“Aurora Energy Research’s long-term forecast reveals that South Africa’s electricity mix will shift dramatically, with renewables rising from 23% in 2027 to 88% by 2060. While this transition promises cleaner energy, it also introduces significant price volatility, requiring massive investments in flexible generation and storage.”
South Africa’s energy landscape is entering a transformative era. Aurora Energy Research, a leading Oxford-based consultancy, has released its first long-term forecast for the country’s power market, projecting that renewable energy sources—primarily solar and wind—will dominate electricity generation by 2060. This forecast, published on August 25, 2026, arrives at a critical juncture as the nation prepares to launch the South African Wholesale Electricity Market (SAWEM) in 2027.
The Forecast: Renewables Take Over
Aurora’s central scenario predicts electricity demand will grow at 1.3% annually between 2027 and 2060, driven by residential and commercial consumption. Industrial demand, however, is expected to remain flat. Over this period, more than 30 GW of coal-fired capacity will retire, necessitating the addition of 120 GW of new generation capacity, largely from solar PV and onshore wind.
- Current share of renewables (2027): 23%
- Projected share of renewables (2060): 88%
- Coal retirements: 30 GW phased out gradually to avoid early 2030s load shedding
- Flexible resources (storage, diesel, gas peaking, CCGTs): 7% of generation by 2060
Price Volatility: A Double-Edged Sword
Aurora warns that the real story is not just higher average prices but greater volatility. As renewables dominate, the market will experience more high-price hours and more zero-price hours. This dynamic creates opportunities for investors who can manage risks such as cannibalisation, curtailment, and balancing costs.
- Baseload prices: Expected to rise into the 2050s due to demand growth, commodity prices, and carbon tax adjustments.
- Capture prices for solar and wind: Forecast to increase by over 100% by 2060, signaling strong incentives for developers.
Implications for Investors and Developers
The forecast underscores the importance of flexibility and smart market positioning. Investors who can deploy storage solutions, hybrid systems, and demand-side management technologies will be best positioned to thrive.
Key opportunities include:
- Battery storage projects to smooth renewable intermittency.
- Gas peaking plants to provide dispatchable backup.
- Hybrid solar-wind-storage systems to maximize capture prices.
- Private generation expansion, already accelerating ahead of SAWEM’s launch.
Policy Context
South Africa’s government has been actively promoting private investment in the energy sector. The upcoming SAWEM is designed to foster competition and transparency, enabling independent producers to sell electricity directly into the market. This reform is expected to attract billions in new investment, particularly in renewables and storage.
Risks and Challenges
Despite the optimistic outlook, several challenges loom:
- Grid reliability: Integrating high shares of renewables requires significant upgrades to transmission infrastructure.
- Economic risks: Delayed coal retirements may be necessary to prevent load shedding, but this could slow decarbonization.
- Market volatility: Investors must prepare for extreme swings in electricity prices.
- Social impact: Rising baseload prices could affect affordability for households and small businesses.
Conclusion
Aurora’s forecast paints a picture of a South African energy market that is both greener and riskier. By 2060, renewables will dominate, but volatility will define the market. For policymakers, investors, and consumers alike, the message is clear: flexibility is the new currency of energy security.
