Questions about government’s R2.2 trillion plan to save South Africa’s economy

The Integrated Resource Plan (IRP), which aims to cure South Africa of its electricity crisis for good, will be the single biggest investment programme of the post-apartheid government at R2.23 trillion.

Energy experts have warned of several risks to the plan, after the previous two IRPs failed to fulfil their mandates in increasing generation.

Minister of Energy and Electricity Dr Kgosientsho Ramokgopa revealed the plan at a media briefing on 19 October, detailing where an amount equal to 30% of the country’s GDP will be going. 

The minister explained that the investment is necessary, as South Africa’s electricity crisis has caused the economy to stagnate.

Eskom has been plagued by inadequate maintenance and investment as well as instances of corruption since 2008, leading to frequent load-shedding.

In 2025, however, the entity has improved, forecasting no loadshedding in the near future.

“As a result of the lights being off, the South African economy has not been able to grow, as they say in economics. Electricity has been a structural constraint to the South African economy,” the minister said. 

“Now that we have turned the corner on load shedding, we are addressing the future. Energy now ceases to be a crisis; energy and electricity are going to be a catalyst for growth.”

The investment will, according to the minister, add 105,000 megawatts of new generation capacity. This is about one-and-a-half times Eskom’s current capacity.

Coal’s share of the energy mix is expected to go from its current 58% down to 27% by 2039 by adding large amounts of solar PV, wind, hydro and nuclear energy as well as battery storage. 

An additional 25,000 MW of Solar PV energy will be added to the grid, as well as 34,000 MW of wind energy. 

Gas-to-power facilities are also part of the new plan. The Minister said that 6,000 MW of Gas to Power will be installed by 2030 to replace retiring baseload power, and another 10,000 will be added by 2039. 

Not going to be easy

The IRP will be dependent on investments received from the private sector to fund these large generation projects.

Energy expert Chris Yelland argues that attracting this investment will not be easy.

“There will be no government guarantees to cover the risks, and various parts of the plan will have to be funded by development finance institutions and commercial banks, there has to be a sound business case for the various parts of the plan to be financed and executed,” Yelland said.

Eskom’s electricity demand has declined over the years as frustrated South Africans move to alternative energy sources, and intensive energy users in manufacturing have closed operations.

The business case for such an investment in generation, therefore, appears risky.

Power and energy expert Vally Padayachee agreed with Yelland, telling Newsday that the R2.2 trillion will be a “formidable challenge.”

He said that these funds will need to come from international investors, as local funding sources will not be enough.

“We have a relatively constrained local capital market that may struggle to support such a large-scale investment without risking inflation or crowding out other critical or essential public expenditures,” he said.

Padayachee echoed Yelland’s call for guarantees and said that South Africa needs clear, secure opportunities for investors.

He added that South Africa should leverage its abundant natural resources to make a strong case for the success of renewable energy projects.

Reviving a project that has wasted R12 billion to date

Part of the IRP is ensuring that 5,200 MW of the new energy mix, or 5%, will come from new nuclear energy. This could include an extra 4,800 MW.

This will entail a revival of the Pebble Bed Modular Reactor Project (PBMR). The project will be lifted from care and maintenance and transferred to the Nuclear Energy Council of South Africa (NECSA). 

Pebble Bed reactors are a South-African-born technology using high-temperature, gas-cooled reactor technology. South Africa was at the forefront of developing the technology 15 years ago.

The Democratic Alliance has expressed concerns about the revival of the project, as it was previously shelved in 2010 after R12 billion had already been spent on it. 

“Before any new commitments are made, updated feasibility and cost assessments must be tabled and scrutinised, particularly ahead of any section 34 determinations,” said the DA’s spokesperson on Energy and Electricity, Kevin Mileham. 

Yelland said that reviving the PBMR project is not a viable option, as South Africa is now 15 years behind the rest of the world after abandoning the technology.

The expert added that a lack of skills in Nuclear energy will be the biggest risk to the IRP, as scientists in this field have largely left the country.

Padayachee was working in Eskom Generation at the time when the plug was pulled on the PBMR project.

He said that, while he supports the revival of PBMR from a science and engineering perspective, he has concerns.

“The implementation of modern modular nuclear reactors must be justified through rigorous feasibility studies, updated economic assessments and strong stakeholder engagement to ensure community confidence and support,” he said.

He urges caution to ensure that historical missteps are not repeated, but said that there is a recent global shift to nuclear energy.

Many countries are now pushing a nuclear energy agenda to complement intermittent renewable energy and replace fossil fuel energy for baseload power.

Yelland said that the IRP’s nuclear goals are unlikely in the allotted timeframe.

Procurement takes about two years to finalise, and traditional pressurised-water reactors take about ten years to build, usually with large unplanned costs and time overruns.