South Africa's successful execution of its renewable energy programme has powered the growth of the renewable energy industry there.
In new analysis, business analyst Frost & Sullivan has found that renewable energy is set to account for 12 per cent of the energy mix in South Africa by 2020, up from one per cent in 2012, and the country is set to become one of the fastest-growing renewable energy markets worldwide.
"In the light of electricity and water scarcity, as well as rising coal prices, renewable energy is becoming a preferred choice of energy generation technology in South Africa," said Frost & Sullivan Energy and Environmental Research Analyst Joanita Roos. "Additionally, South Africa is the 12th highest carbon-emitting nation, and the need to diversify industries and incorporate lower carbon-emitting technologies will spur RE development."
Under the country's renewable energy programme, various renewable technologies have to meet minimum annual targets by the medium term in order to stimulate local manufacturing and services. However, the parameters for each technology will need to be defined individually, and the local industry may lose momentum if certainty over local requirements and capacity allocations are not provided.
Moreover, financial restraints owing to the steep initial capital, as well as legal and technical project costs, hamper renewable industry expansion in South Africa. The shortage of skills and experience in the local industry adds to the challenge.
Further, the overtraded global market has slowed the industry down and increased the reluctance of manufacturers' to start new facilities in South Africa. Only after the huge stock and inventory backlog of large global players has been released, and demand has caught up, can the growth of the local market improve.
"To gain credibility, domestic companies must partner with international firms that have the relevant RE experience and skills," concluded Roos.
"International suppliers too have expressed interest in beginning operations in South Africa, not only to establish a local footprint, but also to secure access to other emerging markets in sub-Saharan Africa."