South Africa’s energy future is currently in the spotlight as the country launches the next phase of its Independent Power Producer (IPP) programme. A crucial question is whether the government should launch a mega-tender for large-scale renewable energy projects or opt for a series of smaller, targeted tenders, tailored geographically to support specific technologies.
With a target of acquiring 10,000 megawatts of renewable energy capacity, the direction South Africa chooses will define the energy landscape for years to come, affecting not only electricity generation but also industrial development, job creation and economic stability.
The argument for a mega-tender is based on the idea of launching a single, large-scale tender for the acquisition of renewable energy. This approach would rapidly accelerate the expansion of renewable energy capacity by consolidating projects into a single initiative. In addition, a mega-tender would attract major international and local investors, providing an attractive and visible opportunity to participate in South Africa’s energy transition.
On the other hand, offering several smaller, targeted tenders in specific regions could address regional energy needs and boost local economies. By geographically siloing tenders, the government could more efficiently exploit the country’s diverse renewable resources. In addition, smaller projects require less capital, opening the door to a wider range of investors, including smaller players.
A hybrid approach combining targeted tenders within defined “energy hubs” could be a solution for South Africa. This approach could support areas with high renewable resource potential while addressing the necessary local grid upgrades to connect remote areas.
However, whether the choice is a mega-tender, smaller tenders or a hybrid approach, reforming South Africa’s electricity transmission system remains a critical factor. According to the National Transmission Company of South Africa (NTCSA), critical components such as large transformers have order lead times of 24 to 36 months, highlighting the importance of stable, long-term supply plans.
Ultimately, the choice between a mega-tender or smaller, targeted tenders will have a major impact on South Africa’s energy futureBy carefully assessing the pros and cons of each approach, the country will be able to chart a path toward a successful and sustainable energy transition.