Opinion
As South Africa moves toward a more competitive electricity sector, the landscape for solar PV developers, investors, and stakeholders is entering a period of unprecedented complexity. Between Eskom’s evolving role, the planned launch of the South African Wholesale Electricity Market (SAWEM), and the political ambitions outlined in the Integrated Resource Plan (IRP) 2025, the industry faces both significant opportunities and considerable uncertainties. Understanding how these elements interact is critical for companies seeking to navigate the next decade of renewable energy development in South Africa.
Eskom at a crossroads: partner, competitor, and market anchor
Eskom’s position in South Africa’s electricity sector remains both central and paradoxical. The state-owned utility is tasked with ensuring grid stability while simultaneously participating in a market increasingly open to private investment. During a September 2025 briefing, Eskom’s leadership emphasized its commitment to renewable energy, framing participation in solar and wind projects as a space the utility “should be able to occupy.” At the same time, Eskom plans to maintain operational control of coal-fired stations, implement gas-to-power solutions, and limit tariff increases to single digits—balancing affordability, energy security, and sustainability.
This roles of market participant, a guarantor of system reliability and gatekeeper of transmission infrastructure, creates inherent tensions. Eskom’s intention to procure its own renewable energy and act as an energy trader, aggregator, and IPP places it in direct competition with private developers. For solar PV investors, this raises questions about access to transmission and distribution capacity, market pricing, and the potential for predatory pricing and gatekeeping of transmission capacity. Eskom’s dominant position could disincentivise private sector investment if not carefully navigated.
SAWEM: toward a competitive market
The launch of the South African Wholesale Electricity Market (SAWEM), currently slated for April 1, 2026, represents a transformative step toward market liberalisation. Designed and managed by the National Transmission Company South Africa (NTCSA), SAWEM aims to provide a transparent and competitive environment for electricity trading. Its core functions include enabling bid and offer submission, scheduling, and settlement while providing traders and IPPs with clear pricing signals.
Industry perspectives highlight both the promise and the challenges of SAWEM. Trading experts recognise the benefits of portfolio diversification and risk management offered by a central market with a buyer of last resort. However, uncertainties remain regarding Eskom’s role as a dominant participant, the independence of the NTCSA and market operator, and the final structure of tariffs and vesting contracts. Achieving regulatory clarity will be essential to unlock private and foreign investment, which will be critical for the scale of renewable energy deployment envisioned in South Africa’s energy ambitions.
The IRP 2025: ambition meets reality
The Integrated Resource Plan 2025 sets out South Africa’s long-term energy strategy, aiming for 105,000 MW of new generation capacity by 2039 with a projected investment of R2.2 trillion (US$126 billion). Solar PV forms a significant part of this roadmap, with allocations of 11,270 MW by 2030 and a total of 25,000 MW by 2039, including both utility-scale and distributed generation.
Yet, the IRP’s broader energy mix raises critical concerns. The plan continues to prioritize coal and gas, and revives nuclear ambitions, despite the financial, technical, and institutional challenges inherent in such projects. While solar and wind are earmarked for substantial growth, the delivery of these targets depends heavily on private and foreign investment, predominantly in transmission infrastructure. Moreover, the IRP’s reliance on politically connected stakeholders in gas and nuclear projects and assumptions of “clean coal” technology could distort investment incentives and complicate the solar PV sector’s ability to compete on a level playing field.
Solar PV Expansion and emerging curtailment dynamics
From a generation mix perspective, solar PV has become the backbone of new capacity growth. Publicly procured renewables have grown from 0.47 GW in 2013 to 7.32 GW in 2025 and are expected to exceed 11 GW by 2028. Private sector additions, roughly 7 GW of solar PV and 4.4 GW of wind, are expected to mirror this scale.
This rapid build-out, however, is already giving rise to curtailment pressures. In Eskom’s accelerated-build scenario, more than 5 TWh of excess solar energy could be curtailed by 2028, primarily due to transmission constraints, highlighting the risk of stranded generation for investors with projects ahead of grid readiness.
