Basic Statistics of South Africa
The total population of South Africa is about 58.55 million. In recent years, the economy has been on a downward trend due to unstable power supply, lack of confidence in investment institutions and companies in South Africa, and labor disputes. The average annual GDP growth rate has fallen from 1.415% in 2017 to 0.153% in 2019. Affected by the new crown pneumonia epidemic this year, the economic performance is not optimistic. The international credit rating agency Moodys even downgraded South Africa’s credit rating to Baa3, approaching the level of junk bonds, and the future economic outlook is negative. South Africa has a tropical grassland climate. The whole year is divided into summer and winter. Summer is from October to February of the following year, and winter is from June to August. The western region is relatively dry, and the eastern coast is relatively humid. The rainy season is mostly concentrated in summer. The annual rainfall decreases from east to west. The average annual rainfall in the east is about 1,000-1,200 mm, and the average annual rainfall in the west is about 60 mm. The uneven rainfall in the region makes the annual average rainfall in South Africa lower than the world average. Geographically, the central area of South Africa is dominated by plateaus. The east and south sides are adjacent to the steep cliffs. The terrain descends from the towering cliffs on the outside to the inland. The local annual average sunshine is about 1,800 kilowatt hours per square meter.
Overview of South Africa’s Renewable Energy Development
According to the 2019 South Africa Integrated Resource Plan (IRP), South Africa has set a cumulative installed capacity of 27.6GW of renewable energy in 2030, with wind (about 11GW) and photovoltaic (about 8GW) accounting for the largest number.
Coal has always been a source of power generation that South Africa has relied on. In order to meet the electricity demand brought about by economic growth and reduce the impact on the environment, South Africa intends to meet part of its electricity demand through the development of renewable energy. However, despite the challenging goals set out in the IRP, it is actually due to the ineffective operation of the local grid company and the low administrative efficiency within the government. Therefore, despite having renewable energy development goals, according to the current situation, there may actually be a risk of not being able to meet the power purchase subsidies required for renewable energy power generation, thus greatly reducing the willingness of developers to enter local investment.
At present, hydropower accounts for the highest proportion of installed renewable energy in South Africa, accounting for nearly 40% of the total. South Africa is surrounded by the sea on three sides and has a large area of lowlands and overhangs. The wind resources are abundant and suitable for the construction of wind farms. The local sunshine resources are abundant, which is conducive to the development of photovoltaics. Coupled with the government’s incentives through bidding policies, photovoltaics and wind power also have a place in South Africa, with installed capacity accounting for 29% and 23% respectively, closely behind hydropower.
South Africa PV Policy and Development
South Africa aims to achieve a cumulative installed capacity of 8.2GW by 2030. In order to achieve the goal, South Africa follows the REIPPP, a renewable energy independent power producer procurement plan, to stimulate market demand through electricity price bidding. So far, 7 rounds of renewable energy tenders have been held, including five rounds of BSW large-scale projects and two rounds of S2 small-scale project tenders. Among them, photovoltaics issued a total of about 2.4GW of tenders. The first three rounds of projects were completed in 2017, and the fourth round of projects was mostly completed in 2019. The government is still drawing up the sixth round of BSW5 bidding plan .
As South Africa does not have a complete supply chain system to support the development of the industry, although there are local content requirements, most of the project development depends on overseas players, and most of the components are made in China. The way to satisfy Local Content tends to be satisfied by hiring local workers to install and use locally made auxiliary materials.
However, despite the huge demand for tenders in South Africa, the local power company Eskom has been plagued by financial and power supply problems in recent years. Recently, it has even stated that it will not rule out renegotiations for projects that have signed PPA, and the local administrative system is vague, which will make the future development of photovoltaics Add a layer of worry. Perhaps this is part of the reason why the sixth round of BW5 bidding has not been released to the public. In addition, due to the impact of the new crown pneumonia epidemic this year, South Africa is also in the mire of the epidemic. The bid for BW5 may be launched this year. Very slim.
The BW4 project is expected to be completed and connected to the grid before the end of this year. At present, most of the goods have been completed in advance last year and have entered the rush to install this year. As most of the market has met the demand for goods from the past bidding projects, the demand for components in the South African market this year is not expected to be optimistic. , And it remains to be seen whether the demand for bidding will be released next year to further boost demand.
South Africa component import and export analysis
From 2017 to 2019, the number of modules exported from China to South Africa has been increasing year by year, especially in 2019, reaching a shipment of 1,182MW. Most of these shipments are expected to meet the installation of the fourth round of BW4 bidding projects. However, considering that the fifth round of BSW5 bidding has not yet been issued, there is little demand for the remaining bidding projects and South Africa is still suffering from the new crown pneumonia epidemic, this year’s module export volume is expected to drop significantly.
South Africa plans to reach a cumulative installed capacity of 27.6 GW of renewable energy in 2030, of which photovoltaic will achieve a cumulative installed capacity of 8.2 GW in that year. Although South Africa has set challenging targets, it has successfully driven demand through its bidding policy. However, in recent years, due to the poor operation of the state-owned power company Eskom, PPA negotiations may even be restarted, and the local administrative system is fuzzy, the fifth round of tenders has not yet been issued, making the local photovoltaic development may come to a standstill. On the other hand, affected by the new crown pneumonia epidemic this year, South Africa is one of the hardest-hit areas in Africa. South Africa is busy controlling the epidemic and may be relatively indifferent to the investment in new energy. This year, the South African module is expected to have a significant decline from last year.