South Africa’s power revolution

South Africa has enjoyed nearly six months without load shedding, a significant relief for the population. However, the country still faces a major energy challenge that requires immediate attention. To successfully address the energy crisis, South Africa needs to build 14,000 km of transmission infrastructure to accommodate the increasing renewable energy from sources like wind and solar. This massive undertaking comes with an estimated price tag of about $10 billion. Sergio Pimenta, Vice President of the International Finance Corporation (IFC), emphasized the importance of investing in energy transmission infrastructure to prevent future power outages. Pimenta highlighted the need for private sector involvement due to the substantial funding required for such a project. He mentioned that public funding alone would not be sufficient, necessitating the formation of successful public-private partnerships. The IFC has engaged with the South African government to explore options for private sector participation in the transmission sector. Pimenta noted that the government is making progress in opening up the sector to private investment, and the IFC is prepared to support these initiatives. The potential capital allocation for South Africa's energy transmission infrastructure project is estimated to be over $10 billion. Pimenta explained that while this amount is significant, it can be achieved through collaboration with other financial institutions to mobilize additional funding. He emphasized the importance of initiating successful projects to create momentum for additional financing sources to participate. The recent endorsement of South Africa's government by ratings agency Fitch for implementing reforms and providing political certainty was seen as a positive development for attracting investments. Pimenta acknowledged the government's efforts to improve the business environment and rule of law to boost investor confidence. The Vice President highlighted the global need for upgrading transmission lines to meet climate goals and ensure energy security. He mentioned the IFC's focus on increasing access to energy in emerging markets and the initiative to provide electricity to 300 million people in Africa, emphasizing the importance of addressing transmission bottlenecks for effective energy delivery. Pimenta expressed optimism about South Africa's potential to serve as a model for successful public-private partnerships in the transmission sector that other African countries could emulate. He recognized the importance of trust and clear regulations in attracting private sector investments, citing the role of a strong regulator in creating a conducive business environment. Despite the challenges posed by legacy issues and governance concerns at power utility Eskom, Pimenta remained optimistic about the prospects of mobilizing private capital for South Africa's energy transmission infrastructure.