Investing in South African renewable energy: programmes, private power, tax and risks

Part of Investing: guides on bringing capital into South Africa, investing your own money, and the rules that apply.

Investing in South African renewable energy means putting capital into wind, solar, battery storage or the grid services around them, either through a government procurement programme or through private power sold directly to businesses. This guide is for foreign and local investors, and for business owners weighing a stake in a project or a power purchase agreement, who want to know which routes are open, what the tax position is, and where the risks sit.

This guide was last reviewed on 30 September 2026 and is general information, not legal, immigration, tax or investment advice.

The sector moves quickly, so every status below carries its date. Where an official figure is not published, we say so instead of estimating.

Where the market stands

The government’s planning document is the Integrated Resource Plan 2025, published in Government Gazette 53596 on 28 October 2025. SAnews, the government news agency, reported that the plan aims to add 105 000 megawatts of new capacity by 2039, including 11 270 megawatts of solar PV and 7 340 megawatts of wind by 2030. It also reported that coal is currently 58% of installed capacity, with 10% from rooftop PV, 10% from grid-connected solar PV, 8% from wind and 3% from nuclear. Those shares add up to 89%, and the report does not break down the rest, so treat them as a rough guide.

Eskom’s 22 April 2026 system briefing says the plan expects about 32 GW of new capacity by 2030, made up of 18 GW of wind and solar PV, 4 GW of storage, 6 GW of gas and 4.5 GW of rooftop PV. The same briefing reports 31.7 GW of generation connections in progress, of which 7.7 GW is already connected. It also flags that past private projects delivered under half of the capacity the 2019 plan required.

The procurement programme itself is further along. The National Treasury’s 2026 Budget Review says the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has signed agreements for 9 771 MW of renewable and battery capacity, with R298.9 billion of committed investment. By the end of December 2025, 7 741 MW of contracted capacity was operating, including peaking plants, and 1 610 MW was under construction.

Route 1: government bid windows (REIPPPP and storage)

In a bid window, the Department of Electricity and Energy, through its IPP Office, invites bids, picks winners on price and economic development, and signs long-term contracts. The buyer of the power is Eskom’s transmission company, the National Transmission Company South Africa (NTCSA), which runs the grid.

Where the windows stand, as of the latest official statements:

• Bid Window 7. It was designed for up to 5 000 MW: 1 800 MW of solar PV and 3 200 MW of onshore wind. The Minister’s statement of 15 December 2025 brought the total procured to 3 940 MW, all solar PV, across 18 projects in Limpopo, the Free State, North West and Mpumalanga.
• Battery storage (BESIPPPP). Bid Window 3 appointed five preferred bidders on 30 May 2025 for up to 616 MW at five Free State sites, with R9.5 billion of investment, according to the Minister’s media statement. The Budget Review says windows 2 and 3 were progressing towards commercial close at the end of December 2025.
• Bid Window 8. We found no request for proposals. The department’s REIPPP programme page lists gas procurement notices and a quarterly report for 2026, and no new renewable bid window document. Any timing you read elsewhere is commentary, not an official date.

Bids are scored 90 points on price and 10 on economic development, per the tables in the December 2025 statement. The newest four solar winners committed 41% of total project costs to local content, 49% South African equity participation and an average of 40% black economic empowerment participation.

Route 2: private power and wheeling

Private power means building a plant and selling to a business customer under a power purchase agreement (PPA), either on the customer’s site or over the grid (“wheeling”, which means moving power across Eskom or municipal lines to another property).

The key rule is Schedule 2 of the Electricity Regulation Act. The Department of Electricity and Energy’s legislative page says the 100 MW licensing threshold was removed in 2022, so generation facilities of any size can be exempt from licensing. Exempt facilities generally still have to register with the energy regulator, NERSA. The conditions are set in the gazetted Schedule 2 notice, which was replaced in 2023, and we could not read an English text of the current version. Get a lawyer to confirm the exemption for your specific plant and connection.

