SOUTH AFRICA I MARKET
South Africa to spearhead solar revolution
South Africa is being tipped as a major market for growth opportunities but where is the South African PV market heading? A recent look at the growing market place shows that companies are beginning to look beyond the country for market opportunities. South Africa seems to becoming the entry point for many companies to the rest of the African continent.
A RECENT SURVEY by PV Insider on the commercial development and sustainability of the South African photovoltaic market revealed some surprising results on the near-term expectations for revenue growth, market drivers and business development strategies.
Not only are companies seeing opportunities beyond the REIPPP program, but they’re also looking beyond South Africa as they investigate other promising Sub-Saharan African markets.
With a total target of 9,770 MW worth of PV deployments by 2030 following the policy-adjusted Integrated Resource Plan, and with the rollout of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme, South Africa’s PV market has shown tremendous growth potential for developers, manufacturers and service providers.
According to the results of a new PV Insider survey which interviewed more than 100 leading professionals, nearly half of the participants have witnessed a revenue increase in the South African PV market over the past year, while about 42 percent said their revenue streams had remained constant.
This is evidence that the profits of the REIPPP are seeping through to the budgets of those active in the market, driven by the undersupply of power in the market and the guarantee of the government procurement programme, which to date has awarded 33 PV projects.
Overall, more than 1 GW of PV has been deployed in South 8
www.solar-international.net I Issue IV 2014
Africa. However, as the production deficiency void shrinks, firms will have to be increasingly competitive to secure consistent revenue streams.
Underlying concerns Throughout the survey, it became evident that there was an underlying concern within the market over the commercial sustainability of the current development process.
Although 65 percent of respondents said they saw the market as fairly or totally sustainable over the next three to seven years – which shows a good degree of confidence in growth prospects – about 24 percent said they were unsure about how the market would evolve over this period. In addition, 10 percent believe that the development pattern is slightly or very unsustainable.
Moreover, half of the respondents acknowledged that their business was too dependent on the REIPPP, and that this was the biggest cause of uncertainty for them. Another 30 percent revealed that price levels were dropping too low to for them to stay competitive.
“This fear is certainly backed up by the figures, with the average price of awarded projects in Round 1 of the REIPPP around 270 cents and the average price in Round 3 about 95 cents,” the PV Insider survey report highlighted, adding that if price levels drop any lower, it is clear that some in the industry would no longer be able to be competitive. Consequently, companies may begin to start taking steps to mitigate against the risk by sourcing a private client base. Meanwhile, the lack of domestic manufacture
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