Renewables index up 6% in September

From the newsletter

Renewables Rising Price Index went up by 6% in September, as the sector experienced price reductions in solar panels, batteries, inverters, and solar home systems across four major African economies. However, China’s recent announcement to cut overproduction and adjust factory-gate prices could change market dynamics.

• Each month, we track solar panels, batteries, inverters and solar home systems against fuel and electricity prices in Kenya, South Africa, Nigeria and Egypt. A rising index signals renewables are gaining a price edge over fossil fuels.

• Over the last three years, data from Ember shows that solar panel prices have fallen by more than 50% with Chinese companies offering the lowest prices.

More details

• For context, China has been the dominant player in the global renewable energy supply chain, accounting for more than 80% of the global solar supply. This dominance is largely due to heavy government subsidies and economies of scale, which have enabled Chinese companies to sell at lower prices and outcompete other players in the market.

• African countries, in particular, have relied heavily on Chinese imports. Their solar panel imports from China have more than quadrupled in the last five years, now exceeding 12 GW annually. Prices have also fallen significantly, with factory-gate prices currently at just $0.09/watt. In September, however, prices in Kenya and Egypt remained unchanged, while South Africa and Nigeria recorded modest increases of less than 1% each.

• Lithium-ion batteries saw the steepest price declines. Prices fell by 10.7% in Kenya, 3% in South Africa, and 0.8% in Egypt, while Nigeria recorded a slight increase of 0.06%. Although these swings look large in markets like Kenya, they were largely driven by temporary offers from selected retailers rather than broader sector-wide shifts.

• Solar home system prices remained unchanged in Egypt, Kenya, and South Africa, but dropped by 9.8% in Nigeria. This decline coincides with the government’s proposal to introduce a 5% tax on petrol and diesel after scrapping fuel subsidies entirely. Retailers may be using discounts to attract customers facing higher fossil fuel costs.

• Grid electricity prices showed minimal changes in Kenya, but South African and Egyptian consumers are bracing for significant increases as utilities plan tariff hikes. In Egypt, prices are expected to rise by at least 25% starting as early as October, while in South Africa, an increase of at least 8.5% is scheduled to take effect in July next year.

Our take

• With grid tariffs rising in South Africa and Egypt, C&I solar and storage solutions could see stronger uptake, as businesses seek alternatives to costly grid power.

• Short-term discounts by retailers may become a common strategy to counteract fuel price declines and retain customers, but this won’t substitute for long-term structural price declines.

• As China adjusts production, price volatility is likely. African buyers may face short-term fluctuations, so suppliers should start exploring alternative sourcing to cushion consumers against the expected supply shocks.