11 May 2025
Business Live
by Khulekani Magubane
Renewable energy infrastructure manufacturers are alarmed at Itac's proposal for higher customs duties on imported components. The renewable energy sector is up in arms over plans to raise customs duties on imported materials used to manufacture solar power products. With just four working days left to comment on the proposed components tariffs, the sector has warned that they will have dire consequences on South Africa’s already hobbled manufacturing capacity.
The International Trade Administration Commission (ITAC) gazetted a notice proposing a review of the tariff structure for renewable energy components to raise customs duties “to the extent that there is capability to manufacture locally” and enhance the competitiveness of South African renewables. The notice proposes tariffs on components used in solar, wind and battery storage infrastructure manufacturing, ranging between 5% and 30%, covering more than 80 different items, including unrefined copper, lithium-ion, screws, arsenic, florescent lamps and stainless steel nuts.
Rethabile Melamu, CEO of the South African Photovoltaic Industry Association (Sapvia) — a lobby group for the solar energy industry — said the four weeks provided for representations was too short to allow the industry to make comprehensive submissions.
“The rationale provided for the tariff review does not clearly align with existing government strategies such as the South African Renewable Energy Masterplan, the Integrated Resource Plan, the Electricity Regulation Act or our Nationally Determined Contributions.” While the rationale offered by Itac has been to support the creation of local manufacturing-related jobs, Sapvia said most jobs in the solar PV sector were generated during the installation and operation phases of projects, not in heavily automated manufacturing.
“A PV module assembly plant with a capacity of 500MW per annum typically employs only 60—100 people, as these processes are largely automated. In contrast, the manufacturing of mounting structures can require 10 times more jobs, with hundreds in the deployment of the technology. She said the local industry needed massive production facilities that the South African market was not capable of supporting. Tariffs on solar components needed to be guided by a comprehensive value chain analysis, including a detailed assessment of employment potential across the entire PV value chain.
“Our view is that the current local manufacturing capacity is less than 15% of domestic demand and is likely to decrease based on the project pipeline. “Scaling to 50% or more will take several years and hinges on a stable electricity supply. In light of our recent electricity challenges, investors may be cautious. In addition, the existing rebate system has already been constrained by limited administrative capacity within ITAC.” She said Sapvia planned to submit a detailed position based on member inputs and to assess the impact in the coming weeks and months. Itac's proposals should be based on empirical information on local manufacturing for each component, which does not appear to have been conducted, Melamu said.
“For the solar sector, Itac introduced tariffs on PV modules in June; however, it has a temporary rebate in place. The current limited tariffs have had no effect on promoting more local content. Sapvia supports localisation that is anchored on empirical evidence.” ITAC told Business Times on Friday that at this stage, no solid inputs had been received from interested parties aside from some requests for extensions from those who need more time to prepare their submissions.
“Also, ITAC has been receiving queries seeking clarity on certain aspects of the publication notice, which we are continuing to address as and when we receive them. At this stage, no recommendations have been made on any course of action for the industry going forward.” The commission said the purpose of the investigation was to solicit inputs from industry, which would then guide what needed to be done to help grow the industry. “The investigation will also reveal the demand performance of the various sub-sectors of the industry, and this would be taken into account before any final decisions are taken.
“The comment period for investigations of this nature is usually four weeks from the date of the publication notice. It is reasonable and compliant with the tariff investigations regulations and with the provisions of the Promotion of Administrative Justice Act,” ITAC said. The gazetted memo invited interested parties to comment on the possibility of increasing ordinary customs duties on some tariff lines “to the extent that there is potential to manufacture them locally”.
“The potential discontinuation of [the] rebate item that makes provision for the duty-free importation of solar PV panels, provided that installed domestic capacity reaches at least 50% of domestic demand, [seeks to] incentivise further investments in the domestic assembly and manufacturing industry.” Leon Marais, associate director of GDP Global Development, questioned the reasons for the proposed increase, saying they did not make much sense.
“If you look at the report, they start off saying that the reasons for the review are that renewable energy presents the opportunity to create strong local components. The second reason is the domestic demand; the manufacturing scope makes South Africa a potential key player.
“The third reason is that improved tariff structure will improve supply competitiveness and availability of components and value chain. Increasing duties will not increase demand. Most of the components are imported. [The industry is facing] a 10% duty on solar panels, which they also want to increase.