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Imports Of Solar Panels & Inverters Surge In South Africa As Power Crisis Grows

South Africa is going through its worst ever period of electricity rationing. The record levels of load-shedding in 2022 resulted in homes and businesses scrambling to get solar and battery storage solutions to cushion themselves from the incessant power outages. In 2022, there were 3,773 hours of load-shedding. This was the most intensive year of load-shedding in South Africa’s history. Load-shedding in 2022 was mostly in Stage 4. This was also the first year that Stage 2 has not been the dominant stage of load-shedding implemented by Eskom since it began. Eskom’s load-shedding program is structured in stages, where Eskom sheds a certain quantum of load from the grid to stabilize the grid. So, depending on the severity of the crisis, load-shedding is implemented in stages from Stage 1 to Stage 8, where Stage 1 sheds 1,000 MW of load from the grid and in a Stage 8 scenario, Eskom takes out 8,000 MW of load from the grid. Load-shedding is implemented over 2-hour or 4-hour blocks on a rotational basis depending on the severity of the crises. Stage 8, however, means most consumers will experience a blackout for about 12 hours.

The effects of load-shedding on homes and businesses have been brutal, and the South African Reserve Bank says that during the higher stages of load-shedding, where consumers can experience 12 hours of load-shedding per day, South Africa loses up to R900 million ($50 million) per day

Two charts from Johannesburg-based Gaylor Montmasson-Clair, a Senior Economist at Trade, Industrial Policy Strategies (TIPS), recently showcased just how much imports of solar panels and inverters have surged in recent months in South Africa.

Let’s take a look at solar panel imports first. Imports of solar panels hit an all-time high in the first quarter of this year. R3.6 billion ($200 million) worth of solar panels were imported into South Africa in Q1 2023. The analysis from Gaylor shows that this is three times as much as the previous quarter. In the whole of 2022, R5.6 billion ($354 million) worth of solar panels were imported into South Africa. This figure will most likely be surpassed in Q2 for this year. Looking back over the past decade, there were also some peaks in 2013, 2015, and 2019, and another surge in 2022. The peaks in 2013, 2015, and 2019 correspond to South Africa’s utility-scale solar competitive bidding rounds under the REIPPPP projects. In 2021/2022, there were some rounds as well, but there was also a strong contribution from homes and businesses buying solar panels for self generation due to increased load-shedding on top of the utility scale projects. South Africa now has close to 2,500 MW of utility-scale solar in operation from the previous competitive bidding rounds.

Image from Gaylor Montmasson-Clair

All those solar panels need inverters, so let’s take a look at inverter imports. Inverter imports surged to R10.5 billion ($650 million) in 2022, up from about $350 million in 2021. 

Image from Gaylor Montmasson-Clair

Of course, as the electricity rationing program in South Africa is still ongoing, there has also been a surge in imports of lithium-ion cells and batteries as homes and businesses rush to get power backup solutions and save on the very expensive fuel and maintenance costs associated with backup diesel generators. That is close to $700 million spent on importing lithium-ion cells and batteries in 2022, which is over R12 billion South African Rand.

Image from Gaylor Montmasson-Clair

Imports of solar panels, inverters, and lithium-ion batteries are set to surge again as more businesses add solar and storage to their energy mix. In the first three months of this year, over 2,400 MW of projects have been registered by private firms seeking to generate their own power to augment what they are currently getting from the grid. These projects will now be at various stages of development, and therefore more solar panels, inverters, and where applicable, lithium-ion batteries, will be brought into the country to complete these projects. This is perhaps a good opportunity to have more locally manufactured products in these sectors as volumes grow, justifying potential investments in these areas. 

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