Government Initiatives Aim to Cut Electricity and Energy Bills

Natalie Nyathi

In both South Africa and the UK, governments are working on plans to lower electricity and energy costs for households and businesses. These efforts come from concerns about rising living costs and the need for stable, affordable energy to support economic growth.

Electricity Minister Kgosientsho Ramokgopa has highlighted the government’s commitment to making electricity prices lower in South Africa. He has said, “Electricity is unaffordable. We cannot continue along this tariff path.” Recently, Ramokgopa introduced a new Integrated Resource Plan (IRP) 2025, a R2.23 trillion investment program meant to change the energy sector. The IRP 2025 aims to add 105,000 megawatts of new generation capacity by 2039, effectively meaning building Eskom “two and a half times” its current size. This plan focuses on diversifying the energy mix, shifting towards cleaner energy sources. By 2039, the energy mix is expected to include 27% coal generation, 24% wind, 18% solar PV, 11% gas-to-power, and 5% nuclear.

The IRP is designed to “end load shedding permanently” and “to make sure every household has access to electricity and to ensure that electricity is affordable.” Ramokgopa also mentioned that the plan aims for a 3% GDP growth by 2030, noting that “there is no economy that grows if the lights are off.” Eskom, South Africa’s main electricity supplier, is also working toward making energy more affordable. Eskom board chair Mteto Nyati stated that after achieving energy security, “the next drive is energy affordability.” Eskom plans to introduce about 2GW of new renewable energy capacity by 2026, with a longer-term goal of 5.9GW by 2030.

However, challenges remain. Former Eskom COO, Matshela Koko, pointed out that “Eskom’s electricity sales have plummeted from 220 TWh to 180 TWh over the past decade, yet electricity costs have skyrocketed by 600%.” The government is looking into various strategies, including “structural reforms to the energy pricing model” and “transitioning to a sustainable energy future that emphasizes renewable energy sources.”

In the UK, the government is also looking at ways to reduce rising energy costs for households. Energy Secretary Ed Miliband has suggested cutting the rate of VAT on energy bills. Miliband stated that the government is “looking at all of these issues” to tackle the ongoing cost-of-living crisis. Scrapping VAT on domestic energy bills could save the average household £86 per year, but would cost the Treasury an estimated £2.5 billion annually.

The government is considering reducing regulatory levies, known as “policy costs,” on energy bills. These levies, which fund environmental and social schemes, made up around 16% of the average electricity bill last year. Some believe that removing these levies could help consumers feel the benefits of the net-zero transition.

Additionally, the UK government is introducing a new British Industrial Competitiveness Scheme to lower electricity costs for businesses. From 2027, this scheme will “reduce electricity costs by up to £40 per megawatt hour for over 7,000 electricity-intensive businesses,” allowing them to be exempt from levies like the Renewables Obligation and Feed-in Tariffs.

The UK government aims to stabilize energy costs and decrease reliance on fossil fuels by combining short-term relief with long-term reforms. These reforms include expanding home insulation grants and boosting renewable generation capacity.

Both the South African and UK governments are actively seeking ways to reduce electricity and energy costs for their citizens. While the approaches differ, the common goal is to ensure affordable, reliable, and sustainable energy for households and businesses.