Across developing and emerging economies, securing a reliable, affordable, and sustainable electricity supply remains one of the most pressing challenges. It is also one of the greatest enablers of economic growth. Meeting this challenge requires unprecedented investment in new electricity infrastructure.
Electricity market reform is an important part of this journey, because it helps to attract the scale of capital required. By moving from regulated systems toward more competitive markets, reform can open access to new sources of capital and innovation. However, a more competitive market alone is not enough. It must be supported by other efforts aiming to mitigate the risks observed in mature markets, such as price volatility and underinvestment in firm capacity, and to help direct investment to where it is needed most.
As electricity market reform results in new sales routes, investors and lenders must first understand how risk is allocated and priced across evolving market structures. Catalytic funding from development finance institutions (DFIs) can help bridge this learning gap by demonstrating that new models can operate commercially and by building the confidence needed for broader participation. This report explores how other markets have evolved compared with the process unfolding in South Africa. It highlights the emerging role of aggregators, a growing commercial model connecting independent power producers (IPPs) with consumers who cannot access long-term, utility-scale power purchase agreements (PPAs) or demand flexibility through shorter-term contracts. By opening up new routes to energy access, aggregators help expand customer choice and accelerate the rollout of new generation capacity. Our partnership with Etana Energy, together with GuarantCo, demonstrates how targeted, catalytic finance can prove innovative commercial models that advance electricity infrastructure development and contribute to broader economic and development goals.
While this report focuses on South Africa’s electricity market reform process, drawing on insights from other developed markets, the lessons extend far beyond any single market. They highlight the key enablers of electricity market reform, as well as the signposts and risks to monitor as reform progresses. We hope this document, and the insights generated by our analysis, can help other developing markets navigate their own reform journeys and work towards sustainable, inclusive, and resilient energy systems.
