South Africa has only small deposits of oil and natural gas and relies on coal production for most of its energy needs. The country has a highly developed synthetic fuels industry, mainly derived from coal. South Africa's economy is structured around large-scale, energy-intensive mining and primary minerals industries, pushing its energy intensity to above average levels, with only 10 other countries having higher commercial primary energy intensities. South Africa's energy sector is critical to the economy, contributing about 15 percent of the country's gross domestic product (GDP). Due to its large coal deposits, South Africa is one of the cheapest electricity suppliers in the world. Although the cost of electricity in South Africa is among the worlds lowest, strong economic growth, rapid industrialization and a mass electrification program led to demand for power outstripping supply in early 2008. The recent power supply crisis has accelerated recognition of the need to diversify the energy mix, such as nuclear power and natural gas, as well as various forms of renewable energy.

Economic problems remain from the apartheid era, especially poverty and lack of economic empowerment among the disadvantaged groups. The South African government has committed to ensuring that black-owned companies have access to the energy sector. Under its black economic empowerment (BEE) program, the South African government has set targets of 25 percent BEE ownership of energy companies by 2014. Large, predominately white-owned corporations have been selling assets to achieve this objective, with the first sale occurring in 2000. BEE firms are commonly referred to as “empowerment” firms.