As South Africans – we are certainly a resilient bunch! We bounce back quickly and
most often block off the source of our despair. But for how long, can this continue?
For how long can we pretend that unemployment is not a real problem? For how
long can we remain optimistic about the recovery of our National Grid? For how long
can we look the other way while cheap, imported products are “dumped” in our
Country? Once we get serious about addressing these issues, only then can we
commence the building process. One such catalyst is local solar panel
manufacturing! Why? Because embracing local PV manufacturing not only
contributes to sustainable energy production but also serves as a catalyst for
building robust and resilient economies. If we can build within, we don’t need to look
outside!
In recent years, the push towards renewable energy has become increasingly vital in
addressing climate change and energy security concerns. One key aspect of this
transition is the development and support of local solar panel (photovoltaic – “PV”)
manufacturing and its related value chains.
The recent imposition of a 10% duty for fully imported solar panels has certainly
created pandemonium amongst importers. The same importers who religiously
propagated Community support and the general upliftment of our Industry are now
out in all sorts of battle paraphernalia calling out Government (who took the better
part of 5 years to implement this) for this “heinously unreasonable” inconvenience
they are about to experience.
Consider this: Solar panels are the cheapest it’s ever been and now only comprises
less than 20% of the total cost of an installation yet this seemingly insignificant effect
has caused such outcry – Why? The reason is simple, the importers are now having
to deal with the oversupply of the market and are faced with eroding margins. This
10% will force them to break even if they continue their business model of not
supporting local and only importing the cheapest available product.
So, importers are not happy! They claim that local panels are inferior, and we don’t
possess the tech to produce globally relevant panels, yet they have never engaged
with us, nor do they wish to. Furthermore, the cost of a solar panel comprises some
17% of the total cost on a typical installation, hence this duty has a less that 1.5%
impact on the total cost of an installed system. If you consider the decreased cost of
components such as batteries and inverters yet the cost of installations increased –
the answer is in the margin of the installers. Surely, they could absorb this 1.5% from
their 30% GP? Yet, the narrative is that this panel duty will drive the installation cost
up, they just need to look at themselves really!
So, it seems that this is a bit of a conundrum for them really!
Beyond this however, the duty is a great way to support and boost the local industry.
We are expecting new entrants and expanding the locally available value chain due
to this protection. What does mean for patriotic South Africans?
“Killing 2 birds with 1 stone” applies so aptly to our solution: Making local assists in
supporting our National Grid and contributes to alleviating the massive
unemployment we face! Real, skilled jobs are created across various sectors, from
research and development to manufacturing, installation, maintenance. This sector
furthers supports in diversifying the economy by contributing to various “feed in”
industries like component manufacturing, various support services industries e.g.,
HVAC, SHEQ, logistics and professional consulting. These jobs provide income for
workers and stimulate economic growth by circulating money within local
communities. This is exactly what our Country desperately needs!
Factually, the global leaders in PV manufacturing are China, India, and the USA. The
rest of us just follow the trends and are totally dependent on the pricing of global
supply chains. Due to the commodity-based nature of the products, price sensitivity
becomes a huge determinant in selection. Hence, as South African manufacturers,
we are dependant on global supply chains and strategic partnerships to comply with
local Financial Institutions incessant need for a “Tier 1” solar panel. Incidentally,
various new rating agencies using models such as the Altman Z-Score ratings etc.
are now being publicised to escalate superiority of global brands. All of which
essentially seek to utilise historical financial results to determine the probability of
future existence. Essentially, will these Companies be around to service the 30-year
warranty? So, no indication of quality, responsible procurement, technical ability &
impact on the environment. But to comply, we must! Hence, as local manufacturers,
we painstakingly subject ourselves to various global audits to obtain international
certifications thereby guaranteeing our process to make a product that carries the
global brand.
Its not all bad though, this process promotes global technology transfer and local
innovation. As companies adapt to meet local demands, they drive improvements in
production processes, leading to more efficient and cost-effective solar technologies.
This not only enhances the country's technological capabilities but also positions it
competitively in the global renewable energy market.
So, local manufacturers CAN make a globally certified and relevant product!
The benefits of local PV manufacturing extend to positive community development
which in turn ultimately enhances national economic resilience. By creating real,
sustainable job opportunities and supporting local education and training programs, it
enhances the overall quality of life in communities and in effect our Country as a
whole. 1 job feeds at least 4 people in South Africa. Hence, a 340MW manufacturing
plant can directly support 1100 people. Furthermore, a thriving local PV
manufacturing sector builds resilience to global supply chain disruptions, ensuring a
stable and reliable source of renewable energy technology within the country.
Moreover, local manufacturing aligns with environmental sustainability goals by
reducing carbon emissions associated with transportation and promoting cleaner
energy production.
If the global lockdowns have not opened our eyes, then nothing will! We need to
build local industries and move away from global dependence. Africa needs African
solutions, not pay for the rest of the world to take our resources in exchange of “hand
me downs.” We are doing it right now, but in pockets across various sectors. We
need to extend this patriotic passion to more Industries.
Most certainly there is hope! India has recently demonstrated remarkable success in
revitalizing its local PV manufacturing sector through targeted policy interventions,
such as the Domestic Content Requirement (DCR) under the National Solar
Mission. By mandating a percentage of locally sourced components for solar
projects, India has witnessed significant growth in PV manufacturing capacity and
job creation. The EU has also introduced robust local content policies to promote
domestic sourcing in renewable energy projects, including solar PV manufacturing.
These policies aim to strengthen local supply chains and support the growth of a
competitive and sustainable clean energy sector within the EU. This is after many
local PV manufactures closed due to the oversupply of cheap imports which made
local manufacturing unsustainable.
The Inflation Reduction Act (IRA) in the USA incentivizes domestic production
across industries, including renewable energy. Through tax incentives, subsidies,
and regulatory reforms, the IRA stimulates economic activity and reduces reliance on
imported goods, fostering domestic manufacturing capabilities.
So, three major global regions managed to rescue and resuscitate their local PV
manufacturing sector. The recent imposition of duty in SA will not only equalise the
cost of locally manufactured product into the IPP Programmes but also expedite the
further local industrialisation of capacity & introduce new entrants to the market
thereby increasing the local value chain especially considering the massive demand
for this product from the Private Sector and from the demand targets of the IRP
2030.
If this fails, we have ourselves to blame! The evidence is there, we just need to stop
bowing to the money and hold a firm stance that Local Solar panel manufacturing is a catalyst for Sustainable Economic Growth!
Units 10 & 11 New Germany Industrial Park, Gate 3, 124 Escom Road, Pinetown, Durban
