South Africa’s energy transition will rise - or stall - on reliability

South Africa’s energy transition hinges on private capital stepping in to fill funding gaps. Although the country has secured over R18 billion in new loans from the African Development Bank (AfDB) and the German KfW Development Bank to support its Just Energy Transition, this funding remains insufficient and is heavily loan-dependent, adding to an already considerable debt burden.

Compounding this, global interest rates remain high, and financing is increasingly flowing toward lower-risk regions. As a result, the basis on which capital is allocated is shifting from who has the boldest vision to who can deliver reliably and measurably over time.

Capital is no longer flowing freely

Despite efforts by central banks to loosen monetary policy, interest rates have risen unevenly since 2021. In the US, for example, the yield on the US 10-year Treasury note – which averaged 2.3% from 2013 and 2019 3 – currently sits at 4.13% 4 . Similar trends are visible across most advanced and developing economies, with China being a notable exception.

These elevated interest rates, coupled with persistent geopolitical uncertainty, are driving capital toward markets where performance is more predictable and the cost of financing is lower. This means African energy projects now face higher hurdles of “bankability”, with lenders demanding more substantial proof of consistent operational delivery. For South Africa, where energy stability has historically been inconsistent, it demonstrates that delivery is now essential.

Investors trust operational reliability over theoretical returns

While financial projections will always have a place in investment decision-making, investors are increasingly prioritising demonstrated performance over theoretical returns. Projects that can prove reliability are increasingly better positioned to attract the private capital needed to drive South Africa’s energy transition.

Uptime now matters more than projected internal rates of return, and guaranteed performance often carries more weight than promised future benefits. Importantly, transparent operational data is helping to reduce financing costs by providing lenders with greater certainty and real evidence of delivery.

Predictability is now a competitive advantage

Volatile energy costs and shifting Eskom tariffs are putting predictability at the centre of financial strategy. CFOs and lenders are favouring solutions that stabilise operating expenditure over unpredictable capital investments.

Fixed-cost energy structures, uptime guarantees, and servitisation models are gaining traction precisely because they offer measurable outcomes and financial consistency. In a cautious investment climate, the ability to demonstrate predictable performance provides an important competitive edge.

Data is the new due diligence

Investor confidence today is built on verifiable evidence rather than promises. Live monitoring dashboards, automated verification tools, and long-term performance histories give lenders and equity partners real-time insight into project reliability.

Access to accurate operational data – including real-time ESG reporting and utility monitoring – reduces financing risk and supports stronger, more cost-effective capital allocation. Leading operational performance data platforms use granular, real-time data to produce full, integrated sustainability reports.

These tools provide the visibility and control needed to run better, leaner and more resilient operations. By streamlining reporting and tracking performance in real time, businesses can make smarter, faster decisions that support both compliance and funding eligibility. Because in a tightening global capital market, performance, not promise, will determine who gets funded.

Manie de Waal is the CEO of Energy Partners

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

BUSINESS REPORT