Overview    

South Africa depends on aging coal-fired power plants to provide approximately 80 percent of the nation’s electricity. Coal will continue to provide the majority of South Africa’s power for the next decade, but the energy system is undergoing a critical transformation as the private sector drives a rapid expansion of wind and solar generation. Behind-the-meter private solar installations totaled more than 7 GW, exceeding the installed capacity of utility-scale projects. Peak electricity demand has steadily declined – currently less than 32 GW – as businesses and households have gone off-grid and energy-intensive industries, including smelters, have shut down. Reduced demand and a marked improvement in the performance of state-owned utility Eskom’s coal fleet enabled a reprieve from nationwide scheduled rolling blackouts, known as load shedding, throughout much of 2024 and 2025. However, the energy system remains fragile, with transmission grid constraints and a rising affordability crisis threatening the sector’s long-term stability. Between 2008 and 2023, electricity prices rose by 720 percent, far outpacing inflation.

State Owned Utility State-owned utility Eskom’s precarious financial position will continue to create a vulnerability in the energy sector, as the utility is mired in billions of dollars in debt, threatening its ability to invest in new transmission and generation, maintenance of existing assets, and purchase of diesel to fund emergency power production. In addition, municipal debt to Eskom continues to grow, standing at more than $6 billion (R107 billion) as of February.

Market Reforms 

The South African government has prioritized energy sector reforms, including establishment of a competitive electricity market. In August 2024, President Ramaphosa signed into law the Electricity Regulation Amendment (ERA) Act. Among the Act’s reforms are establishing an independent transmission system operator (TSO) within five years; creating a competitive electricity market; developing a Market Code to govern the competitive market; and imposing penalties for damage to and sabotage of electricity infrastructure. The government is also moving forward with plans to unbundle the vertically-integrated utility, Eskom, with the National Transmission Company of South Africa (NTCSA) furthest along in the process. The NTCSA legally unbundled from Eskom and began operations in July 2024, but remains financially tied to Eskom Holdings.

REIPPPP: South Africa operates a highly successful Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) for utility-scale transactions. Private sector companies have built over 6,280MW of generation capacity across a range of technologies, primarily in wind and solar, through the program, which is considered as a model for other African nations. Since the program’s 2011 inception, 93 wind and solar projects generating more than 6 GW of electricity are operational, with an additional 2 GW worth of projects under construction. The program has attracted $15 billion (R272.5 billion) in investments and contributed to an 88 percent decrease in solar tariffs and a 70 percent decrease in wind tariffs.

Advanced Gas Turbine Engine Technologies and LNG Imports

The government views natural gas as an important driver of manufacturing and economic growth, as well as a key source of energy to provide peaking and baseload power. Minister of Electricity and Energy Kgosientsho Ramokgopa has suggested the country could commit to 300 petajoules of gas demand per year for power generation – both new gas-to-power plants and retrofitting of Eskom’s current diesel-run open cycle gas turbine (OCGT) peaking plants – and industrial users, who are facing a gas supply shortage in 2030. The country’s access to gas resources, however, is hindered by delays in capitalizing on domestic discoveries and inadequate infrastructure.

In January 2024, Transnet National Ports Authority (TNPA) appointed Dutch terminal operator Vopak and its partner Transnet Pipelines to develop and operate an LNG import terminal at Richards Bay on the east coast of South Africa. The first phase of the project, to allow the import of two million tons of LNG per year, is aiming for an operational date of 2028, with a ramp-up in capacity to five million tons per year by the second quarter of 2030. Vopak is aiming to reach final investment decision in 2026, contingent on securing customer commitments. Eskom plans to build a 3 GW gas-to-power plant adjacent to the terminal and is targeting 2030 for the start of operations, but environmental groups won a legal challenge in September 2025 to dismiss the project’s environmental authorization, with the Supreme Court of Appeal ruling the public consultation process for the project was flawed and ordering Eskom to undertake a more robust public participation process as part of a new environmental impact assessment. TNPA is moving forward with plans for a proposed second LNG terminal at the Port of Ngqura in the Eastern Cape Province and issued a tender in September 2024 for an environmental impact assessment of the project.

