South Africa is pushing for more time on a $1 billion green energy guarantee from the United Kingdom, as delays in project readiness threaten to stall the country’s just energy transition. The challenge is less about money and more about a shortage of bankable projects ready to absorb available financing.
In 2021, several European countries and the United States pledged $8.3 billion toward South Africa’s just energy transition. Yet, nearly five years on, officials report that funding remains largely inaccessible. The problem, they say, stems from a mismatch between global pledges and domestic project pipelines.
“Not enough pipeline is coming through to match the finance that is available. That is one of the big things we are currently facing,” said a government official involved in implementation.
High national debt compounds the problem. Concessional climate finance often requires guarantees, which heavily indebted countries struggle to provide. South Africa, despite being the continent’s most industrialized economy, faces a high cost of capital that limits its access to affordable long-term funding.
“The cost of capital is something that really needs to change for countries like South Africa. Currently, it is unaffordable for many developing nations, and South Africa is no exception,” noted one energy finance expert.
But structural issues run deeper. Many experts highlight weak long-term planning and a lack of alignment between funders’ expectations and realities on the ground. Grant money intended for the transition has often gone toward research and strategy rather than developing projects that are immediately investable.
“I think the issue is planning for long-term aspects. From an international perspective, funders should understand that projects require time to become bankable,” said an industry insider.
In Puma, a key region for the just energy transition, more than 160 community-backed projects have been identified. Yet, many fail to meet investor criteria. There is a clear gap between what is theoretically viable and what is financially fundable.
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“From the perspective of different projects, there is a gap between what would be fundable from an investor standpoint and what we actually have. Funders are not focusing on bridging that gap, which is critical to unlocking financing,” explained an energy sector consultant.
The South African government is actively negotiating an extension with the UK while engaging other international partners to prevent guarantees from expiring. The goal is to provide longer-term certainty so that projects can move from concept to execution.
Experts argue that creating a pipeline of scalable, bankable projects is essential to attracting the remaining pledged funds. Without this, the just energy transition risks stagnation despite significant global commitments.
South Africa’s challenge is now twofold: accelerate project development while ensuring that financing is structured to make these projects viable. Only by bridging the gap between pledges and delivery can the country turn billions in international commitments into tangible progress on its energy transition.
By Thuita Gatero, Managing Editor, Africa Digest News. He specializes in conversations around data centers, AI, cloud infrastructure, and energy.
