The Unspoken Words of Budget 2025: What It Means for Energy and South Africa’s Transition
The Budget attempts to walk a tightrope, balancing concerns about low economic growth and infrastructure spend against the need to narrow the budget deficit and reduce future debt servicing costs, which is already consuming 20c in every Rand of tax revenue collected writes Professor Roula Inglesi-Lotz and Professor Heinrich Bohlmann.
Professor Roula Inglesi-Lotz, an economics scholar at the University of Pretoria, leads its Energy Economics Research Unit. She earned her MCom and PhD there, focusing on the economic impacts of energy. With over 90 publications, she is a recognised expert in energy and environmental issues.
Source: Getty Images
The government’s emphasis on infrastructure development and economic growth sits uncomfortably alongside the announcement of a VAT increase. This approach could dampen household spending, economic momentum, and perhaps confidence in the ability of government to use existing resources more efficiently.
We should also not underestimate the impact of there being no adjustment to the tax brackets for inflation this year, which will effectively raise everyone’s average income tax rate and reduce their disposable income. The contradiction in messaging reflects a broader theme of the budget: ambition without full clarity on execution.
A significant determinant of the effectiveness of such measures is the capacity to respond to structural bottlenecks that hamper economic growth. Foremost among these is the energy sector, where unstable electricity supply remains a principal damping factor for investment, business sentiment, and overall economic performance. One of the key aspects that has hampered achieving the economic growth South Africa needs is a dependable electricity generation, transmission and distribution sector.
PAY ATTENTION: Briefly News is now on YouTube! Check out our interviews on Briefly TV Life now!
The key insights
The 2025 Budget Speech provided key insights into South Africa’s evolving energy landscape. The government reaffirmed its focus on infrastructure, particularly the expansion and modernisation of the national transmission grid needed to bring new renewable generation projects online. This emphasis reflects the state’s role in ensuring grid stability while enabling increased participation from private-sector energy producers.
Although no major policy shifts were announced, the budget reinforced existing strategies for the Just Energy Transition (JET), highlighting the need for public-private partnerships and investment to drive clean energy expansion. Disaster management and climate resilience were also emphasised, indicating the government's recognition of climate-related risks. However, questions remain about the scale of funding available for JET and the mechanisms for attracting sufficient investment.
The speed at which mitigation strategies are being rolled out in areas such as Mpumalanga, where the coal sector is expected to be significantly diminished in coming years as its ageing fleet of coal-fired power stations is retired, is also worrying, especially given the poor reception to the Komati coal plant decommissioning.
Source: Getty Images
Climate Change: Strengthening Resilience While Avoiding Real Reform?
One of the most visible commitments in this year’s budget was disaster management, likely reflecting the government’s recognition of climate-related risks. However, the response is reactive mainly, focusing on resilience rather than more profound systemic change. Mitigation strategies—such as accelerating emissions reduction and expanding renewable energy—received far less emphasis.
Without a stronger push for proactive decarbonisation, South Africa risks remaining in a crisis response cycle rather than long-term sustainability. Future budgets must continue to move beyond adaptation and commit to tangible mitigation efforts, ensuring climate resilience and efficiency are built into the country’s broader energy transition.
Admittedly, without achieving global cooperation in this regard and maintaining the ambition of the Paris Agreement, even successful local policy reforms are unlikely to yield its anticipated environmental benefits.
The Just Energy Transition: Lofty Goals, Limited Details
While the budget does not explicitly use the term "Just Energy Transition" (JET), the focus on transmission infrastructure suggests a continued commitment to ensuring the investment requirements of the transition are met. Expanding the grid is critical to unlocking private sector investment in renewables. However, this emphasis on infrastructure sidesteps pressing concerns about JET's broader funding and social dimensions.
The widely cited $100 billion financing target remains largely aspirational without concrete mechanisms to effectively secure and allocate these funds at affordable rates over the long term. Additionally, the government has yet to outline clear strategies to support coal-dependent communities, workforce reskilling, and economic diversification—critical elements of an equitable transition.
Private sector involvement in shaping the future electricity generation mix will be essential, but it does not guarantee affordability or equitable access. Without firm regulatory frameworks and targeted public investment, the energy transition could deepen rather than alleviate existing inequalities. The budget acknowledges these challenges in principle, but in practice, it remains vague on how they will be addressed.
The Role of the State: Leadership or Passive Facilitation?
The budget underscores the government's role in enabling growth and investment through infrastructure development, but it is unclear whether this is a sign of strong leadership or merely facilitation. While the private sector is expected to grow in energy generation, state oversight remains crucial for ensuring stability, equitable access, and fair pricing. However, the lack of decisive policy direction leaves room for uncertainty. A more assertive approach—outlining clear regulatory safeguards and active state participation in energy planning—would provide much-needed clarity to investors and the public.
Despite referencing global climate and sustainability goals, the budget avoids directly engaging with the full scope of South Africa’s energy challenges. Without more substantial commitments to emissions reductions, clearer funding pathways for JET, and a more defined role for state intervention, the transition remains more of an aspiration than a structured plan.
Looking Ahead: Hopeful Intentions or Missed Opportunities?
The 2025 Budget Speech reinforces the government’s commitment to infrastructure and private sector collaboration, but its lack of specificity raises concerns about implementation. While focusing on transmission expansion is necessary, it does not substitute for broader, systemic energy reform. Future budgets must exceed high-level commitments and articulate clear policies, investment strategies, and accountability mechanisms to ensure a sustainable and equitable transition. Until then, this budget's “unspoken words” may be the ones that matter most.
PAY ATTENTION: Сheck out news that is picked exactly for YOU - click on “Recommended for you” and enjoy!
Source: Briefly News
Admin
Roula Inglesi-Lotz (Professor) Professor Roula Inglesi-Lotz is an energy economist specialising in energy transitions and their socioeconomic impacts. She is a professor at the University of Pretoria and leads its Energy Economics Research Unit. Her work covers energy policies, pricing, poverty, carbon emissions, and the Just Energy Transition. She is Vice President of Membership at the IAEE, founding president of SAAEE, and a UNDP Just Energy Transition Platform 2023 contributor. An NRF C-1 rated researcher, she has received multiple awards, including the 2017 Women in Science Award.
