Competition Regulation for Large-Scale Battery Operators

1. Introduction

Large-scale battery operators are becoming important participants in modern electricity markets. Battery Energy Storage Systems (BESS) can store electricity and later supply it to the grid, participate in wholesale markets, provide balancing services and help manage renewable-energy intermittency.

As battery deployment increases, competition law becomes important. A small number of firms controlling large storage capacity could potentially influence electricity prices, access to balancing services or the ability of renewable generators to compete.

Therefore, battery operators must comply with both competition law and energy-sector regulation.

2. Meaning of Large-Scale Battery Operators

A large-scale battery operator may own or operate batteries connected to the transmission or distribution network.

The operator may earn revenue by providing:

energy arbitrage;

frequency regulation;

reserve services;

balancing services;

capacity services;

congestion management; and

support for renewable generation.

A battery can therefore participate in several markets at the same time.

3. Relevant Competition Markets

Competition authorities may need to define the relevant market before assessing market power.

Possible markets include:

wholesale electricity;

balancing and ancillary services;

capacity services;

energy-storage services;

grid-support services; and

electricity trading.

A battery operator may have significant market power in a small balancing market even if its share of the overall electricity market is relatively small.

4. Abuse of Dominance

Large battery operators could potentially become dominant where they control a substantial proportion of available storage capacity.

Under South Africa's Competition Act 89 of 1998, dominance is assessed under section 7, while section 8 regulates specified conduct by dominant firms.

Potential problems could include:

refusing access to essential storage capacity;

discriminatory treatment of competitors;

exclusionary contracts;

predatory strategies;

tying storage services to other services; and

withholding commercially important capacity.

Dominance itself is not unlawful; the relevant question is whether prohibited conduct and its competitive effects are established.

5. Strategic Withholding of Capacity

Battery operators can decide when to charge and discharge.

This flexibility creates a special competition issue. A dominant operator might theoretically withhold available capacity during periods of scarcity in order to influence market conditions.

However, a battery's operational decision is not automatically anti-competitive. The analysis must consider legitimate technical reasons, state-of-charge requirements, network constraints and market conditions.

Competition authorities therefore need sophisticated economic evidence to distinguish legitimate optimisation from unlawful market manipulation.

6. Storage Access and Foreclosure

Access to storage can become important where batteries provide essential balancing or flexibility services.

A large operator could potentially enter long-term exclusive contracts covering most available capacity. Such arrangements might make it difficult for smaller competitors to obtain storage services.

The Competition Commission has previously identified foreclosure through storage-capacity contracts as a competition concern in the petroleum-storage sector. This is not an electricity-battery case, but it provides a useful storage-market analogy.

7. Senwes Case

The Constitutional Court's decision in Competition Commission of South Africa v Senwes Ltd is useful by analogy.

Senwes controlled important grain-storage facilities while operating in related markets. The Court considered whether conduct by a dominant firm could disadvantage competitors.

The case illustrates a broader principle: control over an important storage facility can influence competition in related downstream markets.

This reasoning may become relevant where a battery operator controls storage capacity that competing generators or traders need to participate effectively in electricity markets.

8. Vertical Integration

A battery company may also own:

renewable-energy generation;

electricity-trading businesses;

transmission or distribution assets; or

retail electricity businesses.

Vertical integration can create efficiencies because generation and storage can be coordinated.

However, competition concerns may arise if an integrated company uses battery capacity to disadvantage independent generators or traders.

For example, it might give preferential access to its own generation assets while making storage services more expensive or less available to competitors.

9. Waco Africa Case

The Competition Commission v Waco Africa case demonstrates the importance of competition enforcement in electricity-related procurement.

The Competition Tribunal considered allegations of collusive tendering under section 4(1)(b) of the Competition Act. The provision prohibits specified horizontal conduct, including price fixing and collusive tendering.

For battery projects, similar risks could arise during procurement of batteries, transformers, grid equipment, engineering services or long-term maintenance contracts.

10. Battery Mergers

Competition authorities should carefully assess mergers involving major battery operators.

Important questions include:

How much storage capacity will the merged firm control?

Will competitors have alternative storage providers?

Can new battery operators enter easily?

Does the transaction combine storage with generation or trading?

Will the merger reduce competition in balancing services?

A merger producing efficiency benefits should still be examined for possible exclusionary or concentration effects.

11. Interaction With Energy Regulation

Competition law works alongside energy regulation.

In South Africa, NERSA and electricity legislation regulate matters such as licensing, registration, grid connection and technical compliance.

A recent 2026 High Court decision, Sibanye Gold (Pty) Ltd v Eskom Holdings SOC Ltd, illustrates the growing legal importance of generation facilities with or without energy storage and their connection to electricity networks. The Court examined Eskom's interpretation of statutory connection rights and held the challenged decision unlawful.

Although this was not a competition-law case, it demonstrates why battery operators may face both regulatory and competition-law requirements.

12. Data and Market Information

Large battery operators may possess valuable information concerning:

electricity prices;

congestion;

renewable generation;

customer demand;

balancing requirements; and

competing traders.

If a vertically integrated firm uses non-public information obtained through a regulated network or market function to benefit its competitive business, competition concerns may arise.

Strong information-separation and confidentiality rules can therefore support competitive neutrality.

13. Need for Competitive Neutrality

Battery markets should provide fair opportunities for:

independent storage companies;

renewable generators;

aggregators;

traders;

municipalities; and

industrial consumers.

Grid access and market participation rules should be transparent and non-discriminatory.

14. Conclusion

Competition regulation for large-scale battery operators is becoming increasingly important as storage becomes a central part of electricity markets.

The principal concerns include market concentration, strategic capacity withholding, exclusive contracts, foreclosure, vertical integration, discriminatory access, information advantages and anti-competitive mergers.

The principles from Senwes and Waco Africa, together with recent electricity-network litigation such as Sibanye Gold v Eskom, provide useful guidance, although they are not all direct battery-market precedents.

The objective should be to allow batteries to provide legitimate efficiency and reliability benefits while preventing control of scarce storage capacity from being used unlawfully to restrict competition.