Could Africa manufacture its own solar panels?

From the newsletter

UK-based Swansea University is leading a $3.66 million initiative to establish the first full-scale perovskite solar module manufacturing plant in South Africa. The project, funded by the UK Research and Innovation Ayrton Challenge Programme, involves collaboration with universities, businesses, and communities in South Africa, Nigeria, Rwanda, & Kenya.

• The project, titled "Resilient Renewable Energy Access Through Community-Driven Holistic Development in Perovskite Solar Module Manufacturing (REACH-PSM)," aims to increase energy access by producing efficient and sustainable solar modules locally.

• The funding will support the construction and operation of a new solar panel manufacturing facility in South Africa. This initiative aims to reduce reliance on imports, create jobs, and contribute to South Africa's renewable energy targets.

• The use of solar energy in Africa has been gaining momentum over the last decade with a continuous decline in prices by 47.2% in six years. Many African countries are now undertaking large utility solar projects to boost their grid capacity. Residential uptake is also increasing, although at a smaller scale. 

• Interestingly, Africa has been relying on importing solar panels, with Chinese imports dominating. Despite being significant consumers, Africa lacks localised solar panel manufacturing, and even the few ventures in this area are limited to assembly, primarily aimed at meeting domestic demand.

• Ghana built its solar panel factory in 2016 with a 150 MW annual production capacity. Burkina Faso established a 30 MW panel production and assembly plant in 2020. However, it's not clear whether they are still in operation. Kenya set up Solinc East Africa in 2011 but later closed it due to serious market competition.

• In 2023, Nigeria began construction of its solar cell factory, the first such facility in West Africa. South Africa's Ener-G-Africa officially launched its new 15 MW annual women-led solar panel assembly plant in Cape Town. This solar assembly facility focuses on making smaller solar panels to serve low-income households across Sub-Saharan Africa. The company is still in operation and has expanded its products to even include cook stoves and biofuels.

• South Africa also hosts ARTsolar which was established in 2010. This manufacturer specialises in high-volume production for utility-scale PV farms, differentiating it from others that target small-scale customers.

• Africa has the potential to become a solar manufacturing hub due to abundant mineral resources and high demand for energy access. However, challenges such as high electricity prices, skills gaps, and infrastructure limitations need to be addressed.

• Countries like South Africa have been increasing electricity prices for a long time, which has forced many industries to scale down, shut down, or spend huge sums of money to switch to solar and other energy alternatives.

• While there is a desire for local solar panel production, Africa lags in technology and skilled labour, hindering its ability to compete with Chinese giants like Jinko Solar and Longi Solar.

• There is a need for African manufacturers to focus on innovation, cost competitiveness, and niche markets. Governments need to create supportive policies, provide access to financing, develop a skilled workforce, ensure reliable infrastructure, and promote regional cooperation for success.

Our take

• The dream of solar panel manufacturing in Africa faces a harsh reality.  It's a costly undertaking, requiring significant investment in research, development, and infrastructure which many African countries lack the capacity to develop. 

• Adding to this challenge, Chinese companies, backed by substantial government support, have become dominant players in the global solar market. Their established infrastructure and access to capital allow them to produce affordable solar panels at a scale that's hard to match. Even manufacturers in Europe and the US struggle to compete

• However, Africa possesses a wealth of mineral resources essential for solar panel production. This presents an opportunity to entice Chinese companies to relocate their manufacturing to the continent. Attracting these companies, however, won't be easy. It will require offering attractive incentives, such as tax breaks, and creating a favourable business environment.

• Furthermore, governments need to implement policies that encourage the use of locally-produced solar panels. This could involve import tariffs on foreign panels, but such measures must be carefully considered to avoid increasing costs for consumers.