Eskom’s recent achievement of a load shedding-free winter has raised hopes for a similar outcome this summer. However, this positive development has unintended consequences for the solar panel industry, leading to a downturn that extends beyond the immediate effects of improved electricity supply.
It’s a troubling trend, says Kevin Robinson, Africa Solar Industry Association South Africa Representative and Board Member. “The situation is deteriorating. Last year, we saw a dramatic price drop of over 50% within a few months. This price crash created financial strain for many installers and distributors who were left with expensive inventory.”
The fallout has been severe with job losses mounting across the industry and many companies grappling with substantial revenue declines. “While the improved energy situation has primarily affected the residential market, which is largely driven by load shedding, global factors are also at play,” says Robinson.
In China, where most solar panels are manufactured, there is significant over-capacity. “Chinese suppliers, facing a surplus, are compelled to reduce prices to maintain cash flow,” Robinson adds. “Although sales continue, the profitability of these companies is in jeopardy as they are selling below cost.”
Additionally, rising interest rates in South Africa have strained household budgets, making solar installations less feasible for many. “The general feeling is that, in some sectors, the economy isn’t doing well, which has led people to be more conservative with their spending,” Robinson points out.
A surge in investments in battery energy storage systems, driven by frequent load shedding earlier this year, consumed substantial capital. Many of these systems are solar-ready but companies lack the budget to install solar panel components, he added.
Looking ahead, Robinson anticipates uncertainty to continue. “This instability is likely to persist for several months. After companies close the financial year, we may see a shift with potential increases in budgets allocated for solar projects.”
