IPP Office Highlights Storage and Grid Expansion as Critical to South Africa’s Next Energy Growth Phase

South Africa’s energy sector is entering a new phase of its transition, with increasing attention focused on battery energy storage, transmission infrastructure and the reforms required to unlock further investment. As the country continues to expand renewable energy capacity and modernise its electricity market, questions around grid resilience, system flexibility and long-term energy security have moved to the forefront of the conversation.

In this ENN interview, Precious Edward, Head of the IPP Office, discusses the growing role of battery storage, the importance of transmission expansion, investor confidence, evolving procurement programmes and the opportunities shaping South Africa’s next chapter of energy growth.

South Africa’s energy transition is increasingly being described as a grid challenge rather than a generation challenge. Has battery storage become the missing piece that allows the next phase of renewable energy investment to move forward?

South Africa has made significant progress in diversifying its generation mix and attracting private sector investment into renewable energy. As a result, the conversation has naturally evolved from one focused primarily on generation capacity to one focused on system flexibility, grid capacity and network resilience.

Battery Energy Storage Systems (BESS) are becoming an increasingly important part of that solution. Storage helps address the intermittency of renewable energy by shifting energy to periods of higher demand, improving system stability and supporting more efficient utilisation of the existing network.

Through the three Battery Energy Storage Bid Windows implemented under the Independent Power Producer Procurement Programme, South Africa has procured approximately 1.7 GW of battery storage capacity in just over two years.  This is a positive signal that there is significant market interest and opportunity to localise storage in the same way South Africa has achieved with renewable energy.

While battery storage is not a standalone solution to all grid challenges, it is a critical enabler of the next phase of the energy transition. Together with transmission expansion, grid strengthening and market reforms, storage will play a key role in unlocking additional renewable energy investment and supporting a more flexible and resilient power system.

The rapid fall in battery costs is changing project economics around the world. Are we approaching a point where storage becomes a standard component of renewable energy projects, and how is that changing investor expectations in South Africa?

Globally, declining battery costs and technological improvements are accelerating the integration of storage into energy systems. In South Africa, Battery Energy Storage costs over the three bid windows have fallen by 54%.

We are increasingly seeing storage move from being viewed as a niche technology to becoming a mainstream component of modern electricity infrastructure, and particularly relevant in a market that is undergoing significant transformation and seeking to accommodate growing levels of renewable generation.

While project configurations will continue to vary depending on location, grid requirements and commercial considerations, it is clear that storage is becoming an increasingly important consideration in investment decisions. Investors are looking beyond generation alone and are focusing on solutions that contribute to overall system efficiency and resilience.

South Africa has attracted billions of dollars through its IPP programmes, but grid constraints continue to limit project development in key regions. What needs to happen over the next two years to ensure investment momentum is not lost?

South Africa has demonstrated that a transparent and predictable procurement framework can attract substantial investment into the energy sector. Maintaining that momentum will require a continued focus on grid expansion and strengthening, particularly in areas with strong renewable energy resources.

The transmission build programme currently being advanced by government and the National Transmission Company South Africa is therefore critically important.

The First Phase of the Independent Transmission Project (ITP) Procurement Programme launched during 2025 marks a defining milestone in Government’s strategic drive to expand, modernise and strengthen South Africa’s transmission network through diversified delivery mechanisms and sustained private sector participation. This phase is well advanced and seven Pre-Qualified Bidders have been appointed under the Request for Pre-Qualification (RFQ) stage.

Equally important is providing investors with greater visibility regarding future procurement opportunities and grid development plans. The continued rollout of energy reforms, together with transmission investment, storage deployment and a predictable project pipeline, will help ensure that investor confidence remains strong. South Africa has built significant credibility as an investment destination, and the next phase is about creating the infrastructure and market conditions needed to sustain that growth.

As the market evolves beyond standalone solar and wind projects, are hybrid systems combining renewables, storage and flexible generation becoming the new benchmark for bankable power projects? What are developers and financiers telling you?

Around the world, energy systems are becoming increasingly integrated, and South Africa is no exception. As electricity systems evolve, there is growing recognition that different technologies must work together to deliver reliability, affordability and sustainability.

Hybrid solutions that combine renewable energy, storage and other forms of flexible generation can provide important operational benefits and help address changing system needs. These solutions have the potential to improve dispatchability, enhance grid stability and optimise infrastructure utilisation. South Africa has already tested this through the hybrid Renewable Energy and Storage projects procured through the Risk Mitigation Programme, and hybrid options are being considered in the conceptualisation of the next bid windows.

From an investment perspective, financiers and project developers are increasingly interested in projects that can demonstrate long-term resilience and adaptability within a changing market environment. While technology choices will ultimately depend on project-specific requirements, there is clear momentum towards more integrated and flexible energy solutions.

South Africa is often viewed as the continent’s energy reform test case. Looking ahead, where do you see the biggest opportunities for investment and partnership, and what role will battery storage play in shaping the country’s next chapter of energy growth?

South Africa’s energy sector is undergoing one of the most significant transformations in its history. The combination of market reforms, infrastructure investment and a growing focus on energy security is creating substantial opportunities for investment and partnership across the value chain.

The 2025 Integrated Resource Plan offers a medium-term investment outlook t not only in renewable energy generation, but also in other technologies and energy solutions such as gas and nuclear, transmission infrastructure, battery storage, grid modernisation, industrial development and skills development. As the country continues to transition towards a more diversified and competitive electricity market, collaboration between government, investors, development finance institutions and the private sector will remain essential.

Battery storage will be a key component of this future system. It provides the flexibility needed to integrate increasing levels of renewable energy, supports grid reliability and helps maximise the value of existing infrastructure. Together with transmission expansion and continued market reform, storage will help underpin South Africa’s next chapter of sustainable energy growth and investment.