South Africa Solar Energy Systems Market

South Africa Solar Energy Systems Market Segmented By Product Type (Solar Panels {Monocrystalline, Polycrystalline, Thin Film}, Solar Inverters {Central, String, Micro}, Solar Batteries {Lithium Ion, Lead Acid, Flow Battery}), By Service (New Installation, Maintenance & Repair), By End-Use (Commercial, Residential, Industrial, Agriculture), By Region, Competition, Forecast & Opportunities, 2028F

South Africa Solar Energy Systems market was valued at USD 826.73 million in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 15.84%, owing to factors such as declining cost of solar PV installations, efforts to reduce over-reliance on coal-based power plants, increasing awareness about net-zero emission plans, and favorable government initiatives.

Declining Cost of Solar PV Installations:

In South Africa, the cost of solar photovoltaic (PV) installations has been declining considerably over the past few years. According to the International Renewable Agency (IRENA), the average installed cost of utility-scale solar PV reached about USD 1,148 per kW in 2020 from USD 1,321 per kW in 2019, representing a 15% decline in the installation cost.

Among the utility-scale solar PV installation cost in South Africa, more than 40% of the price comes from the solar PV modules and inverters, while the balance of the system (BoS) accounts for 34% of the total, and the remaining comes from the soft costs and installation cost.

The rapidly declining PV installed costs are primarily due to the steady improvement in solar PV technology, economies of scale, and competitive supply chains. Such a scenario is likely to continue and increase the adoption of solar energy systems installed in the country during the forecast period.

The residential solar PV installation cost is also reducing significantly in South Africa. In 2020, the average installed cost of residential sector solar PV was USD 1,575 per kW, a sharp decline from around USD 3,145 per kW in 2015 and USD 1,864 in 2019. Hence, with such a scenario, along with the increasing electricity prices by ESKOM, the solar PV market in the country is opening a new wave of clean energy investment by households and commercial and industrial customers.

As of February 2022, the National Energy Regulator of South Africa (NERSA) has authorized the national power utility Eskom to increase its tariff by an average of 9.61% for the 2022/23 financial year. The tariff increase includes 3.49% for the 2022/23 year and legacy decisions from previous years, bringing it to 9.61%. Such a rise in electricity tariffs and a parallel decline in the cost of residential solar PV makes installing solar PV a better option for consumers in the coming years in South Africa.

Thus, owing to the above-mentioned points, the declining cost of solar PV installation in South Africa is expected to drive the South Africa Solar Energy Systems market during the forecast period.

Efforts To Reduce Over-Reliance on Coal-Based Power Plants:

South Africa is the seventh-largest producer of coal in the world, and its thermal power plants are mostly dependent on coal. Nearly 82% of the total installed capacity and 76% of the whole energy production in 2021 will come from coal-based thermal power plants. With 15 operating power plants and a net installed capacity of about 39.3 GW as of 2021, South Africa is ranked as the 11th greatest greenhouse gas emitter in the world.

Nevertheless, South Africa has large domestic coal deposits but has a severe electrical crisis. The Council for Scientific and Industrial Research (CSIR) estimates that load shedding occurred for 1,169 hours in 2021, with an upper limit of 2,521 GWh in comparison to the 1,775 GWh of actual energy shed.

The national power utility ESKOM, which owns and operates the older coal-based thermal power facilities, has been primarily responsible for the energy crisis. The fleet of power plants owned by ESKOM had an average Equivalent Availability Factor (EAF) of 61.8% in 2021, down from 65% in 2020.

The scheduled Capability Loss Factor (PCLF) for ESKOM's coal-fired fleet was 10.4%, the unanticipated Capability Loss Factor (UCLF) for unexpected outages was 24.6%, and OCLF, or Other Capability Loss Factor, was 2.9%. The age of ESKOM's fleet of coal-fired power plants is mostly to blame for such high plant loss factor values. The average age of ESKOM's coal-powered fleet, excluding the recently constructed Medupi and Kusile plants, is 41 years, which is considerably greater.

These power plants are extremely sensitive to outages because of their old age and require frequent maintenance, which raises operating expenses. Additionally, the manufacturing of power is more environmentally damaging and produces a lot more greenhouse emissions. ESKOM estimates that upgrading the utility's aging coal-fired fleet to meet minimal emissions regulations will cost about ZAR 300 billion (USD 15.69 billion).

The issue has been recognized by the government and ESKOM. The state-owned utility has developed a plan to address rising energy demand and offer affordable power after realizing the unviability of operating an aging coal-fired fleet in the face of expanding demand.

ESKOM established the Just Energy Transition (JET) strategy as part of the Integrated Resource Plan, which was last revised in 2019, to hasten the repurposing and repowering of its power plants and actively pursue a stake in the allocation of renewable energy. According to this plan, ESKOM said in August 2021 that it intended to shut down 8–12 GW of its coal-fired fleet by 2030.

Additionally, the 1 GW Komati Power Plant in October 2022 is closed and is replaced with a renewable energy complex consisting of a 500kW agri-voltaic plant, a fabrication factory, and a micro grid assembly, supported by 244MWh of battery storage capacity. This is expected to provide a blueprint for the decommissioning of other coal power plants, such as the Grootvlei (1.2GW), Hendrina (2GW), and Camden (1.56GW) power stations.

Moreover, the IRP included plans to add 1.5 GW of new coal-fired capacity by 2020 to smoothen the energy transition. However, in November 2021, South Africa’s energy regulator and energy minister were sued by environmental activists over the plans to add new coal-fired capacity and power stations. Such instances elucidate that the expansion of South Africa’s existing coal-fired fleet is a contentious issue and will have limited public support during the forecast period.

