Solstice Energy Business Plan › Section 3 › Industry & Market Analysis

3.1 South African Energy
Landscape

South Africa’s electricity sector is undergoing a historic
transformation driven by the convergence of infrastructure aging, load
shedding crises, policy reform, and the compelling economics of
renewable energy. The country’s electricity supply has been dominated by
the state utility Eskom, which operates approximately 44 GW of installed
generation capacity, predominantly coal-fired. However, decades of
underinvestment, corruption, and technical failures have resulted in
chronic power shortages, with load shedding imposed regularly from 2008
onwards and reaching crisis levels of Stage 6 in 2022–2023.

In response, the South African government has progressively opened
the electricity market to private investment through the Renewable
Energy Independent Power Producer Procurement Programme (REIPPPP), which
has attracted over ZAR 256 billion in private sector investment across
123 projects since its inception. The latest Integrated Resource Plan,
published in November 2025, targets 28.7 GW of new renewable energy
capacity, signalling the government’s commitment to a diversified,
cleaner energy mix. Electricity tariffs increased by 12.74% in April
2025, with Eskom’s 88% increase in fixed charges further incentivising
corporate and industrial customers to pursue alternative supply
arrangements through solar PPAs.

Figure 1

3.2 Solar Energy Market Size
& Growth

South Africa’s solar energy market has grown from a niche segment to
the dominant force in the country’s new generation capacity pipeline.
Cumulative installed solar capacity exceeded 10 GW by end-2025, with 1.6
GW of new capacity deployed during the year. The market is projected to
grow from 8.75 GW (total solar energy, including CSP) in 2025 to 15.25
GW by 2030, representing a compound annual growth rate of 11.75%.

The solar energy systems market in South Africa is expected to reach
projected revenue of USD 6.3 billion by 2030, growing at a CAGR of 18%.
The broader renewable energy market was valued at approximately USD 5.5
billion (ZAR 100.3 billion) in 2024 and is projected to reach USD 11.5
billion (ZAR 209 billion) by 2033 at a CAGR of 8.5%. Five leading
developers — Scatec ASA, ACWA Power, Enel Green Power, Mainstream
Renewable Power, and Sonnedix — control approximately 45% of operational
capacity, leaving significant room for well-capitalised new
entrants.

Figure 2

3.3 REIPPPP Programme
and Policy Framework

The REIPPPP has been the primary procurement mechanism for
utility-scale renewable energy in South Africa since 2011. The programme
operates through competitive bid windows where project developers submit
technical and financial proposals, with preferred bidders selected based
on a weighted evaluation of tariff price (70%) and economic development
contributions (30%). Successful bidders enter into 20–25 year Power
Purchase Agreements with Eskom, providing long-term revenue
certainty.

Bid Window 7, launched in December 2023, represented a watershed
moment for South African solar. The window originally sought 1.8 GW of
solar PV and 3.2 GW of onshore wind. Solar PV was massively
oversubscribed, with 8.53 GW of bids submitted from 40 projects.
Remarkably, onshore wind failed to win any capacity due to higher
pricing, and the government subsequently reallocated unused wind
capacity to solar in two tranches (July and December 2025), taking total
solar procurement under BW7 to a record 3.94 GW across 18 IPPs. Bid
Window 8, opened in October 2024, is seeking 3 GW with a new 4-hour
storage mandate on 40% of capacity and raised local content thresholds
to 45%.

The embedded generation regulatory reforms have also significantly
expanded the market for corporate and industrial solar, with the
licensing threshold for distributed generation raised to 100 MW. This
has unlocked a growing pipeline of corporate PPAs, particularly from
mining companies and data centres seeking energy security and ESG
compliance.

3.4 Demand Drivers

The demand for solar electricity in South Africa is driven by a
powerful convergence of structural factors that are unlikely to reverse
over the project’s 25-year life. Grid instability and load shedding have
fundamentally undermined confidence in centralised supply, driving
industrial and commercial users to seek independent power solutions.
Eskom’s tariff trajectory, which has seen above-inflation increases
consistently over the past decade and is projected to continue, makes
solar PV with its locked-in tariffs an increasingly compelling economic
proposition. Corporate ESG mandates and carbon border adjustment
mechanisms are creating new demand from multinational companies with
South African operations. The mining sector, South Africa’s largest
industrial electricity consumer, is rapidly transitioning to renewable
energy to meet both economic and sustainability objectives, with ACWA
Power’s 420 MW solar PPA with Sibanye-Stillwater representing a landmark
transaction. The digital economy’s growth, particularly data centres, is
creating a new category of large-scale clean energy buyers.

3.5 Off-Take Market Structure

Solstice Energy’s primary offtake strategy targets a
government-backed PPA through the REIPPPP programme, providing
sovereign-backed revenue certainty over 25 years. As a secondary or
alternative pathway, the Company is positioned to pursue corporate PPAs
with investment-grade industrial off-takers, particularly mining houses
with credit ratings that meet lender requirements. The wheeling
framework, which allows IPPs to supply electricity to corporate
customers through Eskom’s or municipal networks, is being progressively
refined and represents an expanding opportunity for merchant solar
capacity.

Table 1: Off-Take Market Structure

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