All markets

South Africa

With a cumulative score of 1.63, South Africa ranks number 37 among emerging markets and number 65 in the global ranking.

  • Emerging markets
  • Middle East & Africa

2.10 / 5

Power score

0.54 / 5

Transport score


Buildings score

Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.


Low-carbon strategy

Net-zero goal and strategy

The government of South Africa has proposed a net-zero emissions reduction target to be achieved by 2050.

Nationally Determined Contributions (NDC)

South Africa has signed and ratified the 2015 Paris Agreement. The government has set a peak emissions target in its Nationally Determined Contribution (NDC), a non-binding plan to achieve the goals set out in the Paris Agreement. South Africa aims for emissions to follow a peak-plateau-decline trajectory, where greenhouse gas emissions should peak between 2020 and 2025, then plateau for approximately a decade and decline thereafter.

South Africa’s updated NDC, submitted to the United Nations Framework Convention on Climate Change in September 2021, states that annual greenhouse gas emissions will be in a range from 398 million to 510 million metric tons of carbon dioxide equivalent (MtCO2e) over 2021-2025 and 350-420MtCO2e over 2026-2030.

Fossil fuel phase-out policy

South Africa does not have a fossil fuel phase-out policy. However, there is a soft schedule for the closure of some of its coal power plants, with 7 gigawatts of retirements expected between 2021 and 2030 and the bulk of the remaining fleet (25 gigawatts) to close from 2031 to 2050, as detailed in the government’s 2019 Integrated Resource Plan.


Power policy

South Africa has finally revived policy support for renewable energy projects to deploy capacity quickly and alleviate severe supply shortfalls, which are resulting in frequent load shedding, or rotating blackouts. The government’s Integrated Resource Plan (IRP) was updated in 2019 and has set capacity allocations for at least 20 gigawatts of new wind and solar by 2030, alongside additional thermal generating capacity and storage.

The government also plans to procure 1.5 gigawatts of new coal between 2023 and 2027, and 3 gigawatts of new gas between 2024 and 2027. After a six-year hiatus, with no auction rounds under its Renewable Energy Independent Power Producer Program (REIPPP), the government in October 2021 awarded contracts to 2.6 gigawatts of utility-scale wind and solar projects in its fifth renewable energy auction, to begin implementation of the 2019 IRP.

This follows an emergency auction for firm capacity held earlier in 2020 (known as the Risk Mitigation IPP Procurement Programme, or RMIPPPP), which awarded 20-year offtake contracts to a range of co-located projects – totaling 2.7 gigawatts of solar photovoltaic (PV), wind, battery storage and diesel generators, plus 1.6 gigawatts of gas including power ships.

Auctions are the primary route to market for utility-scale renewable energy projects in South Africa’s regulated energy sector. The sector suffered setbacks due to policy instability in the late 2010s. The government awarded power purchase agreements (PPAs) to more than 6.4 gigawatts of renewables capacity across 102 projects in the first to fourth REIPPP rounds from 2011-15. However, political fallout resulted in three years of delays to the government signing PPAs from rounds 3.5 to 4. The situation went unresolved until 2018, when PPAs were finally signed.

Power policies

Renewable energy auction
Feed-in Tariff
Import tax incentives
Net Metering
Renewable energy target
VAT incentives

Power prices and costs

As is common in the region, South Africa has no wholesale electricity market and the National Energy Regulator of South Africa (Nersa) determines final retail prices. Municipalities are responsible for retail of electricity in some areas, although the customer still has no choice of supplier. State-owned utility Eskom Holdings SOC Ltd. has repeatedly argued for substantial tariff increases to pay back its debts. Tariffs increased by an average of 13.7% a year between 2004 and 2018.

Costs for renewables have also fallen. The levelized cost of electricity (LCOE) for onshore wind in South Africa – at $70-110 per megawatt-hour – falls in the middle of BloombergNEF’s benchmark estimates in 2022, as its relatively low capital expenditure is counteracted by higher financing costs. It is a similar story for PV (without tracking), which has an LCOE of $51-62 per megawatt-hour.

Importantly, renewable energy LCOEs are rising in South Africa, likely due to the higher prices globally. The winning tariffs dropped significantly in each renewables auction round: wind and PV fell 27% and 30% between rounds 3 and 4, after adjusting the tariffs for factors such as inflation and merchant tail. In round 5, tariffs dropped even further. Bid prices converged at their lowest and tightest spread of any auction in South Africa, with projects securing a capacity-weighted average price of $29.55 per megawatt-hour for PV and $33.70 per megawatt-hour for onshore wind. When levelized, these bid prices come in 11% lower than round 4 for PV and 31% less for onshore wind.


