Eskom Tariff Increases vs Solar: Why the Gap Keeps Growing
In April 2025, Eskom raised electricity tariffs by 12.74%. That was not an anomaly. It was another year in a pattern that has been running for over a decade: double-digit annual increases, year after year, with no sign of stopping.
For Gauteng businesses, this means the cost of doing nothing grows every single month. Solar, on the other hand, locks in a fixed energy cost from the day your system is commissioned. The gap between what you pay Eskom and what you would pay with solar widens every year — and the effect compounds.
This post lays out the numbers. No speculation, no best-case scenarios. Just the trajectory Eskom has been on, what it means for your electricity bill over the next 5, 10, and 15 years, and why the financial argument for solar gets stronger with every tariff increase.
A Decade of Double-Digit Increases — The Track Record
Eskom's tariff increases have consistently landed in the 10-15% range for well over a decade. Here is the pattern:
- Annual increases of 10-15% have been the norm, not the exception
- The April 2025 increase of 12.74% was approved by NERSA
- Municipal surcharges often add further increases on top of the Eskom base tariff
- Time-of-use tariffs penalise peak consumption even further
These are not temporary adjustments. They reflect Eskom's structural costs: ageing infrastructure that needs maintenance, new build programmes that need funding, massive debt that needs servicing, and rising fuel and operational costs. The utility has publicly stated that further above-inflation increases are necessary to reach cost-reflective tariffs.
For a business paying R50,000 per month in electricity today, a 12.74% increase means that bill becomes R56,370 next year — an additional R76,440 per year — without consuming a single additional kilowatt.
This is not a one-off hit. It compounds.
The Compounding Problem — What Waiting Actually Costs
Tariff increases do not just add up. They compound. Each year's increase is calculated on the already-increased base from the previous year. This is the same mathematics that makes compound interest powerful for savings — except here, it is working against you.
What a R50,000/month electricity bill looks like at 12% annual increases:
| Year | Monthly Bill | Annual Cost | Cumulative Total Paid |
|---|---|---|---|
| Today | R50,000 | R600,000 | R600,000 |
| Year 1 | R56,000 | R672,000 | R1,272,000 |
| Year 2 | R62,720 | R752,640 | R2,024,640 |
| Year 3 | R70,246 | R842,957 | R2,867,597 |
| Year 4 | R78,676 | R944,112 | R3,811,709 |
| Year 5 | R88,117 | R1,057,405 | R4,869,114 |
| Year 7 | R110,534 | R1,326,412 | R7,600,673 |
| Year 10 | R155,292 | R1,863,509 | R13,282,068 |
| Year 15 | R273,609 | R3,283,309 | R27,802,843 |
Assumes 12% annual increase, compounded. Actual increases may vary but have averaged in this range over the past decade.
Read that last line again. A business paying R50,000 per month today will pay over R27.8 million in total electricity costs over 15 years if Eskom continues its current trajectory. Your monthly bill nearly quintuples.
Now consider: a commercial solar system sized to offset 50-60% of that consumption costs a fraction of that cumulative total — and it starts saving you money from month one.
How Solar Locks In Your Energy Cost
Here is the fundamental difference between grid electricity and solar: Eskom's price goes up every year. Solar's price is fixed on the day you install it.
A commercial solar system at current pricing costs approximately R13,500-R16,000 per kWp for systems under 100kWp. Once installed, the cost of generating each kilowatt-hour is fixed. There is no annual increase. The sun does not send invoices.
The effective cost of solar electricity over the system's life:
- A well-designed commercial system produces electricity at an effective cost of roughly R0.80-R1.50/kWh over its lifetime, depending on system size and financing method
- Eskom's current commercial tariff is already above R2.50/kWh in many municipalities, and climbing
- By year 5, the grid tariff will likely exceed R4.00/kWh
- By year 10, it could be above R7.00/kWh
Your solar system keeps producing at the same cost per kilowatt-hour it did on day one. The gap between solar and grid electricity gets wider every single year. This is not a projection based on optimistic assumptions — it is simple maths applied to Eskom's own published increases.
Worked Example — The Cost of Waiting Three Years
Consider a Gauteng manufacturing business with the following profile:
- Current monthly electricity bill: R80,000
- Proposed system: 100 kWp grid-tie, expected to offset 55% of consumption
- System cost: R1,500,000
- Section 12B tax benefit: R405,000 (27% of system cost)
- Effective cost after tax benefit: R1,095,000
Scenario A: Install solar now
| Year | Grid Cost (Remaining 45%) | Solar Savings | Cumulative Net Savings |
|---|---|---|---|
| Year 1 | R483,840 | R594,160 (including R405k tax benefit) | R594,160 |
| Year 2 | R541,901 | R534,099 | R1,128,259 |
| Year 3 | R606,929 | R598,191 | R1,726,450 |
| Year 4 | R679,760 | R669,974 | R2,396,424 |
| Year 5 | R761,331 | R750,369 | R3,146,793 |
System payback occurs in under 2 years after the Section 12B benefit. By year 5, cumulative savings exceed R3.1 million on a R1.5 million investment.
