By Alberto Gambacorta
As the world prioritises decarbonisation, South Africa stands at a critical juncture in its energy journey.
South Africa has historically been powered by coal, of which there are abundant natural deposits around areas like Emalahleni. Approximately 85% – around 42GW of the nation’s electricity – is generated via coal-fired power stations.
As the world gears up for COP29 in Azerbaijan, there is a growing global consensus among nations and global alliances to decarbonise globally, with renewables often touted as the best way forward.
Globally, institutional funds are being pulled out of fossil fuels, and the coal-based power industry no longer enjoys popular backing. If companies want to do business on the global stage, they have to show their credentials and focus on carbon neutrality. This is the nature of a globally connected economy (following the introduction of the Carbon Border Adjustment Mechanism and previous signatories to the Paris Climate Agreement), one which aims to limit the emission of CO2 and have an environmental focus.
The global trend towards renewable energy has positioned South Africa, with its vast solar and wind potential, to take advantage of the opportunities presented by the energy transition.
Moreover, as a signatory to the Paris Agreement, South Africa has committed to reducing its greenhouse gas emissions and contributing to the global effort to combat climate change. The country’s coal-heavy energy sector is a key focus area for achieving the goals.
Thus, South Africa’s transition towards a diversified energy mix has several drivers, namely: reducing the carbon footprint of the energy sector, meeting growing energy demands and ensuring a socio-economically just transition.
The government must grapple with a complex balancing act, reconciling the urgent need for energy security in the face of some of the world's worst load shedding, with the need to secure long-term sustainability.
South Africa is making strides towards its goal of a technology-neutral energy mix. While certain infrastructure upgrades are necessary, the nation’s sophisticated power grid and robust transmission network provide a solid foundation for scaling up diverse generation sources. Moreover, the government’s support for new independent power purchase agreements has opened attractive investment opportunities in the energy sector.
The private sector is expected to drive significant growth in renewable energy, with potential investments of around R200 billion for private offtake projects and another R200bn for public programmes by 2030.
Projections indicate that the private procurement market could see a growth of 6GW for solar PV and 4GW for wind power by 2030, representing investments of R116bn and R9bn, respectively, particularly from large-scale industrial off-takers, especially in mining, and commercial and industrial sectors.
While further investments into new coal operations are planned, future scenarios forecast around a third of our power to come from solar and wind by 2030.
South Africa’s renewable energy resources and robust infrastructure offer significant opportunities for green investment and growth. That said, the transition towards a more sustainable energy mix must be managed carefully to ensure that it does not exacerbate social and economic inequalities.
In adopting a tech-agnostic, diversified approach to power generation, South Africa can effectively navigate the transition and emerge as a leader in sustainable energy development, as well as help ensure a steady supply that covers all variabilities.
The rapid growth of solar energy over the past year highlights South Africa’s potential to embrace clean power on a large scale, as part of a broader energy mix that includes coal, solar, wind, hydrogen, nuclear and other innovative solutions.
Alberto Gambacorta is the vice president of project development (sub-Sahara Africa) for Scatec.
BUSINESS REPORT