Although the country has vast untapped shale resources, exploiting the country’s shale gas deposits will require the development of an adequate policy and regulatory framework in addition to the required physical infrastructure needed to transport and process any output that is eventually produced. Minister of Mineral and Petroleum Resources Gwede Mantashe, an ardent supporter of domestic oil and gas exploration, has introduced legislation to accelerate petroleum exploration and development, and announced plans to conduct geological surveys in 2025 in the Karoo Basin for oil and gas reserves. The environmental implications surrounding future extraction in the Karoo are controversial however and would likely face resistance from environmental groups.

Advanced Nuclear Energy Technologies

Nuclear power accounts for just over 6 percent of South Africa’s electricity output. Eskom operates the country’s only nuclear plant, at Koeberg, near Cape Town, where two reactors completed in the 1980s have a combined generating capacity of 1,830 MW. South Africa’s National Nuclear Regulator (NNR) approved a 20-year life extension for Koeberg’s Unit 1, until July 2044. The NNR is still reviewing a similar life extension for Unit 2. The South African government is interested in re-establishing the country’s full nuclear complex for peaceful power and technology applications and has announced plans to procure 10 GW of new nuclear, through both traditional builds and small modular reactors (SMRs), over the next decade. The Nuclear Energy Corporation of South Africa (Necsa) plans to break ground in 2026 on a new multipurpose research reactor, to replace the aging SAFARI-1 reactor, at Pelindaba, South Africa’s main nuclear research center.

Energy Services

The national embedded generation market for installations and operation and maintenance of rooftop solar PV has grown significantly, now totaling 7.3 GW, registering a 215 percent increase since Eskom first published its estimates in August 2022. This surge underscores the accelerating adoption of decentralized energy solutions by households and businesses in response to persistent energy shortages and increasing electricity tariffs. The commercial and industrial (C&I) sector has been leading investments in behind-the-meter solar.

With increasing demand in embedded generation, the South African energy storage market is expected to grow to $1,461 million by 2030, becoming a keystone of the future energy services market. This will create opportunities for investors, manufacturers, suppliers, and energy end-users in the energy storage value chain.

Electricity Transmission and Distribution

Transmission grid constraints, particularly in the renewable resource-rich Northern, Western, and Eastern Cape provinces, continue to impede efforts to bring more generation capacity online. In addition, the dilapidated distribution network is buckling under the weight of indebted municipalities that cannot afford to maintain and upgrade the network along with systemic issues like vandalism, theft, and illegal connections. The government estimates the country needs to build more than 14,000 km of transmission lines over the next 10 years, equivalent to a 325 percent increase in the current build rate. The massive expansion of the grid is estimated to cost more than $13 billion (R250 billion).

To accelerate the required buildout, the Department of Electricity and Energy, in coordination with the National Treasury, National Transmission Company of South Africa (NTCSA), and the World Bank’s International Finance Corporation (IFC), has developed a framework for private sector financing of transmission projects and a credit guarantee vehicle (CGV) to de-risk the program for investors given the government’s lack of fiscal space to provide sovereign guarantees. This framework involves the establishment of an Independent Transmission Projects Office (ITPO) with the mandate to issue tenders for private sector funded transmission projects under the Build-Own-Operate-Transfer (BOOT) model. The government published draft regulations in April, released a pre-qualification tender in July for companies interested in participating in the inaugural program, and aims to issue tenders for seven corridors by the end of 2025.

Sub-Sector Best Prospects       

Products and services with immediate need or potential in South Africa include:

•    Renewable Energy Independent Power Producer Procurement Program (REIPPPP)
•    Energy Services
•    Energy Efficiency and Demand-Side Management (DSM) Technologies
•    Oil/Gas, LNG Provision, Exploration Equipment, Extraction, Pipeline, and Fuel Conversion
•    Transmission and Distribution Equipment
•    New Plant Equipment and Related Systems
•    Process Automation and Systems Control Equipment
•    Off-Grid Solutions, e.g., Fuel-Cell Technology
•    Nuclear, including small modular reactors (SMRs) and radioisotope production

Major Shows:
Enlit Africa 2026 
Power and Energy
May 19-21, 2026, Cape Town, CTICC

Resources:                                 
Department of Electricity and Energy (DEE)
Eskom Holdings Limited
Fitch Solutions 
Horizon Grand View Research

For More Information:
Contact in Johannesburg, South Africa:
Mpilo.Mahlangu@trade.gov
Phone: +27-11- 290-3120
Or visit our website: https://www.trade.gov/south-africa/