South Africa is heading towards a substantially different electricity mix, with renewable capacity forecast to overtake thermal generation capacity in 2031. Yet the country’s pumped storage fleet is expected to remain at 2.91GW throughout the next decade, leaving existing schemes to support a system with rapidly increasing solar and wind capacity.
That is a central finding for the hydropower sector in GlobalData’s South Africa Power Market Outlook to 2035, Update 2026. Published in September 2026, the report forecasts renewable capacity increasing from approximately 16.6GW in 2025 to 59.4GW in 2035. Over the same period, it anticipates no additions to large conventional hydropower or pumped storage capacity.
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The result is a transition in which hydropower’s installed capacity changes little, while the system around it changes considerably. Batteries account for the report’s near-term storage expansion, with the proposed 1.5GW Tubatse pumped storage scheme falling beyond its forecast horizon.
A changing generation mix
South Africa entered this transition with a generation fleet still dominated by coal. Coal accounted for 48.8GW of the country’s 74.6GW of installed capacity at the end of 2025 and generated 167.8TW-hours (TWh) of its 213TWh of electricity output. Eskom owned 71.2% of national generating capacity.
Supply performance has improved. The report records an increase in Eskom’s energy availability factor from 60.6% to 65.2% in the year to March 2026, alongside a reduction in load shedding to four days. However, availability remained below the utility’s 70% target and the outlook assumes substantial coal retirements over the following decade.
GlobalData forecasts total installed capacity reaching 105.3GW by 2035, with renewable capacity accounting for 56.4% of the fleet. Solar photovoltaic (PV) reaches approximately 40.1GW and wind 18GW.
The shift in electricity production is slower. Thermal generation’s share falls from 79.6% in 2025 to 53.1% in 2035, while renewables rise from 15.2% to 40.4%. Coal output declines to 124.7TWh but remains a major source of supply at the end of the forecast period.
For storage operators, this distinction matters: a growing renewable share of installed capacity does not immediately remove dependence on thermal generation, but it changes the requirements for balancing supply and meeting peak demand.
Pumped storage holds steady
South Africa’s pumped storage capacity is concentrated in four schemes. Ingula, commissioned in 2016, is the largest at 1.33GW, followed by Drakensberg at 1GW, Palmiet at 400MW and Steenbras at 180MW. Eskom operates Drakensberg and Palmiet, while Steenbras is owned by the City of Cape Town.
Together, these assets account for most of the country’s hydropower capacity. Large conventional hydropower totals 638.9MW, principally Gariep at 360MW and Vanderkloof at 240MW on the Orange River.
The report forecasts large conventional hydro generation rising from around 1TWh in 2025 to 1.4TWh in 2035 as rainfall normalises following drought-affected output of 900GW-hours in 2024. This increase comes without additional installed capacity.
Small hydro offers limited growth. Capacity increases from 45.1MW to 58.1MW over the forecast period, leaving its contribution modest alongside the scale of solar and wind development.
Tubatse is the principal prospect identified for expanding pumped storage. The report lists Eskom’s proposed 1.5GW scheme in Limpopo at the announced stage, with an indicative commissioning date of 2038. It therefore contributes no capacity to the outlook through 2035.
The forecast consequently places considerable reliance on the existing pumped storage fleet during a potentially difficult period for supply adequacy. Coal retirements are concentrated towards the end of the decade: GlobalData assumes 3.7GW closes in 2029 and a further 4.23GW in 2030.
Total generating capacity still increases in 2029, but the forecast shows a net reduction in 2030. The report identifies tightening reserve margins around this period and links the ability to meet evening peak demand to existing pumped storage, the battery project pipeline and proposed gas generation.
These retirement assumptions carry uncertainty. The report notes that previous coal closure schedules have slipped and that Eskom has argued against closing stations before replacement capacity and grid readiness are secured. The projected retirement dates should therefore be treated as assumptions underlying the outlook.
Batteries, grid access and market reform
Battery development is more immediate. GlobalData records 143 energy storage projects totalling approximately 6.24GW, including 795.5MW operational, 673.5MW under construction and 3.73GW planned. These figures describe projects at different stages rather than a committed programme of new operating capacity.
The Battery Energy Storage IPP Procurement Programme has run three bid windows since March 2023. Its approach is deliberately tied to the network, procuring capacity at named substations in the Northern Cape, North West and Free State to relieve congestion.
The second window awarded up to 615MW, with tariffs approximately 35% below those in the first window. The third awarded up to 616MW. The Integrated Resource Plan 2025 allocates 3.1GW of battery storage by 2030 and 8.5GW by 2039.
Network access remains a constraint on the wider transition. The report identifies transmission capacity as the binding limitation on renewable development, particularly in the Northern and Eastern Cape, where much of the strongest resource is located.
The consequences are already evident in procurement. Bid Window 6 awarded no wind capacity because of unavailable grid capacity, while Bid Window 7 reallocated its entire 3.2GW wind allocation to solar PV for the same reason.
GlobalData forecasts the transmission network expanding from approximately 34,900 circuit-kilometres in 2025 to 39,200 circuit-kilometres in 2030. Most additions are at 400kV and 765kV. The Independent Transmission Projects programme is intended to bring private capital into network development, with seven consortia prequalified by December 2025.
Market reform is also changing the commercial setting for generation and storage. Removing the generation licensing threshold in 2022 accelerated private investment, while the Electricity Regulation Amendment Act, effective from January 2025, provides a framework for competitive trading.
However, implementation remained incomplete at the report’s publication. The National Transmission Company South Africa had received its market operator licence, but the report could not confirm that the South African Wholesale Electricity Market had begun trading or that the Market Code had received final regulatory approval.
The initial market design is described as a pool matching generators with large customers. GlobalData identifies its potential to introduce merchant revenue opportunities for storage, which has largely depended on public procurement. Batteries procured through the existing programme receive contracted availability payments rather than arbitrage margins.
For pumped storage developers, this leaves an important commercial question alongside the engineering and financing requirements: how will an evolving market value storage services? The report identifies the potential change in revenue arrangements but does not establish a merchant investment case for new pumped storage.
Its investment forecast underlines the limited near-term expansion of hydro. Of $28.5bn in projected power-sector investment during 2026–30, solar PV accounts for 59.7% and onshore wind 39.2%. Hydro receives just 0.02%.
South Africa’s outlook therefore places existing pumped storage at the centre of a changing system without forecasting an accompanying construction programme. Through 2035, the immediate challenge is to coordinate renewable additions, battery deployment and transmission expansion with the withdrawal of coal capacity. Tubatse represents a possible expansion beyond that period; within it, the country continues to rely on its four established pumped storage schemes.
