Governing thesis: Eskom’s operational recovery has exposed a demand and affordability crisis that profitability alone cannot solve.
Eskom’s R30-Billion Turnaround Has Exposed Its Next Electricity Crisis
An electricity utility making more than R30 billion in annual profit should be good news for its customers. It suggests the plants are working better, emergency spending is falling and the organisation has finally stepped back from the financial cliff. In Eskom’s case, however, the profit has also exposed a deeper problem: the utility is producing more electricity while selling less of it. Eskom reported a R30.3-billion profit after tax for the year ended March 2026, up from R14 billion the previous year.
Improved power-station performance, tighter cost control and reduced dependence on diesel-fired generation all contributed to the result. Lower use of open-cycle gas turbines cut fuel and related costs by R10.6 billion, while the retreat of load shedding marked a dramatic operational improvement.
The financial picture becomes more complicated when revenue and demand are separated. Electricity sales volumes declined by 6.2%, yet revenue increased because tariffs were higher. Industrial electricity use fell particularly sharply, while households, shopping centres, mines and other large customers continued investing in solar generation and alternative supply. Eskom is therefore earning more from each unit of electricity while selling fewer units overall.
That model cannot carry the utility indefinitely. Power stations, transmission lines, maintenance programmes and distribution networks carry enormous fixed costs. Those costs do not disappear when customers reduce their dependence on the grid. If the customer base keeps shrinking, a larger share of the system’s cost may have to be recovered from those who remain; particularly households and smaller businesses that cannot afford solar installations or private generation.
This is the uncomfortable edge of Eskom’s recovery. Higher tariffs may strengthen revenue in the short term, but they can also make alternative energy more attractive. Every customer who leaves or sharply reduces grid consumption then increases the pressure on the remaining pool. Eskom itself has acknowledged that tariff increases cannot secure its future without measures to retain customers and stimulate new electricity demand.
Improved generation has created an estimated two-to-three-gigawatt surplus, giving Eskom an opportunity to move from rationing electricity to finding new markets for it. The utility is targeting energy-intensive industries, data centres, electric-vehicle charging and other emerging sources of demand. But these customers have options.
Some data centres already use solar power, while industrial users will compare Eskom’s prices and reliability with private generation and negotiated supply agreements. Municipal debt presents another threat. Arrears reached R111.6 billion at the end of the financial year and approximately R119 billion by June. That is money billed for electricity already supplied but not passed on to Eskom.
Unless the municipal collection and distribution system is repaired, stronger generation performance will continue to be undermined by failures elsewhere in the electricity chain.
Eskom’s profit is therefore an important milestone, but it is not the finish line. The next test is whether the utility can turn surplus power into sustainable demand, confront municipal arrears and keep the grid affordable for customers who cannot leave it. A profitable Eskom matters. A profitable Eskom that South Africans can still afford matters more.