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South Africa Is Primed for Major Solar Development

South Africa enjoys some of the best sunshine in the world all year round and its electricity is among the most expensive on the planet. The country’s lofty solar ambitions therefore come as little surprise: Forty-two percent of South Africa’s newly-installed energy capacity should be renewable by 2030. Its solar power generation is expected to reach 1,050 MW by 2015 in contrast with just 25 MW in 2012. The country is also expected to have installed over four million solar panels and have the capacity to set up 1.6 million more by the same date. South Africa’s solar photovoltaic (PV) capacity should also reach 8.4 GW by 2030.

As a result South Africa is the most attractive emerging country for solar energy, according to a report released in January by intelligence firm IHS. It achieved a score of 66 out of 100 in IHS’s Emerging Markets Attractiveness Index for the final quarter in 2013, blazing ahead of its rivals by 17 points.

“South Africa has very good solar resources in terms of power generation potential and the potential for solar is higher than initially thought,” says Silvia Macri, a senior research analyst for Middle East and Africa renewables at IHS. “Because of the high cost of technology and other challenges South Africa ended up underestimating its potential capacity at the start,” adds Macri. In 2012, South Africa upped its projections for its 2020 renewable energy capacity by 3.2 MW, from 3.7 MW. 

South Africa is currently working through the first two rounds of its tender process for solar PV projects. The financial closure of these is anticipated to be in 2015. The southern African nation has commissioned and in some cases completed some massive-scale solar projects already. Major PV initiatives which have been successfully tied up in 2014 so far include Herbert 1 — a 22-MW plant that has been set up in the Northern Cape with 90,000 locally-manufactured panels. Another is the 50-MW De Aar facility which is due to become operational in April 2014. Meanwhile French firm Soitec is making firm progress with its 44-MW Touwsrivier plant in the country. The build of the power plant is over 60 percent complete and Soitec anticipates that it will be finished within the next few months. By March, the project had already commissioned half of its capacity.

Progress is equally being made outside the realm of PV. Demand for solar geysers and solar heating in everything from two-bedroom houses to sprawling office blocks is on the up, for example. 

“We have been around for 20 years and when we started the market was very small. It’s still very young but now demand is steadily starting to increase,” says Nikki Van Houten, marketing manager at SunTank, the leading solar heating company in South Africa. "Since the country’s electricity supplier Eskom started having problems with coal supplies in 2008, the solar industry has exploded, helped along by government subsidies,” she adds. The South African government has been enticing households and companies to invest in solar heating systems and solar panels by offering subsidies that cover around 40 percent of the costs of solar systems- in parallel with the tactics that world leaders in solar power generation like Germany have pursued.

Nonetheless, experts think that South Africa has a long way to go before it becomes a trend setter in the field of solar power. “At the moment, I don’t see much innovation from the solar power industry,” says Wim Jonker Klunne, a senior researcher for renewable energy at the Pretoria-based Centre for Scientific and Industrial Research (CSIR).

Macri from IHS also says that “the focus is on producing energy and I don’t see South Africa focusing too much on innovative applications. Of course, things might change but at the moment power generation is the main drive.” Although in most areas of solar research, South Africa is behind America and Europe it has made scientific breakthroughs in the past- for example in the realm of thin-film solar technology. Thin-film solar cells are widely regarded as a more cost-effective alternative to traditional solar cells. The University of Johannesburg first started developing them in 1993, and eventually set up a pilot plant. In April this year a pilot plant for locally-developed thin-film solar technology opened in Stellenbosch.

Some observers are optimistic about the future of innovation in the country. “South Africa is definitely behind the rest of the world but there is a lot of effort and investment now in solar research in the South African universities and so on,” says Van Houten from SunTank. “There is more experimentation now as well, for example with with developing solar houses off the grid,” she adds. South Africa has installed solar panels, batteries and inverters in 30,000 off-grid households so far as part of the government’s aim to ensure 92 percent of the population has access to electricity by this year.

There also needs to be a culture change within South African companies if solar is to truly take off, however, say experts. “In general, people in South Africa don’t think long-term and solar is a long term investment,” says Klunne from CSIR. “Even though the price of electricity is no longer cheap, there does not seem to be the same drive here like in Europe that companies need to save energy and save money through long term renewable investments,” he adds. 

Subsidies for other solar technology — like panels and heating systems — may have distorted the market in South Africa as well, experts argue. “Some companies have come to rely on these subsidies to keep prices low — the ones that are importing cheap parts from China and so on and targeting the lower end of the market,” says Van Houten from SunTank. “Sometimes the government pulls and then reinstates the subsidies too, which leads to fluctuations. As a result a lot of companies have fallen out of the market and it is the older, bigger companies which have survived.”

Lead image: Solar Panel in South Africa via Shutterstock

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