Due to the country's present energy crisis, steady growth in power consumption is anticipated during the predicted period. In order to make up for the discharged capacity and meet the rising demand for energy, the government of South Africa must balance the withdrawal of its coal-fired power with new renewable capacity increases. To refocus its operations on the production of renewable energy and the mitigation of emissions, the national power company ESKOM is also attempting to reform its organizational capacities. During the forecast period, these initiatives are anticipated to boost the possibilities for renewable energy sources like solar energy while also increasing the demand for solar energy systems.

Increasing Awareness about Net-Zero Emission Plan:

Solar energy is a safe and environmentally friendly substitute for fossil fuels that can lower greenhouse gas emissions, reduce the effects of climate change, provide energy security, and enhance consumers’ standard of life. South Africa produces 40% of the continent's CO2 emissions and has the largest carbon footprint in Africa. Due to this, the government is focusing on decarbonization methods. For instance, to support South Africa's decarbonization efforts to achieve net-zero emissions by 2050, the government of South Africa launched a new, ambitious, and long-term collaboration in November 2021 called the Just Energy Transition Cooperation. These initiatives are expected to boost the market for solar energy systems over the next years and increase the prospects for renewable energy sources like solar energy.

Favorable Government Initiatives:

In order to encourage Independent Power Producers (IPP) to finance grid-connected renewable energy projects across the nation, the South African government established the South African Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The first window opened in November 2011, and by bid window 4, there were about 6,327 MW of installed renewable energy, including 2,292 MW of solar PV. Later in October 2021, the chosen bidders for bid window 5 were revealed. This list included 13 solar PV projects with a combined capacity of 975 MW.

Furthermore, according to the IRP for 2019, the government expects to provide a total of 1000 MW worth of solar PV systems annually, between 2022 and 2030, owing to which the requirement for solar energy systems is anticipated to grow in South Africa over the next few years.

Increasing Competition from Onshore Wind Energy

In South Africa, the increasing developments in the wind power sector are likely to restrain the growth of the South Africa solar energy systems market during the forecast period. On the other hand, other renewable power sources, such as hydro and bioenergy, have comparatively slower growth than the wind energy sector.

The country has witnessed considerable developments in the wind energy sector for the past few years. According to the Department of Mineral Resources and Energy in South Africa, the total onshore wind energy installed capacity at the end of 2021 was about 3.03 GW, which is an increase of 23% compared to 2.51 GW in 2020.

Furthermore, the country aims to have 11.5 GW of onshore wind capacity by 2030. In August 2021, the South African electricity public utility Eskom Holdings announced its plan to invest ZAR 106 billion (USD 7.2 billion), in renewable technology, including onshore wind power technology, by 2030. Such initiatives are likely to see massive deployment of onshore wind power projects in the country, restraining the growth of solar energy systems in the coming years.

Moreover, in April 2022, South Africa’s Department of Mineral Resources and Energy (DMRE) launched the opening of the Bid Window 6 (BW6) of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The DMRE invited interested parties to submit bids by August 2022. The launch of the sixth bidding round is expected to see 2.6 GW worth of renewable projects, including 1.6 GW of wind.

Thus, the rising competition from alternative clean energy sources, such as onshore wind energy projects, in diversifying the renewable power sector is expected to restrain the growth of the solar energy systems market during the forecast period.

Market Segmentation

South Africa Solar Energy Systems market is divided into product type, type of solar panel, type of solar battery, type of solar inverter, service, end-use, and region. Based on product type, the market is segmented into solar panels, solar inverters, and solar batteries. Based on the type of solar panel, the market is segmented into monocrystalline, polycrystalline, and thin film. Based on the type of solar battery, the market is segmented into lithium-ion, lead acid, and flow battery. Based on the type of solar inverter, the market is segmented into central, string, and micro. Based on service, the market is segmented into new installation and maintenance & repair. Based on end-user, the market is segmented into commercial, residential, industrial, and agriculture. The market analysis also studies the regional segmentation to devise regional market segmentation, divided among Gauteng, KwaZulu-Natal, Western Cape, Eastern Cape, Mpumalanga, Limpopo, North-West, Free State, and Northern Cape.

Company Profiles

Jinko Solar Co., Ltd., Trina Photovoltaic South Africa Ltd., Canadian Solar South Africa (Pty) Ltd, ARTsolar (Pty) Ltd, Ginlong (Solis) Technologies Co. Ltd, Seraphim Solar, iG3N (Pty) Ltd, IBC SOLAR South Africa (Pty) Ltd, First National Battery, Lento Industries Pvt. Ltd. are among the major players that are driving the growth of the South Africa Solar Energy Systems market.

Report Scope:

In this report, the South Africa Solar Energy Systems Market has been segmented into the following categories, in addition to the industry trends, which have also been detailed below:

• South Africa Solar Energy Systems Market, By Product Type:
• Solar Panels

Monocrystalline

Polycrystalline

Thin Film)

• Solar Battery

Lithium Ion

Lead Acid

Flow Battery

• Solar Inverters

Central

String

Micro

• South Africa Solar Energy Systems Market, By Service:
• New Installation
• Maintenance & Repair
• South Africa Solar Energy Systems Market, By End-Use:
• Commercial
• Residential
• Industrial
• Agriculture
• South Africa Solar Energy Systems Market, By Region:
• Gauteng
• KwaZulu-Natal
• Western Cape
• Eastern Cape
• Mpumalanga
• Limpopo
• North-West
• Free State
• Northern Cape

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the South Africa Solar Energy Systems market.

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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