South Africa’s state utility, Eskom, launched its first-ever Renewable Energy Offtake Programme, a move that could redefine the country’s energy landscape. The programme opens 291 MW of solar PV capacity for direct long-term purchase by large commercial and industrial customers.
Successful bidders will enter power purchase agreements (PPAs) ranging from 5 to 25 years, with the earliest projects expected to reach commercial operation by December 2027.
For the first time, Eskom is preparing not only to control electricity supply but also to compete in providing clean power directly to businesses. For industry, this is a long-awaited opportunity to secure stable, green energy in a market struggling with unreliable electricity and rising sustainability demands. For the country, it signals that policy reforms and project rollouts are beginning to align after years of crisis management.
What the RFP Offers
The tender sets a minimum offtake at 10 MW, with a cap of 291 MW in total. Bidders will be evaluated mainly on price, followed by contract length and the size of their offtake. In essence, Eskom is encouraging companies to lock in long-term solar power at competitive rates.
This is not just a technical procurement process it marks a shift in how South Africa’s largest utility interacts with private industry. Corporates that previously had to rely on self-generation or negotiate directly with independent power producers now have a pathway to utility-backed renewable contracts.
Why This Matters for Business and Decarbonisation
For commercial and industrial power users, the new programme creates a strategic avenue to meet net-zero targets, secure predictable electricity costs, and reduce operational risks tied to load-shedding.
Large corporations, particularly in mining, manufacturing, and retail, have been under pressure from global investors and customers to decarbonize. Signing a PPA with Eskom under this programme provides credibility, long-term security, and the benefit of utility-scale renewable projects without the headache of building and maintaining generation assets themselves.
This could accelerate corporate decarbonisation while giving Eskom a new revenue stream in an era where coal dominance is shrinking.
The Transmission Bottleneck
Despite the promise, the single biggest challenge remains South Africa’s transmission grid. The country needs over 14,000 kilometers of new high-voltage transmission lines within the next decade to integrate planned renewable projects.
Currently, many of the sunniest and windiest regions have limited grid capacity, creating a “grid queue” of renewable projects that cannot be connected. Without the new transmission infrastructure, Eskom’s offtake programme risks being delayed or underutilized.
Financing and Delivery Challenges
Building the required transmission is a colossal task both technically and financially. Eskom alone cannot shoulder the investment burden. Financing models will need to draw on blended solutions, combining government support, private sector investment, and multilateral funding.
The Treasury has already signaled that international partners may step in to help de-risk transmission investments. Discussions with development banks have centered on guarantees and funding mechanisms to attract private capital. However, until these financial packages are finalized, the gap between ambition and reality remains significant.
Delivery speed is another concern. Eskom’s track record on completing transmission projects has been slow, raising doubts about whether it can meet its ambitious targets. Unless independent transmission initiatives are accelerated including public-private partnerships the 14,000 km expansion will remain more aspirational than practical.
A Potential Turning Point
Despite these hurdles, the launch of the Renewable Energy Offtake Programme still feels like a turning point. It represents more than just 291 MW of solar power. It signals a new commercial model: a state-owned utility offering direct long-term renewable power contracts to industry.
This is a departure from the reactive, survival-mode approach that has defined South Africa’s energy sector for over a decade. Instead, it hints at a more structured, investment-friendly model where Eskom and businesses can collaborate in building a cleaner, more resilient energy system.
If successful, this model can be scaled. More auctions could be launched, attracting deeper corporate participation and stronger investment pipelines. It could also provide a blueprint for integrating private sector demand into national planning, aligning corporate decarbonisation with national energy security.
For the promise of this programme to translate into real impact, several steps are crucial:
- Accelerate Transmission Build-Out – The country must fast-track the construction of new grid infrastructure through blended finance models and independent transmission projects. Without wires, generation cannot flow.
- Align Planning and Procurement – Eskom, the National Transmission Company, the Department of Mineral Resources & Energy, and private offtakers must synchronize timelines. Misalignment risks stranded assets and wasted investments.
- Create Interim Solutions – Mechanisms such as wheeling arrangements, prioritized grid access for projects with signed PPAs, and temporary reinforcements can help bridge the gap until the full transmission expansion is in place.
- Replicate and Scale the Model – The 291 MW auction should be treated as a pilot. If successful, Eskom should institutionalize this offtake programme, providing regular and larger opportunities for corporate clean power procurement.
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The launch of this programme also needs to be seen in the context of South Africa’s broader energy transition. The country has committed to moving away from coal, but load-shedding has battered public confidence and investor sentiment.
Eskom’s willingness to evolve into a competitive, renewable-ready utility is critical. It signals to domestic and international investors that South Africa is serious about diversifying its energy mix. It also reassures businesses that they can plan long-term energy strategies with some certainty.
If combined with successful transmission reforms, this could unlock billions in renewable energy investments, create jobs, and set the foundation for industrial decarbonisation.