Solar infrastructure imports spike, showing up the Reippp

While perpetual load shedding is destroying our economy, South Africa has seen a massive spike in imported solar solutions.

Read: SA faces two more years of power outages, Eskom says

When most analysts speak about the potential of renewable energy, they refer to the projects flowing from the government’s Renewable Independent Power Producer Programme (Reippp).

This programme was launched in 2011, and up to 2021 had added only around 6 300 megawatts (MW) of electricity to the Eskom grid.

It is important to note that, according to News24, not a single megawatt of new-generation capacity has been connected to the grid since 2018.

However, during the past five years, the private sector has imported renewable infrastructure to the value of nearly R30 billion, capable of generating 4 550MW. This is equivalent to almost 2.5 Koeberg nuclear plants or 9.5% of Eskom’s total generation capacity.

Statistics from the South African Revenue Service (Sars) show that in 2022 alone, a mammoth R10.7 billion worth of inverters, R12.4 billion worth of lithium-ion batteries and R5.4 billion worth of photovoltaic cells were imported.

The importation of inverters more than doubled relative to 2021, while the incoming batteries spiked by 313%. The growth in imported solar panels was more modest at 54%.

Source: Moneyweb, with Sars data

The growth over the past five years has accelerated significantly and is set to continue to grow virtually exponentially (see table below).

Imported solar capacity, for instance, is expected to jump by another 2 300MW in 2023, taking solar installations in the country to 14.2%.

According to the South African Photovoltaic Industry Association (Sapvia), very few of these inverters, batteries and panels were imported by the big Reippp solar projects, suggesting that this infrastructure was imported for commercial, industrial and household markets.

Sapvia also states that solar panels capable of generating 1 500MW were imported before 2019. Since then, imports have spiked. In 2020 and 2021, solar panels with capacities of 750MW and 800MW were imported. In 2022 this jumped to 1 500MW, and Sapvia estimates that a further 2 300MW will reach our shores this year. This means that until the end of last year, solar panels with a peak capacity of 4 550MW have been imported.

This is a lot of statistics, but it underlines the relative failure of the government-driven Reippp and the efficiency of the private sector.

The government needs to make it as easy and as affordable as possible for businesses and households to install their own generation capacity.

This can be done by removing value-added tax (VAT) from solar infrastructure, offering installation subsidies and buying excess electricity.

This will limit the damage to our economy. This was (again) emphasised last week by South African Reserve Bank data, which states that load shedding will slash the country’s growth rate this year by two percentage points.

This is a frightening statistic, as economic growth is the only way to solve our financial and social problems.

Read:

I hope the government appreciates the impact of load shedding on the economy and realises the impact on tax revenue, job creation and the South African psyche.