South Africa's energy transition is entering a critical phase, according to the latest Energy Market Projections report from Cresco Group advisory firm and Standard Banks division for Corporate and Investment Banking.
The June 2025 update builds on earlier projections from July 2024, incorporating substantial changes following November's draft Integrated Resource Plan IRP2024, which the South African National Energy Development Institute remodelled using a multi-nodal approach.
Cresco updates its market outlook twice yearly, drawing on real project data to help market players navigate the transition. This latest report points out that, while loadshedding ended in March 2024, the country's long-term energy security now depends on getting new capacity, including renewables, gas and storage, online quickly. And there's little margin for error.
Securing supply while enabling economic growth is not a trade-off, it's a necessity. Investors and policymakers must act quickly and decisively if we're to preserve both energy stability and climate credibility.
Coal deferred but not defeated
The Cresco report highlights that the IRP2024's biggest shift is Cabinet's decision to keep Camden, Grootvlei and Hendrina power stations running until 2030. The move, designed to steady the grid while new capacity comes online, highlights the challenge of keeping the lights on while meeting environmental goals.
Although the delay conflicts with climate targets, the Climate Change Bill reinforces South Africas Paris Agreement commitments. By 2040, coal will account for just 25 of generation, with only five Eskom plants still operating.
The coal extension buys us time, but it also raises the bar for everything else. Ensuring flexibility to support growth will remain important.
Gas critical but still uncertain
Gas has become the key piece in South Africa's energy puzzle, with IRP2024 planning 6GW of new gas capacity by 2030 and 10GW by 2040. However, Cresco questions whether the country can support this scale, citing slow policy and limited development. Capacity may reach 10GW, enough for todays needs but not for 2040s peak demand.
The report also emphasises that, while gas is essential to cover peak-hour shortfalls especially during morning and evening demand spikes it cannot serve as a reliable fallback without accelerated investment in pipelines and regasification, and greater policy clarity.
Renewables and storage from ideal to imperative
Wind and solar are expected to dominate by 2040, rising from todays 8 to 30 80 TWh by 2030, with 23GW of new capacity. While wind and solar can generate most of the countrys energy requirements in the day, particularly around midday, the challenge comes in the evenings when demand stays high but solar drops away.
Against this backdrop, battery storage has become essential. Cresco expects both large utility batteries and smaller private systems to play a major role in keeping the grid stable as renewables grow.
Cresco believes that large-scale storage using materials like nickel or iron ore could bring costs down, making long-duration storage affordable at scale. The planned SA Wholesale Electricity Market SAWEM should also help, by creating demand for grid services and drawing more investment into batteries and other flexible technologies.
Balancing the grid 2025 to 2040
Right now, South Africa's grid runs mostly on coal, which makes up around 80 of the total energy mix. However, Eskom's ageing fleet runs at 59 availability. This means that the country faces a 2GW shortfall during evening peaks, but this can still be controlled to a certain degree by effective demand management.
The Cresco report highlights that, by 2030, the picture is going to be different and more challenging. A combination of old coal plants shutting down, steadily rising demand and delayed gas projects could push shortfalls up to 4GW at any time. Even with renewables averaging 24 of generation, balancing the grid will become much harder.
By 2040, when renewables should dominate the energy supply mix, the country will still need reliable back-up power from gas, nuclear or other sources during the hours when the sun doesn't shine.
The vital role of the private sector
Private companies and household solar are growing fast, driven by mining and industrial companies chasing net-zero targets. Rooftop solar is already cutting daytime demand from Eskom. Cresco argues that household solar could become a key balancing tool, if regulations allow grid feed-in. But it also warns that grid connections and transmission delays, rather than tariffs, are now the main roadblock to an energy secure future. This is confirmed by the fact that several renewable projects from Bid Window 7 are stuck waiting for grid access, threatening investor confidence and pr
