South Africa finally has a master plan for the renewable energy industry: That’s what it says

About 85% of South Africa’s electricity is burned through combustion. The country’s shift to renewable energy means the coal industry will be phased out. To this end, the South African Cabinet recently approved the country’s first renewable energy master plan, which stipulates what is needed to establish a new renewable energy industry. Ricardo Amansure of the Center for Sustainability Transitions examines the transition to renewable energy and how communities can benefit from it. He explained what the master plan is going to achieve, what problems it may face, and how to succeed.

What is the overall plan for renewable energy in South Africa?

It is an industrial strategy that sheds light on how South Africa can build new manufacturing industries in the renewable energy and battery storage value chain.

The master plan was developed by the government, and some parts of the organized labor organization are a nonprofit organization that advocates renewable energy and is also a representative of the renewable energy industry. It sets a framework for producing renewable technologies locally. These include solar photovoltaic panels, wind turbines and batteries.

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The master plan has been formulated, so it fits with South Africa’s existing national goal of adding 3-5 GW of renewable energy capacity each year by 2030. This is a scale that can support the development of local manufacturing centers. (A gigawatt can power approximately 700,000 average homes.) This stable supply is enough to give businesses and investors the confidence to commit to long-term investments in local manufacturing centers. These areas are areas where renewable systems and components are produced or assembled for domestic and export markets.

The state-owned power company, Eskom, has not directly guaranteed that it will purchase 3-5 GW of renewable energy per year. But the government’s national electricity plan (integrated resource plan) provides strong signs of future demand.

The master plan also aims to attract at least R15 billion ($784 million) of investment by 2030 and train “green workers” to work on 25,000 direct jobs. These roles range from factory work and logistics to engineering and construction. Many will be suitable for young and semi-technical workers.

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South Africa already has an impartial transition framework to ensure that the transfer to a low-carbon economy is fair and does not leave workers, communities or regions. The master plan aligns with this. It aims to support black-owned companies as well as small-scale and community-based programs, especially where it is affected by the looming loss of work in the coal industry.

However, this is not a response to the country’s frequent power cuts and will not determine how power is generated. Energy system plans such as integrated resource plans and energy action plans do so. (They focus on power generation, ensuring a constant supply of energy and expanding the grid.)

Why does South Africa produce renewable energy systems?

In 2023 alone, the country spent more than R17.5 billion (USD 905 million) on solar and battery imports.

This is unnecessary because South Africa sits on manganese, vanadium, platinum and other rare earth elements. These are key elements in manufacturing clean energy systems and storage that can be manufactured locally.

South Africa has produced solar panels for steel towers and cable cables for wind turbines. Some local companies also assemble balance technology used in inverters and solar and battery systems. The potential of growing the renewable energy industry is there.

How will South Africa build these new industries?

Plants that manufacture solar, wind and battery storage components will be funded through private sector investments and government incentives and support. These include tax relief, localization requirements, and support from the Special Economic Zone. As manufacturing demand increases, plans are expanded to offshore wind and next-generation (longer duration) batteries.

From now until 2030, the master plan has the following purposes:

• Fast track government procurement of renewable energy, ensure reliable energy plans, and expand the grid to handle new projects.

• Develop industries that produce key components such as wind turbine towers, solar installation structures and batteries.

• Promote inclusive development by supporting black-owned companies, small businesses and former coal communities. This is to ensure everyone has the opportunity to participate in a green economic opportunity.

• Improve local skills and innovation. Training and educational institutions and the energy industry will work together to make renewable energy skills part of the national curriculum and workplace training pipeline. They will need the support of the government’s Ministry of Higher Education.

What challenges are they facing in reality?

South Africa has an ambitious strategic history that can position production in energy and automobile manufacturing. They tried hard to step down. Government departments often undermine these plans by delays and mismatched approaches.

If these governance and implementation gaps are not urgently resolved, the master plan may face similar obstacles.

Another bottleneck is the power grid, which cannot accommodate new renewable energy connections. Eskom needs about $21 billion to scale the grid, which will take time.

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This is a problem because renewable energy manufacturers now need to determine future needs if they are investing in new factories and training programs.

South Africa also lacks renewable energy technicians, electricians, installers and engineers.

What does it take to do to succeed in this program?

Some urgent actions are needed:

• The government must publish updated procurement rules with a clear and enforceable set of localization goals. This will give local manufacturers confidence that they will have a market where renewable energy can be sold.

• South Africa’s official power plan still emphasizes the role of coal-fired power and must be readjusted through the renewable energy master plan.

• Eskom may need the support of government and development financiers to expand the grid at the rate needed.

• Training institutions must modernize their courses and train more students to work in the Sun, Wind, battery storage and green hydrogen sectors.

• Governments must create incentives that make it easier for local and international investors to be part of the industry. Traditional tape festival – long wait for environmental approval, land rezoning and licensing processes – must be cut. Simplifying and accelerating these procedures while maintaining safety and environmental standards will increase investor confidence.

This article is republished from the conversation, a non-profit independent news organization that brings you factual and trustworthy analysis to help you understand our complex world. It is written by: Ricardo Amansure, Stellenbosch University

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Ricardo Amansure does not apply to, consult, own shares or funds from any company or organization that will benefit from this article and does not disclose any relevant affiliation except for academic appointments.