South Africa Faces Energy Capacity Cliff by 2030 Amid LNG Challenges
South Africa is set to lose 9.5 GW of dispatchable capacity between 2029 and March 2030 due to coal retirements and the end of the Cahora Bassa contract. The Integrated Resource Plan (IRP) aims to address this with 6 GW of gas-to-power capacity, but affordability and currency risks remain unaddressed in current planning, potentially leading to significant economic impacts.
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By March 2030, South Africa will lose 9.5 GW of dispatchable capacity due to coal retirements and the expiration of the Cahora Bassa import contract. The Integrated Resource Plan proposes 6 GW of LNG-fired combined-cycle gas turbines (CCGT) to address this capacity gap.
However, affordability issues arise as the current framework does not adequately plan for variable fuel costs after 2029, creating risks for long-term LNG agreements. The capacity cliff's ratio of retirement to replacement is measured at 2.16, indicating a significant mismatch in energy transition.
The absence of mechanisms to recover fuel costs could lead to increased tariffs and inflation, straining the economy. These factors highlight the need for a more comprehensive regulatory approach to manage the risks associated with these energy transitions.
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