South Africa's energy goals depend on grid expansion.

By Nolukhanyo Mqhayi and Dhireshni Bageloo Chowthee, Principals of Energy Finance at Nedbank Corporate and Investment Banking

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The national grid is not built for renewables, and it shows.

South Africa's electricity grid was never designed to support a decentralised, renewable-powered economy. Originally built to transmit power from centralised coal-fired power plants in specific regions, the grid is now overwhelmed by a surge of wind and solar projects seeking connection. More than 80% of grid capacity in solarand wind-resource-rich provinces like the Northern and Western Cape is fully allocated, stalling the further roll-out of renewable technology. This continuing grid constraint is costing the country momentum, investment, low-cost energy, and the opportunity to transition to a sustainable energy future. If we do not address this decisively, the knock-on effects will be increasingly felt in the broader economy.

We have outgrown the grid but delays and unpredictability are hurting efforts to invest in it.

According to Eskom, more than R388 billion is needed to upgrade and modernise the country’s transmission and distribution infrastructure. That level of investment cannot, and should not, rest solely on the utility's already stretched balance sheet. The delays in Bid Windows 6 and 7 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) have already illustrated the cost of inaction and are hurting investor confidence. Developers spent time, resources, and capital preparing their bids, only to see fewer than anticipated preferred bidders because the national grid could not support the pipeline.

While some of these projects may shift into private sector channels, the fundamental constraint remains unchanged: Without transmission capacity, energy ambitions have stalled.