Written By: Faith Jemosop
South Africa’s state utility, Eskom, is embarking on an ambitious plan to transition away from its heavy dependence on coal toward a cleaner, more sustainable energy future. By 2040, Eskom aims to derive the majority of its electricity from renewable and low-carbon sources, significantly reshaping the country’s energy landscape.
This marks a critical shift for one of the world’s most coal-reliant nations and could set a precedent for energy transitions across the African continent.
From Coal Giant to Green Powerhouse
Eskom’s strategy is a goal to ramp up its renewable energy capacity from less than 1 gigawatt (GW) today to over 32 GW by 2040. Simultaneously, it plans to shrink its coal fleet from about 39 GW to just 18 GW. This pivot will involve retiring aging coal-fired power stations and replacing them with a mix of solar, wind, hydro, gas, and battery storage systems.
The shift won’t happen in isolation. Eskom is setting up a dedicated renewable energy subsidiary that will focus on building new capacity and entering into partnerships with private developers. This internal unit is expected to play a pivotal role in accelerating the rollout of renewables and overseeing a portfolio of energy projects in line with Eskom’s net-zero vision.
Project Pipeline and Technology Mix
Eskom has already laid out a near-term pipeline of over 2.2 GW in clean energy projects, including solar PV, battery energy storage systems (BESS), and gas-to-power facilities. These are being strategically placed near decommissioned or soon-to-be-retired coal stations, especially in coal-rich provinces like Mpumalanga.
In the longer term, the utility envisions a more diversified energy mix:
- 6 GW of new solar PV,
- 4 GW of hybrid renewable projects,
- 4 GW of gas-to-power,
- 3 GW of nuclear, and
- 3.5 GW of hydro and pumped storage capacity.
This not only signals a strong commitment to renewable energy but also an understanding of the need for flexible and dispatchable sources to ensure grid stability as more intermittent renewables come online.
Structural Shifts and Financing Challenges
However, Eskom’s clean energy ambitions are being pursued in the shadow of serious financial constraints. The utility is burdened by a mountain of debt, nearly R400 billion (about US$22 billion), and is currently operating under a debt relief framework provided by South Africa’s National Treasury.
One major caveat of this deal is that Eskom is barred from taking on new loans for building generation capacity. This restriction complicates its ability to raise capital for the massive investments required to meet its 2040 goals.
To navigate these limitations, Eskom is aggressively seeking concessional funding, particularly through South Africa’s Just Energy Transition Partnership (JETP). This initiative, backed by international donors and development banks, is expected to mobilize between US$11.5 billion and US$12.9 billion in support of South Africa’s clean energy shift. Eskom is earmarking a significant portion of this funding for the repowering of decommissioned coal plants, clean energy buildout, and related grid infrastructure.
A Blueprint for Repurposing
A practical example of Eskom’s strategy in action is the Komati power station, a 1,000 MW coal plant that was decommissioned in 2022. Under the JETP, Eskom is converting this site into a hybrid clean energy hub consisting of 220 MW of solar and wind power, complemented by 150 MW of battery storage. This site also serves as a training ground for reskilling former coal workers and artisans into the renewable energy workforce.
Komati represents a larger vision Eskom has for transforming coal-based communities. The aim is not only to replace fossil fuel energy but also to address the socio-economic disruptions that such a transition can bring. This is especially crucial in Mpumalanga, where coal provides thousands of jobs and supports entire towns.
The Workforce Transition
To avoid a repeat of “coal ghost towns,” Eskom is partnering with institutions like SARETEC (South African Renewable Energy Technology Centre) to retrain workers who are likely to be displaced during the transition. Programs are already underway to equip technicians and artisans with skills relevant to solar, wind, and storage technologies.
This “just transition” model ensures that communities are not left behind as the country shifts from coal to renewables. Reskilling is also critical to avoiding future labour shortages in a rapidly growing clean energy sector.
National Policy Alignment and Global Pressures
Eskom’s 2040 vision aligns closely with South Africa’s broader Integrated Resource Plan (IRP) and Nationally Determined Contributions (NDCs) under the Paris Agreement. The country has committed to reaching net-zero emissions by 2050, and Eskom’s transition is central to achieving that target.
Global climate politics are also influencing Eskom’s direction. The rise of Carbon Border Adjustment Mechanisms (CBAMs) in regions like the European Union means that South Africa’s exports could face carbon tariffs if powered by high-emission energy sources. This creates an economic incentive to decarbonize the national grid.
Surge in Private Solar and Transmission Challenges
The past two years have seen a boom in private solar installations across South Africa, especially after the government lifted licensing restrictions. From just under 1 GW in early 2022, privately installed solar capacity skyrocketed to over 4.4 GW by mid-2023. This has helped alleviate the country’s load-shedding crisis, but also raised questions about Eskom’s role in a liberalizing market.
A major hurdle remains: the transmission grid. Much of South Africa’s renewable energy potential lies in remote regions like the Northern Cape, while demand centers are in the industrialized east. Eskom estimates that it will need to invest US$18–21 billion over the next 10 years to upgrade the transmission system and ensure it can absorb new renewable capacity.
Unbundling and Market Reform
In response to these challenges, Eskom is undergoing structural reforms, including the unbundling of its generation, transmission, and distribution units. This separation is intended to improve transparency, enhance operational efficiency, and attract private investment, especially in transmission infrastructure, which has long been a bottleneck for renewable integration.
Also read: Why KenGen is Venturing into Solar Module Manufacturing
Eskom Transmission is already being set up as an independent entity, and further reforms are expected to make South Africa’s energy market more competitive, decentralized, and investor-friendly.
