South Africa’s energy system is undergoing a major transition as persistent load shedding has ended following the return of coal power plants to service and increased private-sector participation, according to BloombergNEF’s (BNEF) South Africa Transition Factbook 2026.
Corporate PPAs Drive Renewable Energy Growth
Private clean-power procurement is becoming the defining feature of South Africa’s electricity market. Based on BNEF figures, corporate power purchase agreements (PPAs) are projected to spur a higher volume of utility-scale renewable energy installations across the nation than state-run auctions during 2026, marking a historic first. Corporate buyers are expected to support 73% of the 2.3 gigawatts of anticipated solar and wind additions this year, remaining the primary driver of renewables through the end of the decade.
“South Africa’s energy transition has reached a critical inflection point,” said Nelson Nsitem, Africa Research Lead at BloombergNEF. “To date, private companies have played a central role in bringing new clean power into the system, but the next phase will depend on whether infrastructure can keep pace with investment.”
Total renewable energy investment in South Africa reached $5.4 billion in 2025, falling 41% from $8.6 billion in 2024 as fewer utility-scale projects reached financial close. Utility solar dropped 57% to $1.4 billion, and onshore wind decreased 30% to $2.1 billion. However, small-scale solar bucked the broader trend, growing 35% to $1.8 billion to soften the overall decline.
Did you know? Small-scale solar installations grew by 35% to reach $1.8 billion in 2025, serving as a vital cushion against the drop in utility-scale project investments.
Transmission Bottlenecks Threaten Expansion
Investors, developers, and corporate energy buyers are planning further investments in clean power capacity, but transmission grid capacity is emerging as a critical limiting factor. Without faster grid expansion, South Africa’s energy transition may deliver less economic growth than anticipated, according to the BNEF report.
Sofia Maia, Head of Middle East and Africa Research at BloombergNEF, noted the changing motives behind corporate investments. “For many South African businesses, investing in clean energy is no longer primarily a climate decision — it is increasingly about securing reliable power, managing costs and having greater control over their energy supply,” Maia said.
While fossil-fuel demand is declining, coal remains central to the power system, supplying 78% of electricity in 2025, down from 90% in 2015. Under BNEF’s Economic Transition Scenario, solar, wind, and battery storage will increasingly shape the future. As power consumption rises by 35% to reach 319TWh by 2050, solar and wind are projected to supply 69% of that demand, while the coal share drops to 21% amid aging plant retirements.
Industrial Decarbonization and Critical Minerals Competitiveness
Industrial decarbonization is transforming into a core competitiveness issue rather than solely an emissions challenge, driven by trade policies such as the European Union’s Carbon Border Adjustment Mechanism (CBAM). South Africa’s industrial base concentrates heavily on energy-intensive mining and metals production, making fuel switching and electrification essential for reducing emissions.
Although South Africa holds a strategic edge as a major supplier of transition minerals like platinum-group metals, manganese, and chrome, high power costs limit downstream value capture. Average industrial electricity prices sat at R1,652/MWh last year, compared to R964/MWh in mainland China, hampering government ambitions to expand the critical minerals sector.
Meanwhile, the nation’s clean-energy equipment supply chain relies heavily on China, which accounted for 98% of solar and 95% of battery imports in 2025. China is also expanding regional market shares in wind at 80% and electric vehicles at 84%. According to BNEF, this dynamic offers South Africa an opportunity to build domestic manufacturing capabilities and capture a larger share of sub-Saharan Africa’s growing clean-tech supply chain.
Electric Vehicle Strategy and Automotive Sector Outlook
South Africa’s electric vehicle strategy aims to revive the country’s automotive manufacturing competitiveness. While EV sales more than doubled in 2025, they still accounted for 1% of the total passenger vehicle market. Local and export production receive financial backing through the enhanced Automotive Investment Scheme (AIS), alongside a 150% first-year tax deduction applicable to capital poured into zero-emission vehicle manufacturing.
Frequently Asked Questions
What is driving renewable energy growth in South Africa?
Corporate power purchase agreements (PPAs) are driving the majority of utility-scale renewable additions, backed by businesses seeking reliable power, cost control, and energy security after years of load shedding.
How much electricity does coal still supply in South Africa?
Coal supplied 78% of South Africa’s electricity in 2025, down from 90% in 2015, according to BloombergNEF data.
What is the main obstacle to new clean energy investments?
Transmission grid capacity limits how quickly new clean power investments and utility-scale projects can be integrated into the national grid.
How is South Africa supporting the electric vehicle market?
The government provides incentives through the enhanced Automotive Investment Scheme (AIS) and a 150% first-year tax deduction on investments in zero-emission vehicle manufacturing.
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