Due Diligence in Energy

South Africa’s energy sector is heavily dominated by coal, which generated around 85% of the country’s electricity as of 2023, with most power supplied by the state-owned utility Eskom. Eskom not only supplies South Africa but also trades electricity with other Southern African Development Community (SADC) countries. Due to frequent power outages and a need for diversification, the South African government has increased its commitment to renewable energy through the Renewable Independent Power Producer Procurement Programme (REIPPPP). This initiative has already added over 6,000 MW in renewable capacity, mainly from solar and wind sources, with a goal to further expand private-sector investment in renewables.

Future projections suggest that renewables, particularly solar and wind, will make up a larger share of the country’s power mix, increasing from around 9.3% in 2023 to approximately 17% by 2032. The drive for renewable energy is also influenced by South Africa's Just Energy Transition Partnership, which aims to reduce emissions by decommissioning older coal plants and addressing the nation’s environmental footprint. Despite these goals, coal is expected to remain a significant part of South Africa’s energy mix over the next decade as the government manages energy transition challenges and Eskom’s debt restructuring plans.

With the increasing role of renewables, South Africa is positioning itself for growth in green energy, which could impact both domestic stability and export opportunities within the SADC region. The shift to renewables presents new challenges, especially in terms of integrating renewable sources into the national grid and balancing demand with supply during peak times, yet it offers a pathway to a more sustainable energy future.

The importance of performing due diligence in the energy sector

Due diligence in the energy sector is vital for evaluating the financial, environmental, and regulatory aspects of energy projects, whether they involve renewable resources, oil, gas, or other forms of energy. It ensures that projects comply with industry standards, minimize environmental impact, and are financially viable. Through rigorous assessments—including technical, legal, and market analyses—due diligence helps stakeholders identify potential risks, secure investment confidence, and make informed decisions. This process is essential to support sustainable practices, avoid costly liabilities, and promote responsible energy development in a highly regulated and capital-intensive industry.

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