Electricity and Control June 2025

Renewable energy + industrial sustainability

The reviewed and revised second phase of South Africa’s Carbon Tax Act 2019 comes into eect from 1 January 2026 through to 31 December 2030, increasing the rates of carbon tax liabilities and thus motivating sharper reductions in carbon emissions. It signals a decisive shi in the country’s climate and energy landscape. With stricter emissions thresholds and an expanded scope for carbon osets, the revised framework is expected to drive significant investment in renewable energy and reshape how businesses source their electricity. Alberto Gambacorta, Executive Vice-President for Sub-Saharan Africa at renewable energy firm Scatec, outlines how this policy evolution opens new doors – despite notable hurdles. South Africa’s carbon tax overhaul: Unlocking renewable energy investment

Corporate procurement under pressure The evolving carbon tax policy is expected to fuel corporate demand for power purchase agreements (PPAs), as companies look to cut emissions and reduce energy costs. This pressure is amplified by international regulations, notably the EU’s Carbon Border Adjustment Mechanism (CBAM). “Manufacturers exporting to Europe face punitive tari”s if they rely on coal-based electricity,” Gambacorta notes. “This makes moving to renewable energy about more than sustainability – it is about survival in global markets.” Positioning for a green hydrogen future He highlights that the policy shi• also presents a long-term opportunity: green hydrogen. With abundant renewable energy resources and rising global demand, South Africa could become a key player in this emerging sector. However, Gambacorta warns that the country’s competitiveness will depend on overcoming infrastructure and export limitations. “We must be able to produce at the right cost – and have the means to move the product to market.” Turning policy into progress Rather than introducing further regulation, the focus needs to be on fully implementing existing frameworks – such as the Electricity Regulations Amendment Act and new wheeling mechanisms. A national curtailment framework could also allow renewables to be traded more flexibly. “Moreover,” says Gambacorta, “municipalities must be better equipped to procure and distribute clean energy. Only a few are currently capable of acting as e”ective o”-takers.” A call for collaboration To unlock the full potential of South Africa’s energy transition, cooperation between government and the private sector is essential. Forums for public-private dialogue are already active, but real progress hinges on translating discussions into delivery – expanding grid capacity, accelerating project execution, and supporting municipal readiness. “With the right collaboration,” Gambacorta says, “South Africa can meet its energy goals and build a more sustainable, inclusive economy.”

Alberto Gambacorta, Scatec, Sub-Saharan Africa.

A financial incentive for cleaner energy By making fossil-fuel-based electricity more costly, the updated carbon tax regime incentivises companies to move towards cleaner alternatives. “For businesses tied to coal-intensive energy supply chains, investing in renewables is becoming a financial necessity,” Gambacorta says. This economic pressure is increasing the competitiveness of solar, wind, and battery storage technologies, particularly for industrial users. Making use of carbon o sets The revised policy allows for greater use of carbon o”sets, particularly for projects under South Africa’s REIPPPP (Renewable Energy Independent Power Producer Procurement Programme). However, projects must meet the principle of ‘additionality’ – demonstrating they would not be viable without the o”set mechanism. “That’s becoming harder to prove in South Africa, and it gets technical very quickly,” Gambacorta cautions. Confronting grid constraints Despite growing demand for clean energy, grid infrastructure re mains a major bottleneck. Several REIPPPP rounds have faltered due to limited transmission capacity. Yet, there are signs of pro gress. The government’s Independent Transmission Programme invites private-sector involvement in building 14 000 kilometres of high-voltage lines and hundreds of transformers nationwide. Storage solutions, particularly battery systems, also present an opportunity. These technologies help balance the grid by storing excess energy generated during peak sunlight hours and releasing it when needed to ensure demand and capacity align.

For more information visit: www.scatec.com

JUNE 2025 Electricity + Control

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