Raising tariffs on renewable-energy components in South Africa sparks worry among concerned parties

South Africa Weighs Tariff Increases on Energy Transition Components

South Africa is considering a significant shift in its energy sector, with the government mulling over proposals to raise tariffs on imported components for solar, wind, and battery storage products. This move is part of a broader push towards renewable energy, announced in April, and aimed at supporting local industrialisation and creating jobs.

The International Trade Administration Commission (Itac) has put forward these proposals, which also include new export controls on materials needed for renewable-energy products, such as critical minerals. The commission recommends support measures for industries involved in manufacturing solar panels, wind turbines, and battery storage, focusing on enhancing competitiveness, securing supply chains, and promoting innovation through industrial policies and subsidies.

However, the proposals have sparked concerns within the renewables industry and trade unions. Cosatu, the Congress of South African Trade Unions, has proposed negotiating and launching a high-level industrial renewable-energy partnership with China to support localisation and technology transfer. This comes after South Africa has already signed nuclear and renewable energy agreements with China.

Sapvia, the South African Photovoltaic Industry Association, has expressed concern about the proposal to remove the current rebate on the import of solar PV panels. They argue that raising tariffs would increase costs across the value chain, making solar power less affordable and slowing its adoption. On the contrary, Sapvia is more supportive of the proposal to establish new rebates for key input products not manufactured in South Africa, especially for battery manufacturing.

Boitumelo Molete, climate lead at Cosatu, echoed similar sentiments, expressing concerns about rising costs associated with the tariff proposals. Molete emphasized the importance of adopting ways to re-skill and upskill workers for the emerging renewable-energy sector.

The electricity in South Africa is predominantly generated by coal, accounting for over 80%. The country is facing a long-term energy crisis, manifesting in rolling blackouts. The tariff increases would increase the cost of South Africa's energy transition, a major concern for all stakeholders.

Other measures proposed include tariff rebates for some products which are input materials for downstream manufacturing and are not made in South Africa. The final decision on the tariff plans rests with the trade and finance ministers, who will review the Itac recommendations after a public consultation. Stakeholders argue that the four-week consultation period for these proposals is too short.

The tariff plans have become an important issue for the South African government and renewables industry, with implications for the speed of the energy transition, the creation of jobs, and the country's relationship with China. Van Staden suggested that the severity of South Africa's energy crisis necessitates the importation of components for establishing smart and integrated grid technology and storage.

Naude noted a skills shortage in manufacturing renewable-energy products in South Africa, particularly of technicians and engineers. This underscores the need for a balanced approach that considers both local industrialisation and the affordability of renewable energy. The debate continues as South Africa navigates its energy crisis and transition towards a greener future.

Raising tariffs on renewable-energy components in South Africa sparks worry among concerned parties