion	Ensure the utility has correctly migrated your account to the appropriate tariff (e.g., Eskom's Homeflex, City Power's TOU).
	[ ] Register with NERSA	If required by the size of the installation or distributor rules, complete the registration process with the national regulator, NERSA.

6.3. Understanding the Full Cost: Installation, Compliance, and Tariff Changes

A comprehensive financial assessment must account for the total cost of ownership, which extends far beyond the initial hardware purchase. Prospective prosumers must budget for:

• Hard Costs: The physical components of the system, including solar panels, inverters, mounting structures, and batteries.⁴⁵

• Soft Costs: These include installation labor, engineering and design costs, sales and marketing expenses built into the installer's price, and the installer's profit margin.⁴⁵

• Compliance and Connection Costs: These are the fees levied by the distributor to process the application and connect the system to the grid. They can include application fees, charges for any required grid impact studies, and the cost of purchasing and installing the mandatory bi-directional meter, which can run into several thousand Rands.²⁵

• Ongoing Tariff Costs: The new, unbundled tariff structures introduce fixed monthly charges (for service and network capacity) that will appear on the electricity bill regardless of consumption. These ongoing costs must be factored into any calculation of lifetime savings and payback period.²⁰

6.4. Tax Implications of Net Billing Credits: A SARS Perspective

A significant area of uncertainty for many prospective prosumers has been the tax treatment of the credits received for exported energy. The South African Revenue Service (SARS) has provided crucial clarity on this matter through a formal guidance note.¹

The official SARS position is that the export credits received by a taxpayer under the net-billing tariff system do not constitute gross income and are therefore not subject to income tax. The reasoning behind this is that the transaction does not constitute a sale of power for which payment is received. Instead, the excess power is conceptualized as being temporarily "banked" or stored in the grid. The credits received are not cash payments but are used solely to offset the cost of future electricity purchases from the same distributor.¹ As no cash changes hands and the customer remains the owner of the energy, there is no taxable receipt or accrual. This favorable tax treatment simplifies the financial calculations for prosumers and removes a potential disincentive for investment. The SARS guide also provides details on the tax treatment of the various expenses incurred by the taxpayer in generating the electricity.

7. The Utility Dilemma: Revenue Stability in a Decentralized Grid

The proliferation of small-scale embedded generation presents a profound, and in some cases existential, challenge to the traditional business model of electricity utilities, particularly municipalities. The net-billing framework and the associated tariff reforms are a direct regulatory response to this challenge, attempting to balance the national need for more generation with the local imperative for financial sustainability.

7.1. Analyzing the Impact of Reduced Volumetric Sales on Municipal Finances

South African municipalities have historically relied heavily on the revenue generated from electricity sales. For many, the surplus derived from marking up bulk electricity purchased from Eskom is the single largest source of income, often constituting 30% or more of the total municipal revenue.⁴⁶ This electricity surplus is not just used to maintain the distribution network; it is a critical source of cross-subsidy for other essential but underfunded municipal services, such as parks, libraries, and emergency services.⁴⁶

The rise of rooftop solar directly threatens this financial model. The primary adopters of solar PV are often wealthier households and businesses, which also tend to be the largest consumers of electricity. These customers are typically on the highest tiers of inclining block tariffs, meaning they pay the highest price per kWh and therefore contribute disproportionately to the municipality's revenue surplus.⁴⁷ When these high-value customers install solar, their consumption of grid electricity plummets, leading to a direct and often substantial loss of volumetric sales and, consequently, revenue for the municipality.⁴⁸ A case study of Stellenbosch Municipality projected that a significant uptake of rooftop PV could lead to a total electricity revenue reduction of between 0.6% and 2.4%.⁴⁶

7.2. The Rationale for Cost-Reflective, Unbundled Tariffs

The traditional utility business model is predicated on recovering both its variable costs (primarily the cost of purchasing bulk energy) and its fixed costs (the cost of building and maintaining the grid infrastructure) through a bundled, volumetric tariff charged per kWh consumed.⁴⁶ This model functions well in a world of steadily growing electricity demand. However, it breaks down when volumetric sales decline due to factors like energy efficiency and, most acutely, self-generation.

