Analyst Frost & Sullivan believes that there is also potential to direct some of this money towards solar energy. While the potential for solar in Africa in general is quite significant, the uptake of technologies has remained limited due to the cost of equipment.

"In South Africa, solar energy is still primarily used for off-grid applications," Frost & Sullivan Energy Industry Manager, Cornelis van der Waal, says. "This is because of the lack of a feed-in-tariff for individual users. On a commercial scale, wind is certainly more attractive than solar, simply because of the magnitude of the electricity that can be generated through wind."

No incentives

There is still a lot of open space that is not utilised for solar power, for instance on rooftops for photovoltaic (PV) panels or solar water heaters. The major reason that private individuals and institutions are not taking advantage of this though, is the lack of incentives for them to do so.

"The biggest challenge in the solar market in South Africa has been the lack of government support for individuals to purchase equipment and supply any excess power they might generate to the grid," notes Van der Waal.

While the National Energy Regulator of South Africa (Nersa) has proposed such a structure, the suggested feed-in-tariffs may not be high enough to stimulate significant interest. There are also no clear indications of when these will be implemented. The government's targets for having 3% of all power generated by renewable sources by 2013 has also been criticised for not being ambitious enough.

With additional funds available for renewable energy projects, Frost & Sullivan believes that more could be done to encourage solar options. There is scope to create a win-win situation in which consumers reduce their electricity bills, the demand for power from the South African Electricity Supply Commission (Eskom) is reduced and government promotes sustainable, green power generation.