South Africa Energy World Bank Backs Reforms to Advance Energy security and low carbon emission transition

While the nation is attempting to execute a fair transition to a low-carbon economy, South Africa has been dealing with an ongoing energy crisis that has significantly harmed productivity and safety. In 2022, load shedding—also known as power outages—occurred eight hours a day on average and lost the economy two to three percent of GDP growth.

With a $1 billion Development Policy Loan (DPL), the World Bank Board assists the South African government in advancing long-term energy security and a low-carbon transition. The loan supports South Africa’s objective of moving towards a fair and low-carbon economy as well as a major and calculated response to the country’s ongoing energy problem. This operation is timely for South Africa because it will give the country much-needed financial and technical support to pursue energy-related policy priorities, which include long-term electricity crisis relief, promoting private sector involvement, and job creation in the renewable energy sector.

Two important areas of reform are supported by the operation. First, it makes the unbundling of Eskom, the power company in South Africa, easier for the reorganization of the power sector. It encourages the liberalization of the electricity market and seeks to increase Eskom’s productivity by refocusing its funds on transmission and upkeep of already operating power units. Second, the operation strengthens carbon pricing tools and promotes private investment in renewable energy, particularly from households and small enterprises, in order to facilitate a low-carbon transition.

This presents an opportunity for U.S companies to provide their services, especially consulting companies that provide technical assistance, as well as O&Ms and technology providers to compete for renewable energy opportunities as South Africa seeks means to both solve the energy crisis and transition to renewable sources of energy. 

There are even more opportunities with Commercial and Industrial energy solutions for microgrid and energy storage systems that could come out of this financial support through Eskom and the Independent Power Producers’ Office. However, the main challenge that U.S companies are likely to face is that local developers prefer to use solar panels and technologies sourced from China as means to minimize costs and maximize profits. To avert this, U.S. companies will need to work with local companies that are looking for U.S technologies other than solar panels. 

Access to the full document on World Bank Backing Reforms to Advance Energy Security and Low Carbon Transition in South is available here: 

For more information contact: U.S. Commercial Service; U.S. Embassy-South Africa Email:Office.Johannesburg@trade.gov;Phone: +27 11 290 3192
Energy interests: Mlamli Mjambana at  Mlamli.Mjambana@trade.gov