Controversy over solar panels in South Africa
South Africa’s plans to buy emergency power, which has already been the subject of a legal challenge, are again controversial after a requirement for the local content of solar module frames was deleted after the tenders were awarded.
The South African Ministry of Trade, Industry and Competition waived the 65% requirement for the local content of aluminum frames for photovoltaic modules on May 12th.
This followed an application from ARTsolar Ltd., which together with a local unit of China’s Seraphim Solar will be the only beneficiaries of the exemption.
The two companies can now sell panels to some of the winners of contracts to provide emergency power to the national grid.
The preferred bidders were named in March and must finalize funding agreements and regulatory requirements by the end of July for their contracts to take effect.
The South African Photovoltaic Industry Association (Sapvia), which represents both manufacturers and importers of solar panels, said the exemption put some of its members at a disadvantage who did not know the bid requirements would be changed afterwards.
According to Wido Schnabel, its chairman, some local solar power plants have had to close because of conflicting government demands.
“They have started production in the past and have been sorely disappointed,” he said.
The government wavered in sourcing renewable energy from private producers – the last tender before this year was in 2016.
“Personally, I was not aware” that the frames could not be manufactured on site, said Gerhard Fourie, the head of the commercial department for green industries, when asked why the requirements had been changed after the offers were completed.
The local content exemption only applies to the emergency power tendering round, he said.
Hulamin Ltd., which processes aluminum, plans to invest in the supply of frames for future solar projects.
ARTsolar and Seraphim, who say they are not members of Sapvia, welcomed the exemption. Both companies plan to more than triple their production capacity.
“We were smart enough to complain,” said David Nunez Blundell, co-founder of Seraphim’s South African unit.
Nunez Blundell said the two companies had asked local aluminum manufacturers to provide the frames, but were told they could not meet the quantities and timeframes that supplies would be required.
Seraphim would rather “locate our supply chain” as it would cut costs and reduce uncertainty, he said. Seraphim has spent $ 22 million on its factory in Gqbereha on the south coast of South Africa, he said.
The controversy comes after Karpowership, a Turkish supplier of gas-fired power plants on ships, was exempted from local content requirements when it was selected as the preferred bidder to supply 1,220 megawatts of emergency power for 20 years.
DNG Energy has filed a lawsuit seeking the receipt of the Karpowership contract.