Registrations are rising. The government’s Operation Vulindlela report says NERSA registered 147 new generation facilities totalling 1 960 MW in the quarter to 31 December 2025, and 64 more (1 068 MW) by the end of February 2026.

Wheeling is the weak point. The Budget Review says policy uncertainty has affected “wheeling and trading of electricity”, and that limited availability and administrative delays have slowed the allocation of grid capacity. No official figure exists for how long a wheeling approval takes, so do not assume a timeline in a financial model.

The new electricity market and transmission plan

The Electricity Regulation Amendment Act, signed on 16 August 2024, creates a licensed market operator, requires a Market Code, and requires an independent state-owned Transmission System Operator within five years. Current status, from the Treasury’s Operation Vulindlela report for the first quarter of 2026/27:

• Internal trading on the South African Wholesale Electricity Market began in April 2026 with 32 participants. External trading is planned for early 2027.
• The Market Code and trading rules were due to be finalised in September 2026, and the vesting contract framework and pricing methodology in October 2026. We could not confirm that these dates were met.
• A task team has finished the first phase of planning the independent transmission operator, with a detailed plan due by October 2026.

For transmission, seven bidders were pre-qualified for the first independent transmission projects on 15 December 2025, and the final request for proposals is expected in the third quarter of the 2026/27 financial year, per the December 2025 statement.

Grid access and curtailment

Connecting is often harder than building. The NTCSA’s April 2026 briefing reports that it built 270.8 km of transmission lines in the 2025/26 year against a 423 km target, and aims for 550 km in 2026/27. It also warns that annual dumped (wasted) energy could exceed 5 TWh by 2028 if all planned solar projects go ahead.

NERSA approved a pilot on 29 April 2025 that lets wind projects in the Eastern and Western Cape connect earlier, in exchange for accepting occasional curtailment. Eskom’s practice note says the approval runs from 1 April 2025 to 31 March 2028, is a pilot, and that “any Independent Power Producer (IPP) on the system can be curtailed should the system conditions require it.”

Tax: section 12B and what replaced 12BA

SARS’s draft guide on renewable energy allowances, dated 30 July 2024, sets out the rules. It is a draft, so check for a final version.

• Section 12B: a deduction over three years on a 50:30:20 basis for wind, solar, hydro and biomass equipment. Solar PV of one megawatt or less can be deducted in full (100%) in the year it is brought into use. Hydropower is limited to 30 megawatts.
• Section 12BA (ended): the 125% deduction applied only to assets first brought into use on or after 1 March 2023 and before 1 March 2025. Nothing in SARS’s material says it was extended, and our text search of the 2026 Budget Review found no mention of 12B or 12BA, so assume no replacement exists.
• Section 12U: a deduction for roads and fences used by a renewable generator producing more than five megawatts.

Carbon tax rose from R236 to R308 per tonne of carbon dioxide equivalent from 1 January 2026, per the Budget Review. No official source says how this feeds into PPA prices, so we do not quote an effect. For the wider incentive picture, see our guide to dtic investment incentives.

Local content and economic development

Government programmes score and contract on economic development, not just price. Bid Window 7 winners commit to local content, jobs, South African equity and community spending, and those promises become contractual obligations in an implementation agreement. The transmission programme goes further, requiring minimum local production and content levels set by the dtic. The sources we checked show no such requirement for a private PPA.

Where the money comes from

South African development finance is active in this sector, though none of the lenders below publishes standard terms.

• Development Bank of Southern Africa (DBSA): says it has committed about R18 billion across REIPPPP rounds 1 to 4, and funds 36 projects. It also runs an Embedded Generation Investment Programme.
• Industrial Development Corporation (IDC): its energy unit funds businesses generating for their own use and IPPs selling under long-term offtake agreements. No rates or sizes are published for South African deals.
• Credit Guarantee Vehicle: the Treasury has confirmed a USD 350 million credit facility from the World Bank’s IBRD to capitalise it, and the DBSA is its implementation unit. It is not operating yet.
• Just Energy Transition Partnership: the United States withdrew in 2025 and, per SAnews, its pledges were withdrawn. A separate French loan of EUR 400 million is disbursing in 2025 and 2026 tranches. We found no current official total for the partnership, so we give none.

