South Africa’s renewable energy sector continues to grow as independent power producers and developers respond to Eskom’s power supply challenges and the global shift to clean energy. While investment interest is strong, the reality is far more complex. Beneath the surface lies a set of interconnected obstacles that can delay or derail project timelines much like navigating around an unseen iceberg, says Tsatsi Mahlatsi, CEO of Mzansi Energy Consortium.
Key hurdles include regulatory uncertainty, land access bottlenecks and grid constraints as well as limited engineering, procurement and construction (EPC) capacity, and restricted access to early-stage funding. Together, these factors create a layered environment where delays in one area quickly cascade into others.
Land access is among the toughest challenges. While initial engagement with tribal authorities may go smoothly, finalising state leases can take three years or more due to ministerial approvals and conflicting land claims. These delays stall grid allocation and financial close as proof of tenure is required for both.
Government initiatives such as Operation Vulindlela and the Energy One Stop Shop aim to streamline approvals but lack enforcement power, leaving decisions stuck within departments and state-owned entities. Without stronger facilitation, delays remain inevitable.
The regulatory landscape adds further complexity. Eskom’s changes to the Retail Tariff Plan and time-of-use structures have shifted project viability. Developers must complete environmental approvals, land rights agreements and other compliance steps before obtaining an Eskom budget quote. In some cases, Eskom requires a registered notarial deed as proof of tenure before granting grid access, creating a “chicken-and-egg” dilemma.
Severe grid constraints, especially in the Northern, Eastern and Western Cape, also persist. The National Transmission Company South Africa has started procurement for independent transmission projects but years of underinvestment mean progress will be slow.
Even with grid access, a shortage of qualified EPC contractors poses problems. Banks prefer experienced contractors with strong balance sheets, often giving foreign firms an edge. This concentration drives up costs and limits opportunities for emerging local developers.
Early-stage funding is scarce. The Development Bank of Southern Africa offers limited support but with slow processes while the Industrial Development Corporation does not fund project preparation. Commercial banks are risk-averse and demand robust mitigation before committing. Bankability depends on early alignment with lenders on power purchase agreements, technology and EPC selection. Without this, even strong projects can stall indefinitely.
Community engagement underpins all these factors. Local politics and unrealistic expectations can delay projects. Transparent, early consultation with communities and local governments helps prevent disputes and build trust.
Unlocking South Africa’s renewable potential requires addressing these hurdles together. Developers who engage stakeholders early, align with lenders and choose experienced partners are best positioned to navigate the hidden obstacles, steering safely towards delivery and advancing the country’s energy transition.
