Eskom Clears Major Hurdle to Launch Renewable Energy Subsidiary

South Africa's state-owned power utility, Eskom, has secured the approvals required to establish Eskom Green, a wholly owned renewable energy subsidiary that will raise funding, attract private investment and accelerate the development of utility-scale clean energy projects across the country.

The approvals, granted under the Public Finance Management Act (PFMA) and the Eskom Debt Relief Act, allow Eskom to move ahead with the final stages of creating the new company, which was unveiled last month as part of the utility's broader restructuring programme.

Eskom Green will focus exclusively on developing, financing and operating large-scale renewable energy projects while creating a platform that can attract both public and private capital.

The subsidiary will remain wholly owned by Eskom Holdings but will operate under a governance framework aligned with the PFMA, the Companies Act and South Africa's corporate governance standards. The structure is intended to give the business greater flexibility to respond to market opportunities, form partnerships and secure financing for new projects.

Group Chief Executive, Dan Marokane, described the approval as an important step in Eskom's unbundling strategy and its efforts to expand renewable energy generation while supporting the country's decarbonisation goals.

South Africa's 2025 Integrated Resource Plan estimates that the country will need 102 gigawatts (GW) of renewable energy capacity by 2042. Eskom Green aims to contribute up to 32GW of that target by 2040, creating additional opportunities for private developers and investors to participate in the sector.

The company is also preparing to launch a market process to identify strategic partners that can support the delivery of renewable energy projects and related customer solutions.

Funding model designed to attract Investors

A key objective of the new structure is to expand renewable energy investment without placing additional strain on Eskom's balance sheet or increasing financial risks for the South African government.

Under the model, projects will be financed through ring-fenced structures that allow investors and lenders to fund individual developments rather than relying solely on Eskom's corporate finances. This approach improves transparency, allocates risks at project level and can lower the cost of capital.

Eskom Green was developed after studying renewable energy models used by more than 20 utilities worldwide. The review found that renewable energy projects are often delivered more effectively through dedicated entities that can access diverse funding sources, move quickly on investment decisions and build partnerships with private-sector players.

According to Eskom, the new company has been structured to operate as a commercially viable renewable energy platform capable of mobilising capital at scale while maintaining sound financial governance.

The subsidiary will offer renewable energy solutions to large power users seeking reliable electricity supplies and lower-carbon energy options as businesses increasingly pursue decarbonisation targets.

Latest step in power sector reform

The creation of Eskom Green comes as South Africa intensifies efforts to strengthen electricity supply, attract investment and reduce its dependence on coal, which still accounts for most of the country's power generation.

Over the past few years, the government has introduced reforms aimed at opening the electricity market to greater private participation while accelerating investment in renewable energy. Programmes such as the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) have already brought significant private capital into the sector.

Eskom's ongoing unbundling into separate generation, transmission and distribution businesses forms another pillar of those reforms. The establishment of Eskom Green marks a further step in that process and gives the utility a dedicated vehicle to compete in South Africa's rapidly growing renewable energy market.