MEGAPOWER Solar Business Plan › Section 3 › Industry Analysis

South Africa’s electricity sector is the largest in Africa by both
installed capacity (approximately 58 GW nameplate) and final
consumption. It is also among the most stressed: a coal-dominated
generation fleet operating well below design availability, persistent
load-shedding, and an integrated state utility — Eskom Holdings SOC Ltd
— that holds approximately ZAR 400 bn of debt. Against this backdrop,
the country has put in place the policy and regulatory architecture for
the largest renewable-energy build-out on the continent. This section
provides the industry context that frames MEGAPOWER’s investment
thesis.

3.1 Market Size & Growth

Cumulative installed solar PV capacity in South Africa stood at
approximately 1.0 GW in 2015, grew rapidly between 2022 and 2023 in
response to load-shedding stage 6, and is now reported by the South
African Photovoltaic Industry Association (SAPVIA) at 10.2 GW at the end
of 2025. The country is now the largest solar PV market on the African
continent and one of the top 20 globally by installed capacity. The
Department of Mineral Resources and Energy’s Integrated Resource Plan
2023 (IRP2023) targets an additional 28.7 GW of renewable energy
capacity by 2030, of which solar PV is expected to contribute the
majority share.

Figure 3.1

The forecast trajectory implies a 2025–2030 compound annual growth
rate of approximately 21% in installed capacity. This is supported by
three concurrent drivers: (i) the maturation of the REIPPPP
procurement programme, which awarded a record 3,940 MW of solar
PV capacity in Bid Window 7 alone (2024); (ii) the launch of the
South African Wholesale Electricity Market (SAWEM) in April
2026, which has unbundled Eskom and opened up competitive
procurement; and (iii) explosive growth in the corporate /
commercial-and-industrial (C&I) segment, driven by an
aggregate Eskom tariff increase of 36% for 2025/26 and the lifting of
the licensing cap.

3.2 The REIPPPP Procurement Programme

The Renewable Energy Independent Power Producer Procurement Programme
(REIPPPP) is the central pillar of South Africa’s renewable-energy
build-out. Launched in 2011, it has now completed seven competitive bid
windows and has procured more than 12 GW of renewable capacity,
attracting more than ZAR 270 bn of cumulative private investment.
REIPPPP awards 20-year U.S.-dollar-indexed (or, since BW5, fully
ZAR-denominated, CPI-escalated) PPAs with Eskom as offtaker, backed by
the National Treasury through an Implementation Agreement. Its
standardised contracts, repeated tendering rhythm and predictable
financial-close criteria make it one of the most-studied templates for
procurement of utility-scale renewables in the developing world.

Tariffs awarded under REIPPPP have collapsed by more than 87% in
nominal terms since BW1, reflecting both global solar-cost compression
and the maturity of the South African development ecosystem.

Figure 3.2

Solar PV is now demonstrably the lowest-cost source of new generation
in South Africa, undercutting both new-build coal (over ZAR 1.20 / kWh)
and new-build combined-cycle gas (approximately ZAR 1.50 / kWh including
capacity charge). Importantly, the BW5 to BW7 trend has stabilised in
the ZAR 0.43-0.47 / kWh range, with the marginal compression in BW7
driven by a 42% drop in global module prices between 2023 and 2024.

3.3 Generation Mix and Coal Phase-out

South Africa remains heavily coal-dependent, with coal generating 78%
of total electricity in 2025. The IRP2023 targets a steep transition
over the rest of the decade, with the coal share falling to
approximately 45% and the combined wind + solar share rising from
approximately 11% to 34%. This structural rebalancing — driven by the
planned decommissioning of approximately 8 GW of end-of-life coal
capacity by 2030 — creates a multi-decade demand corridor for new
utility-scale renewable generation.

Figure 3.3

3.4 Eskom Tariff Trajectory

Eskom’s National Energy Regulator-approved tariffs have escalated by
an average of 12.7% per year between 2015 and 2025, far exceeding
consumer-price inflation. The 36% tariff increase awarded for 2025/26 —
the highest single-year approval in the regulator’s history — has
fundamentally changed the economics of self-generation and corporate
procurement: average industrial tariffs now exceed ZAR 2.20 / kWh,
against utility-scale solar PPAs available at ZAR 0.65-0.90 / kWh on a
wheeled basis. This sustained tariff escalation makes solar PV the
dominant low-cost option and underwrites the long-term competitiveness
of well-located solar projects.

