The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.

The Commercialisation of SAWEM and SAPP: Two wholesale electricity markets that will change how renewable energy is developed, financed and contracted in the region

– By Dominic Goncalves, Advisory Partner for Energy Strategy at Cresco Project Finance, Founder & Director of Naviara Energy

The renewable energy industry in Southern Africa was commercialised in 2011 with the start of the REIPPP Programme in South Africa and initially focussed on long-term PPAs as the central contract to underpin the business model: an IPP signs a PPA with a utility – or more recently corporate buyer – and project finances the asset against that contracted revenue.

In 2021-2022, South African regulations relaxed the requirement for generation license thresholds, which ushered in new wave of corporate PPA deals between IPPs and corporate buyers such as mines, industrial and commercial loads and data centres.

These two models remain important – but a new market is emerging that will change how renewable energy is developed, financed, contracted, purchased and traded – in South Africa and in the wider Southern African region.

Across Southern Africa, electricity is gradually shifting from a vertically integrated utility product into a traded, time-sensitive and increasingly differentiated commodity. As ‘bulk renewable energy’ is becoming a reality, market demand is moving from requiring the cheapest form of renewable energy to dispatchable, firmed renewable energy – that is, delivering it when it is required the most, not simply when it is most cheaply produced.

Open-access reforms, corporate procurement, regional trading, battery storage and new wholesale markets are creating more routes between generators and consumers. The result is not the disappearance of the PPA, but rather a drastic, required evolution of it.

In 2026 the South African market is gearing up for the launch of SAWEM, the Southern African Wholesale Electricity Market. While the launch itself is delayed – currently to Q3 2026, although with likely first phase implementation in April 2027 – South African market participants – from IPPs to traders, buyers to regulators – have been educating themselves around what the market means and its implications for the evolution of their business.

SAWEM is not the first power market in the region – it is preceded by SAPP, the Southern African Power Pool. SAPP spans 12 countries and serves an estimated 360 million people.

SAPP has an established Day-ahead Market (DAM), although until recently has been dominated by regional utilities and competitive trading has been hamstrung by limited transmission infrastructure. Electricity demand for dispatchable renewable energy has surged, as the region – traditionally dominated by coal and hydro – has faced severe drought cycles, causing load-shedding across various countries, while requiring increasingly stable power for the mining of critical minerals, industrial development, and agricultural production.

IPPs in the region have largely focussed on South Africa until recently – the well applauded REIPPP Programme was regarded as a global case study of competitive procurement and bankable development of utility-scale renewables at the time. Recently however, grid congestion and curtailment have begun to slow down the South African market, which in itself is transforming into a liberalised electricity market.

While the REIPPP model is not necessarily obsolete – progressive developers, sellers, buyers and traders are largely side-stepping it.

SAWEM and SAPP are fundamentally changing the core tenets of PPAs in Southern Africa. While legacy PPAs from the REIPPP era will be protected, new renewable energy projects under development are incentivized to seek a combination of contracted and merchant revenue streams, as multiple offtaker profiles, market opportunities and contracting approaches emerge.

Perhaps the most widely seen experience of this unfolding to date has been the emergence of energy traders and aggregators in the region. Aggregation is aiming to diversify from location-based congestion and curtailment risk and aims to match willing buyers and willing sellers through aggregation pools, enabling more flexible PPA structures and shorter contracting periods.

Portfolio plays by energy traders and aggregators in South Africa – positioning themselves for participating in SAWEM, and many of which are also securing trading licenses to become market participants on SAPP – are focussed on aggregating power by incorporating batteries and energy storage, as well as securing access to renewable energy projects in different regions of South Africa and Southern African countries.

Regional power deficits, peak pricing, transmission congestion and market evolution are currently creating attractive opportunities for IPPs and traders entering SAPP. In the current phase of Southern Africa’s energy transition, transmission rights, grid access and the location of generation have become almost as important as the generation asset itself.

Zambia has offered plausibly the most advanced early indication of how the commercial model in the region may evolve. Open access, merchant and market-based renewable projects, industrial demand and the emergence of aggregators have created viable alternatives to a conventional single-buyer utility or corporate PPA, and these first mover projects and contracts have now moved from development to financial close, construction and operation.

The launch of SAWEM will be an important milestone in the region and will be implemented in phases. Market liquidity, price discovery, credit arrangements, metering, settlement systems and participant capability will need to develop over time. As generators and traders move to develop projects that no longer simply produce renewable energy but enable it to be traded and delivered when its value offering is the highest – locational diversity of generation and battery-supported solar and wind move from being ‘nice to have’s’ to being critical components of competing, trading and contracting – on a market with multiple options for buyers.

For IPPs, this means that route-to-market strategy must become part of project design rather than an exercise completed after the plant has been developed. For corporate buyers, it creates the potential to procure energy products shaped more closely around their actual demand. For banks and investors, it requires a shift from underwriting one contract and one offtaker towards assessing a portfolio of contracted and market revenues. For utilities and regulators, it creates the challenge of enabling competition without compromising system security or shifting unmanageable risk to consumers.

Electricity markets redistribute and reprice risks and rewards; PPA risk profiles are being fundamentally rewritten. Merchant price exposure, congestion, curtailment, imbalance costs and responsibilities, collateral requirements and settlement risk will become more important. Participants with strong forecasting, trading, portfolio optimisation and risk-management capabilities will have an advantage over those focused solely on developing generation capacity.

Southern Africa is therefore entering a period in which the most successful energy companies may look less like traditional asset owners and more like integrated energy platforms: combining generation, storage, trading, software, customer products and finance.

The transition will continue to develop in sprints, bursts, pauses and phases. However, the direction is becoming clear. The region is moving from a model dominated by bilateral PPAs and vertically integrated utilities towards a system in which electricity is increasingly bought, sold, balanced and optimised through competitive markets.

The most attractive investment opportunities are unlikely to be simply another solar or wind farm. It may be the platform, product or portfolio that connects those assets to customers at the right place and the right time.

As also reported by PV Magazine.