South Africa Renewable Energy Market By Type (Hydroelectric Power, Wind Power, Bioenergy, Solar Energy, and Geothermal Energy), By End User (Residential, Commercial, Industrial, and Others), By Region, Competition, Forecast, and Opportunities, 2028

As of 2021, 77 solar and wind projects were completed and run under the REIPPPP program, which had generated roughly USD 13 billion in private funding.

Renewable energy is energy from renewable resources that are naturally replenished on a human timescale. Sunlight, wind, river flow, and geothermal heat are all examples of renewable resources. Many renewable energy sources are sustainable; however, some are not. Several biomass sources are considered unsustainable at the present pace of exploitation. Power generating, heating, and cooling processes frequently employ renewable energy. Although initiatives involving renewable energy are sometimes large-scale, they are also suitable for rural and isolated places, where having access to energy is frequently essential for the advancement of the survival of humanity.

Government Initiatives Toward Greenhouse Gas Emissions Driving the Market Growth

The South African government has taken steps in the energy sector to achieve several goals, including ensuring affordable access to power, promoting the decarbonization of energy systems, fostering economic growth, and enhancing energy security. Fulfil the goals for the clean energy transition, South Africa has launched a few support programs and subsidies for renewable energy.

For instance, in April 2022, the sixth bid window for the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) was opened by the Department of Mineral Resources and Energy (DMRE), which accepted concepts for 2.6 GW of new renewable capacity. The tender capacity is split between 1.6 GW of onshore wind and 1 GW of solar photovoltaic (PV).

Reduction in the Cost of Solar Energy Installation & Growing Usage of Solar panels

The price of solar PV dropped by almost 82% globally between 2010 and 2020. Similar trends were seen in South Africa over the same time period. Due to the increasing usage of solar energy, factors including the declining cost of solar PV and associated technologies are significant. For instance, in South Africa, the cost of solar PV has reduced from an average of ZAR 3.3514 (USD 0.17) per kWh in 2011 to ZAR 0.87 (USD 0.044) in 2020. To increase the usage of solar energy, factors including the declining cost of solar PV and related technologies are essential. Due to the reduction of the cost, the South Africa renewable energy market is anticipated to grow as people are utilizing more solar energy.

Decreasing Reliance on Coal-Based Power Plants

South Africa is the seventh-largest producer of coal in the world, and coal is mostly used in their thermal power plants. In 2021, coal-based thermal power plants accounted for over 82% of the total installed capacity and 76% of all energy production. South Africa was rated as the eleventh-largest emitter of greenhouse gases in the world as of 2021, with 15 active power plants and a net installed capacity of roughly 39.3 GW. Despite having considerable domestic coal reserves, South Africa has a significant power deficit. The Council for Scientific and Industrial Research (CSIR) estimated that load shedding occurred for 1,169 hours (13% of the time) in 2021, releasing a maximum of 2,521 GWh as opposed to the 1,775 GWh of energy that was actually produced. The national power utility ESKOM (South Africa's main electricity provider), which owns and operates outdated coal-based thermal power facilities, has been a major contributor to the energy crisis. Power consumption is expected to increase steadily during the forecast timeframe as a result of the nation's current energy problem. South Africa must balance the shutdown of its coal-fired power with increases in new renewable capacity to fully make up for the retiring capacity and satisfy the growing demand for electricity.

Additionally, the rising use of gas-based and renewable power sources in comparison to coal-based power generation has changed the nation's electrical environment. End-users are anticipated to move toward installing hydropower systems as a result of growing electricity distribution prices. This is anticipated to increase the demand for renewable energy sources across the country.

Electricity Regulation Promoting Renewable Energy

On September 2, 2022, the Electricity Regulation (Act 4 of 2006, ERA) schedule to implement again for draught revisions that were made public by the Minister of Mineral Resources and Energy. The removal of the 100 MW licensing requirement is the main modification proposed. This exemption frees generating facilities, including those with energy storage, from the requirement to seek licenses where they have a point of connection on the distribution or transmission power system. The proposed amendment to repeal the licensing threshold was taken into consideration soon after it was increased on August 12, 2021, from 1 MW to 100 MW. This is an effort by the South African government to promote continued development and investment in the energy industry as well as increased production and steady supply of power. This will help South Africa to address its energy crisis and provide necessary relief to the economy after years of load- shedding.

Recent Developments

• The South Africa renewable energy market has drawn over R53 billion (USD 2.85 billion) in investments and has stable policies and a robust regulatory framework.  South Africa offers a success story with 93 projects currently functioning. Over the course of multiple bid rounds, power prices have decreased as a result of falling transaction costs and falling expenses associated with renewable technologies. Returns have decreased to single digits from double digits. However, considering that all of the country's renewable energy projects have PPAs that ensure returns for the next 20 years, so investment  in the South African market will likely grow. 
• Red Rocket company announced the beginning of commercial operations for their first wind farm in South Africa in March 2022. South Africa's Northern and Western Cape Provinces meet at the project's (wind farm) location. The wind farm project has a 140 MW contractual capacity in addition to its 147 MW installed capacity.
• According to an announcement made by ACWA Power in June 2021, the Redstone Concentrated Solar Power Plant in South Africa was funded around  ZAR 11.6 billion (USD 590 Million). This 100 MW CSP facility is anticipated to go online by the end of 2023 and will capture solar energy using parabolic mirror technology.
• The South African government plans to spend more than USD 8.5 billion in funds announced at the COP26 climate meeting to wean South Africa off coal, in the forecast.
• The International Institute of Sustainable Development estimates that South Africa's energy subsidies have increased three times since 2017 and were worth roughly USD 10.4 billion in 2020. To keep up with the rising demand and encourage investment in renewable energy, the nation raised the levy on fossil fuels. However, fossil fuels and coal-fired energy received the majority of the subsidies.
• South Africa's installed solar energy capacity was 2.91 GW in 2021, and it is anticipated to rise in the years to come. Moreover, half of the nation's installed renewable energy capacity in South Africa comes from solar energy.

Market Segmentation

Market Players

Major market players in the South Africa renewable energy market are