SolarAfrica’s David McDonald: 5 realities shaping the energy market in 2026

Image credit: Matthew Henry on Unsplash

But if you’re on the ground, you know that the market moves in its own time, and in a far more practical way.

The realities shaping 2026 aren’t predictions or policy aspirations, but they’re already playing out in how projects are financed, how municipalities procure power, and how businesses think about energy risk.

Here are five energy market truths that will inform how we, as an industry, operate in 2026.

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1. SA’s energy wholesale hinges on Eskom

Over the past year, there has been a great deal of talk about the South African Wholesale Electricity Market (SAWEM), with words such as “ready”, “milestones” and “imminent”.

But while it might sound, on paper, like we’re about to press play, the reality is that without all stakeholders’ participation, a wholesale market won’t function.

Currently, while Eskom supports the concept of an open market, it still appears to be hedging its bets by building and controlling its own virtual wheeling platform.

And private off-takers and Independent Power Producers (IPPs) will continue to align themselves – at least in the short term – with the state-owned entity because it’s where bankability exists.

This is significant because key stakeholders such as developers, customers and banks are watching and responding to what exists today.

Projects are being financed and built using Eskom-approved structures, and nobody is holding projects back waiting for a market that may or may not arrive on schedule.

I believe that a wholesale market is in the best interests of South Africa’s energy landscape, and that it will still play a role in future.

But in 2026, most private power activity continues to sit outside that debate – for now, at least.

2. Buy the power

While 2025 proved that wheeling is viable at scale and offers multiple advantages, many municipalities are choosing a more straightforward route: buying power directly from IPPs.

In the Western Cape, Swartland and George are two recent examples of municipalities that have stated their intention to source electricity directly from power producers, while in KwaZulu-Natal, eThekwini Municipality was the first SA metro to secure ministerial approval to buy significant capacity from IPPs.

For them, wheeling brings administrative and financial complexity, while direct procurement – on the other hand – is easier to implement and increasingly easier to finance.

Moreover, changes to Eskom’s Electricity Supply Agreement have made these structures more rigorous and, in some cases, more challenging for municipalities to navigate.

As a result, expect the market to become even more fragmented in 2026.

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3. Energy on the balance sheet

In 2026, energy is no longer treated as solely an operational cost; for many large users, it now moves onto the balance sheet and into the risk management function.

Electricity is one of the few major costs businesses can actually fix over a long period, which is why energy conversations are increasingly happening with finance and risk teams (not just the sustainability and engineering people).

We see this clearly in industries such as mining.

Electricity is seen as one of mining’s biggest input costs, and in some cases, uncertainty around future pricing is delaying capital investment.

While things like commodity pricing and market volatility cannot be controlled, a mine does have control over its energy strategy, which is where partners who can structure blended energy solutions have an increasingly vital role to play in 2026.

4. Fixed charges

As self-generation increases, municipalities and Eskom are increasingly reliant on fixed and capacity charges to protect revenue, which changes the landscape significantly.

In future, capacity charges will likely increase at a far faster rate than consumption charges.

What does this mean for 2026?

Expect major players in the energy industry, such as SolarAfrica, to innovate and get smarter about managing peak demand and capacity exposure in a bid to reduce costs for our customers.

Think batteries, hybrid supply models, diversified energy stacks and the ability to supply power outside standard solar hours to become more prevalent.

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5. Wheeling forward

In 2025, we proved that wheeling works.

However, in 2026, we’re seeing more traders enter the energy trading pool, more off-takers and more complex structures.

These are putting pressure on banks that are still geared for simpler, single-buyer deals.

Reaching financial close on these projects is already taking longer than developers would like, and this trend is set to continue.

But this won’t be the case forever: as more multi-tenant projects come online, banks will have access to better data, meaning that risk will become easier to price.

For now, you can expect the length and rigidity of the financial close process to give many developers a few grey hairs.