SA solar panel shortages lead to price hikes on products

SOLAR panel shortages in South Africa may lead to price increases on the available products with the impact of this more likely to be felt by smaller businesses, as well as medium and lower-income households with smaller budgets, according to KPMG partner and head of energy and natural resources Safeera Loonat.

Loonat said this was happening while continued load shedding has seen banks offer new solutions to fund residential and small commercial solar solutions.

Finance Minister Enoch Godongwana announced in his Budget Speech in February that starting in March this year businesses would be able to reduce their taxable income by 125% of the cost of investing in renewables. Individuals who install rooftop solar panels from March 1 would also be able to claim a 25% rebate in the cost of the panels, up to a maximum of R15 000.

The SA Photovoltaic Industry Association (Sapvia) has said there have been anecdotal accounts of solar panel shortages in the country, largely contained to residential and small commercial installations.

Sapvia said it expected that the market forces of supply and demand should even out in the next few months to ease the supply shortfall. It said the only bottleneck facing the import of solar panels were shipping and logistics.

KPMG, a company that provides audit, tax and advisory services said this was a perfect business and localisation opportunity for South Africa to produce the panels for residential and small business purposes. It added that once the demands on the local market were met, there would be the opportunity for export within the rest of Africa.

Loonat said that if South Africa failed to come up with a solution to offer to smaller businesses and residential users, the country would see a possible demise of a number of smaller businesses and the resultant impact on job losses.

“For residential households, there will be further dissatisfaction,” Loonat warned.

Franchise Association of South Africa (FASA) CEO Fred Makgato said when there was a shortage and demand was high, prices would increase.

“It is hoped this does not lead to collusion between suppliers in keeping the prices high, which would be in contravention of the Competition Act,” Makgato said.

Afrika Tikkun Services (ATS) CEO Onyi Nwaneri said the price of solar panels and accompanying solutions such as batteries had risen so much in the past few months that it has become unaffordable for those who need it most in the low to middle- income households, as well as SMMES.

“For many in the category of the population we serve, which is young people aged 18 to 35, this is a pipe dream. Currently, one in three young people are unemployed. They will for the most part not be eligible for these solutions either, because they are unemployed or they are in entry-level positions and may have not built enough credit history or earning history to warrant a consideration. This means these solutions will once again exclude the majority of our population,” Nwaneri said.

The level 1 B-BBEE advisory, recruitment, training and placement company said that in addition, SMMEs in particular those with a turnover of less than R5 million were already operating with very small margins and profitability, therefore high-cost solutions would not alleviate their challenges but worsen them.

It said to manage their risks, banks could only fund companies and organisations with a good credit history, had assets they could leverage or showed strong potential.

Nwaneri said while they welcomed the move by banks to offer new solutions to homeowners for residential and commercial solar solutions, it was their hope that these solutions were sensitive to different categories of the population who had been excluded and would remain excluded, if intentional focus was not made to develop innovative products and solutions that provided equal and equitable access for all.

ATS said economic growth was low, with solar panel shortages and high prices, while the government sought to end load shedding would continue to exacerbate low economic performance.

It said that more importantly, the country’s three biggest challenges: unemployment, poverty and inequality would continue to be entrenched.

“These three challenges have multiple negative impacts not only on individuals, but on our society as a whole.”

Nwaneri challenged the banks and companies in the renewable energy sector to consider leveraging their socio-economic development or corporate social investments and enterprise and supplier development budgets to subsidise the costs of these solutions to ensure equitable access for those who need it most.

She said they were particularly excited that the move to increase the share of renewable energy to the energy-mix presented an opportunity for skills development, employment, and entrepreneurial/enterprise development of young people.

“It is an opportunity we are excited to embrace and hope that all relevant parties will embrace this too, especially in a way that will enable the achievement of sustainable economic empowerment.

“We have already developed different models and solutions on how this can be done and welcome discussions with companies in the sector who are willing to leverage this opportunity to increase skills and employment opportunities for young people,” Nwaneri said.

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