Grid capacity is South Africa’s real energy crisis
Wayne Cowie, CEO at Energy Exchange South Africa (EXSA), writes that grid expansion and battery storage technology are crucial to securing South Africa’s energy future.
South Africa stands at a critical juncture. We have 72 GW of renewable energy projects at advanced stages of development, and a 220GW pipeline of renewable energy projects, yet the national grid lacks the capacity to connect them to businesses and homes. This “gridlock” is the single biggest hurdle to unleashing the country’s renewable potential, creating a significant risk of stalling the green transition and even triggering further electricity and economic crises.
While the focus has been on financing and building new power generation, the urgent challenge lies in upgrading our energy infrastructure – the lifeblood of a functioning energy landscape. As businesses desperately seek stable, affordable, and clean power, the conversation must shift to the twin pillars of the solution: rapid grid expansion and the strategic deployment of Battery Energy Storage Systems (BESS). Without these, our renewable ambitions will remain stranded.
Our ageing grid is a national threat
South Africa’s ageing grid infrastructure is one of the most significant bottlenecks facing the growth of renewables and the stability of South Africa’s energy landscape – and therefore our economy.
Built primarily in the mid-to-late 20th century, the grid was designed for the linear, state-controlled purpose of receiving reliable power from a few coal-fired power stations, mainly in Mpumalanga, and distributing it across the nation. Fast forward to the 21st century, and decades of underfunding of maintenance and lack of capital expenditure on upgrades have resulted in transmission infrastructure that is no longer fit for purpose. As our energy mix and needs have evolved, our transmission infrastructure has remained stagnant, with most high-yield renewable energy corridors located far away from primary grid connection points. In addition, grid capacity in most high-resource green energy generation areas has reached saturation, making it difficult to deliver renewable power to those who need it.
The lack of available transmission capacity effectively stops large-scale power generation projects in their tracks, severely limiting the ability to integrate new, cheaper generation in our energy mix. This has profound implications for businesses and consumers who are forced to use increasingly expensive and unreliable traditional power sources.
It also puts the handbrake on new investment into renewable power generation projects and places higher reliance on costly diesel peaking plants, severely hampering recent momentum in South Africa’s energy transition efforts. Considering South Africa’s fragile exposure to geopolitical fuel shocks, this also raises our energy security risk.
Grid expansion critical, but moving too slowly
According to a recent South Africa Electricity Traders Association (SAETA) report, “Policy to Power – Ten actions to deliver green, accessible and secure electricity”, electricity reform hinges on transmission capacity. The report emphasises that new generation cannot connect without a rapid expansion of the grid, making transmission build the critical issue hampering system reliability.
And while the National Transmission Company South Africa (NTCSA) has made strides towards its commitment to add approximately 14,450km of new lines by 2034 (to connect 56GW of new capacity), progress must be quicker, or private generation projects will stall.
Transmission alone is not enough in an evolved energy mix
Even with increased capacity, bringing renewable energy online is not as simple as flicking a switch. Due to its nature, renewables are inherently variable – solar generating during the day when it is sunny, and wind generation when wind conditions allow. Compare this to a legacy grid built to dispatch regular, stable coal-fired power, and there’s a disconnect. Successful integration of renewable power into our rigid, legacy grid requires intelligent grid technologies, the most pressing of which are BESS. These systems are critical to providing the stability needed for intermittent renewables like solar and wind to be connected via the grid for several reasons.
It makes variable renewables dispatchable, storing excess generation and releasing it during peak demand. It also stabilises the system by regulating frequency and holding reserves, unlocking a higher proportion of clean energy without compromising reliability. Less appreciated is that BESS can defer transmission investment itself: strategically placed storage at congested substations absorbs power the network cannot evacuate and releases it when lines have headroom, unlocking capacity years before new infrastructure can be permitted and built, at a materially reduced cost. This reframes curtailment, increasingly used as a tool to manage a constrained grid, from a blunt loss into a manageable signal. Treated correctly, with sufficient advance notice, a generator facing curtailment can plan to divert that energy into its own batteries rather than spill it, turning a constraint into stored value and deferring the need for network upgrades in the process.
And because a single battery can do all of these jobs, it can stack revenues across them: energy arbitrage, ancillary services and capacity – opportunities that will multiply as the South African Wholesale Electricity Market (SAWEM) and its associated markets come online. This revenue stacking is what will make large-scale storage truly investable.
