South Africa’s Ambitious Renewable Energy Masterplan involves Solar Manufacturing

By Ricardo Amansure, Stellenbosch University

(The Conversation) – About 85% of South Africa’s electricity is produced by burning coal. The country’s move to renewable energy means that the coal industry will be phased out. To this end, the South African cabinet recently approved the country’s first renewable energy masterplan, which sets out what’s needed to establish new renewable energy industries. Ricardo Amansure of the Centre for Sustainability Transitions researches the move towards renewable energy and how communities can benefit from this. He explains what the masterplan aims to achieve, what problems it might face, and how it can succeed.

What is the South African Renewable Energy Masterplan?

It is an industrial strategy that sets out how South Africa can set up a new manufacturing industry in renewable energy and battery storage value chains.

The masterplan was developed by the government, some sections of organised labour, a non-profit organisation advocating for renewable energy, and representatives of the renewable energy industries. It sets out a framework to produce renewable technologies locally. These include solar photovoltaic panels, wind turbines and batteries.

The masterplan has been drawn up so that it aligns with South Africa’s existing national target of adding 3–5 gigawatts of renewable energy capacity each year to 2030. This is a scale that can support the development of local manufacturing hubs. (One gigawatt can supply electricity to about 700,000 average homes.) This steady supply will be enough to give businesses and investors the confidence to commit to long-term investments in local manufacturing hubs. These are zones where renewable systems and components are produced or assembled for domestic and export markets.

The state-owned electricity company, Eskom, has not directly guaranteed that it will buy 3-5 gigawatts of renewable energy each year. But the government’s national electricity plan (the Integrated Resource Plan) provides a strong indication of future demand.

The masterplan also aims to attract at least R15 billion (US$784 million) in investment by 2030 and train “green workers” for employment in 25,000 direct jobs. These roles range from factory work and logistics to engineering and construction. Many will be for youth and semi-skilled workers.

South Africa already has a Just Transition Framework to ensure that the shift to a low-carbon economy is fair, and does not leave workers, communities or regions behind. The masterplan is aligned with this. It aims to support Black-owned companies and small-scale and community-based initiatives, especially in places affected by the looming loss of jobs in the coal industry.

However, it is not a response to the country’s frequent power cuts and won’t decide how electricity is generated. Energy system plans like the integrated resource plan and Energy Action Plan do this. (They focus on power generation, securing a constant energy supply, and expanding the electricity grid.)

Why should South Africa manufacture renewable energy systems?

In 2023 alone, the country spent over R17.5 billion (US$905 million) on solar and battery imports.

This is unnecessary because South Africa sits on reserves of manganese, vanadium, platinum and other rare earth elements. These are the critical ingredients for manufacturing clean energy systems and storage, which could be made locally.

South Africa already produces solar panels, steel towers for wind turbines, and electrical cabling. Some local firms also assemble inverters and balance-of-system technologies used in solar and battery systems. The potential to grow renewable energy industries is there.

How will South Africa set up these new industries?

Factories making solar, wind and battery storage components will be financed through private sector investment and government incentives and support. These include tax breaks, localisation requirements, and support in special economic zones. As manufacturing demand increases, expansion is planned into offshore wind and next-generation (longer duration) batteries.

Between now and 2030, the masterplan has these aims:

• To fast-track government procurement of renewable energy, ensuring reliable energy planning, and expand the electricity grid to handle new projects.

• To develop an industry producing key components like wind turbine towers, solar mounting structures and batteries.

• To promote inclusive development by supporting Black-owned firms, small businesses and former coal communities. This is to make sure that everyone gets their fair chance to take part in green economic opportunities.

• To grow local skills and innovation. Training and education institutes and the energy industry will partner to make renewable energy skills part of national curricula and workplace training pipelines. They will need the support of government’s higher education ministry.

What are the challenges in reality?

South Africa has a history of ambitious strategies to localise production in energy and car manufacturing. They struggled to get off the ground. These plans were often undermined by delays and mismatched approaches by government departments.

The masterplan could face similar obstacles if these governance and execution gaps are not addressed with urgency.

Another bottleneck is the electricity grid, which cannot accommodate new renewable energy connections. Eskom needs about US$21 billion to expand the grid, which will take time.

Photo of rooftop solar in Capetown by Philippe Alamazani: https://www.pexels.com/photo/cape-town-urban-cityscape-with-ocean-view-29933205/

This is a problem because renewable energy manufacturers need certainty now about future demand if they are to invest in new factories and training programmes.

South Africa also has a huge shortage of renewable energy technicians, electricians, installers and engineers.

What needs to be done for this plan to succeed?

A few urgent actions are required:

• The government must publish updated procurement rules with a clear and enforceable set of localisation targets. This will give local manufacturers confidence that they’ll have a market to sell renewable energy to.

• South Africa’s official electricity plan, which still emphasises the role for coal-fired power, must be realigned with the renewable energy masterplan.

• Eskom may need support from government and development financiers to expand the grid at the pace needed.

• Training institutions must modernise their courses and train more students to work in the solar, wind, battery storage and green hydrogen sectors.

• The government must create incentives that make it easier for local and international investors to be part of the industry. Red tape – long waits for environmental approvals, land rezoning and licensing processes – must be cut. Simplifying and speeding up these procedures, while maintaining safety and environmental standards, would improve investor confidence.

Ricardo Amansure, Senior Researcher at the Centre for Sustainability Transitions, Stellenbosch University

This article is republished from The Conversation under a Creative Commons license. Read the original article.