South Africa is moving away from coal-fired electricity, which currently supplies 74% of the country’s power, to wind and solar energy. But as the country’s experience shows, the transition is complex and is being slowed down.
This is because renewable energy works very differently from coal. It needs a different kind of electricity system and new ways of planning and managing the grid.
The transition also requires major changes at the state-owned electricity utility, Eskom, which has long dominated South Africa’s power sector. It involves transforming an electricity system built around a few large coal-fired power stations into one that can absorb power from many renewable energy producers while keeping electricity reliable, affordable and accessible.
I’ve been working in the field of energy and economic regulation in South Africa for 40 years. I sat on the Eskom board for six years until I resigned in 2024 and I was involved in drafting key energy policies.
Based on my experience, I argue that there are five key factors slowing down the energy transition:
- Eskom’s dominance over the country’s electricity system
- inconsistent and politically driven government electricity planning, favouring certain technologies and restricting private energy providers
- a grid that has not been designed to keep up with technological change
- crumbling municipal electricity distribution networks and high levels of local government debt to Eskom
- inability of rooftop solar to sell surplus power into the grid.
These five problems are closely linked to slow-moving institutions, outdated ways of thinking, poor management and corruption. Many countries face similar challenges, but South Africa is a politically fractured society, with low trust in government, weak education systems and high rates of crime. All this shows in the slow pace of the energy transition.
The slow pace comes at a cost. Communities living near coal-fired power stations continue to face health risks. And South African exports could become less competitive as the European Union introduces border taxes on products produced with coal-fired electricity. The country’s coal-fired power stations continue to produce high levels of greenhouse gas emissions that drive climate change.
Five bottlenecks
I have ranked the factors slowing the transition from most to least influential. Others may rank them differently.
The first bottleneck is Eskom: state-owned and slow to respond to change. It controls electricity generation, transmission and distribution. Because it controls so much of the system, Eskom has had the power to influence who can connect to the grid and how quickly new competitors can enter the market.
Eskom is also struggling financially. As more households and businesses generate their own cheaper solar power, its sales have declined. It has tried to slow down the energy transition by challenging licences for electricity traders and by resisting plans to make the national transmission grid fully independent.
It has also backed expensive coal projects. In 2024, Eskom decided to extend the lives of the Camden, Grootvlei and Hendrina coal-fired power stations until 2030 at a cost of about R90 billion (about US$5.5 billion). That money could instead have gone towards new renewable energy projects that would have lasted much longer.
The second bottleneck is the government’s electricity plans (known as Integrated Resource Plans). They are supposed to set out the cheapest ways of providing the country with the electricity it needs. But instead, the government uses them to pick technologies that it prefers, like nuclear and gas, over cheaper renewable energies.
The country passed law setting up a wholesale electricity market, but in contradiction, the government intervenes in the market using the Integrated Resource Plans to limit the operation of market forces.
The third bottleneck is the electricity grid itself. There are two problems here. The first is that South Africa’s grid was built decades ago to carry electricity from coal-fired power stations in the eastern province of Mpumalanga to the country’s main cities and industries. But the best wind and solar resources are mostly in the west of the country. So the grid now needs to become a two-way street, able to move electricity from west to east as well.
The National Transmission Company of South Africa (a wholly owned subsidiary company of Eskom) plans to build 14,500km of new transmission lines over the next decade to help this happen. Until then, some renewable energy projects have to cut back how much electricity they produce because the grid cannot carry it. Coal-fired power stations continue to fill the gap. Years of poor planning and Eskom’s financial problems have made this bottleneck worse.
The second problem is that managing a national grid with thousands of renewable energy providers is more complex than one based on a few coal plants. To keep the system stable, there have to be services in place to respond to sudden changes in power and to restart the grid after a blackout.
Wind and solar need a suite of such services. South Africa is still working out how to organise, fund and allocate responsibility for these services.
The fourth bottleneck is crumbling municipal electricity distribution networks, which create a serious risk to the electricity system. Local governments also owe over R100 billion (about US$6 billion) to Eskom, and this debt is rising fast.
Rising non-payment is worsening the problem, making it harder to fund and maintain electricity services. With weak public finances, government support is limited. Eskom has received R464 billion (US$28 billion) in bailouts. But some of these have gone towards covering losses linked to non-payment, crime and corruption.
The fifth bottleneck is is that renewable energy from rooftop solar systems is being wasted. Over the past five years, solar generation has shot up to about 8%-10% of total generation, powering about 3 million to 4 million households. Excess electricity generated is not used or sold back into the grid because municipalities and Eskom make it difficult and costly to do that.
When people disconnect from the grid, it reduces Eskom’s revenue and raises costs for those who remain. Over time, a weaker grid also makes it harder for large renewable projects to deliver power where it is needed.
What needs to happen next
To address the electricity crisis, the Presidency has set up a National Energy Crisis Committee. This is a collaborative effort by relevant national government departments, Eskom, and representatives from the private sector.
It has made progress but still faces many problems.
There is no magic solution for all these challenges. However, the focus of attention needs to be the establishment of a fully independent National Transmission Company. This will allow private capital to invest in removing the bottlenecks from the grid, and limit some of Eskom’s market power.
- is a Visiting Adjunct Professor, African Energy Leadership Centre, Wits Business School, University of the Witwatersrand
- This article first appeared in The Conversation
