Simplified public-private partnership (PPP) regulations were gazetted in February 2025, to address the bottlenecks large infrastructure projects have historically experienced.
However, Roxanna Naidoo, head of Global Strategy at Latita Africa, notes that “delays in final approvals, capacity constraints in key departments, and protracted procurement processes may still hinder timely completion of renewable energy projects”.
She noted that although the 2025 Budget speech reaffirmed government support for renewables, there was a risk that the newly amended PPP regulations, grid expansions and proposed credit guarantee mechanisms will take longer than anticipated to implement.
In addition, private developers still seek clarity on how broader electricity market reforms will intersect with Eskom’s restructuring, municipal distribution uncertainties, and future power procurements.
“Overlaps among national, provincial and municipal authorities can introduce complexity, so the private sector remains alert to possible changes in rules, procurement terms or contractual obligations,” she said.
Taxes are another key factor that affects renewable energy projects.
An intended two percentage point increase in VAT to 17% led to a delay in the 2025 Budget speech, with finance minister Enoch Godongwana eventually announcing a 0.5 percentage point increase in VAT in 2025/26 and an expected 0.5 percentage point increase again in 2026/27.
The increase in VAT will increase overall project costs, as the cost of equipment and services will increase, while the direct tax incentives for renewable energy producers remain unchanged.
“Many in the industry had hoped for accelerated depreciation or other targeted allowances to mitigate high upfront costs on solar, wind and battery storage projects,” Roxanna explained.
Drilling down to municipal level, private projects that require wheeling agreements or distribution connections via municipal networks require a careful evaluation for payment security and revenue collection arrangements, especially in areas where municipalities have defaulted on electricity obligations.
“Despite national efforts, including potential municipal debt relief programmes to improve local government finances, strained municipal budgets remain a risk,” she added.
Subscribe to ESG Global newsletter