South Africa heading for another load-shedding crisis 

South Africa is not adding new energy generation capacity fast enough to prevent another severe electricity crisis when Eskom begins decommissioning its coal plants. 

Furthermore, the country is not increasing its energy supply at a sufficient rate to facilitate faster economic growth, as any sharp pickup in activity will result in demand outstripping supply. 

This is despite a rapid uptick in private energy generation projects over the past few years, with thousands of additional megawatts in the pipeline. 

As a result, South Africa is at a critical phase in its long-term energy transition plans, facing a looming crisis. 

This is feedback from Standard Bank’s Corporate and Investment Banking (CIB) division and Cresco in their latest Energy Market Projections report. 

The June 2025 update builds on earlier projections from 2024 and incorporates substantial changes following the release of the draft Integrated Resource Plan (IRP) in November 2024. 

This latest report shows that, while load-shedding has been significantly reduced since March 2024, the country’s long-term energy security now depends on getting new capacity quickly. 

New capacity is needed from various forms, including renewables, gas, storage, and potentially nuclear in the long run. 

The report highlighted that the IRP 2024’s most significant shift is the Cabinet’s decision to keep Camden, Grootvlei and Hendrina power stations running until 2030. 

The move, designed to stabilise the grid while new capacity comes online, highlights the challenge of maintaining a reliable power supply while meeting environmental goals.

“The coal extension buys us time, but it also raises the bar for everything else,” said the head of power at Standard Bank CIB, Rentia van Tonder. ”Ensuring flexibility to support growth will remain important”.

While the extension of the life of these coal-fired power plants gives South Africa additional time and flexibility to address its energy shortfalls, it does not appear to be enough. 

“Considering the looming risk of another energy crisis, which may materialise as soon as coal decommissioning is resumed, new capacity additions and RE implementation need to increase at a dramatic rate,” the report read. 

“There is no room for error in REIPPPP Bid Window 7, gas-fuelled generation capacity additions or delays in the private sector procurement.” 

The graph below illustrates the projected distribution of energy generation across a 24-hour day in 2040, based on currently planned and announced projects. 

It indicates that there will still be substantial shortfalls in energy supply during significant parts of the day, requiring ‘top-ups’ with gas, nuclear, or other types of generation. 

The Just Energy Transition Partnership is a noble and essential effort, but total generation still needs to meet demand, both annually and hourly, the report said. 

Renewables boom

Renewable energy generation is a key part of the solution, as it can be rapidly deployed and is inherently decentralised. 

Furthermore, with looming carbon taxes on imports into key trading partners, South African companies have a strong incentive to invest in clean energy for production. 

Wind and solar are expected to dominate the energy market by 2040, rising from 8% of today’s energy market to 30% by 2030, with 23 GW of new capacity. 

While wind and solar can generate most of the country’s energy requirements during the day, particularly around midday, the challenge arises in the evenings when demand remains high but solar production declines.

Against this backdrop, battery storage has become essential. Cresco expects both large utility batteries and smaller private systems to play a significant role in maintaining grid stability as renewable energy sources grow. 

Van Tonder points out that the Standard Bank is on board with this thinking, having helped to arrange funding for four Round 1 battery projects that closed in 2024.

Cresco believes that large-scale storage using materials like nickel or iron ore could reduce costs, making long-duration storage affordable at scale.

The planned SAWEM electricity market should also help, by creating demand for grid services and drawing more investment into batteries and other flexible technologies.

To cover the morning and evening peaks, gas has also become a key piece of South Africa’s energy market, with the IRP 2024 planning 6 GW of new gas capacity by 2030 and 10 GW by 2040. 

However, Cresco questioned whether the country can support this scale, citing slow policy and limited development. Capacity may reach 10 GW, enough for today’s needs, but not for the peak demand of the 2040s.

The report also emphasises that, while gas is essential to cover peak-hour shortfalls, it cannot serve as a reliable fallback without accelerated investment in pipelines and regasification, as well as greater policy clarity.