eThekwini’s energy deal is not the green win it seems to be

This week in the Energy Report, journalist Lindsey Schutters argues that the Durban metro’s landmark 400MW power deal is not a renewable energy success. It’s a carefully orchestrated national strategy to avert an industrial catastrophe that could wipe out 5% of GDP.

Minister of Electricity and Energy Kgosientsho Ramokgopa needed only four succinct bullet points in the Government Gazette to herald a landmark 400MW energy deal: eThekwini will be South Africa’s first metro to procure substantial power from independent producers and could potentially reduce its reliance on Eskom by 18%.

But the devil is in the detail, which reveals that this isn’t quite the green energy story many may have been expecting. Of the 400MW capacity, only 100MW will come from solar photovoltaic (PV) panels. The remaining 300MW will be generated by natural gas. This makes eThekwini’s deal less a renewable energy triumph than a strategic manoeuvre to avert the other national energy crisis: the “gas cliff”.

South Africa faces the imminent collapse of its natural gas supply. This could devastate industries worth up to R700-billion annually and directly threaten more than 70,000 jobs. The country’s industrial economy depends heavily on gas imports from Mozambique via the Rompco pipeline. But those Pande and Temane fields are rapidly depleting and Sasol, the primary importer, has notified customers that it will cease supplying the commercial market between 2026 and 2028.

Ramokgopa has called the gas cliff the “second most pressing issue” keeping him up at night after load shedding, with the potential “to wipe out 5% of the country’s GDP”. This helps to make sense of eThekwini’s gas-heavy procurement. It didn’t stumble into a gas deal; it is a deliberate move.

Read more: Industry lifeline — Sasol unveils bridging plan to avert South Africa’s looming gas cliff

The municipality’s initial public statements spoke of “400MW of renewable energy”, but the request for information (RFI) issued in July 2021 was, strategically, “technology-agnostic”. When the RFI closed 90 days later, it had generated overwhelming support from 104 potential projects totalling 16,477MW.

A breakdown of the technology was revealing. Of the 8,857MW of individual generation assets proposed, natural gas was the single-largest category at 40%, followed by solar PV at just 23%. The message was clear: private developers see gas as the “most mature, large-scale and readily available” option for dispatchable power that can be switched on when needed.

This market-driven evolution towards gas wasn’t coincidental. It reflected the technical reality that intermittent renewable sources need backup.

The timelines of the procurement and the natio­nal gas in­­fra­­structure response reveal a carefully coordinated strategy:

• 2021: eThekwini launches its procurement proces.

• 2023: Sasol officially announces cessation of gas supply between 2026 and 2028.

• February 2025: The Zululand Energy Terminal consortium signs a 25-year agreement to develop a liquefied natural gas (LNG) import facility at Richards Bay.

• August: eThekwini receives final approval for its 400MW deal.

• 2026: The projected gas cliff begins, eThekwini plans to issue its gas tender, and the LNG terminal aims for a final investment decision.

• 2028: Both the eThekwini gas plant and the LNG terminal target commercial operation.

This isn’t a coincidence. eThekwini will serve as a foundational anchor customer for the Zululand Energy Terminal, a joint venture between Dutch multinational Royal Vopak and Transnet Pipelines. The gas will flow through the repurposed Lilly pipeline, avoiding the need for expensive new infrastructure.

This creates a symbiosis whereby the power plant depends on the LNG terminal’s completion, while the terminal needs the long-term power purchase agreement to justify its investment.

Tracking dirt into the energy transition

The eThekwini deal sits uncomfortably with the energy transition narrative. Dr Karen Surridge, renewable energy project manager at the South African National Energy Development Institute, recently celebrated how electricity constraints had driven “a boom in the solar PV and battery industries”, with marked improvements in efficiency and cost reduction.

But eThekwini’s procurement tells a different story. Despite the rhetoric about innovation and renewable energy, when a municipality needed large-scale, reliable power quickly, the market delivered gas.

This reflects a broader tension in South Africa’s energy transition. Whereas policy documents speak of renewable energy and the just energy transition, practical decisions increasingly favour gas as a “critical transitional fuel”. The draft Integrated Resource Plan 2023 allocates significant new generation capacity to gas-fired plants, up to 22,000MW of combined cycle gas turbines by 2050.

Importantly, no companies have been awarded contracts yet. The formal bidding process through requests for proposals is still to come – solar PV tenders in December this year, and gas-to-power tenders in 2026. But the initial interest was overwhelming: 104 potential projects, including 96 energy-generation proposals and eight financial institutions.

The delay until 2026 for gas tenders is strategic, aligning with when the Zululand Energy Terminal consortium needs customer commitments to reach its “final investment decision”. It’s also when the country will be teetering on that gas cliff.

Environmental justice organisations aren’t buying the transition fuel argument. They see new gas infrastructure as creating stranded assets in an accelerating global energy transition, and question whether gas can truly be considered clean.

But industrial stakeholders view projects such as eThekwini’s as vital lifelines. The municipality projects savings of R5-billion over the duration of the power purchase agreement, and R8.5-billion in private investment creating an estimated 2,200 jobs.

The project faces significant risks: global LNG price volatility, construction delays that could leave industries exposed to the gas cliff, and the real possibility that environmental challenges could derail the creation of critical infrastructure.

Viewing things at utility scale

eThekwini’s 400MW deal is more than a case of municipal power procurement. It’s a test case for South Africa’s ability to navigate the immense trade-offs inherent in its path towards a just and sustainable energy future.

The deal reveals the gap between renewable energy rhetoric and practical implementation. Innovation advocates may celebrate solar and battery breakthroughs, but critical infrastructure decisions still favour gas for its reliability and scale.

It also highlights the coordinated national response to the gas cliff – a crisis that could prove more immediately devastating than blackouts, even though it has received far less public attention.

As South Africa grapples with its energy future, eThekwini’s renewable energy deal offers a sobering lesson: in the complex world of energy security, good intentions often collide with harsh realities. The municipality set out to buy renewable energy and ended up as a linchpin in a national strategy to avert industrial catastrophe.

Whether that’s pragmatic policymaking or a failure of renewable energy ambition may depend on one’s perspective. What’s certain is that the eThekwini deal will be closely watched as other municipalities consider their own energy independence – and as South Africa races against time to prevent its industries from falling off the gas cliff. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35. Get DM168 delivered to your door every week. Subscribe here.