South Africa’s IRP 2025 Backs Batteries and Gas Over Solar and Wind

South Africa’s first determination under its 2025 Integrated Resource Plan (IRP 2025), confirmed on 7 October 2026, allocates 9,600 MW of new capacity. Not one megawatt of it goes to new wind or solar, and for investors who have spent years treating the country as a renewables build-out story, that is the detail worth pausing on.

The allocation splits into 4,600 MW of battery energy storage systems (BESS) and 5,000 MW of gas-fired generation. That mix reorders the investable pipeline for the next procurement cycle. The question for mining and energy investors is no longer how much new generation Pretoria wants, but which kind of capacity it wants first.

Electricity Minister Dr Kgosientsho Ramokgopa has framed the package around flexibility rather than volume. The difference matters for where capital earns a return over the next few years.

You will leave this piece knowing which segments look bankable, which carry unresolved risk, and what the exclusion of solar, wind and pumped storage implies about when those segments come back into play.

Why did Pretoria put batteries and gas ahead of new solar and wind?

The answer starts with a problem South Africa already has: too much solar power at the wrong time of day.

When the grid cannot absorb renewable output, operators curtail it. Curtailment means generators are told to reduce output, so electricity that could have been produced is wasted. pv magazine and Business Day both report that curtailment is rising and adding to system costs. Adding more wind and solar on top of that would deepen the waste.

Three pressures drive the sequencing:

• Curtailment of existing renewables: batteries can soak up power that would otherwise be thrown away.
• The evening peak: demand climbs as solar output fades, and the system needs supply it can call on at will.
• The daytime surplus: TechCentral describes the determination as a response to a “daytime electricity surplus”, a structural feature of the load profile.

Government’s stated rationale The 9,600 MW is intended to meet the system’s immediate requirements for “storage, flexibility and dispatchable supply”, according to the government’s 7 October media statement.

Dispatchable supply is electricity that can be switched on when needed, which is the role gas plays. Ramokgopa said gas will receive “big attention” for exactly that reason.

The move is also a schedule change. According to TechCentral, the determination brings forward battery storage the IRP had planned to phase in up to 2035. Business Day reports the procurement is designed to avoid undermining future private generation procurement.

None of this cancels the broader plan, which targets more than 105 GW of new capacity by 2039, including 25 GW of solar. What it tells you is that renewables are delayed, not abandoned. Returns on later solar and wind now depend on storage and grid constraints being resolved first, so flexibility assets sit at the front of the queue and volume assets wait behind them.

How do Section 34 determinations and BESIPPPP actually work?

A headline megawatt figure sounds like a contract, but it is not one yet. A Section 34 determination under South Africa’s Electricity Regulation Act authorises the government to procure new generation capacity through competitive independent power producer (IPP) processes. An IPP is a privately owned generator that sells power to the grid. The determination is open to all market participants, including state utility Eskom.

The storage track is run through the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP). It is site-specific, with one preferred bidder per site. Winners sell capacity, energy and ancillary services to a single buyer, either Eskom or the National Transmission Company South Africa (NTCSA). Ancillary services are grid-support functions, such as keeping frequency stable.

Grid-scale battery storage earns revenue from capacity, energy arbitrage and ancillary services, and that layered stack explains why BESIPPPP bidders compete so hard on design and bankability rather than on headline price alone.

The pipeline from policy to power runs in stages:

1. Section 34 determination authorises procurement.
2. Request for proposals (RFP) opens a bid window.
3. Preferred bidders are selected.
4. Commercial close, when contracts are signed and financing is secured.
5. Construction and commercial operation.

Under the new determination, batteries are meant to charge from electricity that would otherwise be curtailed and discharge at evening peaks. Contracts are to carry enforceable availability and performance obligations.

What a determination does and does not guarantee

A determination authorises procurement. It does not set contracts, tariffs or a timetable.

Bid windows and dates for the new 4,600 MW and 5,000 MW allocations have not been made public, and no gas sourcing assumptions have been reported. For you, the investable event is the RFP and bidder qualification stage, so those are the milestones to track rather than treating this week’s announcement as revenue certainty.

What does the storage track record say about competition and returns?

The storage programme is not starting from scratch, and its first three bid windows show how the market has responded.

Bid Window 1 sought 513 MW across five sites, with R15.4 billion of investment (R is the South African rand). All five projects are at or past commercial close and in construction, although sources differ on exactly when close occurred. Bid Window 2 targeted 615 MW, took bids from 30 April to 6 June 2024, and was still under evaluation in November 2024; its outcome has not been reported in available sources.

Bid Window 3 is where the signal sharpens. Ramokgopa named five preferred bidders on 30 May 2025, representing about R9.5 billion of investment, with NTCSA as buyer.

