In order to achieve the vision of net zero carbon emissions in 2050, South Africa has vigorously promoted the development of renewable energy in recent years. According to the Presidential Climate Committee (PCC), South Africa is expected to add 50-60 GW of renewable energy installed capacity by 2030. However, with South Africa's energy transformation and rising demand for electricity, ESKOM, a state-owned power company that used to generate electricity mainly from coal and monopolized 90% of the country's electricity supply, has been overwhelmed.
In recent years, large-scale power rationing (load shedding) in South Africa has become the norm , in order to alleviate the current urgent power crisis. The South African government announced that the national electricity price will be raised by 18.56% and 12.74% in 2023 and 2024 , respectively, to save residential electricity consumption and encourage the construction of distributed generation facilities. The government issued two photovoltaic tax subsidies totaling up to 4 billion rand (about 210 million US dollars) , as follows:
Taxpayers paying personal income tax who install photovoltaic panels with a minimum output of more than 275 W can receive a maximum 25% rebate of 15,000 rand (about $811) per person, but the rebate does not include other components other than photovoltaic panels, such as energy storage batteries or diesel generators.
2. From March 1, 2023 to March 1, 2025, for renewable energy investment projects in two years, corporate taxpayers can apply for 125% tax relief for capital expenditure in the first year, and the project size limit of 100MW in the past has been abolished.
According to Chinese customs data, the above policies have indeed effectively promoted the market demand of photovoltaic households and small and medium-sized enterprises in South Africa. South Africa will import 1187MW PV modules from China in 2022, 570 MW in the first half and 617 MW in the second half; 2023 can be said to have ushered in explosive growth, with cumulative imports reaching 2665 MW from January to May alone , an increase of 4.6 times compared with the same period last year. Based on the import volume in the second half of 2022, South Africa is expected to generate 1.2 to 1.9 GW of PV module demand in the second half of 2023, while the annual import volume is estimated to be 3.8 to 4.5 GW , compared with last year. The annual growth rate is about 3.4 times.
The rapid development of the photovoltaic market has also reduced the price of photovoltaic resale in South Africa year by year, from 131 rand/degree in 2018 to 86 rand/degree in 2022, and the cost of local generators is 50% higher than in the past due to the war between Ukraine and Russia in 2022, which has led to a discussion on energy storage. In order to calculate the market space of energy storage in South Africa, InfoLink statistics show that as of December 2022, the total installed capacity of ground photovoltaic in South Africa has reached 2,288MW. Assuming that the global photovoltaic ratio is 10%, assuming an average of two hours of energy storage, South Africa alone has about 456 MWh of energy storage market space for centralized ground photovoltaic. South Africa is a place dominated by distributed photovoltaic and energy storage, so the actual installed capacity is even larger. Based on the import of 3.8 to 4.5G W photovoltaic modules from China this year, the energy storage market in South Africa is expected to add about 500 to 600 MWh of energy storage capacity in 2023.
On the whole, the bill introduced by South Africa this year has indeed effectively stimulated the import of components throughout the year, and the country is also the main development center of photovoltaic and energy storage in Africa at this stage, with huge growth potential. However, it is worth noting that the energy storage market in South Africa seems to have a huge space, but the government's planning for energy-storage-related bills and profit models is not yet complete, especially the high pre-capital required for distributed energy storage is the main reason that many consumers consider, including the photovoltaic tax subsidies introduced this year. In 2023, when the war between Ukraine and Russia has eased, the cost of local generating units has also begun to decline. Unless the government introduces subsidies or related profit models for distributed energy storage in the future, whether the price of distributed energy storage can compete with the price of local generating units is still quite interesting. As for centralized energy storage in South Africa, as of the first half of 2023, South Africa's state-owned power company ESKOM has tendered for six energy storage projects exceeding 0.5G W/2G Wh. However, due to its huge scale, it is expected that the grid connection will not be successfully completed until 2024 to 2025. Overall, South Africa is indeed an emerging market worthy of attention.
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