Focusing on the adoption of rooftop solar photovoltaics (PV) by high-income households and businesses in the Western Cape, South Africa, the article analyzes its effects on the hybridization of urban electricity systems and the ability of municipalities to drive a just transition in cities where inequality remains very high. By reducing municipal electricity sales, decentralized solar technologies threaten the surpluses generated from charges paid by grid customers, which are essential to subsidize electricity services for the poor and support other municipal services. Based on fieldwork in four Western Cape cities, the paper shows that municipalities are implementing a variety of local arrangements (regulatory, tariff, and technical) to control distributed electricity generation and are seeking, with mixed success, to avoid a post- carbon transition model that undermines grid benefits by creating a new energy divide.