When a customer installs solar, their kWh consumption may drop to near zero, but the fixed costs incurred by the utility to keep them connected to the grid—maintaining the poles, wires, transformers, and support staff needed to provide reliable backup power and to absorb their exported energy—do not decrease.⁴⁸ Under a purely volumetric tariff, this customer would no longer be contributing to the recovery of those fixed costs. The logical and necessary response from the utility is to "unbundle" the tariff, separating the variable energy charge from the fixed network and service charges. This ensures that all customers who are connected to and benefit from the grid contribute fairly to its upkeep, regardless of how many kWh they consume in a given month.⁴

7.3. Avoiding the "Utility Death Spiral": Strategies for Sustainable Revenue Models

The failure to address the revenue impact of declining sales can lead to a dangerous feedback loop known as the "utility death spiral".⁴⁶ The dynamic unfolds as follows:

1. A first wave of customers adopts solar, reducing utility revenue.

2. To cover its fixed costs from a smaller sales base, the utility is forced to increase its volumetric (per kWh) tariff for the remaining non-solar customers.

3. This tariff increase makes the financial case for installing solar even more compelling for the next wave of customers.

4. More customers defect to solar, further eroding the utility's revenue base, forcing another round of tariff hikes on an ever-shrinking pool of traditional customers.

This vicious cycle can threaten the financial viability of the utility and lead to inequitable outcomes where a smaller, often lower-income, customer base is left to shoulder the entire cost of the grid. The primary strategy being deployed in South Africa to avert this spiral is the introduction of significant fixed charges in the tariff structure. By securing a baseline revenue stream from every connected customer through fixed service and capacity charges, the utility decouples a portion of its revenue from sales volume, making it more resilient to the impact of solar adoption. The Stellenbosch case study calculated that a fixed monthly charge of approximately R363 per household would be required to fully offset the potential revenue losses, highlighting the significant scale of these charges, but also noting that such a charge could act as a disincentive to solar investment.⁴⁶

The net-billing framework and the associated tariff reforms are therefore forcing a fundamental and long-overdue modernization of the municipal electricity business model in South Africa. The "threat" of SSEG is the catalyst accelerating a necessary transition from a simple "buy-and-resell" commodity model to a more complex and sustainable "network service provider" model. This requires a profound shift in the identity, and the financial and technical management, of these institutions. They must now learn to accurately calculate, justify, and charge for the value of reliable grid access itself, separate from the value of the energy commodity that flows through it.

7.4. The Role of Fixed Charges in Grid Maintenance and Equity

The implementation of fixed charges is not solely a measure for utility self-preservation; it is also framed as a matter of fairness and equity. Proponents argue that the grid provides immense value to a solar prosumer, acting as a massive, perfectly reliable battery that supplies power whenever the sun is not shining and absorbs surplus energy when it is. Maintaining this grid infrastructure is costly. If solar prosumers do not contribute to these costs via fixed charges, the full burden is shifted to non-solar users, who are often lower-income households that cannot afford the upfront investment in a solar system.⁴⁷

This creates a regressive cross-subsidy, where less affluent customers end up subsidizing the grid services enjoyed by their more affluent, solar-equipped neighbors. The NERSA rules, with their explicit prohibition of "unjustified burdens or cross-subsidies to the tariffs of customers that are not Prosumers," provide the direct regulatory mandate for distributors to implement fixed charges as a means of ensuring a more equitable distribution of grid costs across all connected customers.⁵

8. Strategic Outlook and Recommendations

The establishment of a national net-billing framework is a watershed moment for South Africa's energy sector. It formalizes the role of the prosumer and lays the groundwork for a more decentralized and resilient electricity system. However, its ultimate success will depend on how effectively implementation challenges are managed and how the framework adapts to the evolving technical and economic landscape.

8.1. The Net Billing Framework's Projected Impact on Renewable Energy Uptake

Despite the complexities and the often-punitive nature of municipal tariff structures, the net-billing framework is expected to provide a net positive stimulus for the adoption of rooftop solar. Its primary contribution is regulatory certainty. By creating a clear, albeit modest, compensation mechanism, it removes a significant element of risk for potential investors and provides a formal pathway for legal grid connection.³ This is likely to spur another wave of solar adoption, particularly in the commercial and industrial sectors where the business case is often stronger.

However, the nature of this growth will be shaped by the framework's economic incentives. The low export tariffs relative to high import tariffs will continue to push the market towards systems designed for maximum self-consumption. This means that the adoption of battery energy storage systems (BESS) will likely become standard practice for new installations, as they are the key technology for maximizing the value of generated solar energy by time-shifting it to displace high-cost peak grid power. Growth will likely be uneven, concentrating in municipalities with more streamlined application processes and more financially viable tariff structures.

