Abbreviations
Such positive expectations indicate that companies may be looking
to expand their operations in sub-Saharan Africa. This is a clear sign
of rising revenues and a continued view of profitability.
As for which sub-Saharan Africanmarkets outside of South Africa
represented the biggest potential for PV project development in the
next five years, Namibia topped the polling with 33%.
Ghana, Nigeria, and Kenya all polled very similarly with around
18% each, suggesting that amongst these nations there was a lack
of consensus on which would be the best investment opportunity.
Other markets being eyed by PV players in the region were said to be
Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
Delving deeper into what would form the largest part of the
companies’ business development spend over the next five years,
the survey found that South Africa had the highest potential growth,
with 53% pointing to this market as their priority.
The report states: This is perhaps reflective of companies waiting
for demand markets to mature further in the region or for a stronger
set of regulatory incentives in neighbouring countries to be set out
to incentivise development.
Nevertheless, for about 33%, expanding into other sub-Saharan Af-
rican markets was their priority over the next five years, while 13%
underlined cost reductions or technological development as their
primary focus.
To effectively develop their business strategies and expand,
companies typically need to collaborate and form mutually benefi-
cial relations with government authorities, developers and financial
institutions. In South Africa, about 40% of survey respondents said
that meeting with financiers was what they needed to help them
broaden their business, which indicates that many companies in the
market may have issues getting low-cost or quick access to capital.
About 20% said that meeting with developers would help them
improve their business, suggesting that some suppliers are still
seeking closer relationships with project developers. For component
suppliers, this is particularly essential in order to sustain and grow
revenue streams.
Only 14% felt that regulators would be the most effective people
to meet for the expansion of their business. So while 54% had sug-
gested a decrease in bureaucracy was the most important measure
needed to facilitate the development of the industry, actually meeting
with regulators was not a high priority for many of the companies.
ENERGY + ENVIROFICIENCY
Signs of a market evolution
Despite the REIPPP being the current driver of the South African
market, interestingly, only 21,5% specified the programme as the
most credible source of growth in the next five to 10 years. With a
mere 10% identifying utility-scale generation outside of the REIPPP
as the most reliable avenue of growth, this was even more indicative
of the lack of faith in large-scale PV development.
What is remarkably significant is that almost 51% see 1 - 5 MW
industrial and commercial deployment as the most credible area for
growth in the next five - 10 years, and almost 17% see residential
deployment as the future source of growth.
These findings show that the market views small-medium scale
deployment of PV as a bigger commercial opportunity than the
REIPPP; a perspective which is in line with the other question that
found overdependence by companies on the REIPPP among the big-
gest causes of unsustainability in the market.
Highlighted in the report is: The REIPPP has beyond repute driven
growth and investment in the PV market in South Africa, however,
there is clear evidence that firms are wary of their dependence on
it. The most important finding, it states, is that companies view the
potential of distributed generation over and beyond that of utility-
scale deployment.
Conclusion
The South African PV market is on a steep upward curve of project
development, as witnessed by the rising revenues and plentiful
business opportunities. While these profits are naturally a welcome
boost to balance sheets, companies are wary of the market’s ability to
sustain this growth over the next five years. As a result, many firms
are putting plans in place to look beyond the REIPPP and to secure a
client base amongst the industrial and commercial sectors, thereby
ensuring a sustainable project pipeline should any changes occur.
New growth opportunities for
South African PV players.
Heba Hashem is an Egyptian-Jordanian freelance jour-
nalist based in Dubai, and a regular contributor to CSP
Today, PV Insider and Wind Energy Update. Having closely
observed and covered the developments in the global solar
power market for the last six years and having interviewed
many industry experts and pioneers, she offers an in-depth
perspective of the ongoing market activity and direction.
Enquiries:
CSP
– Concentrated Solar Power
IRP
– Integrated Resource Plan
PV
– Photovoltaic
REIPP – Renewable Energy Independent Power Producer Procurement
Don't miss PV Project Development South Africa
9,10 September 2014
The Maslow, Johannesburg
(see page 52)
43
July ‘14
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