Eskom Green Secures Final PFMA Approvals, Targets 32GW Utility-Scale Renewable Push By 2040

South Africa’s energy landscape enters a transformative new chapter this week as Eskom Holdings secures the final regulatory green light to officially launch its dedicated renewable energy subsidiary, Eskom Green.

Following the launch of Eskom Green last month, Eskom Holdings has secured the required key approvals in terms of Section 54(2) of the Public Finance Management Act (PFMA), read with the applicable conditions of the Eskom Debt Relief Act, to proceed with the establishment of Eskom Green as a company to house Eskom Holding’s renewable energy business and raise funding.

The approvals mark a key governance and unbundling milestone and enable Eskom to proceed with the implementation of Eskom Green, with the final steps now underway.

A governance framework built for agility

As a wholly owned subsidiary of Eskom, Eskom Green will operate within a governance framework aligned with the PFMA, the Companies Act, King Code principles and applicable shareholder requirements, ensuring accountability, transparency and appropriate oversight. This will enable the appropriate governance agility, competitive market positioning and enhanced access to public-private partnerships.

Eskom Green is a dedicated renewable energy business designed to scale at pace the delivery of cost competitive utility-scale renewable energy projects that support larger power user customers in achieving their decarbonisation and energy transition objectives. It will provide a portfolio of solutions alongside other technologies such as cleaner coal, gas and nuclear to reflect a balanced portfolio of solutions that is required to ensure a sustainable transition.

The subsidiary will offer a range of renewable energy solutions tailored to customers’ needs, with a focus on sustainable, reliable and cost-competitive energy supply.

As part of its implementation programme, Eskom Green will initiate a market process to establish a panel of strategic partners to support the delivery of renewable energy projects and related customer solutions.

Leadership weighs in on the historic milestone

Commenting on the development, Eskom Group Chief Executive, Dan Marokane, emphasised the strategic importance of the approvals:

“This is an important milestone in the further implementation of Eskom’s strategy in the areas of unbundling, delivering utility-scale renewable energy capacity and reducing carbon emissions and other air pollutants. It forms part of our customer-centric strategic response to the Department of Electricity and Energy’s requirement to diversify the supplier base for renewable energy and enable larger power user customers to decarbonise and remain competitive, as well as create an enabling environment for their growth and industrialisation.”

Marokane further contextualized the national targets, stating:

“The 2025 Integrated Resource Plan states that 102GW of renewable energy should be delivered by 2042, in line with this, Eskom Green is targeting to deliver up to 32GW by 2040, which still leaves over two-thirds of the renewable energy generation opportunities open to the private sector.”

Unlocking private capital and expertise

The subsidiary is structured to bridge the gap between public mandate and private-sector efficiency. Group Executive for Eskom Renewables, Rivoningo Mnisi, highlighted the transformative funding potential:

“Eskom Green can now crowd in external capital and expertise and enables private sector investors to be able to partner and invest with Eskom Green and utilise our experience and skills to deliver very compelling and competitive utility-scale renewable energy supply offerings to customers.

“The structure of Eskom Green provides a world-class solution and level playing field to accelerate investment in renewable energy through strengthening investor confidence that supports the economy of South Africa.”

Mnisi added that the move is a natural evolution for the utility, stressing the need for speed in the current market:

“This evolution reflects natural progression for Eskom. The fast-moving renewable energy market requires unprecedented agility and specialised partnership models that sit outside traditional utility structures. By creating a dedicated, ring-fenced platform, we are proactively optimising our approach into a dynamic, market-responsive model designed explicitly to maximise private sector collaboration and accelerate the national grid’s transition,” stated Minsi.

A financially sustainable, ring-fenced model

The establishment of Eskom Green is intended to deliver a combination of financial sustainability, system value and socio-economic impact, while limiting fiscal exposure for the South African government and strengthening Eskom Holdings’ long-term viability.

The establishment, capitalisation, funding and operation of Eskom Green is structured to comply with the PFMA, the Significance Materiality Framework (SMF), and the conditions attached to the Eskom Debt Relief Act.

This approach is consistent with international best practice, where state-owned utilities have established dedicated renewable platforms to scale up delivery while managing balance-sheet, governance and market-participation risks.

Eskom Green has been designed in response to global benchmarking research on over 20 utilities, with insights indicating that renewable project development requires agile decision-making, access to diverse capital sources, partnership-based delivery models, and bankable structures.

By ring-fencing renewable investments within a dedicated subsidiary, Eskom Green improves transparency, enhances bankability and reduces the cost of capital relative to delivery through Eskom Holding’s legacy generation structures. This supports Eskom Holdings’ strategic objective of expanding its renewable portfolio without materially increasing balance-sheet risk or reliance on sovereign support.

Eskom Green’s financial model priorities disciplined capital allocation, predictable cash flows from long-term offtake arrangements and appropriate risk sharing with private sector partners. Over time, this enables Eskom Holdings through Eskom Green to participate in the growth of cost-competitive renewable energy projects while preserving balance-sheet resilience and improving the sustainability of the Group’s generation mix.

Driving South Africa’s just energy transition

From a socio-economic and developmental perspective, Eskom Green is a key delivery mechanism for South Africa’s just energy transition. Its mandate includes the repowering and repurposing of coal-fired power station sites to support continuity of economic activity in affected regions. This approach mitigates the socio-economic impacts of decommissioning, supports skills transition, and contributes, with the support of other stakeholders, to the development of new local economies anchored around clean energy.

Eskom Green’s projects will be structured to support localisation, supplier development and community benefit mechanisms, where appropriate, while maintaining commercial discipline. In doing so, Eskom Green contributes to national objectives relating to energy security, decarbonisation, employment creation and inclusive economic growth.

Limiting fiscal exposure through SPV structures

Eskom Green is structured to ensure that the financial and socio-economic objectives outlined above are achieved by designing it to limit fiscal exposure through a ring-fenced, project finance model.

This SPV-based funding model ensures that project-specific debt, liabilities and risks are ring-fenced, resulting in risks being allocated at project level, shared with partners where applicable and limited to defined exposures for Eskom Green and Eskom Holdings.

Eskom Green’s financial exposure to individual projects is therefore limited to its committed equity contributions, with limited recourse to Eskom Holding’s balance sheet or the national fiscus. Where government support mechanisms are required to enhance bankability, such support is expected to be targeted, capped and subject to the necessary PFMA and shareholder approvals.

Eskom Green does not assume any policymaking, regulatory, or market-operation functions, and its mandate is limited to the development, financing and operation of renewable energy projects within its defined portfolio and partnerships.

Accordingly, its establishment is intended to complement and not duplicate or conflict with, the core mandates of other public institutions in the electricity and energy sector. All activities will be undertaken in compliance with South Africa’s energy regulatory framework.