The South African Renewable Energy Masterplan (SAREM) is expected to be finalised for adoption before the end of March, following which it will become the country’s implementation plan for the industrialisation of the renewables value chain.

Work is still under way to achieve consensus between labour, business, civil society and government on what the priority actions should be and a complete first draft of the document should be released early next year.

The plan is premised mainly on the allocations for solar photovoltaic (PV), wind and battery storage in the Integrated Resource Plan of 2019 (IRP 2019) but will also take account of potential demand arising from the recent reform allowing distributed generation plants below 100 MW in size to be built in the absence of a licence, even if they wheel electricity over the grid and sell to third parties.

Although the IRP 2019 allocations are considered conservative, owing to changes in technology costs and limitations on yearly deployments, it nevertheless envisages a significant scale-up in renewables capacity and storage by 2030.

The plan, which itself could be reviewed in 2022, allocates 14 400 MW to wind, 6 400 MW to solar PV and 2 000 MW to storage between 2020 and 2030 and also caters for at least 4 000 MW of distributed generation.

Initial calculations made as part of the SAREM process indicate implementing the IRP 2019 would require more than 14-million solar panels and 3 600 wind turbines, with a cumulative investment value of R395-billion.

Department of Mineral Resource and Energy director for renewable energy Nomawethu Qase reports that, through SAREM, stakeholders have agreed to identify opportunities to develop industrial capacity around that investment plan.

The Department of Trade, Industry and Competition’s Gerhard Fourie adds that the masterplan will seek to ensure that there is a public-private compact to support “optimal industrialisation” based on a value-chain analysis.

An analysis of the components and materials used in the manufacture and assembly of solar PV and wind farms already points to several “low-hanging fruits”.

These range from cement and steel used in wind turbines, to modules and inverters used to develop a solar PV system.

Green Cape special adviser Francis Jackson, who is facilitating the SAREM drafting process, reports that stakeholders have broadly agreed to a vision for the industrialisation of the renewables value chain. This vision includes the expansion of industrial capacity, the creation of jobs, growing the economy, building a transformed industry and contributing to the country’s just energy transition.

There has also been agreement on some of the enablers of large-scale industrialisation, with the key initial enabler seen as being the rebuilding of investor confidence, which was undermined after the renewables procurement programme stalled in 2015.

When it resumed earlier this year, some of the manufacturing and assembly capacity developed between 2011 and 2015 had been lost.

The consequence is the current “stand-off” between suppliers waiting on orders before making new investments and renewables bidders holding back from placing firm orders until they are satisfied that the capacity is in place to deliver.

“Relying on designations pits players in an irreconcilable game around timing and exemptions,” Jackson explains.

During the most recent two bidding rounds hosted by government, certain components had been designated for local procurement, which led several bidders to seek exemption from the designations on the basis that the capacity was not yet in place.

“It is proposed that a weighted mechanism, such as a local points system, would favour establishing capacity that leverages local strength to the best effect and tracks international evolution and innovations,” Jackson adds.

The Congress of South African Trade Unions’ (Cosatu’s) Tony Ehrenreich indicates that labour’s support for industrialisation in the sector is premised on the creation of decent jobs.

However, Cosatu also sees it as an opportunity to develop a large, new industry “virtually from scratch”.

Siemens-Gamesa’s Janek Winand says industry wants simplified and pragmatic localisation targets that strike the right balance between securing low-cost electricity and the provision of the incentives needed for industrial investment.

He is, however, concerned about some of the targets being mooted for certain components, describing proposals that 90% of large wind-turbine components be localised as “not realistic”.

A draft document indicates that a localisation target of between 40% and 60% is being considered for 2025 for the balance of plant, which could be ramped up to between 70% and 90% by 2030.

It also shows that 39 000 people could be employed directly in operations, maintenance and manufacturing by 2030 and that the industry’s yearly contribution to gross domestic product could be as high as R164-billion by that same date.