In the first half of 2023, South Africa imported over $2.5 billion worth of solar panels, inverters, and lithium-ion cells and battery packs. This is according to analysis from Johannesburg-based Gaylor Montmasson-Clair, a Senior Economist at Trade, Industrial Policy Strategies (TIPS). The surge in demand for all of these has been spurred by South Africa’s electricity generation shortfall crisis that has resulted in prolonged periods of electricity rationing known as load-shedding. 2023 has been the worst year of load-shedding on record, with more load-shedding in 2023 so far than in the past five years combined!
South African imports of solar panels, inverters, and lithium-ion cells & battery packs over the past 10 years. Image courtesy of Gaylor Montmasson-Clair.
Over the past 10 years, South Africa has imported over $10 billion worth of these components. This has prompted calls for more localization along the value chain. One sector that has been gaining some traction over the years is the importation of battery cells from some of the world’s leading manufacturers, such as CATL. South African firms then assemble battery packs in the country, incorporating locally developed and proprietary battery management systems, other software, and other value addition processes. One of the leaders in this space is Solar MD.
Having been established in 2015, a combination of factors, including being ready and prepared at the right place and right time, saw the company make a name for itself in South Africa. Initially, global battery supply constraints meant that it and a few other local battery firms were well positioned to fill the gap and meet local demand in South Africa’s nascent residential and small commercial solar and battery sector.
Solar MD had started to expand its operations in South Africa and was again able to capitalize on the huge demand that was induced by all this load-shedding. An example of this is when Solar MD unveiled its 14.3 kWh wall-mounted battery pack for homes and small businesses in October 2021. Solar MD says its 14.3 kWh pack is the most ideal option for larger homes as the load-shedding crisis escalates in South Africa. They add that this pack also gives people in this segment more value for money compared the standard options on the market which are mostly the 5 kWh packs imported from China. Solar MD’s 14.3 kWh LFP packs retails for about R85,000 ($4,600).
The insatiable demand for solar panels and backup battery systems in South Africa has resulted in Solar MD scaling up its plans again. Construction has now started on a facility that will be home to Africa’s first dedicated gigawatt battery storage manufacturing plant. It was a landmark moment, said Alderman James Vos, the City’s Mayoral Committee Member for Economic Growth, at the sod-turning ceremony for Solar MD’s new industrial site in Richmond Park.
The new 12,500-square-meter Solar MD light industrial site under construction in Cape Town. Image courtesy of Solar MD
More information on this exciting development was released via a press release by the City of Cape Town. The City of Cape Town says the new 12,500-square-meter Solar MD light industrial site will include offices, manufacturing, and storage facilities, and will be four times the size of the current facility. Solar MD currently produces around 120 batteries per day with plans to increase manufacturing up to 300 batteries per day once the new facility is fully up and running. Its staff component will also increase to 240 from its existing 120 employees. The project, scheduled for completion in May 2024, is being managed by Atterbury Property.
“This development marks an exciting moment for Cape Town. Not only does this investment fuel Cape Town’s drive towards a smarter, cleaner, and more secure energy future, but it also makes this metro the base for the production of these batteries that are exported into Africa and Europe,” said Alderman Vos.
Solar MD has invested over R150 million into its developments since opening in 2015 and plans to invest close to R1 billion over the next five years as it expands. The company’s growth has been supported by GreenCape, the City’s Special Purpose Vehicle (SPV) in the green economy, as well as the City and provincial government’s investment promotion partner, Wesgro.
“This shows the tangible value of partnering with SPVs. In fact, by supporting companies such as Solar MD, GreenCape helped to facilitate R1,733 billion in investments in the last financial year for Cape Town which led to hundreds of jobs. In the next year, we are going to expand our investment campaigns of Cape Town as a green energy hub while extending skills development opportunities to more communities and small businesses,” said Alderman Vos.
This is an impressive development for South Africa as it will help increase the localization component in the battery value chain, as well as create much needed employment opportunities.
Images courtesy of Solar MD
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