What's Happening?
Wärtsilä Energy's General Manager for Business Development in East and South Africa, Tord Johnsson, has highlighted the importance of flexibility in South Africa's energy market. The country faces significant
challenges due to loadshedding and the planned retirement of 8.4 GW of coal capacity by 2029 and 2030. Wärtsilä's report, 'Making money with flexibility,' emphasizes that flexibility is not only crucial for grid stability but also a commercial opportunity for Independent Power Producers (IPPs) and utilities. Recent legislative changes, including the Electricity Regulation Amendment Act, are transforming the sector from a monopoly to a competitive market, encouraging private investment and the expansion of renewable energy sources. The introduction of the South African Wholesale Electricity Market (SAWEM) in 2026 is expected to further enhance competition and reward flexible power solutions.
Why It's Important?
The shift towards flexible power solutions is critical for South Africa's energy future. By prioritizing flexibility, the country can better manage the volatility introduced by increased renewable energy capacity, such as solar and wind. This approach not only stabilizes the grid but also creates new revenue streams for fast-response assets like energy storage systems and flexible gas turbines. The legislative changes and market liberalization are expected to attract significant private investment, driving the expansion of renewable energy and supporting the transition to a cleaner, more sustainable energy system. This transformation is essential for ending South Africa's energy shortage and ensuring reliable, profitable, and clean energy for all citizens.
What's Next?
South Africa is set to launch the South African Wholesale Electricity Market (SAWEM) in April 2026, which will introduce competition and transparent pricing that rewards flexibility. The country is also projected to need 53 GW of battery storage and 23 GW of flexible gas turbines by 2050. As more intermittent renewable energy sources come online, the demand for fast-response assets will increase, driving up their value. The establishment of an open ancillary services market could allow flexible assets to earn revenue by providing critical services to the grid. These developments are expected to support the country's transition to a flexible, sustainable energy system.
