South Africa recently added a major new asset to its power system, as the 273-megawatt (MW) Grootfontein solar photovoltaic (PV) project reached commercial operation in the Western Cape.
The facility, developed by Norwegian renewable energy company Scatec ASA in partnership with local investors, is the first project from the fifth bidding round of the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) to come fully online.
Located about 150 kilometres north-east of Cape Town, the Grootfontein cluster is now the largest co-located solar PV facility in the Western Cape. Its commissioning comes at a critical moment for South Africa, which continues to grapple with electricity shortages, ageing coal infrastructure and the urgent need to diversify its energy mix.
Once fully operational, the plant is expected to generate around 700 gigawatt-hours (GWh) of electricity each year, enough to supply more than 180,000 households. Project developers estimate it will reduce carbon dioxide emissions by approximately 630,000 tonnes annually, easing pressure on a grid still dominated by coal-fired generation.
Beyond the immediate capacity addition, Grootfontein’s completion carries broader significance for South Africa’s renewable energy programme. Bid Window 5 of the REIPPPP, launched in 2021, faced delays as developers contended with rising global equipment costs, supply chain disruptions and constraints in grid connection capacity.
The successful delivery of Grootfontein is seen by industry analysts as a signal that large-scale renewable projects can still reach financial close and completion despite these headwinds.
Power from the facility is sold to state-owned utility Eskom under a 20-year power purchase agreement (PPA), providing the long-term revenue certainty required by lenders and equity investors. Such contracts have been a cornerstone of the REIPPPP since its inception in 2011, helping South Africa procure close to 9 gigawatts of renewable capacity across multiple bidding rounds.
The ownership structure of the Grootfontein project reflects the localisation and transformation requirements embedded in the REIPPPP framework. Scatec holds a 51 per cent equity stake, while South African Black Economic Empowerment firm H1 Holdings owns 46.5 per cent. The remaining 2.5 per cent is held by the Grootfontein Local Community Trust, giving nearby communities a direct financial interest in the project’s long-term performance.
This structure is designed to ensure that renewable energy investments deliver benefits beyond electricity generation, including dividend flows to community trusts, local procurement and job creation during construction and operation. Similar requirements have been adopted by other African countries seeking to attract private capital while addressing social and economic inclusion.
Grid integration remains one of the most pressing challenges highlighted by the Grootfontein project. South Africa’s transmission network was largely built to serve centralised coal plants in Mpumalanga, far from the country’s best solar and wind resources. As renewable capacity expands in the Northern and Western Cape, the need for new high-voltage transmission lines has become acute.
Eskom estimates that around R400 billion will be required to build more than 14,000 kilometres of new transmission lines over the coming decade, alongside investment in substations and battery energy storage systems. Without these upgrades, grid congestion risks slowing the rollout of new renewable projects despite strong investor appetite.
Solar PV has emerged as one of the lowest-cost sources of electricity in South Africa and across much of the continent, with recent projects achieving levelised costs of around 3.6 US cents per kilowatt-hour. This cost advantage has made solar a central pillar of energy planning not only in South Africa, but also in countries such as Kenya, Morocco and Egypt, which are scaling up utility-scale renewables to meet rising demand.
For South Africa, the addition of Grootfontein provides incremental relief to a power system that has endured years of load shedding. While a single project cannot resolve structural challenges, energy analysts note that each new renewable facility reduces reliance on emergency diesel generation and ageing coal units, lowering system costs and emissions over time.
The project also reinforces South Africa’s position as a reference market for renewable energy development in Africa. The REIPPPP’s transparent procurement process, bankable contracts and clear policy framework are frequently cited by investors as benchmarks for other countries seeking to mobilize private financing at scale.
As Africa’s electricity demand continues to rise alongside population growth and industrialization, projects like Grootfontein underscore the role of large-scale solar in closing the continent’s energy gap. With abundant solar resources and declining technology costs, the challenge now lies less in generation potential and more in grid expansion, financing and execution.
The successful commissioning of Grootfontein suggests that, with the right structures in place, those hurdles can be overcome.
Source: https://africasustainabilitymatters.com/
