SA power crisis: R440 billion needed to expand the grid

South Africa is unveiling an ambitious Independent Transmission Programme aimed at attracting private sector investment to expand the country’s electricity grid.

Minister of Electricity Kgosientsho Ramokgopa announced the initiative on Tuesday, describing it as a “step change” in addressing the nation’s ongoing energy challenges.

Private investment to unlock energy potential

The new programme will facilitate private sector participation in developing over 1 100km of new transmission lines across three provinces, potentially unlocking more than 3 200 megawatts of additional power generation capacity.

“Today, for me, represents a step change because now the conversation transitions. It’s about ensuring that we are able to achieve energy security and ensure that the transformational elements of the energy sector gets to be realised, and our ability to mobilise significant amount of resources coming from private sector is achieved,” Ramokgopa said.

The minister explained that the initiative stems from amendments to the Electricity Regulation Act introduced by President Cyril Ramaphosa. These amendments create a framework for private investment in what has traditionally been a state-controlled sector of the economy.

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Addressing structural constraints to economic growth

Ramokgopa positioned the transmission expansion programme as crucial to South Africa’s economic growth strategy, directly addressing one of the primary structural constraints.

“If you are familiar with some of the contemporaneous questions confronting the country in relation to how you manage the budget, essentially what is confronting us is an economy that is not growing. And central to that is two things: the structural constraint is electricity and the inefficiency on the logistics side,” he said.

The minister emphasised that South Africa’s renewable energy potential remains largely untapped due to transmission limitations, particularly in the Northern Cape, Eastern Cape and Western Cape provinces.

“We have exhausted all of the transmission that allows us to evacuate the electrons so that the economy can benefit from those assets. For as long as we don’t do this capacity expansion, we will not be able to realise that ambition,” Ramokgopa added.

🔌 Strengthening SA’s Power Grid! 🔌

Minister Kgosientsho Ramokgopa has outlined plans for the procurement of electricity transmission infrastructure. Gauteng, North West, and Northern Cape have been selected to boost energy reliability and ensure a stable power supply. ⚡🇿🇦… pic.twitter.com/rdkoTOn3M1

— South African Government (@GovernmentZA) April 1, 2025

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Scale of the investment challenge

According to the National Transmission Company of South Africa, the country needs about 14 000km of new transmission lines at a cost of about R440 billion.

Ramokgopa said neither the state nor Eskom has the financial capacity to fund this expansion independently.

“The sovereign balance sheet is constrained. The significant erosion over a period of time of the Eskom balance sheet is not sufficient to carry the kind of investments that are required in this space,” he noted.

The private sector investment aligns with South Africa’s National Development Plan, which calls for private investments equivalent to 20% of the country’s GDP.

“What the president announced, and what the minister would want to announce, the R1 trillion rent is government’s contribution to the infrastructure story. But we need significantly more than that for us to be able to achieve this,” the minister said.

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Energy programme first phase details and timeline

The first phase of the Independent Transmission Programme involves seven corridors spanning three provinces: Northern Cape, North West and Gauteng.

The total length of transmission lines will be 1 164km, with associated transformer infrastructure totaling 2 680 MVA.

“And then the new generation capacity that we are going to unlock as a result of this intervention is 3 222 megawatts,” Ramokgopa added.

The minister outlined that these investments will follow a build-operate-transfer or build-operate-own-transfer model, based on market feedback from earlier consultations.

The timeline for implementation includes:

• Request for qualification to be issued in July.
• Request for proposals planned for November.
• Evaluation and contracting to follow thereafter.

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Addressing energy plan implementation challenges

The ministry plans to mitigate risks by using a “late stage tender” approach, in which the government handles preliminary requirements before the private sector gets involved.

Ramokgopa said the government would secure necessary environmental impact assessments and rights of way, including using expropriation where necessary, to ensure projects can proceed without delays.

“We’ll exhaust what is in the law, and then ultimately, if we don’t agree, we are going to do expropriation. It’s nothing new. So we’re going to do expropriation, and then we compensate to add the level that we would have determined,” he said.

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Building local industry capacity

Looking beyond the immediate infrastructure development, Ramokgopa emphasised the need to build local industry capacity to supply components for transmission projects.

He acknowledged that years of limited construction activity have resulted in a loss of skills and manufacturing capability.

“The capacity is not present. The engineers have left. The expertise has left for other parts of the world,” he said.

Ramokgopa stressed the importance of domesticating inputs for the programme to create jobs and industrial capacity within South Africa, while balancing this against cost considerations.

“We are going to choose our battles correctly to say, where are the areas where we think we have a niche, where we think we can build an industry over a period of time, and then coordinate that with the instruments that sit with the department of trade, industry and competition to ensure that we are able to broaden the flow of industrialisation.”

Regulations governing the procurement process are expected to be issued on Thursday, providing further clarity on how the programme will be implemented.

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