The war in Iran has served as a masterclass on the risks of fossil fuel dependency. With the Strait of Hormuz essentially closed and global liquefied natural gas (LNG) prices skyrocketing after attacks on Qatari export facilities, South Africa’s energy strategy is facing a moment of truth.
Why are we betting our future on volatile, imported gas when batteries, in combination with renewables, can cover much of South Africa’s electricity supply? These technologies do not need a continual supply of fuel and are not subject to the kind of price shocks or availability shortages that fossil fuel generators experience.
The world is going big on big batteries. The grid-scale batteries have been improving in performance, and total installed project costs have decreased by an average of 20% per year from 2014 to 2024. For 2025 battery pack prices for stationary storage were 45% lower than in 2024.
The battery cost reductions have a knock-on effect, reducing the overall cost of supplying stored energy into electricity grids at the time it is needed.
Globally, battery storage capacity additions in 2024 were 24 times that of 2019, only five years earlier. This trend is not only in major developed economies. In the year to October 2025 countries outside of China, Europe and North America increased grid-battery deployment by 242% compared to the preceding year.
The grid-battery boom could have positive effects for South Africa, providing multiple services, improving grid functioning and making optimal use of the existing grid while more power lines are built. Coupling grid-batteries with solar and wind generators can make them “firm and dispatchable” — despite the renewable source being intermittent, the combination with batteries can supply a consistent output as required. Scatec’s Kenhardt project (540MW solar and 1,140MWh battery) in the Northern Cape that came online in 2023 is a good example.
Grid-batteries can also reduce the use of diesel or gas. This has benefits in terms and energy security, reducing greenhouse gas emissions, and can provide cost savings. In 2018 California was already replacing some gas peaker plants with batteries.
By 2021, in Australia two- to four-hour batteries were 30% cheaper (on a levelised costs of electricity basis) than the equivalent capacity gas peakers. For South Africa, analysis by Meridian Economics concluded the significant reduction in energy storage costs in 2025 further “prioritises batteries for new capacity services and delays [the] need for new peaking plants”.
However, the South African government is going in the opposite direction, with ambitions to significantly increase the use of gas in the power system at the time when economically competitive, low-carbon alternatives are booming. What is going on, and whose interests does it serve?
The answer comes in a key phrase: “anchor demand”. South Africa’s main natural gas supply has been via pipeline from Mozambique, but this is coming to an end in the next few years, the so-called “gas cliff”.
In the absence of sufficient domestic gas production South Africa will likely turn to LNG imports, but to justify building the necessary infrastructure and secure LNG imports at a competitive price, you need to buy regular, large volumes of it. If the local gas industry does not need that much you need to create additional needs, the anchor demand.
To create this artificial demand, the 2025 Integrated Resource Plan (IRP) proposes forcing 6GW of gas into the energy mix, with the electricity & energy minister indicating a minimum 50% load factor, meaning a plant runs, on average, at more than half its maximum output.
This is clearly for generating large amounts of power, not only stepping in during peak electricity demand, meaning a lot more gas would be burned. That will help create demand for gas, but it’s not the most efficient or cost-effective way to run a power system. In effect this means if the price of Eskom electricity goes up due to unnecessarily high gas utilisation, Eskom electricity consumers are subsidising industrial gas users.
The reaction from the gas industry in South Africa to the gas cliff has largely been: “Where can we get more gas?”. There seems to have been limited investigation into what industrial use cases for gas can be achieved via other means, and at what cost. With the EU and other countries starting to factor the price of carbon into their imports, there is an economic and an environmental reason to reduce fossil fuel use, including gas.
Curiously, the IRP 2025’s own analysis indicates forcing 6GW of gas into the power system by 2030 costs more, has higher emissions and a lower overall score than when this gas is not forced in.
At a ministerial briefing on the IRP 2025 in October it was stated a minimum load factor of 50% for gas plants is necessary to secure gas supply and support gas infrastructure. But no public evidence has been shared to back this claim.
Furthermore, the 50% gas plant load factor does not align with independent, peer reviewed power system models in South Africa. Most of these models would ideally run the gas plants at very low-capacity factors of 3% to 5%, requiring relatively little fuel over the course of a year.
As with other commodities, lower gas prices are generally associated with larger contracted volumes and firmer offtake commitments. Conversely, low load factor gas plants may have higher fuel costs than assumed in current power system models. Or the gas volumes may be too low for any feasible LNG import. As a result, there may be an economic case for increasing gas utilisation above what is purely needed to meet electricity demand.
The million-rand question is how different gas use profiles across the power sector and industry would affect LNG import viability and cost. The answer is we don’t really know because there is not sufficient publicly available evidence for how the LNG decisions are being made by government.
Given the rapid advancements in grid-battery capability and cost reductions, the work that underpins South Africa’s electricity planning documents should investigate an accelerated roll-out of stand-alone grid-batteries, and renewables coupled with storage. These technologies can provide insulation from volatile fossil fuel markets, especially during times of geopolitical tension.
The decision to run gas plants at 50% load factor based on the “anchor demand” argument has been made behind closed doors with zero public evidence to support its necessity. We need a rigorous, independent and public techno-economic assessment.
In the wake of the Iran conflict, energy security means energy independence. You can’t sanction the sun, and you don’t need a pipeline for a battery. It is time our policy caught up with the technology.
• Halsey is a policy adviser for the South African energy team at the International Institute for Sustainable Development.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.