15 Feb South Africa on the cusp of an R18 billion energy boom
South Africa may be poised to be a global hotspot for both the mobile and stationary battery storage markets, reports the World Bank Group.
According to its latest flagship report assessing the South African battery market and value chain, the country is on the cusp of a change in terms of demand for batteries.
The battery market and value chain could lead to the generation of thousands of jobs in the country and a market revenue estimate of $1 billion (R18 billion) by 2030.
South Africa’s recent policy push towards renewable energy sources, alongside the failings of the national power utility Eskom has made an ideal climate for the battery storage market to thrive.
Even on a smaller scale, it is no longer uncommon for households to have some sort of small-scale stationary battery storage system such as a UPS battery or Inverter.
Initiatives such as the National Development Plan 2030 focus on reducing CO2 emissions from the electricity sector by improving electricity supply in rural areas across the nation, among other things, said the group.
“The Integrated Resource Plan 2019 also aims to set renewable energy targets in the state, expanding distributed generation, and retiring old coal power plants,” said the World Bank.
South Africa also released the first grid-scale energy storage tenders in 2020-21.
The international community has eyed South Africa’s shift away from coal and towards renewables. South Africa’s geography is very well suited for large-scale solar and wind farms.
In July 2022, president Cyril Ramaphosa unveiled a $8.5 billion (R140 billion) green energy investment opportunity for South Africa, funded by several countries, including the UK, the Netherlands and other member states.
The Just Transition Framework, which is part of the plan, aims to transition the labour force from coal to renewables fairly. The framework includes policies to boost renewable energy, battery storage, electric vehicles, green minerals, and hydrogen.
To balance a large quantity of renewable power, however, especially solar and wind, they must be supported with energy storage systems such as pumped hydro or battery energy storage systems, said the World Bank Group.
The scope of the battery market is broadly split into stationary and mobile (e-mobility) storage applications, said the World Bank Group.
“Stationary applications cover front-of-the-meter (FTM) and behind-the-meter (BTM) storage installations,” it added.
The graph below shows just how the market is divided among stationary and e-mobility sectors, including common behind-the-meter segments such as UPS batteries and inverters:
“Currently, the market is purely driven by behind-the-meter (BTM) battery installations in UPS, telecom, rooftop solar, solar home lighting systems, and microgrids.”
The BTM segment, which is currently dominated by lead-acid batteries in South Africa, will also provide opportunities for other advanced chemistries, such as Lithium-ion and Flow battery technologies.
Recent policy directives from Ramaphosa also spell good news for battery systems, with rooftop solar planned to be incentivised.
During his State of the Nation Address on 9 February, Ramaphosa said that private energy generation for households and businesses alike would be key to mitigating the load-shedding crisis – therefore, a framework for tax incentivisation relating to rooftop solar is in the pipeline.
This push toward private solar use will only further push up demand for battery storage systems in the country.
On a larger national energy scale, the World Bank reported that by 2030 renewable energy through intermittent sources of power – especially solar and wind – would account for nearly 31% of the installed capacity.
The graph below, provided by the World Bank, forecasts just how many units of renewable energy can be expected to be produced over the next decade:
“To balance this intermittent power, there is a requirement for flexible resources on the grid such as gas, hydro, pumped hydro, and battery storage plants,” said the group.
“Presently, there is 2.9 GW of pumped hydro storage in the country. The IRP 2019 advocates an additional 2GW of storage by 2030,” the group said.
Government is concerned that its automotive industry could face declining growth and potential layoffs if it doesn’t make a move towards producing electric vehicles (EVs).
As South Africa is a significant exporter of vehicles to Europe, the National Association of Automobile Manufacturers of South Africa (naamsa) predicts that EVs could make up 40% of all European vehicle sales by 2030, which may increase to 80% by 2040.
naamsa believes that ignoring the shift towards EVs could cause the country to lose R201 billion in export earnings per year.
South Africa, in response to this, has taken active steps in adjusting its automotive manufacturing practices. Even domestic use of EVs is being looked into, with a recent Green Paper proposing a revision of import taxes on EVs – thus boosting affordability.