Scenario B: Wait three years, then install solar
During those three waiting years, the business pays full grid prices:
- Year 1 grid cost: R1,075,200
- Year 2 grid cost: R1,204,224
- Year 3 grid cost: R1,348,731
- Total paid to Eskom in the waiting period: R3,628,155
When they finally install in year 4, the system costs more (component inflation, though moderate), and the base they are saving against is higher. But the R3.6 million already spent on grid electricity is gone.
The cost of waiting three years: approximately R1.8 million in lost savings — more than the entire cost of the solar system itself.
Every year of delay is not just a missed saving. It is money permanently transferred to Eskom that could have been invested back into your business.
Why the Gap Accelerates Over Time
The mathematics here create an accelerating advantage for solar owners:
1. Eskom increases compound upward. Each year's increase is applied to the previous year's higher base. Your grid bill grows exponentially, not linearly.
2. Solar costs stay flat. Your panels degrade by approximately 0.5% per year — a negligible reduction. A 25-year-old panel still produces about 87% of its original output. Maintenance costs are roughly 1% of system cost per year. There is no escalation.
3. The savings gap widens every year. In year 1, you might save R380,000 on electricity. By year 5, that annual saving could be R600,000+. By year 10, it could exceed R1,000,000. The system is the same — it is the grid price that keeps climbing.
4. Every year of hesitation increases total lifetime cost. A business that installs solar in 2025 will save significantly more over 25 years than one that installs the identical system in 2028, because the earlier adopter captures three additional years of the widening gap.
This is the compounding effect in action. It is the same reason financial advisors tell you to start investing early. The difference is that with solar, the "investment" also produces a tangible return from day one: lower electricity bills.
What About Eskom Getting Better?
Some business owners hold off on solar because they believe Eskom will stabilise, load shedding will end, and tariff increases will moderate. Let us address this directly.
Load shedding may reduce. New generation capacity from renewables and the private sector is coming online. Eskom's maintenance programme is showing some results. It is plausible that load shedding becomes less frequent.
But tariff increases will not stop. Eskom's cost base is structural. The utility carries hundreds of billions in debt. Its infrastructure requires massive ongoing investment. Its workforce costs are high. Even if generation becomes more reliable, the financial recovery needed to make Eskom sustainable requires continued above-inflation tariff increases.
NERSA's approved increases reflect this reality. The 12.74% increase in April 2025 was granted because it is what Eskom needs to cover its costs — not because of any temporary crisis.
Solar's value is primarily about cost, not just backup. Even in a world with zero load shedding, a business paying R2.50+/kWh for grid power when it could generate at R0.80-R1.50/kWh is leaving money on the table. The cost argument stands independently of the reliability argument.
The Decision Gets More Expensive Every Month
Here is the reality for Gauteng business owners:
- Eskom tariffs will keep increasing at 10-15% annually. This is not speculation — it is the established pattern and NERSA-approved trajectory.
- Solar system costs have stabilised. The dramatic price drops of the past decade have levelled off. Waiting does not get you a significantly cheaper system.
- The Section 12B tax benefit provides a 27% effective cost reduction — but it requires ownership and commissioning within your tax year.
- Financing options like PPAs (zero capital outlay) and asset finance (cash-flow positive from month one) remove the capital barrier entirely.
The financial case for commercial solar was strong five years ago. It was stronger last year. It is stronger still today. And next year, when Eskom announces another double-digit increase, the case will be even more compelling — but you will have lost another 12 months of savings.
See What the Numbers Look Like for Your Business
Every business has a different consumption profile, roof, and financial structure. The examples above are illustrative — your actual numbers may be better or worse.
The only way to know is to get a proper assessment. We analyse your electricity bills, assess your facility, and build a financial model specific to your business. No generic estimates. No assumptions. Just your data, your roof, your savings.
Get Your Free Assessment — we will show you exactly what solar saves you today, and what the gap looks like over the next 5, 10, and 25 years against Eskom's tariff trajectory.
Or call Albert directly: (083) 287 5986
Gentricity is a commercial solar specialist serving businesses across Gauteng. We design systems that deliver maximum financial return, with transparent projections you can take to your board. Explore our financing options or see our commercial installations.