South Africa’s plan to ditch coal hits a costly roadblock

Cape Town – South Africa’s plans to reduce its dependence on coal-fired electricity have suffered a setback after the government failed to appoint preferred bidders in its first major gas-to-power procurement round, raising concerns about the country’s ability to meet its planned coal retirement targets.

The Department of Electricity and Energy announced on Wednesday that none of the four bidders who submitted proposals for the 2,000-megawatt (MW) programme met the mandatory requirements for gas supply assurances, despite offering a combined 2,830MW of capacity.

According to Bloomberg, the failure threatens to delay plans to replace ageing coal-fired power stations with alternative generation capacity.

The department said South Africa imports most of its gas from Mozambique and does not have a liquefied natural gas (LNG) receiving terminal.

“The bidders were unable to provide gas-supply assurances to the level required,” the department said.

South Africa’s 2025 Integrated Resource Plan envisages retiring 8,000MW of coal-fired capacity by 2030, while the government has planned for 6,000MW of gas-powered generation as part of the transition.

However, declining gas production in Mozambique, limited domestic supplies and delays in developing LNG import infrastructure threaten the availability of fuel needed to support the programme. State-owned power utility Eskom has also warned of waiting periods of about five years for gas turbines, potentially pushing projects beyond the planned deadlines.

Electricity and Energy Minister Kgosientsho Ramokgopa maintained that the government remained committed to developing gas-fired generation.

“Our responsibility now is to address the infrastructure, commercial and institutional conditions required to translate market interest into viable and deliverable projects,” he said.

“South Africa is not retreating from our gas-to-power objectives.”

The setback comes amid wider delays in the country’s energy transition. In an October 2 report, BusinessTech said South Africa had postponed by six months the request for proposals for the first phase of its private-sector transmission-line programme, further slowing efforts to expand the electricity grid.

The delay matters because additional transmission infrastructure is needed to connect new generation projects and move electricity from renewable-energy-rich regions to areas of demand.

Meanwhile, Reuters reported in August that coal still supplied more than 80% of South Africa’s electricity, while renewable sources accounted for about 10%.

The news agency also reported that mining companies were accelerating investments in wind and solar power to reduce electricity costs and emissions, although industry executives said Eskom’s conventional power supply would remain important because renewable generation is intermittent and battery-storage technology is still developing.

The failed gas tender therefore highlights the challenge facing South Africa as it seeks to balance electricity security with its transition to cleaner energy. Without reliable replacement capacity and the infrastructure to support it, the retirement of coal-fired power stations could take longer than planned.

The government said lessons from the first procurement round would inform the next steps, with further details on the programme’s future direction expected before the end of 2026.

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