ABA Editorial · Aug 10, 2025 · 14 min read
South Africa's Eskom has been the defining power sector crisis on the continent, with load-shedding disrupting economic activity and accelerating the country's pivot toward renewable independent power producers. The Just Energy Transition Partnership (JETP) committed billions in international financing to support the move away from coal. This report maps Eskom's trajectory, the JETP complications, and the private IPP acceleration that has reshaped South African power.
South Africa has the most developed power sector on the African continent and also the most visible power sector crisis. Eskom, the state-owned utility that has historically supplied the overwhelming majority of South African electricity, has experienced a decade of deteriorating operational performance that produced rolling blackouts (known locally as load-shedding) severe enough to reduce national GDP growth and trigger emigration among businesses and skilled workers. At the same time, South Africa has become one of the most active African markets for private-sector renewable independent power producers, driven by a combination of regulatory reform that allowed private generation, corporate demand for reliable supply, and falling solar and wind technology costs. The Just Energy Transition Partnership (JETP) announced at COP26 in 2021 committed international financing to support South Africa's move away from coal, but implementation has been complicated by domestic political considerations and labor concerns in coal-mining regions. This report maps the Eskom crisis, the JETP complications, and the private IPP acceleration that has reshaped South African power.
Eskom was once one of the most capable state utilities in the developing world. For decades it operated a large coal fleet that supplied approximately 95 percent of South African electricity at prices that were among the lowest in the world in real terms. The decline began in the early 2000s with the accumulation of maintenance backlogs, delays in new capacity construction (including the long-delayed Medupi and Kusile coal plants), labor disputes, and governance failures that became severe during the 2015 to 2018 period. By the early 2020s, Eskom was operating an aging fleet with unit availability well below international benchmarks, unable to meet South African demand during peak periods, and dependent on expensive open-cycle gas turbines to supplement coal generation.
Load-shedding became a feature of South African life during this period, with outages scheduled across geographic stages (Stage 1 through Stage 6 or higher during the worst periods) and durations that reached four to eight hours per day in some areas during 2022 and 2023. The economic impact has been measured in percentage-point reductions in annual GDP growth, with the South African Reserve Bank and other official sources attributing significant damage to the power crisis.
Through 2024 and 2025, load-shedding frequency decreased significantly as Eskom maintenance discipline improved, private generation capacity came online, and imports from regional sources supplemented supply. The improvement has been welcomed but is widely considered fragile, with any return to previous operational problems capable of rapidly restoring the crisis conditions.
South Africa's most important policy response to the Eskom crisis has been the liberalization of private generation. Regulatory reforms through 2022 and 2023 raised the cap on self-generation, streamlined licensing procedures, and allowed corporate customers to enter into direct power purchase agreements with private generators. The result has been an acceleration of utility-scale and commercial-scale solar and wind deployment led by operators including Scatec, Globeleq, ACWA Power, Enel Green Power, and several South African-headquartered developers.
The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), operated by the South African Department of Mineral Resources and Energy, has been running in rounds since 2011 and has procured several gigawatts of renewable capacity through competitive auctions. More recent rounds have explicitly included storage components to address the intermittency that pure renewable generation cannot solve. Corporate PPAs have become an additional procurement channel, with South African corporates including retailers, mining companies, and manufacturers signing direct agreements with private developers.
The South Africa Just Energy Transition Partnership, announced at COP26 in 2021, committed approximately USD 8.5 billion in international financing (concessional loans, grants, and risk guarantees) from the United States, United Kingdom, Germany, France, and the European Union to support South Africa's transition away from coal. The framework was initially celebrated as a template that could be replicated for other coal-dependent developing economies.
Implementation has been complicated. Coal mining is concentrated in specific South African regions where communities depend on mining employment, and the political challenge of managing workforce transitions has slowed the pace of coal plant decommissioning. Some of the JETP financing has been structured as loans rather than grants, creating debt sustainability concerns for the South African government. Sequencing decisions about which coal plants to retire first, how quickly to ramp up renewable alternatives, and how to support affected communities have required negotiations that took longer than the original JETP framework anticipated.
As of early 2026, the JETP remains the most significant international climate finance commitment to any African country, and it remains operationally important for South Africa's energy trajectory. The question is whether implementation accelerates to match the original ambition or continues at a slower pace reflecting domestic political constraints.
Three indicators will shape South African power. First, whether Eskom's operational improvements of 2024 and 2025 persist or whether load-shedding returns in response to new failures. Second, whether REIPPPP rounds and corporate PPA deployment continue at the pace required to actually replace aging coal generation on the timelines the JETP assumes. Third, whether just transition commitments to coal-mining communities are funded and implemented, because unresolved labor and community concerns could stall the transition indefinitely. South Africa remains the most important single country for the African energy transition because of its scale, its coal dependency, and its model role for other coal-dependent developing economies watching the JETP template.