The launch of the South African Wholesale Electricity Market (SAWEM) presents a major opportunity for the wind energy sector but its success will depend on whether South Africa can establish credible market structures and address transmission constraints, says Talent Duma, Policy Advisor at the South African Wind Energy Association.
For more than a decade, renewable energy deployment has relied heavily on the government-led Renewable Energy Independent Power Producer Procurement Programme model. SAWEM will shift this approach by introducing bilateral contracts, power exchanges and ancillary service markets, creating additional routes to investment and growth for the wind sector.
South Africa has made progress through the establishment of the National Transmission Company South Africa and initiatives such as the SAWEM School but institutional readiness remains uneven.
A competitive market depends on clear rules, real-time system operation, transparent pricing and strong oversight. The decision to delay SAWEM’s launch to the third quarter of the year reflects the need to prioritise credibility over implementation speed.
Transmission constraints remain the biggest risk to the market’s success. South Africa’s transmission network is already constrained, particularly in wind-rich provinces, which could limit renewable energy uptake if transmission expansion does not accelerate alongside market reform.
Transmission and market reform must proceed in parallel not sequentially.
At the same time, market liberalisation will place increasing pressure on Eskom’s older coal-fired power stations as less efficient plants become less competitive in the market environment. This will require greater focus on infrastructure repurposing and system flexibility.
Effective oversight by the National Energy Regulator of South Africa will also be critical to maintaining market confidence. Electricity markets are vulnerable to manipulation and credibility will depend on whether participants trust the system to be fair, transparent and enforceable.
Under the draft Integrated Resource Plan 2025, South Africa is aiming to add 7,3 GW of new wind capacity by 2030. SAWEM can support this growth, provided the market is backed by sufficient grid infrastructure and credible market mechanisms.
