- More than 120 GW of new capacity is needed by 2060 as coal retires and wind and solar take over the generation mix.
- Baseload prices are set to rise into the 2050s, with more high price hours and more zero price hours as volatility increases.
- Storage, diesel, gas peaking and new combined cycle gas turbines will provide critical dispatchable power, making flexibility a key value driver.
South Africa’s power market is on track for rising volatility as renewables grow to supply 88% of generation by 2060, according to the first long term forecast for the country by Aurora Energy Research. The Oxford based analyst says the outlook is timed to guide investors and developers ahead of the planned launch of the South African Wholesale Electricity Market in 2027.
Aurora’s central scenario shows electricity demand growing at 1.3% a year between 2027 and 2060, with residential and commercial loads offsetting a flat industrial base. Over the same period more than 30 GW of aging coal fired plants will retire, creating a need for more than 120 GW of new capacity, mostly solar PV and onshore wind.
The generation mix shifts decisively away from coal. Wind and solar are forecast to rise from 23% of generation in 2027 to 88% by 2060. Coal units will retire more slowly than currently scheduled to avoid economically damaging load shedding in the early 2030s. Flexible resources including storage, diesel, gas peaking and new combined cycle gas turbines are expected to provide around 7% of total generation by 2060 and will be critical during periods of low renewable output.
Price dynamics are set to change as the market transforms. Baseload power prices are projected to increase towards 2050, driven by rising demand, higher commodity prices and the gradual removal of carbon tax exemptions in the power sector. Capture prices for solar PV and onshore wind are forecast to rise by more than 100% between now and 2060, a clear signal to developers and investors.
Aurora says the real story is not just higher average prices but a widening distribution of outcomes. The market will see far more high price hours and far more zero price hours as renewables dominate. This volatility creates opportunity for those who can manage exposure to cannibalisation, curtailment and balancing risks, according to Dan Monzani, Managing Director for the UK, Ireland and Africa at Aurora Energy Research.
The forecast arrives as private generation accelerates and preparations for SAWEM gather pace. For investors and project developers, the message is that flexibility, storage and smart market positioning will separate winners from losers in a system where coal phases out and renewables reach 85% to 90% of generation.