Power market

Eskom dominates South Africa’s power sector, although independent generators have started to capture some of the market, particularly in the renewable energy sector. The country regularly exports electricity to its neighbors through the Southern African Power Pool.

However, meeting peak demand is a major challenge as the supply crisis worsens. South Africa has seen regular short-term load shedding (scheduled power cuts) return from 2019 to 2022 at rates worse than the previous height of load shedding in 2014 and 2015.

Coal dominates the country’s electricity mix, accounting for 73% of capacity in 2018. Coal’s share in generation is likely to be broadly maintained despite growth in renewables, as the Medupi and Kusile coal plants (at 4.8 gigawatts each) are fully commissioned under the government’s IPP program.

Installed Capacity (in MW)

20122014201620182020020K40K60K MW

Electricity Generation (in GWh)

20122014201620182020050K100K150K200K250K GWh

Utility privatisation

Which segments of the power sector are open to private participation?


Wholesale power market

Does the country have a wholesale power market?

Not available

Doing business and barriers

Investors remain wary of future policy stalemates, and Eskom is in a weak financial position. Its financial challenges are continuing amid weak power demand, non-payment by municipalities and governance issues. A roadmap for unbundling the utility published in 2019 aims to resolve these challenges. Electricity consumption in South Africa has stagnated in recent years, declining on average 0.5% per year since 2006. The reduction has been mostly caused by heavy power users, due to factors such as an economic slowdown, volatility in commodity markets and rising electricity costs. This trend has been reflected in peak demand, which fell for a fourth consecutive year in 2021.

Regulatory approval for off-grid renewable energy projects of any size has become easier following revisions to regulator Nersa’s exemption policies, which bodes well for solar projects to supply industries. The main opportunity for off- or mini-grid projects in South Africa is in rural areas where electrification was at 66% in 2018, compared with 93% in urban areas. The Integrated National Electrification Plan includes initiatives to boost electricity access in rural areas – aiming to fund an estimated 723,000 grid and 49,650 non-grid connections to households by 2020. It is not clear if this target has been achieved, owing to the Covid-19 pandemic.

Currency of PPAs

Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?

Not available

Bilateral power contracts

Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?

Not available

Fossil fuel price distortions - Subsidies

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?

Not available

Fossil fuel price distortions - Taxes

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?

Not available


EV market

The government has yet to implement any substantive policy support in this sector and the electric vehicle market remains at an early stage. There are no national subsidy programs such as capital expenditure grants for EV purchases or tax incentives. South Africa’s NDC anticipates that the country will transition its transport sector as late as the 2030s.

There are also significant barriers to EV adoption in South Africa. These include a lack of charging infrastructure and high upfront costs that are elevated by higher import taxes on EVs to compensate for the lack of petrol tax revenue. Many consumers may also not wish to rely on the grid to power their vehicles due to the high risk of load shedding, meaning that they might not be able to charge their car when needed.

EV policy

The government has yet to implement any substantive policy support in this sector.

Transport policies

Electric vehicle target
Electric vehicle purchase grant or loan incentive
VAT incentives for EV
Import tax incentives for EV
EV charging infrastructure target
EV charging infrastructure support

Fuel economy standards

Does the country have a fuel economy standard in place?

Not available


Buildings market

The government in 2016 implemented a National Energy Efficiency strategy targeting a 50% reduction in specific energy consumption (measured as gigajoules of annual energy consumption per square meter of occupied floor area) by 2030 relative to a 2015 baseline. South Africa has some measures to support energy efficiency, including issuing energy performance certificates (EPCs).

There are an array of loans and grant options available to South African consumers to implement energy efficiency measures in buildings, but these mostly target commercial and industrial consumers. Funding is available via loans from many banks, via energy services companies (ESCOs), as cash grants and tax deductions.

Energy efficiency policy

Does the country have a national energy efficiency plan?

Not available

Energy efficiency policy

Are there minimum energy performance standards for buildings?

Not available

Energy efficiency incentives

Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?

Not available

Buildings policy

The government has yet to implement any substantive policy support in this sector.

Buildings policies

Low-carbon heat target/roadmap
Tax credits
Boiler scrappage schemes
Heat pumps purchase grants/loans incentive
Ban on boilers: new build homes
Ban on boilers: all homes

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