Most South African energy deals don’t collapse because the power isn’t needed. They stall because three practical workstreams are treated as afterthoughts: land, grid lines, and licences and approvals. When those are vague, everyone ends up negotiating in the dark – and by the time reality catches up, timelines, budgets, and sometimes the deal itself have already drifted beyond recovery.
Here’s how the Land + Lines + Licences trap plays out in practice, and the discipline that prevents it.
Land: the project’s foundation is rarely as clean as the pitch deck suggests
In South Africa, land questions go well beyond ownership. Lenders and off-takers want confidence on duration – does your lease or servitude last as long as the revenue contract, because a 20-year PPA sitting on a 5-year lease is not financeable. They want confirmation of access – roads, cable routes, maintenance corridors, and the right to bring equipment on site without requiring fresh consent each time. They want to know about encumbrances – whether the land is bonded and whether mortgagee consent has been obtained, whether there are zoning restrictions or environmental constraints that affect the footprint, and whether communal land or state land is involved, each of which triggers a specific and often lengthy consent pathway.
A deal stalls when land issues are described as “being finalised” without a plan that is actually controlled. The fix is to treat land like a gated checklist: confirm the right, confirm the term alignment, confirm access, confirm all consents required and how each will be obtained. Until that checklist is complete, the project has a foundation risk that every other workstream is sitting on top of.
Lines: grid reality isn’t a negotiating position – it’s a physical constraint
South Africa’s networks are constrained, dynamic, and increasingly complex to navigate as embedded generation volumes grow. A project can be commercially sound, contractually advanced, and still be physically impossible within the timeline assumed – because the grid position was never properly established.
Deals stall on grid issues in predictable ways. The point of connection is identified but available capacity isn’t confirmed. Network upgrades are acknowledged as necessary but funding responsibility between the developer, the network operator, and the municipality is unresolved. Wheeling arrangements are assumed but the wheeling agreement, third-party network access rights, and loss factor treatment haven’t been negotiated. COD dates are in the model but nobody can explain what they’re based on beyond an indicative study that carries no commitment.
The best project teams stop debating opinions about the grid and start building a documented grid position: connection studies, correspondence with the relevant network operator or Eskom, NERSA registration pathway confirmation, and a clear record of the assumptions underpinning the commercial model. Once the grid truth is shared and evidenced, commercial negotiations become grounded in something real. Until then, they’re provisional.
Licences and approvals: the slow part is rarely the paperwork – it’s ownership
The SA approval stack for an energy project is not simple. It typically includes environmental authorisation under NEMA – and whether a Basic Assessment or a full Environmental Impact Assessment is required is a threshold question that affects timeline significantly. It includes a NERSA generation licence or registration, depending on the scale and structure of the project. It includes municipal approvals covering zoning, land use, building plans, and any local by-law requirements specific to the technology or site. It may include a Section 34 declaration under the Electricity Regulation Act. It may include a water use licence. And it includes grid connection technical approvals from the relevant network operator.
None of these is hard because the forms are complicated. They are slow because nobody owns them.
A functional approvals plan has every required approval listed, a named owner for each, the next action required, the target date, and the dependencies – what needs to happen before this approval can move. If an approval doesn’t have an owner and a next action, it doesn’t exist as a managed workstream. It exists as a hope. And in SA’s regulatory environment, hope is not a project schedule.
The 3-page readiness pack that keeps deals moving
Before negotiating long-form agreements, we ask parties to produce three pages that make the Land + Lines + Licences position visible and shared.
Page one is the land summary: what right exists, the term and how it aligns to the revenue contract, access rights confirmed, encumbrances identified, and consents still outstanding with a plan for obtaining each.
Page two is the grid summary: point of connection, voltage level, available capacity and how it was confirmed, whether wheeling is involved and on what terms, upgrade responsibilities and cost exposure, the NERSA registration pathway, and the key dates the commercial model depends on with the evidence supporting them.
Page three is the approvals tracker: every required approval listed with its owner, current status, next action, target date, and dependencies. Nothing sophisticated – just accountability made visible.
These three pages don’t replace legal drafting. They prevent legal drafting from becoming the forum where reality is discovered too late – which is the most expensive version of project development there is.
What stalling actually costs
When Land + Lines + Licences are vague at the point legal drafting begins, the consequences are specific and compounding. Legal fees increase because drafting pauses while commercial reality is established. Financing timelines extend because lenders won’t advance to the next stage on unresolved fundamentals. Off-takers become nervous and begin exploring alternatives. Key team members lose confidence. And in a market where grid capacity, regulatory windows, and buyer appetite are all moving, the cost of a six-month delay is rarely just six months.
The teams that close SA energy deals are not the ones who draft the longest contracts or the most comprehensive heads of terms. They are the ones who remove uncertainty early – on land, on grid, and on approvals – and move into procurement, financing, and construction with a shared, evidence-based view of what is actually possible.
If your deal feels like it is almost there but never lands, look at Land + Lines + Licences. That is almost always where the momentum is stuck.
Caveat Legal works with energy developers, IPPs, municipalities, and transaction advisors to structure and close energy deals from early-stage development through to financial close and construction. If you’re working on a deal and want to pressure-test your Land + Lines + Licences position, get in touch.
