Jan 13, 2025
As the largest economy in Africa, South Africa is often looked to as a regional leader and trendsetter. In a continent characterized by extreme energy scarcity, the country had by 2012 achieved an 84% electrification rate. But these efforts, coupled with a significant industrial base, have also made South Africa the highest emitter of greenhouse gases in the region and frequently led to electricity demand outstripping supply.
It is a balancing act familiar to many fast-growing developing countries: how to transition to a low-carbon economy, while providing cheap and reliable energy for all? In answer, South Africa has launched a series of trailblazing green projects designed to tap its abundance of renewable energy sources, including the first concentrated solar power plants in Africa, and a fiercely competitive procurement program that has helped to halve the cost of solar and wind energy in just three years.
By 2015, in fact, more variable clean power was coming online than could be integrated into the national grid. South Africa urgently needed over 360 megawatts (MW) of additional storage, and testing by the state-owned utility, Eskom, confirmed that grid-scale battery storage technology could dramatically speed up and deepen the penetration of renewable energy.
There was just one problem. Battery storage on this scale had never before been attempted in sub–Saharan Africa. To convince the private sector to come on board would require a catalytic investment.
That’s where CIF’s Clean Technology Fund (CTF) stepped in.
The power of concessional finance
For over 16 years, CIF and its partner multilateral development banks have been supporting South Africa to unlock the country’s full renewable potential, by bridging high up-front capital costs, reducing risks, and getting large-scale clean energy projects off the ground.
In 2012, an injection of $80 million in highly-concessional finance from CIF’s Clean Technology Fund (CTF), added to $90 million from the African Development Bank (AfDB) and $250 million from the International Finance Corporation, supported the construction of the $2-billion, 250 MW KaXu, Xina and Khi concentrated solar plants, the first ever built in a developing country. Another $43 million investment from CTF and AfDB helped unlock $126 million in co-financing for the 100 MW Sere Wind Power Plant, which has considerably exceeded yearly expected energy outputs and carbon emissions offset since opening in 2015. [The image below is of the Khi Solar One plant.]
Yet in its first two years of operation, the Sere plant was forced to curtail more than 9 GWh of additional wind energy due to a lack of storage. A similar pattern was occurring at other renewable plants—all while electricity demand nationally was soaring, leading to rolling power shortages, and disrupting businesses and healthcare. In 2016 alone, Eskom spent approximately USD $661 million to run fossil-fuel powered plants to meet peak demand, a short-term measure detrimental to both the environment and public finances.
With CIF’s support, a plan was drawn up: to launch the first competitive tender for grid-scale battery storage on the continent.
A multi-million-dollar storage plan
Unveiled in 2023, thanks to $195 million from the International Bank for Reconstruction and Development (IBRD) and $220 million from AfDB, this flagship project represents the largest battery energy storage system (BESS) on the African continent. In total, the project is expected to support the design, procurement, installation and sustainable operation of almost 360 MW of large-scale energy storage infrastructure at 6 Eskom substation sites. [The image below is an example of an energy storage unit in Johannesburg, South Africa.]
Even more impressive, these investments have already helped lay the essential groundwork for the government to procure an additional 445 MW of storage from private sector investment, through a competitive tender process. This was possible in part because of $20 million from the CTF in dedicated technical assistance, to create national grid codes and other essential policies and strengthen Eskom’s technical capacity to maintain and operate large-scale batteries.
Taken together, the project has proven an innovative, transformational and scalable pathway, helping to increase the share of clean energy in South Africa’s power grid, boost the network during peak hours, create new clean jobs, ramp up local technical capacity, and catalyze private investment.
Demonstrating potential at scale
While South Africa remains heavily reliant on fossil fuels, the balance has begun to tip. Overall, CIF investments of nearly $450 million have mobilized almost $2 billion in co-financing, supporting Eskom to scale up renewable energy capacity and storage, and contributing to a reduction of 1 million tons of CO2 equivalent (MtCO2eq) in potential annual greenhouse gas emissions. Much of this new capacity has been installed in locations where electricity supply and access are low, to help improve quality of life for rural communities.
In 2021, the South African government significantly raised the country’s Nationally Determined Contribution, committing to producing 30% less absolute greenhouse gas emissions by 2030. So far, the outlook is good: renewable sources now generate over 8% of South Africa’s electricity, and the government last year announced a bid window to add almost 15,000 MW of further renewable capacity, which should help put an end to recurrent power shortages. South Africa’s rapid scale-up is even set to fuel a regional clean energy explosion: renewable energy capacity in Sub-Saharan Africa is projected to nearly double by 2027, with more than 60% of this growth coming from South Africa.
As Eskom General Manager Velaphi Ntuli sees it, successfully proving the feasibility of utility-scale BESS for the first time has helped “pave the way for wider adoption and possible export of the technology to other regions beyond the borders of South Africa.”
