The South African solar revolution, once celebrated as a grassroots answer to the ongoing energy crisis, is now hitting a snag: red tape. A recent government initiative to regulate small-scale solar setups has left startups in a scramble, households scratching their heads, and the overall energy transition hanging in the balance.

For years, South Africans have turned to rooftop solar to dodge those frustrating rolling blackouts, with installations skyrocketing as Eskom’s grid struggled. However, what started as a carefree dash toward energy independence is now facing the harsh realities of bureaucracy. 

With the new regulations, homes and businesses that have grid-tied solar systems are required to register them as Small-Scale Embedded Generation (SSEG) units — a process that critics say is slow, inconsistent, and sometimes feels punitive. Municipalities, already feeling the pinch from revenue losses as customers leave the grid, have been accused of dragging their feet on approvals or slapping on hefty fees.

Eskom stands firm on its stance that these regulations are crucial for ensuring safety and maintaining grid stability. They caution that unregistered systems could pose a serious risk, potentially electrocuting technicians during maintenance if they inadvertently send power back into offline transmission lines. However, the utility’s communication has been somewhat confusing: on one hand, they recently introduced a temporary waiver on registration fees for systems under 50kW, but on the other hand, they’ve also warned of penalties for those who don’t comply. 

This uncertainty has hit solar startups particularly hard. Companies like Wetility, which is backed by MultiChoice and based in Sandton, are feeling the pinch. They’ve reported that customers are either delaying or outright cancelling their installations due to concerns about unexpected costs or regulatory complications.

“The intent behind SSEG isn’t unreasonable — it’s about safety and planning,” says Johanna Horz, Wetility’s chief of staff. “But the rollout has been chaotic. Some municipalities take weeks to process registrations; others don’t have the systems to handle them at all.” Wetility raised $48 million from investors in 2023. 

The delays are more than an inconvenience. South Africa’s solar industry, which had been a rare bright spot in a sluggish economy, is now facing contraction. “Supply chains are tightening, and job growth in renewable energy — a key pillar of the country’s Just Energy Transition — is stalling,’’ Horz adds. 

A Global Norm, A Local Mess

South Africa’s dilemma isn’t unique. From Germany’s “prosumer” model to the U.S.’s net metering, most countries regulate grid-tied solar to ensure safety and fair compensation for excess power. The difference, analysts say, is execution.

“The reality is that the SSEG process can feel — and often is — frustrating. It varies by municipality, many of which lack the digital systems or staffing needed to process registrations efficiently,” Horz says. 

The stakes are high. South African municipalities, which rely on electricity sales for up to 40% of their revenue, are staring down budget shortfalls as solar adoption grows. A 2017 Stellenbosch University study warned that grid-connected PV could slash municipal income by up to 2.4% — a figure that’s likely higher today.

“This financial pressure has left municipalities in a difficult position and created uncertainty for customers around potential future costs, some of which have yet to be determined,” Horz says. 

There are glimmers of progress, nevertheless. The South African-German Energy Programme (Sagen) is reportedly working with local governments to streamline SSEG processes and modernize revenue models. Meanwhile, Eskom’s fee waiver — extended to 2026 — offers temporary relief for residential users.

But for South African solar startups, the damage may already be done. “The conversation has changed from ‘solar is freedom’ to ‘solar is a headache,’ shares a local stakeholder who wishes to remain anonymous with Launch Base Africa. ‘That’s a tough message to reverse.’”

As load-shedding returns in 2025, the irony is palpable: the very regulations meant to stabilize the grid may end up keeping more households tethered to it.