Exchange control for foreign investors

The Reserve Bank’s Currency and Exchanges Manual is the rulebook. Three points matter here:

• Banks may approve inward foreign loans to a South African company, which must be reported on the Loan Reporting System. The interest rate should be market related, and related-party loans need transfer pricing documentation.
• Banks may allow transfer of dividends to non-resident shareholders in proportion to their shareholding, once SARS supplies a compliance letter or tax clearance PIN.
• Fees on a foreign loan may not be paid upfront, and may be paid from South Africa after the loan arrives, if they do not exceed 5% of the principal.

Our guide to exchange control for foreign investors explains the wider rules. To set up the project company, see how to register a company, and for residence routes see the business visa guide. More on our investing hub.

Permitting and environmental approval

The environment department said in July 2022 that it would exempt developers from environmental authorisation for certain activities in solar projects in low to medium sensitivity areas. We did not verify the current conditions, the position for wind, or typical approval times, and no official timeline is published.

Summary: routes compared

Route	Buyer	Status (30 September 2026)	Main risk
REIPPPP bid window	NTCSA	BW7 at 3 940 MW solar PV; no BW8 request for proposals found	Waiting for next window; delivery delays
Battery storage (BESIPPPP)	NTCSA	BW3 preferred bidders named 30 May 2025	Sites are set by government
Private PPA on site	Business customer	Licence exempt, registration with NERSA	Customer credit
Private PPA with wheeling	Business customer	Policy uncertainty noted by Treasury	Wheeling approvals, grid capacity
Wholesale market	Market participants	Internal trading since April 2026; external in early 2027	Rules not final

Main risks

• Offtaker credit. In government programmes, the state carries the exposure: the Budget Review puts government’s signed REIPPPP exposure at R244.3 billion by 31 March 2026. In a private PPA, your risk is the customer’s balance sheet. No official credit data exists.
• Curtailment and oversupply. The NTCSA itself projects dumped energy above 5 TWh by 2028, and congestion curtailment is a live regulatory tool.
• Grid queue. With 31.7 GW in the connection process and transmission construction behind target, dates slip.
• Policy change. The Market Code, trading rules, vesting contracts and the new transmission operator are all unfinished, and the Operation Vulindlela report says distribution reform is behind schedule.
• Permitting. Timelines are unpublished and vary by site.

Frequently asked questions

Do I need a licence to build a solar or wind plant in South Africa?

Generally not a generation licence, since the 100 MW threshold was removed in 2022, but exempt facilities must usually register with NERSA, and grid connection and environmental approvals still apply. Confirm the exemption for your plant with a specialist.

Is the 125% renewable energy tax deduction still available?

No. Section 12BA applied only to assets first brought into use before 1 March 2025. Section 12B, with its 50:30:20 schedule and the 100% year-one deduction for solar PV up to one megawatt, continues.

Is there an open REIPPPP bid window I can enter?

We found no open renewable bid window or Bid Window 8 request for proposals on the department’s page as of 30 September 2026. Check the IPP Office website for the latest notices.

Can a foreign investor take dividends out of a South African power project?

Banks may allow dividend transfers to non-resident shareholders in proportion to their shareholding, once SARS provides the required compliance letter or PIN. Loans from abroad must be reported and meet the Reserve Bank’s criteria.

Can I sell power to another company across the grid?

Wheeling is allowed in principle, but Treasury says policy uncertainty has affected it, and grid capacity allocation has been slow. Treat timelines and costs as unknown until you have written approvals.

Is the wholesale electricity market open to new generators yet?

Not to external participants. Internal trading began in April 2026, and external trading is planned for early 2027, subject to final rules.