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    SA misses localisation boat on energy technology

    September 27, 2023 - Adil Nchabeleng


      South Africa is missing out big time on occupying the energy space and developing its own generic technology solutions to compete with European and Eastern countries in the rush to manufacture green technology solutions.

      For now, South Africa remains a giant consumer of energy technology and imports its technology from all over the world, mainly China, for solar, inverters and battery storage products.

      On wind technology, Europe takes a sizeable share of the pie in supplying South Africa with wind turbines and transformers technology.

      How come South Africa has procured so many renewable bid windows and we are in a renewables boom cycle, yet the country has no industrial policy to force original equipment manufacturers to build plants and manufacture these products locally?

      Where are the Industrial Development Corporation, Public Investment Corporation, and Development Bank of Southern Africa investment and their role in pressuring the government department and retailers to buy locally made solar and wind technologies made in South Africa?

      The Department of Trade, Industry and Competition (Dtic) is doing nothing to limit the porous solar technology imports flooding South African retailers. I think it is a foregone conclusion that South Africa has lost the war on imports parity.

      This trend of allowing imports to flood the market started way in the early days of our democracy, when cellphones started saturating the market. At that time, the Dtic did nothing to stop the downward spiral of product imports.

      It was somehow cheaper to import complete cellphones than to manufacture them locally. This is the case still today. It is cheaper to import fully manufactured and assembled renewable energy products than to manufacture them locally.

      There are no Dtic import controls that encourage locally made products and discourage imports for green energy technologies. It’s a free-for-all, which has in turn created a huge problem for sub-standard goods and technology imported in South Africa.

      Most retailers I speak to and interview complain that there are no suppliers of locally manufactured wind and solar energy solutions. So they have no option but to import all products. Every piece of technology is imported from Europe and the Far East. With our weak rand this, puts South Africa on the back foot, costing an arm and a leg.

      The major solar manufacturers and steel fabrication for wind and turbine technology makers are all based overseas. We import complete products into South African shores. We import totally finished goods and products that just require installation.

      South Africa should have started encouraging locally manufactured technologies to mushroom and take centre stage a long time ago. Instead, local factories were not supported and South Africa lost major manufacturers in the process.

      We have an energy shortage crisis. Which in turn creates a market stimulus in renewable alternative solutions to offset load shedding and constant power cuts. What is needed is leadership in how to direct the creation of home-based technologies that can compete with imported solutions.

      This is another crisis in the making.

      South Africa also imports batteries, something the country is competent at producing locally. May I remind you that it was South Africa that gave Tesla Electric car its battery technology and some of its scientific competencies.

      It was South African engineers who pioneered the Joule Electric Car technology project. Most of the scientists and engineers who developed the intellectual property (IP) later moved overseas and assisted Tesla to gain a leading advantage to manufacture and assemble battery technology used in their cars.

      This is where the gap exists. A pro made in South Africa policy environment that encourages and rewards the manufacturing and retail sector to support and buy locally manufactured technology goods and products.

      The skill and capacity to manufacture these technologies exists locally.

      One of the Dtic’s policies is to create an environment for “Infrastructure-led growth and youth entrepreneurial development support – urgent socio-economic priorities for South Africa’s economic recovery”.

      Minister Ebrahim Patel needs to steer the Dtic into its intended mandate of competing with international manufacturers. The department is focused on high-end big industrial sectors like automotive and mining, but very little is done on energy products manufacturing and localisation.

      We want to see more locally made wind technology and solar panels, inverters and batteries. So let’s cut the excuses, it is not that difficult a science. The market opportunities are soaring right now every time load-shedding stages increase.

      The secretary-general of the ANC ruling party, Fikile Mbalula, should make it his agenda to remind the government of its mandate to boost the gross domestic product by stimulating local manufacturing of energy technology, components and products.

      The Dtic has a special focused policy called the Economic Reconstruction and Recovery Plan (ERRP) which was introduced in South Africa by President Cyril Ramaphosa in October 2020 with the aim of stimulating the economy post the Covid-19 pandemic economic slowdown, which devastated the economy.

      Manufacturing and assembly bonanza

      The ERRP policy focuses on revitalising the economy through science, research and innovation. This is an area of opportunity that we can use to turn our energy crisis into a manufacturing and assembly bonanza.

      According to the World Bank’s economic assessment of South Africa, it found that young entrepreneurs were the best placed hope for the country to turn its economic woes into success.

      In a report produced by the chief director Makhwasane Matjeke, a senior economist and policy analyst: Macroeconomic Policy at the Dtic, he cites another study conducted by McKinsey on SMEs in Africa and the Middle East in the context of Covid-19 which found that “small businesses are key to unlocking economic opportunities and achieving inclusive growth”.

      The government has to create an enabling environment for entrepreneurs so that they can create businesses, which would then create job opportunities in the various sectors, particularly the energy sector, and in turn tackling the jobs crisis facing South Africa.

      To reverse de-industrialisation and stimulate economic growth and job creation, bold steps need to be taken by the state to make good on its ERRP policy of reversing de-industrialisation currently plaguing our economy.

      South Africa should take advantage of these energy opportunities. It is a win-win, which will boost economic growth and help the country’s post-pandemic recovery.

      This is where a crisis meets with opportunity for local manufacturing sectors.

      The president must urge all departments and parastatals to direct their various campaigns and public initiatives on tackling the energy crisis through supporting local manufacturers and buy locally made products used for additional energy generation and storage technology.

      It is no secret that Europe and China are celebrating the opportunities provided by the load-shedding energy shortage crisis. They are laughing all the way to the bank while South Africans and the economy linger hopelessly in persistent power cuts and a state of darkness.

      Crown Prince Adil Nchabeleng is president of Transform RSA and an independent energy expert.

      * The views in this column are independent of “Business Report” and Independent Media.



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