Simple division gives an indicative sense of capital intensity: roughly R30 million per MW for BW1 and about R15 million per MW for BW3. These are rough calculations from headline figures, not reported costs, but the order of magnitude helps you size what 4,600 MW could attract.

Bid Window 3 demand 33 bids totalling 4,067 MW competed for 616 MW of capacity.

That is roughly 6.6 times oversubscription. With one winner per site, bidders compete on price, technical design and bankability, which compresses margins. The read for you is that storage is bankable but crowded, so assume thin returns unless a bidder holds a genuine cost or site advantage.

Is the private storage market a parallel opportunity for miners and developers?

The state auctions are not the only route. A private market for storage is already operating alongside BESIPPPP, and it has been busy in 2026:

• A TotalEnergies-led consortium energised a hybrid project with a 500 MWh battery in July 2026.
• Scatec completed a hybrid solar-storage project with a 100 MW/200 MWh battery in August 2026.
• A project near Johannesburg reached financial close at 77 MW/308 MWh.
• A hybrid site with a 660 MWh battery reached financial close and will wheel power to private off-takers.

Wheeling means sending privately generated power across the public grid to a buyer elsewhere. These projects show storage economics already work outside the state programme, with commercial buyers rather than a single government offtaker.

What this means for mining investors

For mines, reliability is the core concern. Greater system flexibility may reduce load-shedding exposure, the scheduled power cuts that have disrupted South African operations.

A developer and financier ecosystem now exists for behind-the-meter, private-wire and hybrid solutions. Behind-the-meter means generation installed on the customer’s side of the grid connection. Co-located storage that charges at midday and discharges into the evening peak fits the same pattern the government is targeting.

Industrial solar adoption is already reshaping demand, as miners and manufacturers add on-site generation to hedge grid instability, which is the same behaviour that pairs naturally with co-located storage.

The implication for you is that mining companies do not need to wait for the new determination to reach RFP. If you hold exposure to South African miners, private storage offtake is a credible second route to cost control, with a different risk profile from auction exposure.

Gas-to-power and the later determinations: where is the risk concentrated?

At 5,000 MW, gas is the largest single allocation in the determination. It is also the least defined.

Ramokgopa told Business Day that government is still “finalising the evaluation of the previous round, round number one, on gas.” A new allocation is being announced while the first round remains unresolved.

The gas-fired power transition has been planned for years, yet the 5,000 MW allocation arrives while the first procurement round is still being evaluated, which is why fuel logistics matter more than the headline megawatts.

The gaps are substantial. Available sources do not report whether supply will come from liquefied natural gas (LNG) imports or domestic gas, whether delivery relies on pipelines or a floating storage and regasification unit (FSRU), the status of the earlier Risk Mitigation IPP Procurement Programme, or expected gas costs. No public reactions from industry bodies such as the South African Wind Energy Association, Eskom or the regulator NERSA have been found.

Ranked by how directly they affect returns, the principal risks are:

1. Gas supply and price exposure: fuel cost and availability drive project economics, and no mechanism has been detailed.
2. Procurement timing: slow evaluation cycles stretch the gap between determination, RFP and contract.
3. Single-offtaker concentration: long-term agreements with Eskom or NTCSA concentrate credit and regulatory risk, including tariff and gas cost pass-through rules.
4. Transmission and curtailment: unresolved grid bottlenecks could cut revenue for future renewables.
5. Stranded-asset and carbon policy: tighter climate policy or carbon pricing could shorten gas plant economic lives.
6. Rand and local content: projects are rand-financed amid currency volatility and carry local-content obligations.

The exclusion of solar, wind and pumped storage signals that grid and curtailment problems must ease before those segments return. The stated intent to protect future private procurement suggests later determinations could open substantial renewables capacity, but no timing has been given. Treat gas as an option that demands fuel-logistics and regulatory diligence, and renewables as a later-cycle position contingent on grid progress.

These statements are speculative and subject to change based on policy developments, procurement outcomes and market conditions.

Sequencing capital across storage, gas and the renewables still to come

The determination sorts South Africa’s next procurement phase into three tiers. Storage is proven but crowded, gas is large but unclear, and renewables are deferred until grid and curtailment fixes arrive.

For mining and energy investors, the decision is less about whether to have exposure and more about which tier fits your risk appetite and time horizon. Private storage offtake offers a route that does not depend on government timetables.

Three signposts will clarify the picture: the RFP release for the BESS and gas allocations, resolution of the first gas round, and timing of the later solar, wind and pumped storage determination. Until those arrive, the 9,600 MW headline is a direction of travel, not a contract.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors.