A report by SA’s largest climate financier, Standard Bank, and financial advisory company Cresco has called on the country to increase new capacity additions and renewable energy projects at a “dramatic rate”, casting doubt on its ability to achieve carbon neutrality by 2050.
Considering the looming risk of another energy crisis, which may materialise as soon as coal decommissioning is resumed, new capacity additions and renewable energy implementation need to be speeded up, the report says.
“There is no room for error in REIPPPP [Renewable Energy Independent Power Producer Procurement Programme] bid window 7, gas-fuelled generation capacity additions or delays in the private sector procurement,” it says.
“The Just Energy Transition Partnership is a noble and essential effort, but total generation still needs to meet demand — annually and hourly — and as many as 28% of coal-fired power stations are still required to be part of the mix in 2040,” the report reads.
“Meeting the goal of carbon neutrality in generation by 2050 seems challenging based on the projections — especially given the realities of getting projects into construction as experienced in SA ... What exactly that means in terms of the country’s obligations in terms of the $11.9bn in concessional debt and grant funding allocated as part of the project is unclear.”
In a move to unlock SA’s just transition, electricity & energy minister Kgosientsho Ramokgopa in March kick-started the process to procure 1,164km of 400KV transmission lines in the Northern Cape, North West and Gauteng.
The newly established National Transmission Company of SA (NTCSA) will be the buyer of the infrastructure as the government ramps up its reform of the network industries in an environment in which funding from the US is uncertain.
The NTCSA began trading a year ago, aiming to build 14,000km of new transmission lines in the next decade with a price tag of R400bn.
In the past decade it added only 4,400km of new transmission lines.
The 14,000km of extra-high-voltage lines will be installed to accommodate new, mostly renewable, generation capacity. SA’s grid capacity has been a big obstacle to the transition to renewables and to fixing load-shedding.
Partnership
The country’s 2040 energy mix is projected to be primarily driven by renewable energy generation, in line with the Just Energy Transition (JET). The JET is a partnership made up of the UK, Germany, France, the US and EU, which committed more than $8bn to help SA reduce emissions and transition away from coal.
Donald Trump’s administration has withdrawn from the JET partnership, reducing SA’s total international JET pledges from $13.8bn to $12.8bn. In 2040 just five Eskom coal-fired power plants are expected to remain in operation.
The report says renewable energy generation is set to increase to 80 terawatt hours — 30% of total generation — by 2030.
Rentia van Tonder, head of power at Standard Bank corporate and investment, said one of the consequential decisions taken by the government last year was to keep Camden, Grootvlei and Hendrina power stations running until 2030.
Previous decommissioning schedules provided for the Grootvlei and Camden power stations to be fully decommissioned by 2025 and Hendrina by 2026.
Though the move was designed to steady the grid while new capacity came online, it also highlighted the challenge of keeping the lights on while meeting environmental goals, she said.
“The coal extension buys us time, but it also raises the bar for everything else. Securing supply while enabling economic growth is not a trade-off; it’s a necessity. Investors and policymakers must act quickly and decisively if we’re to preserve both energy stability and climate credibility.”
Standard Bank has flexed its financial muscle to be a leader in climate financing on the continent, having deployed R177.4bn in sustainable finance since 2022 as part of its target of mobilising R250bn by next year.
The bank’s updated sustainable finance mobilisation target is more than R450bn by 2028, apart from what it has already deployed from 2022.
Cresco warned that grid connections and transmission delays, rather than tariffs, were the main roadblock to an energy secure future.
“We are looking forward to the opening of the SA wholesale energy market by April 2026, which will open the transparency around Eskom generation and allow for more accurate energy projections,” executive director Robert Flutter said.
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