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The Electricity Regulation Act of 2006 is a textbook example of licensing laws that ultimately serve incumbents at the expense of not only prospective competitors but also customers who can benefit from innovations made by these competitors. In the case of South Africa’s electricity crisis, licensing laws are making South Africa’s electricity crisis unnecessarily more difficult to solve because NERSA has the last word on who can compete and how competitors can compete in the electricity market.

https://mises.org/wire/licensing-laws-deepen-south-africas-electricity-crisis

Dumo Denga

Since 2007, South Africa has been experiencing an electricity crisis. Eskom (a South African state-owned company) cannot produce enough electricity to meet increasing demand, so Eskom has implemented rolling blackouts, which is also called “load shedding” by the South African government. Rolling blackouts involve Eskom periodically and intentionally stopping the delivery of electricity to certain parts of South Africa to avoid a total blackout.

The severity of rolling blackouts increases as Eskom’s capacity to produce electricity decreases, and the severity of the rolling blackouts are categorized into stages—where “stage 1” is the least severe and “stage 8” is the most severe for now. Energy experts and even government officials have suggested solutions but to no avail because the South African government ignores them.

In this piece, I argue two points. First, I argue that South Africa’s electricity licensing laws need to be eliminated or amended. Second, I argue that those same licensing laws prevent effective and affordable electricity supply solutions from being implemented, deepening South Africa’s electricity crisis.

Here are some facts about South Africa’s electricity crisis. According to data from Statistics South Africa, Eskom’s yearly average electricity production share is 94 percent, and South Africa’s electricity production decreased by 11 percent while Eskom’s electricity production decreased by 18 percent since the beginning of the rolling blackouts in 2007.

The decrease in South Africa’s electricity production is attributed to Eskom’s aging infrastructure and corruption. According to data from EskomSePush, South Africa experienced 311 days (over seven thousand hours) of rolling blackouts in 2022. Rolling blackouts have negatively affected businesses and livelihoods to the point where businesses have experienced significant decreases in profits and also had to cut jobs as a consequence. On the lighter side—and I say this sarcastically—the rolling blackouts have assisted South Africa in beating its climate goals, since less production in electricity leads to less emissions of greenhouse gasses.

Eskom’s domination in South Africa’s electricity market is no accident. Legislation has given Eskom unique privileges and protection from outside competition ever since its inception in 1922. Anton Eberhard writes:

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