The Generation of Electricity in South Africa 2025

This report on electricity generation in South Africa provides comprehensive information on electricity infrastructure, generation and grid capacity, energy sources, renewable energy generation, generation performance, energy security risks, and tariffs. It provides information on energy resource reforms, the integrated resource plan and developments such as decommissioning coal plants, gas-to-power, nuclear and battery storage. The report includes notable players, corporate actions and influencing factors such as environmental issues. There are profiles of 37 notable players including Eskom, the Avon and Dedisa peaking power plants, African Rainbow Energy and Power, Enel Green Power, EDF Renewables and Scatec.

Challenges

Coal continues to dominate generation, posing climate and reputational risks. Balancing decarbonisation with job preservation in coal regions is politically and socially sensitive. Eskom’s ageing Infrastructure is prone to breakdowns and costly to maintain. Eskom’s financial and operational challenges persist as it continues to face liquidity constraints, ageing infrastructure, underperformance at key coal stations, and grid constraints. Eskom’s financial stability is exacerbated by extremely high levels of municipal debt. Eskom’s slow progress in establishing separate generation and distribution subsidiaries is stalling market reform and affecting investor confidence. The impact of power outages and rising electricity costs on the economy and economic growth. The introduction of new utility-scale independent renewable energy power supply is constrained by the lack of capacity on the national grid.

Introduction

• Following years of declining plant performance and power cuts, electricity supply has stabilised.
• The Independent Power Producer (IPP) programme has procured over 11GW of capacity, attracted billions in private investment in clean energy infrastructure.
• Independent power helped diversify the energy mix, reduce reliance on Eskom, and stimulate local economic development.
• Challenges include grid access, transmission constraints and permitting delays.

Opportunities

Blended finance structures and public-private partnerships are unlocking capital for large-scale infrastructure. Grid-scale battery systems, thermal energy storage, and hybrid renewable-storage projects, particularly in areas facing transmission constraints. Local manufacturing of solar PV, wind, and battery components. Private power purchase agreements and electricity wheeling/trading in South Africa and in other African countries. Renewed interest in small modular nuclear reactors, in South Africa and in other African countries. The proposed expansion of the electricity transmission network provides significant opportunities for the transformer industry and its supply chain.

Outlook

• The electricity sector is in transition, with clear signs of progress along with persistent structural challenges.
• The need for new generation capacity remains urgent.
• Execution depends on resolving grid constraints and accelerating transmission upgrades.
• Pricing pressures have narrowed margins for IPPs, but opportunities remain.
• Eskom is showing real signs of recovery on the technical front, but its financial sustainability is under pressure with mounting municipal debt.
• Challenges such as grid constraints, financial pressures, and regulatory uncertainty remain.
• Ongoing developments in renewable energy, storage, and market restructuring present opportunities for diversification and improved system resilience.
• Decentralised power generation and on-site energy storage are opening up new business opportunities.
• There is a renewed drive toward expanding nuclear generation capacity.
• The energy sector’s growth outlook will depend on coordinated investment, regulatory clarity, and the ability to translate planning into delivery at scale.

Trends

Declining dominance of Eskom as private sector electricity generation increases. Electricity demand continues to decline, mainly due to improved energy efficiency, rooftop solar PV and rising Eskom tariffs. Electricity trading is becoming more flexible, with businesses increasingly shifting from long-term contracts to shorter-term power purchase agreements and merchant models. Energy insecurity, economic, technical, political, and social factors have delayed South Africa’s transition from coal-fired generation. Municipalities are increasingly exploring alternative supply models to reduce dependence on Eskom. Renewable energy companies are expanding into commercial and industrial self-generation, wheeling and battery storage. While loadshedding has eased, energy security remains fragile, with Eskom continuing to depend on emergency procurement, and increasingly, on private power generation.