Posted in: Solar and Renewable Energy Policy

New report shows that job creation in the PV sector is inevitable

In the most conservative case, we’re looking at over 30 000 jobs created per year in the solar PV industry 

Job creation is one of the most important considerations for the South African economy. Sitting at around 29%, unemployment is a serious hindrance to the South African economy. The creation of solar PV systems for the government and private clients brings down costs and increases energy reliability, bolstering profitability and growing businesses. However, the question of how many jobs the PV industry creates has been a hot topic for several years. 

A new study, completed by the CSIR and commissioned by the South African Photovoltaic Industry Association (SAPVIA) with sponsorship from SOLA, has set out to look at just how many jobs solar PV has created in South Africa so far, and what we can expect from the industry in the future. 

Measuring jobs in the PV sector is tricky, because of the variability of jobs throughout the life-cycle of each plant. Typically, both large-scale and embedded generation plants will have quite a lot of employment during the construction phase, which taper off when the plant goes into Operation & Maintenance (O&M). However, these jobs last the lifetime of the plant, and thus are cumulative over time. 

How are solar jobs measured?


There’s been much discussion about how to measure jobs in the solar PV sector,  which has not had a unified approach or metric, resulting in confusion about the numbers of jobs created by the industry. As such, the first step in the research was coming up with a useful way to measure jobs, particularly those in the solar PV sector that tend to undulate based on construction times. 

Based on an international literature review and experiences in other survey approaches, the CSIR used “Full Time Equivalent” (FTE) as a metric to measure jobs. A FTE job looks at the amount of time that a worker spends at a job compared to a full time employee. For example, if an employee only works half-time, their FTE score would be 0.5. As a result, the metrics represented by FTE show what the equivalent full-time employment would be per annum for a particular job.

In addition, the CSIR used a standardised unit output of MW per annum in order to be able to compare jobs across the value chain. As such, the jobs in the analysis and in the future scenario modelling are represented FTE jobs per MW per annum. This allows the job statistics to be comparable across different sectors and in relation to other forms of employment creation, and takes a conservative view on estimating jobs.

The predicted scenarios for job creation in the solar PV industry in South Africa

The report looked at historical data in order to create a model to predict future employment scenarios in the sector. It modelled three different scenarios, the IRP 2019 scenario, the accelerated case scenario, and the high road scenario.

  1. The IRP 2019 scenario

This scenario looks purely at the jobs resulting from the Integrated Resources Plan 2019 by the South African Department of Mineral Resources and Energy. In this scenario, the solar PV industry would create between 33 000 – 35 000 jobs per year from 2022 and 2030, but there would be little consistency and large variations between years. 

  1. The accelerated scenario

This scenario takes into consideration the growth of the market outside of the IRP guidelines, and assumes that utility scale solar PV will be built in addition to embedded generation, owing to the government’s intention to allow more embedded generation to plug the energy supply gap in the short term. In this scenario, an initial spike in job creation of 51 580 FTE jobs will be created during 2022, followed by a dip back to 31 131 FTE jobs in 2023 and climbing to consistently to 37 975 jobs by 2030

  1. The high-road scenario

In this scenario, the predicted import of solar modules is expected to increase, in addition to the building of both Utility and embedded generation solar PV facilities, which continue to grow post-2022. In this scenario, jobs are expected to bounce up in 2022 to 53 422 FTE jobs, and return to 33 972 in 2023, growing steadily to 39 817 FTE jobs in 2030.

What does this mean for the sector?

The jobs report paints a picture of what the expected job creation trajectories will look like. The research highlights the fact that the halting of renewable energy procurement in 2015 was devastating to the jobs in the sector, but has not prevented it from recovering in the recent years. There are some important aspects to consider in order to ensure the maximum job creation:

  • O&M jobs are the most sustainable, as they run throughout the lifetime of each PV facility (usually around 20 – 25 years). They have the potential to create substantial, lasting job opportunities in the sector.
  • Localising PV component manufacturing could have a significant effect on the growth of PV-sector jobs in South Africa, particularly if there is a clear path to how much the sector will grow each year.
  • The embedded generation market is a very important player in the creation of PV jobs, but has been hindered by policy uncertainty. 

Overall, the report shows that whichever scenario ends up playing out, there is likely to be significant growth of solar PV jobs in the coming years. 

Download the full report here.

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Energy Wheeling supplies power to areas located away from the direct source of power

SOLA gets approval for largest solar PV wheeling agreement in South Africa

A flagship renewable energy project, commissioned by Amazon, is set to demonstrate the flexibility and convenience of procuring independent power through the electricity grid. The project will see 28 GWh of solar energy wheeled via Eskom’s utility grid from a solar farm in the Northern Cape to Amazon’s facilities each year.

Energy wheeling holds tremendous value in that it enables the supply of energy to urban areas from energy projects in outlying areas, such as a solar farm located in an area where the sun is most powerful and consistent. This is done through the transfer of electrical power via a utility’s distribution system. In other words, the power generated in a sunny area is distributed to an offtaker where there might be less solar resource. 

