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Accelerating Renewable Energy Manufacturing in the Global South

For countries in the Global South, accelerating renewable energy manufacturing presents a golden opportunity to meet growing energy demand, build local industries, reduce import dependency, and create jobs. This transition is crucial for addressing energy poverty and ensuring sustainable economic development. Here, we explore the strategies and policies needed to achieve these goals and highlight how Centurion’s Energy Transition Centre can support this transformative journey.

The Need for Renewable Energy Manufacturing

Modern, secure, and affordable energy is essential for mitigating poverty, ensuring prosperous rural livelihoods, and building vibrant industries. However, sub-Saharan Africa has the world’s lowest electrification rate, with an average access rate of only 40%. Many rural and urban areas remain non-electrified, and current generation capacity often fails to meet the demand of a rapidly growing population and proliferating small and medium-sized enterprises (SMEs). Additionally, the heavy reliance on fossil fuels for electricity generation poses significant vulnerabilities, particularly as the world moves towards decarbonization.

To overcome these challenges, Africa must transition from a monopolized, fossil fuel-dominated energy system to one that leverages cleaner, affordable, and sustainable renewable energies. This transition not only addresses energy needs but also fosters economic development and environmental sustainability.

Strategies for Boosting Renewable Energy Manufacturing

Holistic Industrial Policies

Creating effective industrial policies requires a comprehensive, multi-faceted approach. Governments must have visibility over national and regional demand for renewable energy products to strengthen the investment case for local renewable energy manufacturing. Deployment targets and supportive policies can stimulate domestic demand. Local content requirements, especially where public financing is involved, can be effective if they are time-bound and enforced.

A successful example is Brazil’s wind manufacturing industry, which thrived due to strong public procurement, local financing, and national content policies. Such policies gave a clear, long-term market signal to global manufacturers to produce turbines and other components locally, resulting in a competitive wind industry.

Building Domestic Manufacturing Capacity

In a competitive global environment, stimulating demand alone is not enough. Supply-side incentives and support are crucial for building local renewable energy manufacturing industries. For instance, India’s Production Linked Incentive Scheme, launched in 2021, aims to create an end-to-end value chain, from mining to polysilicon, wafers, cells, and modules. By 2024, India is expected to significantly reduce its import dependency with substantial manufacturing capacities.

Similarly, favorable fiscal incentives for knocked-down kits in the electric mobility sector are driving the expansion of local assembly in countries like Ethiopia, Ghana, Kenya, and Rwanda. In South Africa, tax incentives under the Renewable Energy Master Plan (SAREP) are promoting greenfield and brownfield manufacturing in renewable energy value chains.

Kenya’s e-mobility policy emphasizes local manufacturing, with a focus on creating incentives for component manufacturing of electric powertrain, battery packs, electric motors, and power electronics.

Effective Policy Frameworks

An effective industrial policy framework must embody a whole-of-systems approach, offering a long-term roadmap for renewable energy manufacturing based on extensive consultations and data. The framework should consider economic and technical feasibility and leverage comparative advantages.

Governments must support early-stage industry development, reduce input costs, and provide access to reliable and affordable electricity and concessional financing. South Africa’s Renewable Energy Master Plan, for instance, highlights the importance of co-creation and co-ownership involving government, industry, and labor to drive implementation.

Building a Skilled Workforce

As the renewables manufacturing sector grows, the skills gap can quickly become a constraint. Technical and vocational training institutes must integrate curricula related to manufacturing roles, combining theory with practical training for new students and upskilling the existing workforce. Collaboration across Global South training institutions on curriculum design and delivery is essential.

In the e-mobility sector, for example, there is a need for skills related to electric powertrain, which falls more within computer/electronics manufacturing than mechanical engineering. Building human capacity on both manufacturing lines and in operations is crucial for sustaining growth.

Strengthening South-South Cooperation

South-South cooperation is vital for integrating markets and maximizing economies of scale in renewable energy manufacturing. Existing programs like the Africa Continental Free Trade Agreement and regional economic communities play crucial roles in this integration.

Cooperation can also bridge gaps in policy design, investments, technology access, and skills building. Knowledge exchange among Global South countries can facilitate learning from those further along in their renewable energy value chain development.

Shaping Africa’s Future at the Energy Transition Centre

As we embark on a critical journey towards a sustainable energy future, your involvement is crucial. The Energy Transition Centre at CLG is at the forefront of transforming Africa’s energy landscape, advocating for an energy mix, including renewable energy adoption to foster economic growth and improve quality of life. We invite you to join us in this essential mission. Whether you’re an industry expert, a policy maker, or a concerned citizen, your contribution can make a significant difference. For guidance, insights, or to share your ideas, feel free to contact the Energy Transition Centre today with questions:

Together, we can shape a brighter, more sustainable future.