Oliver Ochieng, bird story agency

This year, South Africa is set to become the tenth-largest solar market in the world, as thousands of private companies and households embrace solar photovoltaic (PV) technology in a bid to reduce their carbon footprint and keep the lights on.

Data from NASA, the country’s energy regulator indicate that South Africa invested more than US$588 million (11 billion rand) in solar PV technology in the third quarter of last year alone. 

Additionally, by the end of January this year, private companies and households had installed more solar capacity than the total capacity of the national utilities, the two largest power stations Madhu P and Casilla, combined.

In a podcast on Investec Focus Radio, Vitaly Art, technical specialist at the South African PV Industry Association (SAPVIA), said South Africa’s growth in the solar industry dates back to 2010 and 2011, when large scale public procurement of renewable energy really got underway.

“And in the last two to three years, the solar industry has grown at a really incredible rate. And that's due to not only energy independence drive, so customers or end users protecting themselves from load shedding, but also due to regulatory reforms that have allowed real utility scale investment in renewable generation, specifically solar PV,” he stated.

In layman's terms, a 53% astonishing growth is being witnessed in South Africa’s solar sector across all market segments. There are approximately, Vital said, 126,000 households in South Africa that have solar PV, out of a total of 148,000 total solar installations.

“The residential solar installations make up approximately 85% of all solar installations in the country. And the rest is commercial industrial all the way up to utility scale,” he added.

From a global perspective, the amazing growth is putting South Africa on the world scoreboard. The country is projected to be at number 10 among the world’s largest solar markets by the end of 2024, but Vital contends that a lot of work lies ahead to compete with countries occupying top positions, such as China, the USA, Australia, India and Japan.     

“From a projected installed capacity point of view in 2024, we projected to be number 10, at around 4.3 gigawatts projected for the year, that's by Bloomberg New Energy Fund. And if you look at that scoreboard, number three is India at approximately 18 gigawatts projected for 24. The United States is 40 gigawatts. So at least we're on the scoreboard.

“But if you look at it from an installed capacity per person, we lag quite far behind the rest of the world, we're sitting at approximately 132 watts per person. Australia is at number one at 1216 Watts, the Netherlands at second and Germany in third position. We've got a while to go yet. South Africa may be playing catch up in some respects.”

According to Bernard Kardon, senior transactor in the Investec energy and infrastructure finance team, solar is an investment that is starting to make commercial sense in South Africa, from a costing point of view, and of course, from an environmental impact point of view.

“At the end of last year, we saw a huge amount of input of solar panels. I think the total solar panels importation in 2023 was around 17 and a half billion rand, that in comparison to I think the number is 5.6 billion in 2022, just speaks to the sheer growth in demand. What that did lead to was an oversupply of equipment towards the end of last year, and the warehousing of stock, which has brought prices down, which is obviously good news for the end user,” he shared during the podcast.

“If we look at the upstream value chain, if we look at polysilicon prices, and wafer prices and module prices in China, that's a commodity that you can track like any other, those prices have been decreasing for the last three to four years continually decreasing. And that is due to a variety of factors impacting the supply chain and the production costs in China, but also looking at the sort of international demand for solar PV,” interjected Vital. The current price decrease in South Africa, he added, is going to continue.

Despite a sharp decrease in the cost of solar installation in South Africa and other parts of the world, it is clear that financial muscles are needed for one to have it installed in his or her home. For that reason, the concept that is most popular in some countries, can be used to make solar energy accessible.

It is what Vital terms as ‘community solar,’ where you take advantage of economies of scale, and install large scale solar PV and battery energy storage systems at a single feeder point, that in turn feeds an entire community.

That in itself would allow the community to have access to clean, low cost. “Unfortunately, the ownership models and the funding models haven't been completely unpacked in South Africa yet, but that is something that we accept as a solution to lower income communities benefiting from solar PV,” he emphasised.

Mal Humphries, the head of sustainable solutions within Investec said there is a huge interest in the South Africa solar story. She noted that the story is becoming juicier by each passing day, as manufacturers continue coming to the fore in South Africa.

“And we are also seeing many participants, whether those are contractors, energy advisors, importers that are participating and taking advantage of the growth that we're seeing in this market. So many of our clients are not just solving energy problems for themselves, but they are also participating in the growth that we're seeing in this industry,” she explained.

“While we need to up our game when it comes to local manufacturing for solar PV equipment. It's encouraging to hear how much foreign interest there is in our solar boom.”  

As South Africa negotiates a corner to become among the world’s top solar markets, consumers are advised to first of all know what they are buying, and to use somebody that's certified to install. PV panels have got 2025 to 30 years warranty periods. They got 20-to-25-year production guarantees.

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Useful link to editors: 

https://www.investec.com/en_za/focus/the-current/sa-solar-awakening.html