South Africa’s ambitious plan to expand its power grid, the main obstacle to transitioning from coal to renewable energy, is facing a major challenge: securing $21 billion in investment for the nearly insolvent state-owned utility, Energy News Africa reports.
Since the May election ushered in a coalition government, there has been a notable policy shift towards renewable energy after years of bureaucratic inertia and mixed signals about the country’s commitment to moving away from coal, which currently generates 80% of South Africa’s electricity.
Private companies like Mainstream Renewable, a venture owned by Aker Horizons, EDF Renewables, and Acciona SA, are gearing up to reshape the energy sector. However, a new hurdle has emerged: how to transmit electricity from remote, sun-drenched, and wind-swept areas to power-hungry cities.
Over the past month, six officials informed Reuters that they are exploring options to finance approximately 14,000 kilometers (8,700 miles) of power lines and pylons. However, a viable funding solution has yet to be identified.
“Our efforts to decarbonize hinge significantly on our capacity to expand the grid,” Energy Minister Kgosientso Ramokgopa stated during an interview with Reuters at his Pretoria office late last month. “But securing 390 billion rand ($21.3 billion) is beyond the state’s current financial capacity.”
Meanwhile, international donors have offered a combined $11.6 billion, primarily in loans, to support climate-related projects. However, they are hesitant to provide the required funds to Eskom, the state power company, without sovereign guarantees—a safeguard the government cannot presently offer due to Eskom’s precarious financial situation. Despite billions in government debt relief, Eskom still carries over 400 billion rand in debt.
Adding to the utility’s woes, financially strapped municipalities owe Eskom 78 billion rand, which Ramokgopa has described as an “existential threat.”
Representatives from the German and French partners in the donor-funded program did not respond to emailed inquiries, and British partners declined to officially comment.
