The South African government should probably not consider subsidising a local solar equipment manufacturing industry as the scale of the international competitors in this market is too big to compete with.
This was according to SolarWorld Africa managing director Gregor Kuepper, who spoke Friday at a briefing in Cape Town to celebrate the 40 years that the company has been a supplier and distributor of imported solar equipment, mostly from Europe and from China, for a host of local companies and applications.
He said investment in solar power manufacturing capacity in South Africa should rather just be on innovations peculiar to the South African market.
SolarWorld’s client companies count among the pioneers of solar power installation in South Africa and sub-Saharan Africa, long before the Eskom load shedding crisis resulted in the flood of new entrants to the market.
Early adopters of solar power used it mainly for rooftop residential and smaller commercial and industrial uses, and traditionally the equipment, which was more expensive then, would only be able to pay itself off over a number of years.
However, said Kuepper, with the price of solar power equipment having fallen considerably in recent years, and local utilities now able to do power wheeling and build renewable power plants of up to 100 megawatts and sell power to other off-takers, a solar power utility connected directly to the grid, without battery storage facilities, might now be able pay itself off in as little as two-and- a-half to three years.
For commercial and industrial uses, solar was now able to provide electricity at a cost of below R2 per kilowatt hour (kwh), while diesel generators produce power at between R7-R8/kwh, depending if there was cheap diesel available. Never mind the future saving on diesel costs, he said.
Kuepper said while large renewable energy utilities might be able to supply cheaper power in the future over the grid, much depended on whether the government could extend the grid fast enough. Solar power in South Africa offered a solution of being able to provide power right at the point of the power demand.
He said last year there had been a shortage of solar equipment on the world market, while the second half of the year was characterised by oversupply.
To provide an indication of the extent of the growth of solar installations worldwide, he said that in 2022, about 240 gigawatts of solar power were installed globally, while in 2023 this number nearly doubled to 440 gigawatts. And this number was expected to be far exceeded again this year.
He said the energy crisis in Europe arising from the geopolitical tensions, load shedding in South Africa, and growth in the solar market in China were currently big drivers of the solar power market.
In terms of the Cop27 global climate summit environmental targets for 2030, the industry would need to provide the same amount of new energy capacity every two years, that the industry had installed in the last 20 years.
There was a good regulatory environment in South Africa to import solar equipment, Kuepper said. Experience in Europe showed that job creation in the manufacture of solar power components was low compared with the number of jobs that were created through maintenance, installation and other services in the sector.
In addition, he said, although the number could not be quantified, considerably more employment was created in other sectors and businesses, through increased spending, efficiencies and investment, that was created through the provision of lower priced electricity.
BUSINESS REPORT