SA adds 1.1GW of solar in 2024

January 21, 2025

From the newsletter
In 2024, South Africa installed approximately 1.1 GW of new solar capacity. While this is less than the 2.6 GW installed in 2023, it's still the highest amount of solar added by any African country last year. This is according to the South African Photovoltaic Industry Association (SAPVIA), which tracks solar energy developments in the country.

  • A total of 2,738 MW across 384 projects, of all capacity sizes, were registered with the national energy regulator in 2023. This was followed by 2,880 MW across 454 projects in 2024. These projects are at various stages of development, including operation, construction, and financial close, with many scheduled to become operational in the next two years.

  • The private sector has been leading the development of South Africa’s utility-scale pipeline since the beginning of 2023 when South Africa faced severe load-shedding challenges.

More details

  • South Africa's energy sector has one of the highest installed capacities in Africa, at over 63 GW. Together with Egypt, they account for over 50% of Africa's total installed energy capacity.

  • However, South Africa's load-shedding issues have hampered its progress in increasing electrification rates and achieving universal access, unlike its peer, Egypt.

  • In 2024, the government implemented the Electricity Regulation Act, which brought major changes, including ending the century-old monopoly of the state-owned Eskom. The act introduced an open electricity market, allowing private players to generate, transmit, and distribute electricity to their customers. Previously, they were required to sell all electricity to Eskom.

  • The regulations also removed licensing requirements for embedded generation projects – generation for own consumption – which were initially capped at 100 MW. This means private investors can now easily generate electricity for their own consumption with less stringent measures.

  • According to SAPVIA, these changes have led to a proliferation of private sector project development and deployment for bilateral PPAs and energy trader/aggregator applications. This trend is expected to continue and drive significant growth in the large-scale PV market over the next two years.

  • The public sector is also moving quickly to adopt solar. Six utility-scale solar projects, totaling 708 MW, reached financial close in 2023 and 2024 and are expected to enter construction in early 2025, with 75 MW already under construction.

  • The seventh round of South Africa's Renewable Energy Independent Power Producer Procurement Program (REIPPPP) resulted in 1,760 MW of capacity across eight projects at an average tariff of $0.0252/kWh. These projects are expected to reach financial close in early 2026, before entering construction throughout that year.

  • SAPVIA is observing a healthy solar market and expects annual solar additions to reach approximately 2.5 GW to 3 GW of new capacity this year, through a mixture of private and public procurement. This is forecasted to increase from 3.5 GW to 4 GW in 2026.

  • SAPVIA also expects that the establishment of a wholesale electricity market, slated for implementation in 2031 at the earliest, alongside investment in transmission infrastructure, will further drive growth in the large-scale solar PV market in the next two to five years.

  • Although solar installations slowed in 2024 compared to 2023, national and local governments are evaluating tax incentives and feed-in credit schemes to encourage adoption among middle- and low-income households.

Our take

  • South Africa's grid challenges and the enactment of the Electricity Regulation Act are motivating the private sector to switch to solar. The power-wheeling option means investors no longer need to worry about the location of their energy projects. They can set them up anywhere, as long as there is a transmission line to allow for electricity evacuation.

  • Investors can not only take advantage of this and set up generation plants but also participate in selling electricity directly to residential, commercial, and industrial consumers. This way, they can reap more benefits from each point along the electricity supply chain.