Finance minister Enoch Godongwana has introduced a 10% tax on all solar panel imports to support local photovoltaic (PV) panel manufacturing.
The minister gazetted the new duty on 28 June 2024. It states that “photovoltaic cells assembled in modules or made up into panels” are now subject to a 10% general import duty.
The move is part of South Africa’s National Renewable Energy Master Plan, previously published by the Department of Mineral Resources and Energy.
The plan aims to support local demand for renewable energy, drive industrial development, and support the development of emerging suppliers and local capabilities.
Artsolar — a local solar energy equipment supplier — first called for a 10% duty to be imposed on solar panel imports in 2017.
It announced its support for the change, which comes seven years after its request, in a press statement.
“In recent years, the push towards renewable energy has become increasingly vital in addressing climate change and energy security concerns,” it said.
“One key aspect of this transition is the development and support of local solar panel PV manufacturing and its related value chains.”
While it acknowledged the dismay the changes could cause for foreign manufacturers, it added that the import tax was a great way to boost the local industry.
“We are expecting new entrants and expanding the locally available value chain due to this protection,” Artsolar added.
Describing the change as “killing two birds with one stone”, it said the move would continue to support the national electricity grid by reducing demand while alleviating unemployment in South Africa.
That will include supporting skilled jobs in various sectors, such as research and development, manufacturing, installation, and maintenance.
Artsolar said the changes will also promote global technology transfer and local innovation.
“As companies adapt to meet local demands, they drive improvements in production processes, leading to more efficient and cost-effective solar technologies,” it said.
“This not only enhances the country’s technological capabilities but also positions it competitively in the global renewable energy market.”
Solar panel import boom
South Africa imported a record number of solar panels in 2023, valued at R17.5 billion and with an estimated capacity of 5,000MW.
According to a senior economist at the Trade and Industrial Policy Strategies (TIPS), Gaylor Montmasson-Clair, the value of solar panel imports in 2023 was triple that of the year before.
The imports were driven by severe load-shedding during the year and the government’s incentive to install solar systems by offering residents and businesses tax rebates on new solar panels.
Demand surged in early 2023, with R3.6 billion of solar panels imported in the first quarter alone.
That was followed by a record second quarter, with solar panels worth R8.4 billion imported to South Africa.
Demand started to drop significantly in the second half of the year as a large chunk of those who could afford to install solar power systems had already done so.
Many of those remaining have been constricted by consumer price pressure due to high inflation.
The trend of slowed demand has continued into 2024, likely due to the absence of load-shedding since late March 2024.
In June, data from the South African Photovoltaic Industry Association (SAPVIA) revealed that demand for rooftop solar installations has plummeted over the past three months.
The country is currently on an 85-day streak of no load-shedding, which has removed the power cut frequency and intensity factor. As a result, demand for rooftop solar installations has fallen significantly.
“On the residential sector market segment, absolutely, the rate of installations has decreased significantly compared to the same period last year when we were experiencing stage 3 or 4 of load-shedding at this time of year,” said SAPVIA’s De Wet Taljaard.
Taljaard noted that most South Africans decide to install solar power systems when they are fed up with load-shedding.
Source
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