8.2. Navigating Grid Constraints and the Interplay with Congestion Curtailment

As decentralised generation continues to grow, the primary limiting factor will increasingly shift from regulatory and financial frameworks to the physical constraints of the electricity grid itself. In many parts of the country, particularly in areas with high renewable energy potential like the Northern and Western Cape, the existing transmission and distribution networks lack the capacity to accommodate significant amounts of new generation without risking instability.⁸

Recognising this looming bottleneck, NERSA has recently approved a "congestion curtailment" regime. This policy allows the National Transmission Company of South Africa (NTCSA) to grant grid connection access to new renewable energy projects (initially 3,470 MW) in constrained areas, on the condition that the NTCSA has the right to temporarily order these generators to reduce their output ("curtail" them) when the network is overloaded.⁵¹ In return for accepting this risk, the generators will be compensated for the energy they were available to produce but were prevented from exporting.⁸

While initially focused on large, utility-scale projects, the principle of curtailment is highly relevant to the future of decentralised generation. As clusters of residential and commercial solar installations grow in specific neighbourhoods, they can create similar localised congestion on the distribution grid. The net-billing framework addresses the financial rules of grid interaction, while curtailment addresses the physical limits. In the future, these two policy domains will need to be integrated, potentially leading to more sophisticated "dynamic" export limits or tariffs that reward prosumers for being able to respond to signals from the grid operator to reduce their export during times of local network congestion.

8.3. Recommendations for Policymakers: Streamlining Processes and Ensuring Tariff Consistency

The analysis reveals a clear need for greater standardisation and transparency in the implementation of the net-billing framework at the municipal level. To unlock the full potential of SSEG and avoid stifling growth through administrative friction, the following policy actions are recommended:

• Standardise Application Processes: NERSA, in collaboration with the South African Local Government Association (SALGA) and industry bodies like the South African Photovoltaic Industry Association (SAPVIA), should develop a standardised application template and a set of "best practice" guidelines for municipal SSEG connection processes. This would reduce complexity for consumers and installers and eliminate the inefficient "postcode lottery" of administrative requirements.⁵²

• Enforce Tariff Transparency: NERSA should enforce its own principles of cost-reflectivity by requiring municipalities to publicly disclose the detailed cost-of-supply studies that underpin their tariff structures, particularly the calculation of fixed charges. This would allow for independent verification and ensure that these charges are justified and not being used to unfairly penalise solar prosumers.⁵²

• Address the National-Local Policy Conflict: There is an inherent tension between the national goal of rapidly adding generation capacity and the municipal imperative to protect revenue. National government should explore mechanisms to support municipalities through this transition, potentially through conditional grants or other financial instruments that compensate for verified revenue losses from SSEG uptake, thereby aligning local financial incentives with national energy security goals.

8.4. Recommendations for Prospective Prosumers: A Strategic Approach to Investment and Compliance

For households and businesses considering an investment in solar PV, a strategic and well-informed approach is critical to maximising returns and ensuring compliance:

• Conduct Thorough Due Diligence: Before committing to an investment, prospective prosumers must thoroughly investigate the specific tariffs, application processes, and costs of their local electricity distributor. The financial viability of a system in an Eskom-supplied area may be completely different from one in Johannesburg.

• Prioritize Self-Consumption: The system design should be optimised for maximising self-consumption, not for maximizing export revenue. This means accurately sizing the system to meet the property's daytime load and strongly considering the inclusion of a battery storage system to capture surplus energy for evening use.

• Ensure Full Compliance: Prosumers must use accredited installers and ensure that all technical and administrative requirements are met. Adhering to registration deadlines, such as Eskom's March 2026 cutoff for fee waivers, is crucial to minimise costs and avoid future penalties.³

8.5. Conclusion: The Future of a Bidirectional Grid in South Africa

The approval and implementation of the net-billing framework is a landmark development, representing the most significant step yet in the modernisation of South Africa's electricity supply industry. It formally ends the era of a purely centralised, unidirectional grid and ushers in a new, more complex reality of bidirectional energy flows and active consumer participation. The framework is a pragmatic compromise, carefully balancing the need to incentivise much-needed private investment in generation with the financial realities of the country's incumbent utilities.

While formidable challenges remain—particularly in harmonising the fragmented and often cumbersome implementation at the municipal level—the framework successfully establishes the essential regulatory foundation for a future energy system. It is a system where millions of prosumers, from individual households to large factories, are no longer just passive recipients of power but are active, integral components of a more resilient, decentralised, and ultimately more secure national energy landscape. The journey ahead will be complex, but the direction of travel is now irrevocably set towards a bidirectional grid.