Aug 13, 2013
Localisation will add to solar PV costs, but offers jobs and growth benefitsBack
Construction|Africa|Components|Environment|Eskom|Industrial|Power|Projects|Renewable Energy|Renewable-Energy|Resources|SECURITY|Solar|System|Systems|Urban-Econ|Africa|South Africa|Energy|Manufacturing|Manufacturing Sector|Potential Developers|Services|Solutions|Systems|Davin Chown|Elena Broughton|Garth Strachen|Gerhard Fourie
In fact, the report, which was prepared for the Department of Trade and Industry (DTI), the South African Photovoltaic Industry Association (Sapvia) and the WWF-SA, calculates that higher levels of localisation could have an employment multiplier effect of between 40% and 50%, depending on the market segment analysed.
For this reason, Urban-Econ chief economist Elena Broughton, who presented the study’s findings on Tuesday, said it would be worthwhile for policymakers to consider ways of ensuring higher levels of local content across the solar PV value chain, where the main components include the crystalline PV modules, inverters, trackers, wiring and construction.
The findings were made only days ahead of the August 19 closing date for the third bid window under the Department of Energy’s (DoE’s) Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), where localisation offerings are expected to emerge as key differentiators in a context where potential developers are vying for a relatively modest PV allocation.
The threshold of PV projects has been set at a minimum level of 45%, with preferred bidders set to be named on October 29. However, bidders are expected to submit proposals that exceed that threshold, as has been the case in previous rounds.
Through the REIPPPP, the DoE aims to secure an initial 3 625 MW of large-scale renewables capacity, of which 2 460 MW has already been allocated across 47 projects, including 27 solar PV projects. The procurement programme is being conducted in line with an Integrated Resource Plan that indicates that South Africa expects to add 8 400 MW of utility-scale solar PV capacity between 2010 and 2030.
A request for proposals issued in early May for the third bid window indicated that solar PV had been allocated a further 400 MW of capacity and would be subject to a price cap of R1.40/kWh.
Broughton said that the cost premium associated with higher levels of local content could not be ignored, particularly in a context where government was hoping to secure a lowering of renewables costs in every subsequent bidding round.
But she argued that the localisation premium could be offset by the creation of an environment that stimulated the roll-out of smaller-scale PV systems across commercial and residential markets, which would accelerate the reduction of costs.
In fact, the study shows that the non-utility opportunities for PV could be larger than those presented by the utility market and, depending on adoption rates, could be as large as 11 700 MW by 2030. However, initial rooftop-solar diffusion would depend materially on the creation of financial incentives, as well as on market mechanisms that closed the gap prior to a point where system costs approached ‘grid parity’ levels.
An immediate constraint related to the prevailing municipal financial model, which depended heavily on electricity revenues to cross-subsidise other municipal services. For this reason, local governments were generally unwilling to support the introduction of solutions, such as ‘net metering’, that allowed commercial and residential PV investors to feed power back into the grid.
Sapvia chairperson Davin Chown said that the organisation was planning to engage with the South African Local Government Association on the matter, but cautioned that a resolution was unlikely to be forthcoming in the near future and could entail changes to legislation.
There was also uncertainty surrounding the future financing of demand-side management (DSM) programmes, after the National Energy Regulator of South Africa rejected Eskom’s application of five yearly tariff increases of 16% in favour of increases of 8%.
DTI acting deputy-director general for industrial policy Garth Strachan indicated that government was studying various ways to further incentivise green industries, including by securing resources for DSM programmes.
This view was reinforced by the department’s chief director for green industries Gerhard Fourie, who said a major focus was on finding ways to raise the adoption rates for PV systems in the commercial and residential sectors.
The study showed a direct and strong correlation between adoption rates and the social and economic benefits, noting that at an adoption rate of 10%, there would be more than 20 000 MW of installed PV capacity by 2035, while the industry could create more than 389 000 jobs between 2013 and 2035.
“A key requirement for the creation of these jobs is the high adoption rate in the commercial/industrial and residential market segments, which would account for 204 723, or 52.6%, of all jobs created along the value chain between 2013 and 2025,” the study highlights.
Strachan said green industries, such as the PV sector, had been incorporated into the country’s Industrial Policy Action Plan for their potential to stimulate growth and create jobs.
He also stressed that the sector had been included not only to meet the country’s energy-security and climate commitments, but “to ensure that manufacturing also takes place, so that the economy does not lose out on one of the new waves of global industrialisation”.
Edited by: Creamer Media Reporter
To subscribe email email@example.com or click here
To advertise email firstname.lastname@example.org or click here
Other Electricity News
Article contains comments
Updated 16 minutes ago Despite the headwinds facing the South African economy and ongoing political uncertainty, real estate investment trust Redefine Properties delivered a “robust performance” in the first half of the financial year, with a distribution of 41.7c for the six months to...
Updated 32 minutes ago Less than one percent of staff stayed away from work on the first day of a strike by members of the Communication Workers Union (CWU), the SA Post Office said on Thursday. CEO Mark Barnes said it was “business as usual” as the first day of the strike had had a...
Updated 43 minutes ago Denel’s board said Finance Minister Pravin Gordhan’s accusation that the board and executives are “arrogant and belligerent … are unsubstantiated, baseless and unfounded”. Gordhan made the accusation during his Treasury budget debate in Parliament on Wednesday. This...
Recent Research Reports
Energy Roundup – May 2016 (PDF Report)
The May 2016 roundup covers activities across South Africa for April 2016 and includes details of the National Energy Regulator of South Africa’s proposal to introduce a coal benchmark cost as part of its final decision on Eskom’s multiyear price determination...
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
This Week's Magazine
The two spent-fuel pools at Eskom’s 1 800 MW Koeberg nuclear power station, in the Western Cape, will be full by 2018, increasing the urgency on the State-owned utility to begin pursuing alternative storage options. Koeberg has, over the past 32 years, accumulated a...
South Africa lacks the skills necessary to implement the government’s plan to build 9.6 GWe of new nuclear energy capacity, warns nuclear-qualified Quality Strategies International CEO David Crawford. “Apart from the concern about the affordability of the programme,...
Cybersecurity multinational Check Point has released its latest 700-series cybersecurity systems for small businesses, which draw on its international threat intelligence to provide up-to-date cybersecurity, says Check Point South Africa country manager Doros...
Daimler Trucks and Buses Southern Africa (DTBSA) saw a marked slip in new-vehicle sales in 2015 compared with 2014, with sales dropping from 5 897 units to 5 300 units. The decline came as the South African new truck and bus market declined from 31 558 units in 2014...
Group of 20 (G-20) economies threatened to penalise havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. The G-20 will consider “defensive measures” against financial centers and...