The electricity supply industries of Southern Africa are dominated by the State owned utility of South Africa, ESKOM. ESKOM generates around two thirds of the electricity produced in the whole of Africa and is extending its transmission grid north into neighbouring sub-Saharan countries. Eskom provides about 95% of South Africa's electrical power and more than 60% of Africa's. It has been forecasted that by 2008 the country's electricity demand is expected to exceed supply capacity, and South African power exports have already been restricted.

ESKOM, with a generating capacity of 35 200 MW from 20 power stations, is one of the largest utilities in the world, and generates approximately 98% of South Africa's electricity. Generation is primarily coal-fired, but also includes a nuclear power station at Koeberg, two gas turbine facilities, two conventional hydroelectric plants, and two hydroelectric pumped-storage stations. The company also owns and operates the national transmission system.

ESKOM has a nominal generating capacity of 39 154 megawatts, although 4 201 megawatts of generating capacity is currently mothballed. Power from coal-fired generating plants amounts to 34 882 megawatts or 89,1 per cent of Eskom's nominal generating capacity.

South Africa has huge deposits of coal and its base-load stations are mainly fired by coal. In terms of non-thermal generation, the country has limited hydro-electric resources and Koeberg, commissioned in 1984, is South Africa's only nuclear installation. This 1 930 MW station is located near to the major load centre of Cape Town, at the opposite end of the country from the coal reserves of Mpumalanga.

Eskom supplies electricity to Lesotho, Swaziland, Botswana and Namibia as well as exporting to Mozambique and Zimbabwe. In the North, Zambia with its substantial hydro reserves is the second largest exporter of electricity in Africa.

The success of Eskom's campaign to improve the availability of its existing generating plants, together with the possible advent of gas and further hydro-power generation, has deferred the need for new coal fired generating plants and it now seems that new generation sources will not be required before 2007 and will probably only be required in 2010. It is estimated that demand for power will increase at a rate of 1000 MW per year. Based on this estimate, Eskom’s spare capacity will run out by 2005, at which point the mothballed plants of Camden, Grootvlei and Komati will be brought back on line, with this additional capacity sufficing until 2010. However, the higher availability of existing power stations means that these stations are now capable of burning quantities of coal annually which are greater than the capacity of the associated tied colliery.

Seventy percent of South Africa’s population have access to electricity, well above the SADC average of around 20 %. The National Electricity Regulator has been supervising Eskom’s progress towards government targets, which aim to bring electricity to the entire country. The South African government introduced an electricity "poverty tariff" in November 2001 that reduces electricity prices for the poor. Nearly half of rural households in South Africa still do not have power.

The South African Government plans to restructure Eskom in order to improve efficiency and accountability within the company. Most of Eskom’s activities, with the exception of power transmission, will eventually be privatised.

The government has indicated that approximately 10 % of the company's generation capacity will be privatised by 2004.

Eskom Enterprises, a wholly owned subsidiary of Eskom, was established in 2000 ahead of plans to privatise the electrical power industry in South Africa. The company functions as a holding company for a variety of companies in the diverse fields of telecommunications, e-business, heavy engineering, electrical power consulting, real estate and transportation. Its core activities are infrastructure development, project management and research and development services, energy business operations and specialised energy services. Eskom Enterprises was formed to develop and commercialise Eskom's non-regulated activities and aims to become a leading player in the African electrical power industry.

The government announced a plan to distribute electricity in August 1997, which involved dividing South Africa into five regional electricity distributors (REDS), which would be joint-venture companies formed by Eskom (Eskom currently distributes nearly 60% of the electricity it generates directly to end-users) and local authorities. The REDS would purchase electricity from generators (Eskom and IPPs) on the basis of wholesale purchase tariffs established by the National Electricity Regulator (NER). This was the first step in the gradual unbundling of Eskom's activities.

The first private player was introduced to the South African electrical power arena in mid-2001 when AES Corporation of the United States purchased 50 % of Kelvin power station in Johannesburg. The deal, struck between the Johannesburg metropolitan council and a consortium consisting of AES and black empowerment partner Global African Power, means that the consortium has management control of the station.

Eskom has the goal of bringing affordable electricity to all. With this in mind the company has worked towards establishing a sub-Saharan interconnected power grid linking up as far as Zambia, Kenya and Zaire - the Southern African Power Pool (SAPP). The Pool aims to promote reliability and economy by integrating planning and operation of networks in the region. Eskom’s role in the Power Pool has traditionally been through joint projects, however, the company has recently shown interest in buying into privatised state utilities. Uganda and Zambia are reported to be among the first targets for investment.

In August 1998, Eskom signed an agreement with the Zambia Electricity Supply Corporation, which allows South Africa to import Zambia's excess power. According to the agreement, Eskom will be able to import 300 MW during peak power generation periods.

South Africa is Africa’s largest net exporter of electricity, sending power to Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zimbabwe. South African usage constitutes 85 % of the 204.8 billion kWh consumption for the SADC region.

Eskom has entered into two joint venture operations. The first is the formation of MOTRACO - comprising Electricidade de Moçambique (EDM), Swaziland Electricity Board (SEB) and Eskom for the construction, ownership and operation of a 400 kV line that will supply electricity to MOZAL, a new aluminum smelter in Maputo, Mozambique. It is anticipated that supply will commence in 2001. Eskom has also entered into a buy and bank agreement with the Zambian Electricity Supply Corporation (ZESCO) and SNEL, an electricity utility in the Democratic Republic of Congo (DRC) to trade electricity at different times of the day. Funds flowing from this venture will be used for the refurbishment of the badly damaged electrical infrastructure in the DRC.

The South African government has awarded a UK-German-South African consortium a contract to design a plant to provide fuel for the country's Pebble Bed Modular Reactor (PBMR) project. The consortium is composed of NUKEM Nuklear GmbH of Germany, British Nuclear Fuels (BNFL) and local firm Engineering Management Services. It is expected that the feasibility study into the fuel fabrication facility is expected to be complete in late 2001.

In light of the country's recent energy crisis, South Africa has embarked on a number of projects to increase energy output and meet rapidly rising demand.

South Africa’s only nuclear facility, Koeberg, is located outside Cape Town and has a capacity of 1930 MW. The plant accounts for approximately 7 % of the country’s total electricity generation. Eskom are also planning the development of a smaller nuclear reactor, which uses relatively new technology. Government commitment to the future development of nuclear power remains strong and funding for the construction of the Pebble Bed Modular Reactor (PBMR) was given in 2004. The Pebble Bed Modular Reactor will generate 110 MW of power and produce considerably less waste than a traditional nuclear plant of the same size.

The location of the new plant depends on the outcome of feasibility studies of the two proposed sites: one in the Western Cape and the other in the North West Province, where most sources of fuel for the reactor are found.

The project to develop a commercial PBMR is being led by a consortium involving Eskom, the Industrial Development Corp , BNFL and U.S. Exelon Corp. The first phase of the project involves the undertaking of a feasibility study, an Environmental Impact Assessment and a public participation process. The plant will most likely be situated near Koeberg in the Western Cape.

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