South Africa’s electricity reform momentum risks stalling unless transmission infrastructure is urgently expanded, with grid capacity, rather than generation investment, now the primary constraint to unlocking private investments and ensuring energy security, says renewable-energy company Discovery Green executive director and actuarial research head Dan Ginsberg.

He argues that, in addition to continued policy reform, the immediate priority should be focused on the physical power grid build-out at scale. South Africa’s energy transition is increasingly shaped by a structural imbalance, with strong private-sector appetite to build generation capacity, but insufficient transmission capacity to connect new projects.

While generation investment continues to accelerate, Ginsberg stresses that transmission expansion has not kept pace, as 14 000 km of new lines are required to support the evolving energy mix and growing demand, positioning transmission as a critical enabler of economic growth.

Ginsberg cautions against trivialising the national priority of building out the grid, which has become a bottleneck.

“It’s not so much from a generation perspective that there needs to be reform, there is great appetite to provide capital for new plants. A substantive issue now is that the grid needs to be built out to support the generation expansion.”

He emphasises that clearer and more transparent grid access frameworks remain necessary, particularly as competition for limited connection capacity intensifies.

The prioritisation of particular technologies will also become increasingly important, as South Africa’s current pipeline shows a structural bias towards solar PV projects, which risks exacerbating imbalances in supply profiles.

Wind generation, which provides complementary nighttime energy, remains underrepresented and, without careful planning, available grid capacity could be disproportionately allocated to technologies that do not adequately meet system needs, which, in turn, undermines overall reliability, Ginsberg adds.

He also highlights the importance of fairness and transparency in access rules, warning against any form of “grid hoarding” that could distort market outcomes and delay project delivery.

Pricing Signals, Market Design Gaps

Market design remains a key constraint to unlocking flexibility and innovation in the electricity system and Ginsberg points to a disconnect between the current pricing structures and actual supply-demand dynamics, particularly in relation to time-of-use tariffs.

This misalignment weakens investment signals for wind and technologies, such as battery energy storage and flexible supply, which are essential for managing intermittency as renewables penetration increases. While batteries can support short-duration balancing, their high cost limits large-scale deployment without stronger economic incentives.

Further, the absence of a formal capacity market compounds the challenge even more, as current market structures primarily reward energy delivery only, rather than the availability of capacity to stabilise the grid during peak demand or supply shortages.

Ginsberg also advocates for introducing further mechanisms that compensate flexibility and reserve capacity to significantly enhance system resilience.

He notes that aggregators and traders may play a growing role in facilitating energy trading and financial optimisation, but stresses that physical grid balancing, ultimately, depends on infrastructure and operational capabilities, including storage and demand response.

“Time-based dynamics, particularly during winter peaks and evenings, further highlight the need for refined pricing signals. As demand surges when the sun goes down, and with supply being less constrained during the daytime, the system will require sufficient capacity to avoid shortages, which is a requirement that is not yet fully reflected in current tariffs or investment patterns.”

Looking ahead, Ginsberg identifies the newly established energy transmission entity National Transmission Company of South Africa as being pivotal in addressing these challenges, underscoring its importance in accelerating grid expansion, supporting pricing reform and clarifying market structures, which could potentially include the introduction of a power capacity market.

He comments that transmission expansion represents a relatively cost-effective intervention when compared with generation investment, and delivers a disproportionately high economic impact, but without it, even well-funded generation projects could remain stranded.

“Without a rapid and coordinated push to expand transmission infrastructure, the country risks undermining both investor confidence and long-term energy security,” he concludes.