South Africa’s Naos-1 Hybrid Solar Project Reaches Financial Close
Published · 4 min read
SOLA Group has announced financial close on its Naos-1 Hybrid Solar and Battery Project, marking a major step forward for South Africa’s renewable energy transition.
The project represents the country’s first utility-scale solar and battery storage system designed to deliver power directly to private industrial customers through the national grid.
What the Project Will Deliver
Naos-1 will combine a 300 megawatt solar facility with 660 megawatt-hours of battery storage near Viljoenskroon in Free State province.
The facility has secured 25-year power purchase agreements with Sasol and Air Liquide, two major industrial energy users. Both companies operate large plants in Secunda and are working to cut their carbon emissions.
Construction is already underway. The project targets commercial operation in the first half of 2028.
How Battery Storage Changes the Game
Unlike traditional solar installations that only generate power during daylight hours, Naos-1 includes battery storage that can dispatch electricity during evening peak demand periods.
This design solves the intermittency problem that has limited solar’s reliability for industrial operations. The batteries store energy generated during peak sunlight and release it when it’s needed most.
The system allows industrial customers to access clean energy without building their own generation facilities. Instead, they sign long-term contracts that lock in predictable electricity costs for 25 years.
Addressing South Africa’s Energy Crisis
The project comes as South Africa continues battling an energy crisis driven by Eskom’s aging coal-fired power stations.
For more than a decade, technical failures at state-owned plants have forced scheduled power cuts called load-shedding. At their worst, these blackouts stripped 6,000 megawatts from the grid in single events.
The crisis has pushed private businesses to seek alternatives. The government has responded with regulatory reforms, including removing licensing requirements for distributed generation projects up to 100 megawatts and allowing electricity wheeling arrangements through the national grid.
Major Financing Commitment
Financial close followed what participants called an accelerated negotiation process involving multiple South African lenders.
The Development Bank of Southern Africa served as the largest senior debt financier. Nedbank, RMB, Investec, and Absa also provided funding.
SOLA Group says Naos-1 is the first of several planned projects. The company has an additional 600 megawatts of hybrid solar and battery projects at advanced development stages.
Building Momentum for Renewables
Between 2019 and 2024, installed renewable capacity in South Africa rose by 129 percent, driven largely by solar power.
Solar capacity jumped 223 percent to more than 13.5 gigawatts during that period. South Africans installed more than 5,000 megawatts of rooftop solar over just the past three years.
Private sector investment in renewable energy has exceeded R350 billion (approximately USD 19.77 billion) since 2023 alone.
The government has set a target of 40 percent clean energy by 2030. The updated energy plan projects renewables will supply just over 40 percent of South Africa’s electricity by that date.
Grid Infrastructure Remains a Challenge
Despite this progress, transmission infrastructure built for centralized coal plants struggles to accommodate distributed renewable generation.
Recent procurement rounds saw approximately 6,000 megawatts of projects unable to proceed because of insufficient transmission capacity. The grid simply cannot handle more generation from those locations without expensive upgrades.
The government is developing an Independent Transmission Projects programme that allows private investors to finance and operate transmission infrastructure. The first phase is expected to see 3,200 megawatts of power running along 1,164 kilometers of privately funded transmission lines.
A new National Transmission Company of South Africa has been established as a separate subsidiary of Eskom, with plans to eventually operate as a fully independent state-owned transmission operator.
Jobs and Communities in Transition
The energy transformation creates both opportunities and challenges for workers. South Africa’s unemployment rate stands at 30 percent, with youth unemployment particularly severe.
The coal industry provided approximately 400,000 jobs as of 2021, including 80,000 direct jobs and between 200,000 and 300,000 indirect positions. As coal plants retire, these workers face displacement.
The Just Energy Transition Investment Plan, with international pledges now at USD 13.5 billion, allocates resources for skills development and worker retraining. The plan focuses particularly on Mpumalanga province, which hosts the bulk of South Africa’s coal-fired power stations.
Green jobs are being created in renewable energy installation and maintenance, but many are temporary construction positions. Experts say workers from the coal sector often lack the credentials required for medium and high-skilled renewable energy positions without targeted training programs.
What Comes Next
SOLA Group has over 1 gigawatt of capacity in operation and construction. The company aims to reach 2 gigawatts of solar power and 5 gigawatts of storage by 2030.
The government’s Energy Action Plan projects adding 38 gigawatts of generating capacity between 2024 and 2030, with significant contributions from the private sector and renewables.
The South African Wholesale Electricity Market, anticipated to launch in April 2026, will transition the country from bilateral contracts to a competitive market structure.
Success will depend on resolving the grid infrastructure bottleneck, maintaining regulatory momentum, and ensuring the transition creates broadly shared prosperity.
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