Eskom Green receives government approval to launch under business separation program

Eskom announced on Thursday that the final stages of implementing this subsidiary are already underway. When Eskom Green was launched last month, the utility stated that the division would be spun off into a wholly-owned subsidiary with an independent board of directors, pending approvals regarding governance, regulation, and shareholders—an obstacle that is now removed.

Goals and Market Ambitions

Eskom Green aims to supply up to 32 GW of renewable energy at an industrial scale by 2040. This accounts for approximately one-third of the 102 GW required by South Africa by 2042, according to the Integrated Resource Plan for 2025. CEO Dan Marokane emphasized that this target 'leaves over two-thirds of renewable energy generation capacity open for the private sector.'

This statement reflects criticism from independent power producers who questioned the feasibility of a state-owned generation company competing in the renewable sector while another entity, Eskom, manages the national grid. Eskom clarified that the new subsidiary 'does not take on any policy development, regulatory, or market operation functions' and that its creation is intended to complement, not duplicate or conflict with, the mandates of other state institutions in the energy sector.

Project Model and Partnership

Board Chairman Mteto Nyati had previously asserted that Eskom would not exist in 40 years without a renewable energy business. Marokane noted: 'This is an important step in the further implementation of Eskom's strategy in areas of separation, providing industrial-scale renewable energy capacity, reducing carbon and other air pollutants.'

The central element of the structure is a project finance model, where individual projects are placed in special purpose vehicles. Debts, obligations, and risks are isolated at the level of each project. Eskom Green's involvement in any project will be limited to its declared equity capital, with limited access to the Eskom holding company's balance sheet—an approach designed to comply with the National Treasury's R254 billion debt relief package conditions, which restricts Eskom's ability to take on new loans.

Rivoningo Mnisi, Eskom's executive head of renewable energy, stated that 'Eskom Green can now attract external capital and expertise, allowing private sector investors to collaborate and invest with Eskom Green, leveraging our experience and skills to provide very compelling and competitive proposals for supplying industrial-scale renewable energy to clients.'

Future Plans and Legacy

The company reported that Eskom Green is initiating a market process to form a group of strategic partners to support project implementation. Its mandate also includes the modernization and repurposing of coal power station sites as they are decommissioned, to sustain economic activity and jobs in affected regions. In this area, where Eskom's track record, particularly at the now-closed Komati station in Mpumalanga, has drawn criticism for slow progress, Mnisi previously told TechCentral that the solar-battery hybrid at Komati is queued after the Letaba project, which was launched in May.

Eskom launched the Eskom Green brand last month; the approvals received on Thursday allow the legal entity to be officially registered and capitalized. The utility did not specify what initial capital the subsidiary will receive or when its first projects will reach financial closure.