The energy landscape in South Africa is undergoing a seismic shift, which presents challenges and remarkable opportunities for our country and the southern African region, writes Jenna Harris, MD of Apollo Africa.
The recent launch of the National Transmission Company of South Africa (NTCSA) and the unbundling of Eskom’s transmission business, mark the start of an energy transformation that could position South Africa as a major energy exporter within the Southern African Power Pool (SAPP).
The creation of the NTCSA represents a critical energy sector reform, providing open, fair, and transparent access to the national grid for both public and private energy producers. This will enhance efficiency within the electricity sector and foster competition in a future electricity market.
But perhaps more importantly, it opens the door to new opportunities for South Africa to export energy across borders, generating significant economic benefits and strengthening regional energy security.
South Africa is uniquely positioned to become the “power basket” for Southern Africa, exporting electricity to neighbouring countries while earning valuable foreign exchange. Our nation boasts a relatively stable investment environment, with banks and private sector investors increasingly willing to back new energy projects.
The existing 6.4 GW of private renewable generation facilities in operation, coupled with an additional 4 – 6 GW under construction (with more in the pipeline) – are driving investor confidence in South Africa’s renewable energy sector which is arguably only limited by Eskom’s speed of connecting projects to the grid.
By leveraging these favourable investment conditions, South Africa can rapidly expand its generation capacity, whether through wind, solar, or other forms of renewable energy. We’re already connected to the Southern African Power Pool, which facilitates energy trading between countries in the region.
With the right infrastructure in place, and given regulatory and political stability, power generated in Mpumalanga could be transmitted to countries like Malawi or Zimbabwe, helping to stabilise energy supplies and support regional development. On top of this, these energy exports would generate revenues for South Africa in foreign currencies, particularly US dollars – a much-needed boost for our economy.
A Regional Power Ecosystem
The NTCSA’s mandate to establish a transparent trading platform and an independent Transmission System Operator (TSO) will be crucial in realising this vision. The transition to a competitive electricity market will not only attract more participants but also create a more dynamic and resilient energy system across the region. The larger the number of players in the market, the more effectively we can balance supply and demand, ensuring that power is available when and where it is needed most.
Historically, Eskom has been supplying electricity to neighbouring countries, but often to the detriment of local consumers. However, with more participants entering the market and contributing to the regional power pool, the system can smooth out fluctuations in energy supply, leading to a more stable and reliable grid.
This interdependence is a key aspect of the future energy system. While South Africa might provide excess power when the wind is blowing, we may still rely on other energy sources, including Eskom’s diesel generators, to meet demand when renewables cannot. A true energy ecosystem, where all participants collaborate to stabilise and support the grid, will benefit both South Africa and its neighbours, making the entire region more energy-secure.
Economic and Environmental Benefits
Beyond energy security, expanding South Africa’s role as an energy exporter could create significant economic opportunities. Energy generation assets, particularly renewable projects, often attract investment from pension funds, offering steady, low-risk returns over time.
These funds are ultimately held by South African citizens, meaning the economic benefits of energy exports could be felt by a broad segment of the population.
From an environmental standpoint, the green energy transition presents a unique opportunity to position South Africa as a leader in renewable energy exports. However, current market structures may not fully support the shift to greener energy sources. Under the new market code, energy buyers could still end up purchasing electricity generated from fossil fuels, rather than renewables.
As more companies adopt sustainability targets and seek to reduce their carbon footprints, there is a clear opportunity for South Africa to differentiate itself by exporting green energy to the region and beyond.
A Call for Collaboration
To realise this vision, we need to rethink Eskom’s role. Rather than trying to protect its monopoly on energy generation and transmission, Eskom should focus on building and maintaining a world-class grid that can accommodate multiple energy producers and facilitate cross-border energy trade.
By earning revenue from grid fees and network usage, Eskom can play a vital role in South Africa’s energy future without being solely responsible for generating electricity.
South Africa’s energy future should be about expanding the pie, not fighting over who gets the biggest slice. By working together, government, private sector, and regional partners can create a more resilient and sustainable energy system that benefits everyone.
The road ahead is not without challenges. Regulatory hurdles, particularly around import and export licenses for electricity, need to be overcome to allow private sector players to fully participate in cross-border energy trade. But the benefits are clear: by becoming a key energy exporter within the Southern African Power Pool, South Africa can boost its economy, strengthen regional ties, and help secure a more sustainable energy future for all.
We finally have a proper chance to seize this opportunity and together, build a brighter, more energy-secure future for South Africa and the Southern African region.