A constrained grid constrains an open electricity market
South Africa is on the (slow) road to an open energy market. A cornerstone of this is wheeling – the process where a South African company can buy renewable power from an independent power producer directly or via an energy trader and move it across the grid to their operations.
Wheeling is crucial to realising a local liberalised energy market because it bypasses local generation constraints (i.e., the energy generation project doesn’t have to be built onsite or nearby). It also provides corporates with direct access to clean energy, without having to deal with the complexity, substantial capital outlay, and risk of executing the development, construction, and operation of a large-scale renewable energy project. Critically, it creates an additional route to market for power producers, thus incentivising private investment in renewable energy.
Wheeling also supports the system more broadly. Enabling buyers to contract with generators across the country, it creates a commercial route to market that encourages a geographically diverse renewable fleet. Wheeling itself does not alter power flows; electrons follow physics regardless of who has contracted with whom. The system benefit comes from having that diverse generation connected to the grid at all, as geographic spread produces steadier aggregate output and eases the balancing burden.
But successfully realising the benefits of energy wheeling is contingent on a grid that has the capacity to do so. With lines already saturated, or near to it, additional transmission capacity and modernised grid technologies are crucial to seeing wheeling achieve scale.
The state cannot build the grid alone
Realising the NTCSA’s Transmission Development Plan (TDP), is the single most important action to ensure our grid infrastructure keeps pace with promising generation activity – for the energy security of our nation. Unveiled in October 2024, the TDP sets out the ambitious construction commitment of 14,450km of new transmission lines and 210 transformers to bring the required 56GW of new generation power online.
According to the same SAETA report, the NTCSA’s 2025/2026 financial year target is 423.1km, with just over 108km completed as of October 2025. Although there has been progress in planning and procurement, South Africa’s slow pace of transmission deployment remains a significant risk to energy security and decarbonisation efforts. Accelerated grid expansion is essential for enabling private renewable projects to connect and sustaining public trust in sector reforms.
There is also a concern that these delays signal not only capacity constraints but also a reluctance within Eskom to facilitate greater access for private participants. When one considers the projected R440 billion required to modernise and expand the grid, against the utility’s current balance sheet, the need for effective public-private collaboration is mission-critical.
This is why genuine independence for the NTCSA matters so much. You cannot run an open, competitive electricity market when the dominant generator also controls the gate to the grid. Private investors in generation, storage, and transmission itself need a neutral counterparty they can bank on. But let’s be clear-eyed: unbundling is an enabler, not a substitute. Restructuring an organogram doesn’t string a single kilometre of line. Independence will only unlock grid capacity if it is matched with capital and execution, which is precisely where the Independent Transmission Programme (ITP) comes in.
Modelled on the proven renewables procurement approach, the ITP enables private players to finance, design, build, and operate transmission infrastructure, with the assets ultimately transferring to the NTCSA. The pilot phase alone targets over 1,100km of new lines to unlock more than 3GW of grid capacity. Scaled with urgency, the ITP can do for transmission what independent power producers did for generation: crowd in the private capital and skills that the state’s balance sheet simply cannot stretch to – and it deserves the full backing of policymakers, lenders, and industry.
Towards a resilient South African grid
A resilient South African grid will be built as much through wires and flexibility as through new generation. Expanding transmission and scaling battery storage are the practical enablers that turn abundant renewable resources into dependable power for households and industry. The task now is execution. We must accelerate the NTCSA Transmission Development Plan, mobilise public-private capital and capability through vehicles like the ITP, and complete the market reforms – SAWEM, ancillary services, and capacity mechanisms – that make reliability investable.
A further structural reform deserves serious consideration: moving the Grid Access Unit (GAU) out of Eskom Distribution and into the NTCSA or another independent entity. As it stands, the GAU sits inside the very business that collects retail revenue, so every wheeling connection it approves for a non-REIPPPP project erodes the income of the entity it reports to. This creates a clear conflict of interest that, combined with its lack of authority over the NTCSA resources it relies on for connection designs, breeds delay and perverse incentives. Housing grid-access facilitation within an independent transmission structure would allow these decisions to be made objectively and efficiently, though it would require careful legislative alignment, since the GAU’s administrative role in guiding IPPs through connection is distinct from the NTCSA’s oversight role in granting access under Section 34B of the Electricity Regulation Amendment Act.
Getting this right is how we convert the energy transition into energy security and economic competitiveness.
