With growing demand for clean energy, South Africa is restructuring its power sector and attracting private investments to accelerate its green transition.

South Africa is reshaping its energy sector to move away from its heavy reliance on coal-fired plants. The government has signed the Electricity Regulation Amendment Act to bring in more competition and encourage private sector participation. Despite these efforts, the country’s renewable energy market is still in its early stages, and it’s projected that South Africa won’t meet its energy demand until 2040.

As renewable energy projects like solar and wind power gain traction, big companies, including mining firms, are increasingly turning to private energy deals, bypassing state utility Eskom. Rentia van Tonder, head of power at Standard Bank, noted, “Companies are buying power from traders and aggregators to meet ambitious sustainability goals, driven by growing uncertainty over regulations.”

The government’s Just Energy Transition Partnership Plan, designed to decarbonize South Africa’s electricity system, has made slow progress. Despite an $8.5 billion deal with developed countries to fund renewable energy projects, little money has been disbursed. There are hopes that funds will soon be directed towards expanding the transmission network to support renewable energy integration.

While solar and wind power are expected to grow significantly over the next two decades, South Africa faces challenges. Coal power stations will still make up a portion of the energy mix in 2040, complicating efforts to achieve carbon neutrality by 2050. The future of green hydrogen, expected to enter the market after 2030, will depend on its financial feasibility for large-scale use.