NJ Ayuk, executive chairman of the African Energy Chamber, shares Just Energy Transition (JET) lessons learnt from two African countries with different power generation contexts.

What: To date, South Africa and Senegal are the only African countries to have entered JETP agreements.

Why: JETP programmes have been introduced to provide financial support to developing nations as they transition away from fossil fuels.

What next? Ayuk says that JETPs alone are insufficient to fully fund Africa’s transition from fossil fuels, and attracting private investment to close the financial gap may be a significant challenge for many African countries.

During the 26th UN Climate Change Conference of the Parties (COP26) in 2021, South Africa became the first country to sign a Just Energy Transition Partnership (JETP) with the International Partners Group (IPG), which included France, Germany, the United Kingdom, the United States, and the European Union. These agreements have been introduced to provide financial support to developing nations as they transition from fossil fuels.

Since the initial JETP with South Africa, similar partnerships have been established with Indonesia and Vietnam. In Africa, Senegal and the IPG signed a JETP in June 2023. In an article published by the African Energy Chamber (AEC) on January 13, NJ Ayuk, executive chairman of the AEC, talks about lessons learnt from the two countries on the African continent.

Ayuk says that the most effective way for Western and other developed countries to assist Africa in transitioning away from fossil fuels is by prioritising investment and collaboration rather than adopting a patronising approach.

“This is precisely what the JETP programmes seek to do, assist energy emerging economies that are dependent on coal to transition away from fossil fuels while leaving room to address the associated social consequences,” he explains. “That is investment, that is collaboration, and above all, it is respectful of the reality that Africa can move only on its own schedule in this matter. Arbitrarily forbidding us from using our natural resources will only do more harm than good.”

To date, South Africa and Senegal are the only African nations that have entered JETP agreements. South Africa secured $8.5bn, while Senegal agreed to a $2.7bn deal. However, the two countries have significantly different strategies for utilising these funds, reflecting their distinct power generation contexts.

South African dilemma

South Africa’s energy sector faces a critical balancing act between ensuring energy security and advancing its decarbonisation goals. Coal dominates over 80% of its power generation, but chronic power outages, known locally as load shedding, have worsened since 2008, stalling economic growth at under 1% GDP annually for the past decade. In 2023, extensive maintenance issues in the ageing coal fleet led to record load shedding occurring on 335 days, double the disruptions seen in 2022.

The crisis spurred a surge in demand for solar panels and batteries. However, Eskom, South Africa’s state-run power utility, prioritised energy security by extending the operational life of coal plants, delaying its decommissioning plans for older plants. Also, Eskom’s generation recovery strategy launched in 2023 has significantly improved coal plant maintenance and no load-shedding events have occurred since March 26, 2024.

This reliance on coal conflicts with South Africa’s Just Energy Transition Investment Plan (JET-IP). The government is now renegotiating $2.6bn of the $8.5bn JETP funding to accommodate its current energy needs. The country must urgently align energy security with its transition goals, says Ayuk, especially as peak demand is expected to rise to 38 GW by 2030, which is 6 GW more than the current peak.

To meet this demand, 13.6 GW of new capacity is anticipated by 2027, with solar PV contributing over 50% and onshore wind 25%. Battery storage from the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPP) will also support this growth. Renewable energy’s share in South Africa’s energy mix is projected to rise from 14.1% to nearly 29% by 2030, but coal is still expected to meet two-thirds of daily demand. Therefore, balancing energy security with decarbonisation remains South Africa’s key challenge.

“I want to be very clear here: South Africa’s renewable energy growth is commendable, and Eskom’s decision to prioritise energy security via coal when an alternative solution wasn’t immediately available was understandable and pragmatic,” says Ayuk, pointing out that the country’s renewables are not advancing fast enough to cover for the ageing of its coal fleet. “And no amount of emergency maintenance campaigns can ensure that similar issues won’t lead to a load-shedding crisis again. If unaddressed, it will introduce the risk of shortfalls when the coal fleet is inevitably shut down at its end of life,” he warns.

In Ayuk’s opinion, gas-to-power (GtP) is a practical interim solution for South Africa as it works to expand its renewable energy capacity. GtP offers the flexibility needed to meet demand when the ageing coal fleet is no longer viable, leaving only the Koeberg nuclear power plant (NPP), along with limited solar and hydropower, to bridge the energy gap. Natural gas is more cost-effective and efficient than coal, he notes. Additionally, retrofitting former coal plants with gas turbines is relatively inexpensive, enabling a gradual coal phase-out while avoiding the costs of building new infrastructure.

This approach is critical, according to Ayuk, as South Africa estimates the coal phase-out will require $99bn between 2023 and 2027. To date, the country has raised about half of this amount through its 8.5bn JETP agreement with the IPG, $33bn in private sector investments, and $10bn from the public sector. To close the remaining funding gap, South Africa plans to rely on grants, guarantees, and concessional loans from both domestic and international private entities.

Fewer challenges for Senegal

Senegal faces fewer challenges than South Africa in its energy transition, as its power generation relies on liquid fuels rather than coal. Historically, the West African country has depended heavily on oil and diesel-fired power plants, making its energy sector vulnerable to fluctuating global oil prices. However, with recent discoveries of offshore gas reserves, such as those in the Greater Tortue Ahmeyim (GTA) field shared with Mauritania, Senegal is shifting towards natural gas as a key component of its future energy mix.

The $2.7bn secured through its JETP is expected to attract additional investments from both private and public sectors. In addition, Senegal will receive technical support from international partners to enhance renewable energy integration, focusing on grid stabilisation and battery storage. These efforts align with its electrification goals to increase renewables’ share in its installed capacity from 22% to 40% by 2030.

To achieve its targets, Senegal has committed to developing an investment plan within 12 months to outline its needs, opportunities, and funding allocations. Furthermore, it plans to publish a revised nationally determined contribution (NDC) at COP30 in late 2025. The current NDC includes unconditional targets of 235 MW of solar PV, 150 MW of onshore wind, and 314 MW of hydropower by 2030. With international support, these targets are set to increase to 335 MW of solar PV, 250 MW of onshore wind, 50 MW of bioenergy, and 50 MW of solar thermal.

Growing pains

“Overall, both South Africa and Senegal stand to benefit significantly from their JETPs, and this is a trend I hope to see continue in the future for African states,” says Ayuk. “There are, of course, growing pains.”

JETPs are still in their early stages, with initial agreements signed more as political promises than fully developed plans, according to AEC’s executive chairman. This has caused delays in implementation for South Africa and Senegal as consultations and negotiations work out the logistical details. Moreover, Ayuk believes that JETPs alone are insufficient to fully fund Africa’s transition from fossil fuels, and attracting private investment to close the financial gap may be a significant challenge for many countries.

“This is why it is crucial for African states, and the world at large, to keep a close eye on how things develop in South Africa and Senegal, as their efforts to address these challenges will no doubt set the example for others,” he concludes.