THE industrialisation of renewable energy technology in SA could generate employment, but the sector was being hamstrung because of high levels of surplus components held in stock by global suppliers, Gerrit Kruyswijk of the Industrial Development Corporation said yesterday.
On Wednesday the government is expected to announce the results of the first tender bid for renewable projects, involving 53 projects with a capital expenditure of more than R64bn.
Country policies on the reduction of greenhouse gas emissions have driven the renewable energy industry worldwide, and while the industry accounts for less than 1% of SA's electricity generation capacity, the intention is to lift this to 9% by 2030.
However, "the employment impact" of actually operating renewable plants was low, and "the real jobs" were in component manufacturing and in the maintenance of the technology to drive the plants, Mr Kruyswijk said at an event at the COP-17 conference on climate change.
He said it was necessary to maximise local content targets for these projects - even the existing South African manufacturers of solar panels' local content was only about 30% because of the large number of subcomponents that needed to be imported, Mr Kruyswijk said.
On wind energy, manufacturers in SA could make a start by targeting the steel foundations, towers and blades, which were heavy components and therefore not competitive to import.
Saliem Fakir, a representative of the Department of Trade and Industry's South African Renewables Initiative, said key to the success of the new renewables industry in SA was the capital cost and the financial viability of projects over 15-20 years. He said the gap between the cost of conventional and renewable energy was narrowing, a trend likely to continue due to rising costs of coal and nuclear power, and falling costs of renewable energy.
Mr Fakir said the cost of capital in SA was the third highest in the world, and renewable energy project developers should consider grant funding and concessional loan funding to reduce the cost of finance.
One of the advantages SA had in terms of entering the market was "that we already have a good industrial base that we can work on", he said.
Nedbank official Sakkie Leimecke said the R64bn capital costs of the proposed renewables projects represented a big exposure by SA's banks, but the government was standing behind the "off-take risk" of the projects.
Mr Leimecke said the first bid for renewable projects in SA represented a "learning curve" for the industry, and a continuous programme of bids would reduce the risk premium on project financing costs, as well as cut other costs, such as for technical expertise, most of which was having to be imported, and through the emergence of more competitive contractors on renewable projects.