S. Africa’s coal-to-renewable transition blocked by $21b shortfall

South Africa needs to secure $21 billion to expand its power grid, a critical component in its transition from coal to renewable energy.

The expansion, which aims to address the current bottleneck in replacing coal—responsible for 80 per cent of the country’s power—is hindered by the need for significant investment in infrastructure.

The expansion involves building 14,000 kilometres (8,700 miles) of new power lines and pylons; however, the state-owned utility, Eskom, is struggling with over 400 billion rand ($21.3 billion) in debt and additional unpaid bills from municipalities.

The government is exploring alternative funding options, including private sector involvement and engineering, procurement, and construction (EPC) financing. Donors have offered $11.6 billion for climate projects but are reluctant to fund Eskom without sovereign guarantees, which the government cannot provide.

Energy Minister Kgosientso Ramokgopa has stressed the urgency of finding solutions, as the grid expansion is critical for integrating renewable energy sources and addressing ongoing power shortages.

The government is also working on regulatory changes to attract investors and potential partnerships with international entities like China.

Attribution: Reuters