South Africa has made significant progress in boosting its renewable-energy sector; however, several issues need to be addressed to facilitate the country’s transition away from coal-dominated electricity supply while maintaining energy security and economic stability, says independent power producer (IPP) ENGIE South Africa business development head Léa Giroux.

South Africa remains heavily reliant on coal, which currently generates about 80% of the country’s electricity, although the many coal-fired power stations are ageing and becoming increasingly unreliable. This unreliability, and the associated environmental challenges, make a diversified energy mix essential.

Giroux asserts that the proposed changes outlined in the Electricity Regulation Amendment Bill – aimed at creating the South African multi-market model – represent a “pivotal shift” in the sector’s structure.

The ongoing unbundling of State-owned power utility Eskom and the ongoing liberalisation of the market will reshape South Africa’s energy system. This shift is expected to foster competition, improve efficiency and drive innovation in the sector. She adds that these reforms mark a major step forward in the country’s energy transition.

However, transitioning away from coal is a complex process that requires careful planning and investment.

She says that, while renewable-energy projects are becoming more cost-effective, large-scale developments still require significant upfront investment. Therefore, attracting and securing public and private funding, particularly for transmission and energy storage solutions, are essential for a successful transition.

Further, while there is significant potential for renewable energy, energy sources such as solar and wind must be scaled up in a manner that ensures grid stability and be paired with transitional solutions, such as natural gas and hybrid systems, to support reliability when renewables are intermittent.

Grid infrastructure limitations also need to be addressed to accommodate decentralised renewable energy from wind and solar farms.

Grid Infrastructure
South Africa’s power grid was designed for centralised coal plants and is not yet equipped to handle large-scale decentralised renewable energy. Without major upgrades, transmission bottlenecks will continue to slow the expansion of renewables and limit the amount of clean energy reaching consumers, Giroux says.

She adds that many countries face similar grid constraints, citing intergovernmental organisation International Energy Agency, which states in its Electricity Grids and Secure Energy Transitions report that over 80-million kilometres of transmission lines need to be added or refurbished by 2040, globally, to meet climate targets.

South Africa’s best solar and wind resources are located in areas with limited grid capacity. This mismatch has led to many private- sector projects struggling to connect to the grid, despite the strong project pipeline.

South Africa requires a R112-billion capital investment in grid infrastructure to accommodate new generation capacity over the next five years. Without this, up to 60 GW of renewables projects, many of which are ready or in advanced development stages, could remain unused, she adds.

To address this, government has introduced the Independent Transmission Infrastructure Procurement Programme, which involves the private sector’s financing, developing and operating parts of the transmission network.

“There is currently a pilot phase, and we expect the lessons from this programme to shape future procurement models,” she says.

Policy
Policy uncertainty also presents a challenge, and while Giroux acknowledges the success of recent regulatory changes in unlocking significant investment in the sector, she notes that several challenges persist.

Delays in approvals and regulatory red tape continue to slow the roll-out of new projects; a more streamlined and predictable policy framework would accelerate private investment and development.

She adds that municipalities face even greater challenges. In addition to lengthy regulatory approvals, they must also navigate municipal finance regulations and by-laws.

Moreover, while regulations support energy storage and energy wheeling, the process of transmitting electricity from one location to another lacks a comprehensive framework.

Currently, guidelines for municipalities on handling wheeling applications are lacking, making it difficult for them to procure new generation capacity.

However, key policies, such as the South African Renewable Energy Master Plan and the Electricity Regulation Amendment Bill, are steering South Africa towards a more sustainable system, she adds.

The Just Energy Transition Investment Plan extends beyond renewable-energy expansion to ensure that workers and coal-dependent communities are not “left behind”. Consequently

, South Africa has the resources and potential to build a sustainable, low-carbon energy system, but coordinated action is required to overcome these challenges, Giroux concludes.