SOUTH AFRICA I MARKET
development, the limited supply of long-term finance for non- REIPPP projects and the ongoing problems with small-scale feed-in domestic and commercial installations were highlighted as other substantial problems by the rest of the respondents.
What regulators can do
In examining what can be done by South African regulators to facilitate the development of a sustainable solar industry over the next 3-7 years, the majority of respondents – around 56 percent – believed that a decrease in bureaucracy was the answer.
About 20 percent said a change was needed in the way the REIPPP was administered, while 19 percent felt that higher local content requirements would be a beneficial measure.
Only five percent cited restrictions on foreign companies entering the market as advantageous to the development of the industry, which indicates that South Africa will continue to benefit from keeping its doors open to foreign investment and expertise. Additional responses revealed that many companies are craving
specific legislations which provide a clear framework for the growth of rooftop PV or an effective framework to conclude private power deals.
Revenue growth
Confidence in South Africa’s PV market in the mid-term was once again evident when a staggering 87 percent of respondents said they were expecting an increase in their business development budgets over the next three years. About 40 percent went as far as saying they were expecting a substantial growth in their budgets over this period.
Such positive expectations indicates that companies may be looking to expand their operations in Sub-Saharan Africa and is a clear sign of rising revenues and a continued view of profitability.
As for which Sub-Saharan African markets outside of South Africa represented the biggest potential for PV project development in the next five years, Namibia topped the polling with 33 percent.
Ghana, Nigeria, and Kenya all polled very similarly with around 18 percent each, suggesting that amongst these nations there was a lack of consensus on which would be the best investment opportunity. Other markets being eyed by PV players in the region were said to be Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
Delving deeper into what would form the largest part of the companies’ business development spend over the next five years, the survey found that South Africa had the highest potential growth, with 53 percent pointing to this market as their priority.
“This is perhaps reflective of companies waiting for demand markets to mature further in the region or for a stronger set of regulatory incentives in neighbouring countries to be set out to incentivize development,” states the PV Insider survey report.
Nevertheless, for about 33 percent, expanding into other Sub-Saharan African markets was their priority over the next five years, while 13 percent underlined cost reductions or technological development as their primary focus.
To effectively develop their business strategies and expand, companies typically need to collaborate and form mutually beneficial relations with government authorities, developers and financial institutions. In South Africa, about 40 percent of survey respondents said that meeting with financiers was what they needed to help them broaden their business, which indicates that many companies in the market may have issues getting low-cost or quick access to capital.
About 20 percent said that meeting with developers would help them improve their business, suggesting that some suppliers
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www.solar-international.net I Issue IV 2014
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