The Department of Mineral Resources and Energy (DMRE), in partnership with industry, experts, labour representatives and various governmental entities, has birthed an initiative known as the South African Renewable Energy Masterplan (Sarem).

But don’t be fooled by the name; it is not an energy plan. 

Sarem’s ambitions are clear: to harness the burgeoning demand for renewable energy technologies in a way that not only brings about industrial progress but also fosters an inclusive era of development, interwoven with the transformative potential inherent in renewable energy and battery storage value chains. That it aligns well with South Africa’s broader decarbonisation agenda is seemingly tangential. 

In a webinar this week, Gaylor Montmasson Clair, a senior economist at Trade and Industrial Policy Strategies and the Sarem facilitator, divulged more details about the plan and what it aims to achieve.

He noted, “The growth of the renewable energy industry … it’s a typical kind of hockey stick graph with exponential growth that we are seeing. And that is the positive side of the story. We’re really seeing renewable energy growing. 

“Of course, the other side of the story is that these are imports … and it is a missed opportunity to produce those things domestically and create an industry and answer those needs through domestic manufacturing.” 

A picture is worth a 1000 words.
SA has imported $2.5 bn worth of #solarpanels, lithium-ion #batteries and inverters in the 1st half of 2023.
So great to see the exponential rollout of #RenewableEnergy in SA, but what a missed opportunity for local industrialisation! pic.twitter.com/4dr8FI2sw5

— Gaylor Montmasson-Clair (@GaylorTIPS) August 7, 2023

He explained that this is precisely what Sarem hopes to address. 

“So that is really the opportunity that Sarem aims to answer. It’s acknowledging the booming market for renewable energy and battery storage technologies, both domestically and globally, and it sees that as an opportunity for the country to drive industrial and inclusive development. And these are the two, effectively, the two key goals of Sarem.”

Unprecedented growth

According to the International Energy Agency’s Renewable Energy Market Update, “Global renewable capacity additions are set to soar by 107 gigawatts (GW), the largest absolute increase ever, to more than 440GW in 2023. 

“This unprecedented growth is being driven by expanding policy support, growing energy security concerns and improving competitiveness against fossil fuel alternatives,” the report notes.

The masterplan puts this in context for South Africa. 

“Renewable energy technologies provide the least-cost avenues to generate electricity. Globally, solar photovoltaic (solar PV) and wind energy technologies reached, on average, US$0.048 and US$0.033 per kilowatt-hour (KWh), respectively, in 2021. In South Africa, they similarly reached R0.375 per KWh for solar PV and R0.344 per KWh for wind energy technologies in 2021,” the plan notes.

“In addition, public policies, primarily targeted at fast-tracking the decarbonisation of economies in the pursuit of climate change objectives, have further driven an exponential rollout of renewable energy technologies worldwide. 

“In South Africa, the rollout of renewable energy technologies is similarly set to increase rapidly, as the country aims to achieve energy security for all as well as decarbonise its electricity supply. Utility-scale renewable energy and battery storage public procurement of 22.9GW is planned from 2022 to 2030, according to the 2019 Integrated Resource Plan (IRP).  

“As of February 2023, more than 13GW (5GW of wind and 8.3GW of solar PV) of private sector-led projects (>1 MW) were in advanced development  in the country.”

SA’s renewable’s value chain

Fostering inclusive and industrial development are two of the core objectives of the plan. Regarding the latter, the masterplan notes that South Africa is not starting from zero. 

“Combined with South Africa’s broad industrial capabilities in connected or related value chains (such as steel, aluminium, shipbuilding, capital equipment and electro-technical equipment), the historical roll-out of renewable energy, however imperfect, has displayed wide-ranging domestic capacity in supplying the renewable energy and storage sector,” it reads. 

It continues that:  

• In the solar PV value chain, local industries have capabilities in the assembly of mounting structures, trackers and modules. Production capacity is, however, often limited and at times mothballed. Cell and wafer production, which are heavily dependent on raw material sourcing and economies of scale, are at exploratory stages.
• In the wind energy value chain, the manufacturing of steel and concrete towers, the assembly of rotors (including the production of blades) and many services can be provided locally. Hub manufacturing and the production and assembly of nacelles constitute the next frontier.
• The lithium-ion battery value chain is, apart from battery cells (primarily imported from China), well developed, with capabilities in mineral beneficiation, casing and assembly and electrical systems (including battery and energy management systems). Whether cell production would be economically viable in South Africa remains to be established.
• The vanadium-based battery value chain, although nascent domestically, also boasts material local capabilities, including vanadium mining and refining, electrolyte production and VRFB assembly. The manufacturing of stacks, dependent on intellectual property, would be a possible next step for the industry.
• Across the value chains, local capabilities also exist in the manufacturing of (centralised) inverters, civil works, electrical balance of plant (eg, cables) as well as numerous services (such as yield assessment and various advisory services). In the future, existing capabilities could also be leveraged to develop opportunities around end-of-life management (reuse, remanufacturing and recycling).

Making reference to the IRP and South Africa’s energy policy landscape, Montmasson Clair noted: “Sarem is not a new energy policy. It does not replace our energy policy documents and it is not a fully fledged, just transition plan for the country either.

“It has a massive contribution to make to both those developments but it is distinct from those two and I think we have to remain true to the mandate which is on the industrial development of the renewable energy and battery storage value chain.” 

Asked about how the plan aligns with South Africa’s climate objectives, he explained, “Sarem is not an energy plan; we obviously are making a contribution to that effort [climate mitigation] but one thing is that Sarem does not determine the market and I don’t think it is possible to determine the market anyway. But in intent and ambition, we are fully aligned.” DM

Written comments and inputs on the Sarem can be directed to [email protected] on or before 18 August.