Renewables drive SA’s energy storage demand

January 17, 2025

From the newsletter
Yesterday, we mentioned that South Africa is leading in solar energy installations in Africa as highlighted in the AFSIA report. Today, we point out that it is also a leader in energy storage, particularly battery energy storage. Through government initiatives, over 513 MW of battery energy storage systems have been constructed since 2020.

  • To combat South Africa's persistent energy challenges, the government has been actively procuring energy storage solutions through two key programmes: the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) and the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP). These initiatives have already secured significant battery storage capacity, with 360 MW from Bid Window 1 and 615 MW from Bid Window 2. Bid Window 3, targeting another 616 MW, is currently reviewing applications.

  • South Africa's ongoing load-shedding crisis, with 2023 being the worst year on record with over 281 days of power cuts, has prompted the government to accelerate its investment in energy storage. This is particularly crucial as the country increasingly integrates renewable energy sources, such as solar and wind, into its grid.

More details

  • Across Africa, renewable energy installations, particularly solar and wind power, are rapidly increasing. However, the intermittent nature of these sources poses a risk to grid stability. To address this challenge, integrating them with Battery Energy Storage Systems (BESS) is becoming standard practice. This trend is evident across the continent, with countries like Egypt, Senegal, Togo, and South Sudan embracing utility-scale solar power paired with energy storage. For example, Egypt has over 900 MWh of energy storage capacity, Senegal has 72 MWh, and Togo has 40 MWh.

  • South Africa, in particular, is witnessing a surge in energy storage projects, utilising a variety of technologies. Examples include the Kenhardt Solar PV Park, which boasts a BESS capacity of 1,140 MWh. Ilanga I utilises a thermal energy storage system with a capacity of 100 MW, while Hex also employs BESS with a capacity of 1,140 MWh. Although there is a mix of thermal storage using molten salt and BESS, the latter is becoming increasingly prevalent due to its versatility and rapid response capabilities.

  • This rise in energy storage adoption is closely aligned with South Africa's Integrated Resource Plan (IRP) 2019, which allocates substantial capacity for wind (17,742 MW) and solar PV (8,288 MW) to be installed by 2030. Recognising the need for grid stability, South Africa has even included a clause to prioritise renewable energy projects with integrated energy storage systems for future developments.  Similarly, Kenya is also exploring this approach and has modelled various scenarios in its energy transition and investment plan to 2050.

  • To capitalise on the growing demand for BESS, South Africa is increasing its local battery manufacturing. The goal is to increase capacity to gigascale levels, to cater for demand for both BESS and the growing electric vehicle market. Balancell is a leading player with a 1 GW manufacturing plant for lithium-ion batteries. Other players include Revov, which produces lithium-ion batteries for BESS and EVs. Established companies like Metair and Auto-X, traditionally focused on lead-acid batteries for the automotive industry, are now also turning their attention to lithium-ion technology for BESS and EVs.  

  • The potential of South Africa's battery manufacturing sector is underscored by the country's reliance on imports. Currently, South Africa imports over $1 billion worth of battery cells annually. This shows the potential market opportunity for local manufacturers. While these imports serve various applications, including electric vehicles, the demand for BESS represents a significant portion of this market, creating a strong incentive for domestic production.

Our take

  • BESS remains an attractive market for energy companies. Despite the current high cost of batteries, projections show a potential decline of up to 40% by 2030. South Africa's localisation of manufacturing, supported by government incentives, is expected to drive costs down further.  Strong demand for BESS, driven by South Africa's energy needs and the growing electric vehicle market, will enable local manufacturers to achieve economies of scale.

  • Achieving gigascale energy storage will require substantial investment, likely exceeding the government's capacity. Therefore, active private sector involvement is crucial to accelerate the development of South Africa's energy storage sector.