Figure 3.4

3.5 Solar Resource Quality

South Africa is one of the world’s pre-eminent solar resources.
Average annual Global Horizontal Irradiance (GHI) ranges from
approximately 1,700 kWh/m²/year in the Eastern provinces to over 2,300
kWh/m²/year in the Northern Cape, with Direct Normal Irradiance (DNI) in
the same area exceeding 2,700 kWh/m²/year — values comparable to the
best Atacama and MENA sites globally. Atmospheric humidity is low,
soiling rates are moderate, and winter-cleaning intervals are
well-understood by domestic O&M operators. The Northern Cape’s solar
resource is materially superior to that of any province in continental
Western Europe and competitive with the world’s leading utility-scale
solar regions.

Figure 3.5

3.6 Demand Drivers

3.6.1 Persistent grid stress and load-shedding

Eskom’s coal fleet operated at an average Energy Availability Factor
(EAF) of approximately 56% in 2023 and 60% in 2024, against a design EAF
of 75%. Stage 6 load-shedding (6,000 MW shed) was implemented for 78
days in 2024. In 2025, load-shedding events were less frequent due to
the ramp-up of REIPPPP capacity and a substantial recovery in coal
availability, but the structural deficit between demand and reliable
supply persists, and the 2030 IRP capacity targets imply an aggressive
procurement pipeline through the entire decade.

3.6.2 Corporate decarbonisation and Scope-2 emission reductions

South African mining majors and large industrials now operate under
credible Scope-2 emission reduction commitments, often as a precondition
for export-market access (notably the EU Carbon Border Adjustment
Mechanism, which began phased implementation in 2026). Anglo American,
Sibanye-Stillwater, Sasol, AngloGold, Glencore and Mercedes-Benz South
Africa have collectively contracted more than 4 GW of corporate solar
PPAs since 2023. Mining majors alone are expected to procure a further
6-8 GW of corporate renewable capacity by 2030.

3.6.3 Wholesale market and wheeling

The launch of SAWEM in April 2026 — together with NERSA’s wheeling
tariff (~ZAR 0.12 / kWh) — means corporate offtakers in load-centre
provinces such as Gauteng can now contract Northern Cape renewable
energy at delivered prices roughly 15% below local grid tariffs. This is
the single most significant structural change in the market since
REIPPPP’s launch.

3.6.4 Hyperscale data-centre demand

Microsoft, Amazon Web Services and Google have collectively committed
to more than 1 GW of new data-centre capacity in South Africa through
2030, all of which is contracted under 100% renewable-energy targets.
The hyperscale segment is now the fastest-growing single source of
corporate PPA demand in the country.

3.7 Supply-Side Dynamics

3.7.1 Module and inverter pricing

Global PV module prices fell 42% between 2023 and 2024 according to
PV-Magazine pricing trackers, settling in the USD 0.10-0.12 / W range
for tier-1 bifacial modules in 2025. This deflation has continued to
drive South African utility-scale tariffs lower and has increased the
bankability of bid prices below ZAR 0.50 / kWh. Inverter and tracker
pricing has followed a similar but less dramatic trajectory. Modules and
inverters together account for approximately 30-45% of total project
capex in the South African utility-scale segment.

3.7.2 Local content

South African solar PV manufacturing capacity is approximately 620 MW
per annum for utility-scale modules, against an annual demand of more
than 3 GW. This shortfall is filled by imports, mostly from China and
South-East Asia. A 10% import tariff on solar modules was introduced in
mid-2024, partially offset by depreciation of the Rand against the
Dollar. Local content requirements were tightened in REIPPPP BW7 with a
target of 40-50% of value, achievable through balance-of-plant items
(mounting structures, trackers, civil works, cabling) and labour.

3.7.3 Grid-connection capacity

Grid availability — not module pricing or capital — is now the
binding constraint on the pace of solar deployment in South Africa.
Eskom’s grid capacity in the high-irradiance Northern Cape was largely
allocated by the end of 2024, leading to grid-connection studies
migrating to the Free State, the North West and the Eastern Cape, where
new transmission corridors are under development. Because of this,
MEGAPOWER’s secured grid-connection budget quote is a material
competitive moat.

3.8 Regulatory Environment

South Africa’s renewable-energy regulatory architecture has matured
substantially over the last 24 months. The most material regulatory
developments are:

3.9 Industry Outlook & Conclusion

Three independent forecasts — from the IEA, IRENA and Mordor
Intelligence — agree that South African utility-scale solar PV will
continue to grow at a compound annual rate of 18-22% through 2030. The
IRP2023 target of 28.7 GW of new renewables by 2030 implies project
finance demand of more than ZAR 600 bn in the same period. Investor
demand for the asset class is structurally supported by long-dated,
contracted, inflation-linked cash flows, by international
climate-finance commitments, and by South African pension-fund mandates
that increasingly require infrastructure exposure. MEGAPOWER’s
investment thesis is to participate in this build-out at the most
cost-competitive end of the curve, with a bankable project structure
delivered at a moment of unprecedented offtaker appetite and regulatory
support.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of MEGAPOWER Solar Power (Pty) Ltd.