These findings reinforce that curtailment risk is now a central variable in solar PV investment modelling. Developers and financiers are increasingly pricing grid-access certainty into their financial close assumptions.
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Transmission investment: the next frontier
The grid bottleneck challenge is being directly addressed through the government’s Independent Transmission Projects (ITP) Programme, which aims to mobilise large-scale private capital into around 14000km of transmission lines plus related infrastructure. The Department of Electricity and Energy (DEE) and National Treasury recently synchronised ITP procurement with the rollout of the Credit Guarantee Vehicle (CGV), a World Bank backed instrument designed to provide credit guarantees for infrastructure projects.
The announcement of pre-qualified bidders and a draft Request for Proposals is expected by December 2025, with the CGV operational by late 2026. For renewable investors, the CGV could fundamentally improve the risk-return profile of grid-linked assets by reducing reliance on sovereign guarantees and enhancing the bankability of transmission-related partnerships.
Institutional realignment and procurement integrity
The recent appointment of Precious Mmabakwena Edward as head of the Independent Power Producers Office (IPPO) represents another key institutional inflection point. IPPO, which procures new generation renewables capacity from the private sector on behalf of government, will also be in charge new transmission capacity procurement. Edward brings deep technical and commercial experience from both Eskom and the private sector, notably in solar CSP and energy procurement.
Her appointment comes as the IPPO faces scrutiny over governance lapses and stalled projects. Bid Window 5, marred by allegations of tender irregularities and unbankable tariff bids, saw 14 projects terminated and bid bonds enforced, totalling R254.8 million for one IPP consortium. The reform of procurement processes under new leadership is viewed by industry stakeholders as essential to restoring investor confidence, ensuring predictable timelines, and re-establishing procurement credibility.
Conclusion
South Africa’s energy sector stands at a defining crossroads, where policy ambition, infrastructure readiness, and market reform are converging to shape the future of renewable investment, particularly in solar PV. The combined influence of Eskom’s strategic restructuring, the forthcoming South African Wholesale Electricity Market (SAWEM), and the Integrated Resource Plan (IRP) 2025 underscores both the scale of opportunity and the depth of risk that developers and financiers must now navigate.
The path forward will demand a careful balance between growth and governance. On one hand, the policy environment is increasingly favourable which includes government commitments to renewable energy expansion, ongoing liberalization of the electricity market, and the emergence of private wheeling and trading mechanisms all point to a sector entering a new phase of competitiveness. The expected rollout of SAWEM promises greater market transparency and liquidity, potentially unlocking more sophisticated price discovery and risk management tools for investors. Similarly, the acceleration of industrial and commercial demand for clean power presents a significant long-term driver for solar PV adoption across multiple market segments.
On the other hand, challenges remain both structural and systemic. Eskom’s dual role as market operator and competitor continues to raise questions about fair access to grid infrastructure and the independence of market pricing mechanisms. Transmission constraints, curtailment risks, and delays in complementary gas-to-power and storage projects may test the system’s resilience in the short to medium term. Furthermore, political and regulatory uncertainties—ranging from tariff reform to the independence of the NTCSA—could influence project timelines and investor confidence.
For solar PV developers, these dynamics call for agility, diversification, and strategic engagement. Success will depend not only on deploying technology efficiently but also on understanding the evolving market architecture. Developers and financiers who engage proactively in policy consultations, advocate for transparent market rules, and invest in hybrid and storage-integrated assets will be best positioned to capture emerging value streams. Cross-border partnerships and access to international finance will also play a critical role, particularly given the capital intensity of large-scale solar and storage projects.
Ultimately, the evolution of South Africa’s electricity market represents both a test and an opportunity for the solar PV industry. If policy consistency, market transparency, and transmission expansion can be sustained through 2030, the result could be a stable, investment-grade ecosystem where renewable energy forms the cornerstone of national growth.
Author: Bryan Groenendaal
Bryan Groenendaal is the founder and editor of GBA
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