At a time when the country is facing a significant energy crisis, the report provides a consolidated overview of the electricity market from consumption to generation to financing.
The African Energy Chamber (AEC) – serving as the voice of the African energy sector – has officially launched its South Africa-focused market report, providing a comprehensive overview of the state of play of the country’s energy sector. Serving to guide investors and project developers interested in South Africa’s immense opportunities, the report details the current challenges and upcoming opportunities across the power generation, renewable and hydrocarbon markets.
Currently, the South African energy situation represents an economically challenging one, with the report identifying that the year 2022 witnessed new electricity outage records, with an over 300% increase in outage hours compared to 2021. As per the latest updates, the country experiences between 4.5 and 6 hours of load shedding per day, with the average load shedding stage being Stage 3 (allowing for 3 GW of the national load to be shed with outages implemented 18 hours over a four-day period) or Stage 4 (allowing for 4 GW to be shed with outages implemented 24 hours). However, advances across the power generation sector aim to turn this trend around.
According to the report, coal remains the predominant source of energy in the country, with industry representing the lion’s share of consumption at 54% in 2022 and projected to reach 55% in 2025, falling to 50% in 2030. In the long-term, the report identifies solar, wind, natural gas and nuclear to drive supply, while steady industrial and residential demand is expected. On the funding side, the report emphasizes that electricity will remain the prime focus with majority of financing required from the private sector. With up to $43.2 billion in power infrastructure needs between 2023 and 2027, opportunities for investors are immense.
Meanwhile, the report explores the state of play of South Africa’s renewable energy sector, stating that solar and wind will continue to contribute to the majority of capacity in 2023 and beyond. By 2030, approximately 18 GW of hydrogen electrolyzers, 16.2 GW of pumped storage, 16 GW of battery, 15 GW of solar thermal, 14.5 GW of solar, 8 GW of onshore wind and 3 GW of storage will contribute to capacity. With only 45% of the existing installed capacity currently operating, South Africa’s renewable sector offers unparalleled opportunities for green energy players.
In addition to renewables, the report goes one step further by providing an analysis of the country’s natural gas market, identifying key trends across the exploration and production industries. Currently relying heavily on imports, the report states that unless large-scale discoveries fill the gap, the import-trend will only continue. The Brulpadda and Luiperd discovery present a viable solution to stabilizing the South African market as their potential to support current and future gas-to-power projects is set to improve energy security. The discoveries represented 20% of the total African discovered volumes in 2019-2020, and with the majority of the Block yet-to-be-explored, the report emphasizes that there lie ample opportunities for exploration.
“South Africa is in the midst of an energy crisis, declared by the government as a National State of Disaster. The report aims to not only provide a detailed overview of the country’s energy sector but a roadmap as to how South Africa can address the crisis. From discussing the current state of loadshedding in the country to power demand/supply to the REIPPP and renewable forecasts to South Africa’s natural gas potential, the report comes at a critical time for the country. The report brings clarity and a deeper understanding of the South African power market,” states NJ Ayuk, Executive Chairman of the AEC.
Through its detailed overview of South Africa’s energy sector, covering key areas including power generation, renewable energies, natural gas and investment, the AEC’s State of South African Energy Report represents a comprehensive guide to investing in South Africa’s energy sector.
Get your copy of the report here.