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Innovation 8 August 2022

Delivering solar power to SA Manufacturers

Despite Government’s National Development Plan 2030 efforts, South Africa’s manufacturing sector has yet to see its intended revival.

The country is now producing 3.3% less than it did a decade ago and according to Stats SA, as of Q2 2021 employment in the sector had declined by 40% since 1990.

Factors leading to this decline include the rise of manufacturing powerhouse China, along with other low-wage, global competitors producing goods at lower prices, labour unrest and strike action back at home, increased fuel and transportation costs, price volatility on inputs, the economic downturn resulting in decreased consumer income and demand – and most recently the impact of Covid-19 lock-downs and subsequent supply chain issues.

Other significant contributors to the sector’s decline are steep hikes in electricity tariffs and productivity losses due to persistent power outages and loadshedding, with a record-breaking 2400-gigawatt hours shed in 2021, according to PwC, representing a 38% increase on 2020.

Lowering costs and securing energy supply

When it comes to manufacturing, power interruptions result in extensive losses: loss of materials and extensive recovery operations; wasted wage costs as factory floors stand idle coupled with overtime expenses to deliver on output schedules; and delayed fulfillment of orders and consequent risk of losing customer accounts.

There is some good news. While many external factors are difficult to control in the manufacturing sector, the issue of power stability is no longer one of them.

Government has removed the threshold for private electricity provision which allows private entities to generate power without requiring a licence. They will only be required to register and comply with the technical and environment requirements.

In South Africa, where we experience an average of 2 500 hours of sun every year, Solar Photovoltaic (PV) presents the manufacturing sector with a viable means of lowering electricity costs and obtaining energy security.

Energy security and solar installation costs will be further improved through Government’s power plan announced on 25 July, which aims to accelerate the procurement of new power generation capacity from renewables, gas and battery storage and increase private investment in the energy sector. Under the plan, the lengthy regulatory process for approving new power projects will be streamlined and special legislation will be tabled in Parliament to expedite approval, allowing businesses to commence their operations sooner. Relevant Government departments will also work in co-ordination to prioritise new capacity generation and ensure that projects under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) are implemented on schedule. The next round of the REIPPPP will further boost solar generation by doubling the amount of capacity procured from 2,600 MW to 5,200 MW.

Solar power uptake will be encouraged through incentives that seek to offset solar installation costs. Businesses and households who instal rooftop solar panels will benefit from Eskom’s pricing structure and rules, allowing them to sell excess power to the grid.

Solar power will also prove to be effective in offsetting the carbon emissions produced by electricity and diesel to lower carbon tax burdens on large emitters as they come into effect in coming years – and will help producers appeal to eco-conscious consumers.

While the benefits of solar power are plentiful, solar PV installations are not without their risks. When it comes to industrial installations, for those who are not experts in the renewable energy sector it can be challenging to accurately assess energy and infrastructure needs, evaluate quotes, compare specifications on the recommended components, identify the quality of the proposed technology and warranties, vet suppliers and calculate costs versus expected return.

Solar solutions for the Manufacturing sector: Introducing PowerPulse

PowerPulse by Standard Bank is a digital platform that enables your company to cut through this fog and navigate the complex process of commercial solar PV installations with ease – by delivering an end-to-end solution.

PowerPulse assists South African manufacturers to:

  • Complete an online feasibility assessment to determine whether solar power is suited to your specific needs based on your consumption, size and site
  • Set-up briefing sessions and site visits with accredited, pre-vetted Engineering, Procurement, and Construction (EPC) providers that have the right expertise and track record on industrial installations
  • Receive three proposals with a comparison report to help you assess the quote and compare like-for-like on:
    • Specifications, quality, and warranties of proposed components
    • Sizing of the system in relation to your annual consumption load profile
    • Pricing calculations with cashflow implications
    • Payback periods with scenarios that both include and exclude South Africa’s 12P tax incentive
    • Applicable ongoing maintenance costs
  • Our trusted EPC providers can support with legal and technical assistance to ensure compliance for solar PV connections according to Eskom and local municipal regulations
  • And finally, should you require funding, Standard Bank offers a specialised financing solution for solar energy projects beginning at R250 000, with no upper limit constraint.

Usage of the PowerPulse platform is free

  • The PowerPulse platform is for free to all businesses operating in South Africa. There is no charge for completing the feasibility analysis or connecting with pre-vetted EPC suppliers
  • All costs pertaining to the Solar PV installation and ongoing maintenance will be listed in the quotes you receive via the platform
  • Project financing fees apply.

Ready to start?

PowerPulse is an innovative solution that is transforming the way we produce, deliver and consume energy in South Africa.  For more information, please contact our Concierge team on [email protected]