South Africa’s renewable energy policy landscape in 2026 will be shaped by market liberalisation and the roll-out of frameworks introduced last year to stimulate energy investment and economic growth.
One of gamechangers is the South African Wholesale Electricity Market (Sawem), which will be launched on 1 April. It will replace the historic single-buyer model, dominated by Eskom. It represents a structural shift in how electricity is bought, sold and priced – with far-reaching implications for energy security, costs and investment.
“The approval and implementation of the Sawem market code by [energy regulator] Nersa prior to the launch of Sawem is the single policy that will make the biggest difference,” said Dom Wills, executive director for Sola Group.
“The rules for trading in a wholesale electricity market in South Africa will allow more market participants to enter the market and will grow new electricity offerings such as intra-day trading, capacity and ancillary service markets. In time, financial derivatives and carbon markets will be built on top of these initial products.”
The National Transmission Company South Africa, which is central to the operation and success of Sawem, received its market operator licence in November. However, the final licence conditions were deferred pending resolution of conflict-of-interest concerns while it remains an Eskom subsidiary.
This month, the Electricity Market Advisory Forum begins operational work, staring with a review of the market rules and market code. It was established late last year and will advise Nersa on electricity market reform, including trading arrangements, market codes and regulations.
Policies and regulations
South African Photovoltaic Industry Association (Sapvia) spokesman Frank Spencer said other policies and regulations that will dominate the sector this year are Nersa’s grid capacity allocation rules (GCAR), which were finalised last year, and the targets set in the integrated resource plan approved by cabinet last year.
The implementation by network service providers will be a focus. The rules will help reduce uncertainty, prevent preferential treatment and help developers make informed decisions.
Read: Billions flow into renewables as South Africa races to fix its grid
He said industry engaged constructively in the consultation process. However, Sapvia and other stakeholders still questioned whether “grid hogging” (the reason used by Eskom to implement its interim GCAR in 2023) was really a problem in the first place.
Spencer said the existing budget quote process already imposed time limits and costs that prevented indefinite capacity holding. However, a positive outcome is that unlike Eskom’s interim GCAR, the final rules from Nersa do not require developers to demonstrate a confirmed off-taker before receiving grid allocation.
This removes a circular barrier where projects couldn’t secure off-take without grid access and could not get grid access without off-take. Asked if this will address constraints on renewable energy, Spencer said not significantly.
While the GCAR addresses queue management, physical grid availability remains the binding constraint. Spencer said real enablers for 2026 and beyond will be transmission infrastructure expansion and transitional measures like the new congestion curtailment rules that allow connection ahead of grid upgrades.
Meanwhile, the Independent Transmission Programme (ITP), which has pre-qualified seven consortia with the final request for proposals, is expected in the third quarter of 2026. This follows alignment with a credit guarantee vehicle – being developed by national treasury with support from the World Bank – expected to be operational in July. The programme will unlock large-scale investment in transmission infrastructure.
The ITP marks South Africa’s first effort to attract private capital into transmission infrastructure, easing pressure on Eskom’s balance sheet while addressing the mismatch between renewable-rich regions and limited grid capacity.
There have, however, been delays in getting the ITP off the ground.
Spencer said the final request for proposals, originally expected in late 2025, has been pushed to the third quarter of this year to align with the operationalisation of the credit vehicle.
This is necessary because bidders and lenders need full clarity on the guarantee framework before they can price their bids. But it means that construction will only start next year.
Sapvia has welcomed the launch of the ITP, but it shares industry concerns about the structure of its first phase. All seven pre-qualified consortia are led by international companies.
Structural
The difficulty is structural: South African contractors have built Eskom’s existing transmission network, but as subcontractors rather than as principals on greenfield independent power producer-style projects. This experience did not count towards the request for qualification thresholds.
Energy minister Kgosientsho Ramokgopa has committed to South African companies taking the lead in future phases.
Read: Billions flow into renewables as South Africa races to fix its grid
Sapvia said it will hold the government to this commitment. It said the 49% local equity requirement exists, but unless it explicitly includes construction and manufacturing capacity, rather than just financial participation, it risks becoming a vehicle for passive investors rather than genuine industrial development.
“The programme is a pilot/proof of concept for private participation in transmission, rather than a comprehensive solution. Even if phase 1 proceeds on the revised timeline, the lines will not be operational until 2028 or later. In the meantime, grid constraints will continue to be the major constraint for new utility scale projects,” said Spencer.
He said transitional measures like curtailing congestion in the Eastern and Western Cape, and minor incremental grid strengthening, will determine how much renewable capacity can connect in the near term. The ITP is part of the long-term answer, but it is not a 2026 solution.
Another policy that is expected to have some impact on the sector is the South African Renewable Energy Masterplan, approved by cabinet in June last year.
“The plan signals to investors that government views renewables-linked industrialisation as a strategic priority. For firms considering long-term investments in South African manufacturing capacity, this policy clarity matters, even if the masterplan itself carries no legal force,” said Spencer.
Read: Big solar and energy storage projects going live across South Africa
But its success will depend on whether the complementary measures of industrial finance, skills development, trade policy and, especially, grid expansion, materialise to make local procurement an attractive choice. – © 2026 NewsCentral Media
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