Chris Haw, SOLA’s Executive Director, explains that although the concept of wheeling energy using Eskom’s existing infrastructure has been in place since 2008, certain administrative barriers have hindered the uptake of such services. “This project, which comprises a 10 MW solar PV farm, has also received a sought-after generation license from NERSA, a milestone that other similar projects have struggled to achieve.”

SOLA will be responsible for developing the project and will build, own and operate the solar facility.

Haw explains that the NERSA process requires a signed Power Purchase Agreement and fully developed project in order to obtain approval. “This creates contractual challenges because many inputs, such as the foreign exchange rate, are still fluctuating whilst the application process is underway. The high standard of development required for submission means that NERSA are not handing out licenses to projects that won’t proceed, which is a very good thing.” 

The project aligns with the South African Government’s intent to open the electricity grid, allowing independent generators of electricity and consumers to enter into bilateral agreements to optimise the cost and sustainability of energy, which has previously been difficult to achieve. The generation license received from NERSA is one of the first granted as part of the recent allocation made for distributed electricity generation in order to plug the short-term capacity gap.

Haw says that SOLA will deliver the energy via the Transmission Network though a Wheeling Use-of-System agreement. “This Wheeling Use of System Agreement is the first of its kind and the largest solar PV wheeling arrangement in South Africa to date.”

Haw credits the company’s multi-disciplined skillset and 10-year track record of developing, financing and building solar PV projects in South Africa with overcoming the many challenges that were faced.

The SOLA Group has a history of breaking down barriers to enable renewable energy projects in South Africa. The group developed some of the county’s first IPP projects, signed the first bi-directional metering agreements with municipalities, and are responsible for innovative solar-plus-storage projects like the microgrid currently powering Robben Island.

The project will be majority black South African-owned, demonstrating a pivotal dedication to transformation in South Africa’s energy sector. Mahlako a Phahla Investments, a black women-owned and operated energy and infrastructure investment holding company will own 45% of the project.

Other investors into the project include African Infrastructure Investment Managers (AIIM), through the IDEAS Fund, one of South Africa’s largest domestic infrastructure equity funds and one of the largest investors in the country’s renewable energy landscape.

The project’s success could mean that more companies like Amazon will look to procure cleaner independent power through the grid.

“This project is the tip of the iceberg in terms of what the electricity picture in South Africa could look like,” says Haw. “Projects like this demonstrate the potential of a truly modernized electricity market where consumers can procure cleaner energy through state-owned grid lines whilst paying for their upkeep in the process,” he adds.

The project will begin construction in early 2021.

South Africa electricity grid supply

The great opportunity to reform South Africa’s power sector

Over the past few weeks, there has been encouraging movement in South Africa’s electricity sector that indicates a gradual opening of the electricity market. NERSA recently confirmed that licensing of electricity generation over 1 MW will be allowed without ministerial sign-off, which could make the processing of renewable energy generation licences more efficient; and municipalities were recently granted the freedom to procure their own power. In addition, the prospect of the renewable energy bid window 5 (REIPPP 5) opening in December indicates that South Africa is starting to take the procurement of renewable electricity seriously. 

And whilst renewables still make up a small share of South Africa’s total generation capacity, the growing cost gap between the grid and solar, along with falling battery prices, means that South African electricity consumers are faced with something new in the context of our traditionally monopolistic electricity market: choice.

As was discussed in our previous piece on going off grid, it is clear that many consumers are choosing to go entirely off grid. However, mass grid defection is not necessarily the most optimal system for the majority of South African consumers. If the government suppresses private and distributed electricity generation, forcing customers to choose between staying on grid with expensive, unreliable power, and quitting the grid entirely, there may be large-scale grid defection as businesses choose to forego the unreliable and expensive grid. This will erode both Eskom and municipal revenue streams, driving more tariff increases that impact many South Africans

However, effective grid modernisation will turn potential defectors into ‘prosumers’, who choose to remain grid-connected and participate in a more open and mutually-beneficial electricity market. There are already some municipalities in South Africa that allow for grid feed-in (see this convenient list), which helps grid-tied solar PV systems become more profitable. However, we’re still a long way from a mature electricity market, where the cheapest electricity can be generated and consumed when it is required, enabling overall cost reductions of electricity. 

A modern grid will make use of enhanced infrastructure for better management of variable renewable energy, and ensure equitable electricity pricing that allows consumers to generate their own electricity and/or buy electricity from independent power producers whilst paying fees to utilise the electrical grid. This could generate new revenue that would enable better maintenance of the existing infrastructure, further replacing outages. 

However, we are still a way off from this “modern grid” idea. Some of the immediate steps that could be taken to enable grid modernisation, preventing mass defection and price increases, could include:

  • Laws and standards must be updated to cater for all technologies in the energy mix. 
    • We’re starting to see some progress on this, but there is still a fair way to go, according to Anton Eberhard:

  • Grid operators should be assisted with tariff modernisation
  • Arbitrary size restrictions on embedded generators should be reset based on rational technical and cost considerations. 
  • Permitting and licencing authorities must be held to their mandates and assisted and upskilled where needed.

If we can ensure that these factors are considered, there will be a hopeful outlook for South Africa’s electricity future. The alternative picture is not as sunny, as our power system could devolve into something undesirable for businesses and inequitable for South African citizens.