Why the next energy opportunity lies in Southern Africa

As instability around one of the world’s most sensitive energy corridors continues to unsettle fuel markets, the lesson for investors is becoming harder to ignore: energy security is no longer only about molecules in transit, but about the resilience of the electricity systems that keep economies running when global supply chains tighten. The IEA highlights that energy security has expanded beyond traditional fuel supply to include electricity systems, infrastructure and critical mineral supply chains and that the transition is shifting focus towards the minerals, materials and manufacturing capacity needed for energy technologies.

The good news is that global capital is increasingly flowing towards electricity systems, with investment in grids, storage and electrification now significantly exceeding spending on upstream fossil fuels. For investors, the implication is straightforward: the most compelling opportunities increasingly sit where reform, power demand and network expansion are converging.

In this environment, electricity networks are becoming a central focus of energy system transformation and Southern Africa, led by South Africa, stands out for its disproportionate share of installed capacity and energy investment on the continent.

South Africa, in particular, fits that profile more clearly than it did even a couple of years ago. For years, its electricity narrative was dominated by shortage, loadshedding and disruption. Today, the picture is beginning to shift from crisis response to system enhancement. In June 2025, the World Bank approved a US$1.5 billion Development Policy Loan to support South Africa’s infrastructure reforms, including measures to improve energy security, attract investment into transmission, expand grid access and strengthen municipal distribution. The World Bank also linked these reforms directly to jobs, investment and better public service delivery, while pointing to improved utility performance and reduced load-shedding intensity, with Eskom’s Energy Availability Factor around 63% by late 2024, up from 55% in 2023.

South Africa is not out of the woods, but it is building a more investable power system than it had even a short time ago.

The more important story, however, is not about generation, but about transmission. South Africa’s own policy direction now recognizes that the next phase of growth will depend on the ability to move more power, more reliably, across a much larger and more flexible grid. The National Treasury and the Department of Electricity and Energy have stated that more than 14,000 km of new transmission lines will be needed over the next decade to integrate around 53 GW of new generation capacity. The National Transmission Company South Africa’s development plans reinforce the same logic: the country’s future energy competitiveness depends on building the network fast enough to connect renewable-resource regions to demand centres and prevent grid bottlenecks from becoming the next brake on growth.

This is precisely why South Africa’s Independent Transmission Projects (ITP) programme deserves investors’ attention. The ITP framework is designed to open grid build-out to private developers, financiers and operators under a more transparent and programmatic procurement model. The government reported more than 130 formal responses to its market-sounding exercise and over 44% of local participants indicated partnerships or intended partnerships with international firms.

The supporting bankability architecture is improving as well, with a Credit Guarantee Vehicle being developed with World Bank support and draft transmission regulations designed around transparent cost recovery and clearer risk allocation. For investors, that is a meaningful signal: transmission in South Africa is beginning to shift from policy aspiration to a pipeline that can be structured, financed and delivered by private sector players.

A recent meeting hosted by the World Economic Forum focusing on the power sector investment opportunity in Southern Africa brought this into sharper focus. The dialogue highlighted a set of investment-ready generation projects that includes Salima Solar in Malawi, Mphanda Nkuwa Hydro in Mozambique and Batoka Gorge Hydro on the Zambia–Zimbabwe border. Two transmission lines also caught investors’ interest: the ZiZaBoNa interconnector linking Zimbabwe, Zambia, Botswana and Namibia, as well as the BOSA line linking Botswana to South Africa.

The significance of these projects lies less in the detail of any one asset than in what they represent together: a more connected Southern African system built on flexible clean energy generation and cross-border transmission. Taken together, these projects represent scalable opportunities that can enhance global energy security, accelerate low-carbon growth and create investable infrastructure platforms at a regional scale. Investors and stakeholders converged around a clear opportunity: Southern Africa already has meaningful generation potential and transmission is now the strategic lever to unlock its next phase of growth.

To add to investors’ interest, the region operates one of the most advanced regional electricity trading platforms on the continent: the Southern African Power Pool (SAPP). SAPP already operates structured arrangements that include a Day-Ahead Market Forward Physical Markets IntraDay trading and balancing mechanisms.

In practical terms, countries in the region are not standing at the edge of a theoretical future market; they are positioned within a regional power system that already has market architecture, trading experience and cross-border expansion needs. For investors, that reduces one of the biggest risks often associated with African power markets: the absence of functioning market institutions.

The investor case becomes even stronger when one looks beyond the power sector alone. Generation and transmission investments are not only about stabilizing the power sector; they are about underwriting the region’s next industrial chapter in critical sectors for the region’s economy (think mining activities, for instance) that depend on reliable, scalable and lower-carbon electricity. This is the real investment case. Southern Africa is no longer only trying to solve an electricity crisis. It is building the foundations of a larger infrastructure story, one where grid expansion, market reform, industrial growth and regional trade begin to reinforce one another. In a volatile energy world, this makes countries’ transmission build-out more than a utility upgrade and one of the clearest entry points into Africa’s next energy investment cycle.