South Africa – part 1: The local PV market – competitive but promising

Over the last years, the photovoltaic (PV) market in South Africa has been booming. Besides other reasons, this positive development has been pushed by the government which claimed to achieve 17.8 GW of green electricity by 2030. A major share is meant to come from photovoltaic and solar thermal power stations. Despite the increasing number of players in the solar market, Jens Hauser, Manager Sustainable Energy, Southern Africa – German Chamber of Commerce and Industry PNC sees promising perspectives for German PV companies in South Africa. In the first part of our series, he gives an overview of the current situation of the local PV market.

Solardirekt: „Mr.Hauser, in what state is the local PV market currently?“

Jens Hauser: „The market is booming. Thanks to the increasing electricity prices, the renewable energy forms have become an attractive alternative to conventional energy forms. PV is particularly important as the technology is relatively simple and the projects can be carried out quickly and easily. German companies from the renewable energy sector which can offer a USP, have good chances here. Yet, there are many German enterprises in this field who are well established already with own presences. In general, the South African market can be subdivided into three major sectors. These are network suppliers and utilities (> 1MW) –supply contracts with Eskom, the medium and bigger commercial market sector (10 KW – 1 MW) – the self-supply of companies, and finally the residential market sector (<19 KW) for private users from the upper residential market. The market is characterised by a huge number of players and competition is high. The number of qualified South-African enterprises which are able to plan and realise PV-projects on their own, keeps growing.”

Solardirekt: „Which are the most promising sectors of the PV market in South Africa?

Jens Hauser: „The commercial market develops at an extremely fast pace as well as the market for self-supply plants (embedded generation). Experts expect tremendous growth figures for the coming years, with annual growth rates up to 350 MW. To become independent of the expensive net electricity, more and more producing companies and commercial buildings (shopping malls and office complexes) are installing PV plants. As a result, there hardly is any feed-in. Thanks to net-metering, self-supply becomes accessible for more and more communities. As Eskom strongly balks at further renewable energy plants, the market for major plants is at halt now.”

Solardirekt: „What is special about the local market? “

Jens Hauser: „Of course, we have national rules which apply for the whole country but there are also mechanisms to access the market which only apply for several communities and regions. Also, the electricity prices differ greatly, depending on the supplier – whether it is Eskom or the local utilities. Therefore, you must look at each customer and project from an individual point of view. For example, the rules for the simplified registration of renewable energy projects for self-supply up to 1 MW apply nationwide (for these projects you do not need a Generation Licence). Yet, the self-metering rules depend on the community, respectively not every community can offer feed-in tariffs based on net-metering. Electricity trade and transmission are not big issues, yet.”

Solardirekt: „What are the big challenges for the coming years, what are chances?“

Jens Hauser: „For sure, the harmonization of the regulations (eg. net metering) and a transparent regulation for the trade of electricity and the transmission through the public networks will be major issues. Also, the transformation of Eskom into an independent network operator which will enable the participation of other independent electricity producers, will be a challenge. The role of the utilities keeps changing, too. They develop from mere electricity distributors into electricity producers (renewable energies) and service suppliers. As a result, the utilities become important for the developers of the renewable energies – either as installation contractors or purchasers of electricity from renewable sources with supply agreements.”

Next week you will read about chances and risks of Germany PV companies in the South African mark

Jens Hauser, Manager Sustainable Energy, Southern Africa – German Chamber of Commerce and Industry PNC