Ethiopia builds more solar cell manufacturing plants

From the newsletter

Three Chinese companies plan to invest at least $460 million in solar cell manufacturing plants in Ethiopia. This brings the total foreign companies investing in solar manufacturing in Ethiopia to four. The country’s cheap power and its trade benefits with the US, which allow exemption from tariffs for bifacial solar cells, have made it an attractive investment hub.

• Toyo was the first company to set up its solar cell manufacturing plant in Ethiopia, targeting the US market. The company currently has a manufacturing capacity of 2,000 MW and plans to double it by July this year.

• Beyond Ethiopia, renewables manufacturing is gaining traction across the continent. Both Nigeria and Egypt have plans to set up solar manufacturing facilities. Morocco has built Africa's first wind blade factory.

More details

• Chinese companies Hanergy New Energy Technology Company Limited and Jandu signed a $360 million deal to establish a solar cell manufacturing plant.

• Another  $100 million agreement was signed by Motuma Temesgen, Director General of Geda Special Economic Zones (SEZs), and Zhang HuaRong, Huajian’s Founder and CEO. The company will operate on leased land within the SEZ, aiming to start production within three months.

• Motuma Temesgen stressed the government’s commitment to creating a favourable investment climate, highlighting ongoing work to complete essential infrastructure like power, roads, and water supply. Zhang HuaRong cited Ethiopia’s macroeconomic reforms as a decisive factor in Huajian’s decision, noting that these changes have revived investor interest.

• Ethiopia has the cheapest and most affordable power in Africa at just $0.006 per unit, which is highly attractive to manufacturing industries. Moreover, the country’s historic reliance on hydropower, with the largest 5,150 MW dam in Africa. This provides a significant operational cost advantage for energy-intensive solar cell production.

• Apart from the US tax exemption and cheap power, Ethiopia's SEZs and industrial parks offer a comprehensive suite of incentives that significantly enhance their attractiveness for manufacturing. Fiscal incentives are extensive, including up to 10 years of income tax exemption (with extensions for export-oriented firms), duty-free importation of capital goods, accessories, and construction materials, and exemption from export taxes. Expatriate employees also benefit from personal income tax exemptions. 

• Across Africa, other nations are also establishing themselves in solar manufacturing, albeit with varying degrees of success and different strategic focuses. South Africa has historically been a leader, with established manufacturers like ARTsolar and a new renewable energy masterplan aiming for significant investment and job creation.

• Egypt has rapidly emerged as a major solar market, driven by large-scale utility projects like the Benban Solar Park, which create substantial domestic demand. Nigeria has ambitious plans to ban solar panel imports to boost local manufacturing, with companies like LPV Technologies making strides, but faces a contradiction between these ambitions and the immediate need for imports to meet vast energy demands. 

Our take

• Africa’s local manufacturing age might arrive sooner than we previously anticipated. With Ethiopia’s current track record in investments and Nigeria and Egypt following closely, energy independence through renewables is no longer a far-fetched dream.

• The next step is for Ethiopia to ideally maximise the benefits of such a landmark deal by prioritising transparent regulations and local workforce development for the project.

• Once again, cooperation with industry leaders will be the ultimate success of Africa’s manufacturing in renewables. Ethiopia’s alliance with China has grown its manufacturing capacity twofold already and is expected to do much more. Other nations should be taking notes.