Chasing long term Rands in the Private Energy Market

21st October 2021

Chasing long term Rands in the Private Energy Market

Table 1: Non-exhaustive list of upcoming projects in the private sector

Introduction to the private energy market:

The private energy market is characterised by the sale of energy by independent power producers to private offtakers. The projects are generally known as captive power projects. The energy purchased by the buyers can either be connected “behind the meter” or wheeled over Eskom’s national grid infrastructure.

What Cresco is seeing in the market:

Cresco is expecting significant competition in the private energy market over the next two to three years to achieve renewable energy penetration rates of approximately 30% for the project offtakers.

How the Department of Mineral Resources and Energy presentation on risks, threats and challenges to the mining and energy sector released on the  August 24, 2021, impacts the private energy market:
The country requires a significant amount (potentially more than R150-billion) of long-term (at least 12 years) fixed rate Rand funding to ensure these procurement projects detailed in Table 2 below are implemented along with associated job creation and local content benefits.

As can be seen from the table above, the pipeline of projects requires a large amount of funding, potentially causing a constraint on the availability of funding.

Funders of power projects comprise the following.

Possible solutions to overcome the funding constraint:

Cresco’s current experience:


Although the lack of liquidity is not yet tangible in the market, if the programmes mentioned earlier are rolled out, then this problem will become more pronounced. Proactive engagement with funders regarding innovative funding solutions now can go a long way in preventing a funding shortfall in the future.