Out in the middle of nowhere in the Free State, about an hour’s drive north-west of Bloemfontein, one of South Africa’s largest single-phase solar PV projects to date will soon be taking shape amid the sun-bleached farmlands and salt pans that characterise the area.

Spanning more than 1 000 ha, about the size of 1 000 rugby fields, the ZAR9 billion Notsi project features more than 860 000 solar panels. Its annual energy output of about 1.5 TWh will be enough to power about 140 000 homes per year. Independent power producer Anthem announced in March 2026 that it had achieved financial close on the project.

Crucially, Notsi will not be channelling its electricity to one offtaker (‘customer’, aka Eskom). As with an increasing number of renewables projects in South Africa, the project follows a multi-offtaker wheeling model where Notsi will feed electricity into the national grid to be wheeled virtually to offtakers around the country through power purchase agreements.

In this case, the 20-year offtake agreements are with licensed private electricity traders Discovery Green and Noa. According to a February 2026 report by the South African Energy Traders Association, compiled by Krutham, about 56% (~2.6 GW) of the almost 4.7 GW of private-contracted power projects above 5 MW that reached financial close between 2023 to 2025 was contracted to electricity traders.

With Notsi, Discovery Green and Noa will sell the electricity to businesses across a range of sectors, including industrial, retail, mining and farming enterprises. Smaller com-panies can even get in on the act. Engineering News reports that Discovery Green will allocate a portion of its contracted amount of 290 MW to Ampli Energy, its joint venture with Sasol that offers month-to-month supply deals to small companies.

The Notsi project is indicative of the move away from South Africa’s old single-generator, single-offtaker model towards trader-intermediated deals.

‘That shift reflects the limits of one-to- one contracting as the market matures, and the role traders now play in aggregating demand from multiple customers and supply from multiple generators to unlock new routes to market,’ writes Wayne Cowie, CEO of energy wheeling company Energy Exchange of Southern Africa, in a recent article published by Engineering News.

There’s also a not-so-insignificant benefit for government’s balance sheet.

The state has in the past provided financial guarantees for large-scale renewable energy generation projects through public procurement programmes.

‘However, competitive electricity markets reduce fiscal exposure for the state,’ writes Cowie. ‘A thriving multi-market model that encourages private investment in new generation frees up the fiscal balance sheet to provide credit support for other infrastructure needs such as transmission, water, logistics and housing.’

In essence, funding for renewables has shifted from a government-led procurement model – the long-running Renewable Energy Independent Power Producer Procurement programme, introduced in 2011 – to a liberalised market driven largely by the private sector wanting clean, affordable and reliable electricity.

As BDO South Africa notes in its 2025 renewables report, ‘corporate power purchase agreements and self-generation projects are reshaping the energy landscape, driven by companies seeking cost stability, emissions reductions and resilience against ongoing grid challenges’.

The report indicates that to implement the Just Energy Transition, South Africa will require more than ZAR1.5 trillion in investment by 2030, which will necessitate ‘blended finance, concessional funding and innovative risk mitigation tools’. In addition, green bonds, public-private partnerships and development finance institutions will be central to mobilising the funding. For example, the funders behind the Notsi project include Standard Bank, Nedbank, Absa, Vantage Capital’s GreenX Note III fund and Third Way Investment Partners.

Cowie argues that wholesale electricity markets – the role that will be filled by the imminent South African Wholesale Electricity Market (Sawem) – provide transparent pricing, ‘ensuring that the lowest-cost generation is scheduled first. This helps keep overall electricity costs down and improves the efficiency of power production and delivery. This should have a long-term impact of flattening tariff trajectories – a critical consideration for households, municipalities and businesses that have absorbed the consequences of the existing model for two decades’.

Those consequences have been considerable. According to the Krutham report, average electricity tariffs increased by 937% between 2007 and 2024, more than 700 percentage points above cumulative inflation of about 155%.

‘[Traders] provide liquidity in markets, manage risk and translate market price signals into transactions between companies,’ writes Cowie. ‘By aggregating demand and sourcing power from diversified generation portfolios, traders absorb volume, price and counter-party risks that would otherwise fall on individual customers or financiers. That risk-transfer function is central to unlocking investment in new generation.’

While the recent Electricity Regulation Amendment Act of 2024, which underpins the transformation of South Africa’s energy sector, makes it possible for municipalities to enter power purchase schemes and undertake renewable energy projects of their own, few local governments have the wherewithal to do so.

A March 2026 report from the International Institute of Sustainable Development (IISD) notes that most municipalities in South Africa still depend largely on national government transfers and limited own-source revenues, ‘which often fall short of the capital required for large-scale renewable energy or climate resilience initiatives. In contrast, private-sector participation in municipal climate finance remains minimal, creating a persistent funding gap that constrains project implementation and scalability’.

While metropolitan municipalities such as Cape Town and eThekwini have instituted independent power procurement and rooftop solar programmes, ‘many smaller rural municipalities continue to struggle with basic grid maintenance and limited administrative and financial capacity’.

In April 2026, the City of Cape Town, for example, budgeted more than ZAR1.2 billion over the medium term to improve its energy security. This included ZAR586 million to upgrade the Steenbras pumped hydro-electric power station, which helped keep at least some of the lights on in Cape Town while load shedding plunged the rest of the country into darkness during the electricity crisis a few years ago. The city is also spending another ZAR659 million on renewable energy procurement.

Last year, eThekwini became the first metro in the country to get the green light to generate its own electricity from renewable energy sources, including 100 MW of solar PV. The project was expected to unlock ZAR8.5 billion in private investment.

While the bigger, metro municipalities are better placed to access specialised financing, the IISD report points out that ‘many South African municipalities currently lack the creditworthiness, governance systems or financial track records’ required to secure such borrowing. ‘The challenge is not just about accessing finance but about creating the financial and regulatory readiness needed to engage with the prevailing climate investment architecture.’

It advises that ‘establishing a dedicated mechanism to track climate finance flows specifically directed towards local government should be strongly prioritised’. In addition, municipalities should partner with the private sector ‘to promote localised renewable energy development uptake’.

As for projects on a smaller, more individual scale, GreenCape’s 2025 market intelligence report on renewable energy points out that embedded solar PV generation has been made more accessible through the reduced overall installation costs, as well as the increasing number of competitive financing options.

‘Most commercial banks offer some form of standalone product for solar PV finance as well as having them incorporated into existing products. Power purchase agreements along with debt financing and rent-to-own are the most prevalent financing mechanisms currently available.’

The financing of renewables shows no sign of slowing down in the near future. Cowie points out that an additional 18 GW of projects could reach financial close in coming years. ‘These are not theoretical numbers. They represent investment decisions made by private players responding to a market that is opening.’

Images: Gallo/Getty Images