The South African Photovoltaic Industry Association (SAPVIA) has expressed surprise at government’s decision to introduce a 10% import duty and rebate on “photovoltaic cells assembled in modules or made up into panels” in the absence of consultations with domestic consumers.

The trade measure has also been implemented ahead of the formal launch of the South African Renewable Energy Masterplan (SAREM), which is meant to guide the industrialisation of renewable-energy value chains. The launch of SAREM is believed to be imminent, with some of the contents of the plan having already been reported in the media.

Introduced in line with Section 48 of the Customs and Excise Act, the new duty was confirmed in a Government Gazette notice dated June 28 and authorised by then Finance Minister Enoch Godongwana, who was subsequently reappointed to the position as part of the government of national unity.

The International Trade Administration Commission of South Africa (Itac) provided notice in August last year that such a duty was being considered alongside a temporary rebate facility for PV cells assembled in modules or made up into panels.

This action was triggered by an application for such protection lodged in 2019 by ARTSolar, which has a facility in KwaZulu-Natal able to produce some 325 MW of modules yearly.

Itac concluded that there was a need to provide protection to ARTSolar and Seraphim, as they had invested heavily in their manufacturing capacity and were the only two domestic manufacturers remaining following disinvestment by others.

The 10% duty, it also concluded, should be introduced together with a temporary rebate provision, which will be made available in the form of a rebate permit “issued at such times, in such quantities, and subject to such conditions as the Itac may allow”.

SAPVIA reports that, having been made aware of the proposed duty and rebate, it conducted detailed consultations with its members and provided a written response to Itac on September 29, 2023, which included a request for engagements with Itac and the Department of Trade, Industry and Competition.

It had already conducted a localisaiton study, which was updated in 2023, to assess local manufacturing potential, and the findings were shared with Itac.

“We were of the view that such engagement will enable us to explore instruments that can prioritise investment in quick wins and low hanging fruit and localisation incentives,” SAPVIA CEO Dr Rethabile Melamu tells Engineering News & Mining Weekly, while reporting that Itac never committed to such an engagement.

SAPVIA’s governing committee has met to discuss a possible response and has warned that the immediate implication is a likely 10% price increase to cover any potential problems or delays in importers utilising the rebate mechanism.

It also wants clarity on transitional arrangements, especially as most of its members are not clear on permit applications, including how these will be dealt with for earlier orders and ongoing projects that have already reached financial close.

“Despite continued module price declines over the last three to four years based on upstream cost of production decreases and oversupply locally and internationally, module pricing still makes up a significant portion of the total solar PV project capital expenditure, ranging from 30% to 45% for rooftop PV and decreasing to 20% to 35% for carport and ground-mount solutions,” Melamu notes.

However, Gaylor Montmasson-Clair, who is Trade & Industrial Policy Strategies senior economist and SAREM facilitator, believes the implementation of a 10% custom duty on imported PV panels is long overdue.

He tells Engineering News & Mining Weekly that the duty is fully aligned with SAREM, which considers the careful use of tariffs on selected products to be necessary to support local industrial development.

“It will help local panel manufacturers compete in the domestic market and reach full production capacity and hopefully expand in the future.”

Montmasson-Clair acknowledges that global panel production is a highly competitive and subsidised industry, but he says South Africa fares well as a manufacturing location to service the local and regional markets.

The duties, Montmasson-Clair notes, are also attached to a rebate facility “so as not to artificially raise the price of panels in South Africa”.

“The goal of the duties is to support local and prospective manufacturers to reach full capacity and expand production. Beyond that, the rebate facility is available.”

For its part, SAPVIA acknowledges government’s desire to protect the solar PV manufacturing capability and to expand it in the medium to long term in line with the ideals of the SAREM.

The association also stresses that it is a proponent of localisation of the solar PV value chain as evidenced through the studies it has commissioned on localisation.

“Nonetheless, SAPVIA supports localisation of components that is steeped in empirical data, and as such has served on the project steering committee of the SAREM since the inception of the process,” Melamu says.