Somewhere in your business there is a number for what electricity will cost. A budget line, a forecast, a price sitting in a draft contract. Here is the uncomfortable thing about that number: South Africa's new wholesale electricity market has not yet settled what kind of market it will be, and your number has quietly picked an answer for you.
Two decisions will shape this market, and the rules as written do not resolve either of them. The market's rulebook, the SAWEM Market Code v2.3, writes a ceiling on the wholesale price in its Annexure 2. Whether that ceiling holds at its current level or gives way as the market matures is a question the written rules do not answer; both outcomes remain live. The second question is the same shape: the written rules do not resolve whether firm capacity, the plant that shows up when the wind and sun do not, is paid for being available alongside whatever it earns selling energy, and there too both outcomes remain live. Two live questions, each with two answers. Four possible worlds.
It is tempting to average them into one forecast. Resist it. A forecast that averages a rainy world and a dry world tells you to carry half an umbrella, and half an umbrella keeps nobody dry. Our model prices each of the four worlds separately and refuses to average them, because the worlds do not converge. What firm supply must earn to exist, how exposed that supply is to fuel costs, and whether new firm capacity gets built at all differ widely from one world to the next, widely enough to change decisions, not just decimals.
That has a hard consequence for buyers. Every single number forecast has already chosen a world, or blended several, and the chooser was almost certainly not you. The choice sits invisibly inside the number, and you are the one carrying the difference if the world that arrives is not the world the number assumed.
You do not need to read the market codes to protect yourself. You need one question, asked of every forecast, every quote, every adviser: which world does your number assume? Does it assume the price ceiling holds, or gives way? Does it assume firm capacity is paid for its availability, or not? A good answer names the assumptions and shows you the number under the alternatives. A blank look tells you the number is a blend, and the risk is yours.
The market's design is being settled now, in documents most buyers will never open. You do not have to open them. Just ask the question. Which world does your number assume?
Basis
The price ceiling and the two open design questions rest on the market's published rulebook, the SAWEM Market Code v2.3 and its Annexure 2. The four worlds and their divergence come from Oshili's market model at its indicative structure grade, the structure firm, the differences deliberately stated in words rather than numbers. No model figures appear in this piece.
Oshili Power publishes market analysis for energy intensive buyers, mines, heavy industry and their advisers across South Africa and the Southern African Power Pool, grounded in its working model of the South African Wholesale Electricity Market. The model prices the market's rules as they are written, holds the unresolved design questions open as separately priced worlds, is tested against measured market records, and is intended in time to answer a buyer's questions anywhere on the South African grid. Questions beyond the published analysis are welcome through the contact form on the Oshili Power website.