South Africa’s plans to buy emergency power, already the subject of a court challenge, faces fresh controversy after a local-content requirement for solar-panel frames was scrapped subsequent to the award of the tenders.
The 65% local-content requirement on aluminum frames for photovoltaic panels was waived by South Africa’s Department of Trade, Industry and Competition on May 12. That followed an application by ARTsolar Ltd., which along with a local unit of China’s Seraphim Solar will be the only beneficiaries of the exemption.
The two companies will now be able to sell panels to some of the winners of contracts to supply emergency power to the national grid. The preferred bidders were named in March and they must conclude funding arrangements and regulatory requirements by the end of July for their contracts to come into force.
The South African Photovoltaic Industry Association, or Sapvia, which represents both manufacturers and importers of solar panels, said the exemption disadvantages some of its members who were unaware that the bidding requirements would be changed retrospectively. Some local solar panel plants have had to shut down because of the inconsistency of government demand, according to Wido Schnabel, its chairman.
“They have set up manufacturing in the past and they were bitterly disappointed,” he said.
The government has vacillated when it comes to procuring renewable energy from private producers -- the last tender it issued prior to this year was in 2016.
“I personally wasn’t aware” that the frames couldn’t be made locally, Gerhard Fourie, the trade department’s chief director of green industries, said when asked why the requirements had been changed after bids had closed. The local-content exemption will only apply to the emergency power bid round, he said.
Hulamin Ltd., which processes aluminum, said it plans to invest to supply frames for future solar projects.
ARTsolar and Seraphim, which say they aren’t members of Sapvia, welcomed the exemption. Both companies plan to more than triple their production capacity.
“We were clever enough to complain,” said David Nunez Blundell, co- founder of Seraphim’s southern African unit.
Nunez Blundell said the two companies had asked local aluminum manufacturers to provide the frames but were told that they couldn’t in the volumes and time frames in which the supplies were needed. Seraphim would rather “localize our supply chain” as that would lower costs and decrease uncertainty, he said. Seraphim has spent $22 million on its factory in Gqbereha on South Africa’s southern coast, he said.
The controversy comes after Karpowership, a Turkish supplier of gas-fired power plants mounted on ships, was exempted from local content requirements when it was selected as a preferred bidder to supply 1,220 megawatts of emergency electricity for 20 years. DNG Energy has filed a legal suit demanding that it be given Karpowership’s contract.
The article has been updated with Seraphim comment.