Energy for Growth Hub
Report Dec 15, 2023

Transforming South Africa’s Public Power Purchase Agreement (PPA) Process through Transparency

Making Markets Work
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Load shedding is severely affecting South African GDP growth. The year 2022 was the worst year of load-shedding to date, with the country experiencing 157 days of power outages. By March 2023, the country experienced a record 141 consecutive days of load shedding, often over 10 hours daily and costing the country $51 million a day according to the Central Bank. Eskom, the heavily indebted state-owned utility and bulk electricity provider, announced that ‘permanent’ load shedding averaging at least 2,000-3,000 MW is expected for the next two years. In February 2023, President Ramaphosa declared a National State of Disaster to address the power crisis and. The Energy Crisis Committee had been set up in July 2022 to “end load shedding”, yet the situation has worsened.

An Electricity Minister was also appointed in March 2023 to address inter-departmental alignment and cooperation in government, a central issue in this case study. Brazen conflict among key players — the ruling party ANC, national government ministers, Eskom, regulators, organized labor, and local government — has hindered progress.

Despite a solid legislative and world-class institutional framework for renewable energy, demonstrated from 2011-2014 in the initially successful Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), procurement efforts since then have been paralyzed by opaque contracting, corruption, and ideological disputes that have plagued the coal sector.

South Africa’s Just Energy Transition Partnership (JET-P), a package of $8.5 billion to speed up the transition from coal to renewable energy, raises concerns, particularly due to limited public consultation, and opposition by the Energy Minister, in the development of the investment plan.

Exploring opaque and delayed contracting practices, this case study highlights the potential of PPA transparency to mitigate these challenges in power procurement — and ultimately help South Africa address its economic and electricity woes as well as the inevitable march towards increased renewable energy deployment.

Read our full case study (10 pages) here.