Energy Sector Overview - Decarbonising South Africa's Economy

Transitioning to Clean and Secure Energy Sources

By Raine St.Claire

South Africa's Energy Status

South Africa, the second-largest African economy, holds the 82nd position out of 120 countries in the 2023 Energy Transition Index (ETI). Despite a 6% improvement since 2014, challenges persist. With renewable energy only contributing 13% of the total energy mix, there is a consistent high carbon footprint of more than 70% coal dominating the sector.

Key Policies And Commitments

Recent commitments show increased political dedication to achieving net-zero emissions by 2050. The Just Energy Transition Investment Plan (JET IP), launched with global partners, outlines a five-year $8.5-billion investment for decarbonisation and sustainable development. This plan covers electricity, new energy vehicles, and green hydrogen, with a financial requirement of $98-billion.

South Africa’s policies, including the National Development Plan, Integrated Energy Plan, and Renewable Energy White Paper, focus on a diversified energy mix. They prioritise renewable energy, distributed generation, and battery storage. The Renewable Energy Independent Power Producer Procurement Programme, initiated in 2011, aims to procure 2.6GW of solar and wind power.

To encourage self-generation, the government plans to eliminate the 100 MW licence exemption threshold and proposes a feed-in tariff. The South Africa Hydrogen Society Roadmap, published in February 2022, outlines national ambitions and policy frameworks for the hydrogen economy, marking a crucial milestone in the country’s energy transition.

Alternative Energy Solutions

While power generation from coal as primary energy source is currently at 80% of the overall power generated and is expected to decrease down to 65% by the end of this decade, growth from natural gas and renewable sources is expected to kick off from around the same time. 2031 share of natural gas, onshore wind and solar PV is expected to be 5%, 17% and 7% respectively, accounting to a total of about 30% of the overall power generated.

In the long term, this ratio from natural gas, onshore wind and solar PV is expected to increase to 15%, 30% and 20% respectively, totalling to 65% of the total power generation. Coal is expected to be still in play contributing to one fourth of the total capacity.

Creating Smarter And More Adaptable Energy Systems

Sasol

As South Africa’s leading integrated energy company, Sasol is the country’s largest liquid fuels supplier, private investor and tax payer and has a significant impact on the economy; direct and indirect contribution to South Africa’s GDP is around 3% annually.

Headcount:

• 31 270 employees worldwide

• Operations in 32 countries

• South Africa: 29 073 (2023) up from 28 630 (2022)

• International: 2 197

Empowerment:

In 2023, Sasol Siyakha Trust launched the Women Empowerment Finance affordable capital initiative to provide interest-free and preferential-rate loans for 100% black women-owned suppliers in Sasol’s programmes. Addressing challenges for these businesses, the initiative reflects a commitment to gender equity and inclusivity.

In Africa, where women entrepreneurs face a $42-billion funding gap, this tailored initiative promotes diversity and inclusion, aligning with Sasol Siyakha’s goal of fostering economic growth and a fair environment for women in business. The holistic approach includes capital, post-investment support, technical development, and mentorship for impactful growth.

Sources: Africa Energy Chamber |Sasol |Statista |Wärtsilä