SA is preparing for one of the largest infrastructure buildouts in its history: to expand an electricity transmission backbone that took six decades to build by 50%, in little more than 10 years.
Eskom’s Transmission Development Plan calls for about 14,500km of new high-voltage lines and 133,000 mega volt-amperes (MVA) of additional transformer capacity — adding more than 40% to the grid. With a projected investment requirement of roughly R440bn, the scale is without precedent and sets the stage for the real test of reform: whether capital, regulation and market design can converge to make this buildout bankable.
In practice, bankability means structuring projects in a way that gives investors and lenders predictable revenues and confidence that risks can be managed effectively. That requires certainty about who will buy the power and how payments will be secured; clear institutional arrangements backed by guarantees; rules that manage market risks so a single contract can anchor financing; and regulatory enablers that clear permits, land access and environmental approvals upfront.
This matters because the pressures bearing down on SA cannot be met by plans or policy signals alone; they require projects that mobilise capital at scale, with attractive commercial terms. A starting point is the commercial architecture of transmission projects.
Programme rather than isolated projects
Investors will not commit without confidence that the buyer can honour long-term obligations, and that certainty must come from the National Transmission Company of SA (NTCSA). A transmission services agreement anchored in its balance sheet, reinforced by a credit-guarantee vehicle, would provide the payment security lenders require and signal that government, the Treasury and development partners are aligned behind a programme rather than isolated projects.
Bankability also depends on whether projects can move through SA’s regulatory terrain without becoming mired in uncertainty. Lenders are less likely to advance capital against permits that are still pending or subject to appeal; environmental authorisations, water licences and grid-code compliance need to be secured upfront to anchor confidence that timelines will hold.
Furthermore, the long corridors required for transmission cannot be built without clear servitudes. Unresolved land rights or disputes with communities have the potential to delay projects and thus drive up costs. And across all of this runs the question of environmental balance. Transmission projects inevitably intersect ecosystems and settlements, and financiers — particularly development banks and institutional investors — will only participate if biodiversity effects and community considerations are credibly addressed from the outset.
Once these foundations are in place, SA can turn to its banks and development partners to convert them into financeable projects. Domestic banks have the expertise to structure transactions and manage risk, while multilateral development banks can extend concessional finance and guarantees that reduce credit risk.
Important steps have already been taken. The creation of the NTCSA provides a dedicated off-taker, while the Renewable Energy Independent Power Producer Procurement Programme has shown that transparent procurement draws private capital. This institutional progress is reinforced by legislative reform: the Electricity Regulation Amendment Act, new regulations to strengthen investor protections and a ministerial determination assigning NTCSA future transmission contracts.
The government is also working with the World Bank on a credit guarantee vehicle to further mobilise private investment. Together these measures point to a reform agenda that is moving forward, but they do not immediately resolve the core constraint: without transmission capacity, new supply cannot reach demand. The result is curtailed investment at precisely the moment when global pressures are intensifying.
In less than five months, the EU’s Carbon Border Adjustment Mechanism will come into full effect, imposing border charges on carbon-intensive imports such as iron, steel and aluminium. For SA’s exporters the implications are stark: a coal-heavy energy mix inflates the embedded carbon in production, raising costs at the EU border and threatening the competitiveness of some of the country’s most important industrial sectors. Without large-scale access to renewable power, producers risk higher tariffs, shrinking margins and the erosion of market share in one of their most valuable export destinations.
Domestic policy is moving in the same direction. The department of forestry, fisheries and the environment has introduced sectoral emissions targets as part of its implementation of the Climate Change Act, which will bind key industries to defined emissions pathways. For mining, metals, manufacturing and transport, this makes decarbonisation a regulatory requirement rather than a voluntary choice. Access to clean electricity is now the central lever for compliance, and businesses unable to secure renewable power will face rising regulatory costs at home just as they confront higher carbon penalties abroad.
Much then rests on the shoulders of transmission, which has become the defining bottleneck for renewable energy uptake. The frameworks now being tested around the grid are not unique to electricity; they are the same ingredients that will determine whether other networked systems can be built at pace. Water infrastructure is perhaps the most immediate case: while transmission extends across the surface, pipelines run beneath it, but both require clear mandates, predictable revenue models and the ability to align public, private and development capital behind investable projects.
The choices made in transmission will therefore reverberate far beyond the power sector, setting the template for how SA secures the resources on which its economic future depends.
• Khoza is managing executive: ESG at Absa Corporate & Investment Banking.
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