By: IOL

South Africa’s solar energy sector has seen remarkable growth in recent years. This has been driven by falling equipment costs, technological advancements, and a shortage of electricity. Globally, the cost of solar panels and batteries has dropped by as much as 40% to 60% over the past two years, in addition to improvements in panel efficiency and battery power density. This means users can now install fewer units to achieve the same output.

Combined with a more easily navigated regulatory framework and the risk of loadshedding returning, solar energy has become an increasingly viable option for households and businesses across the country.

One of the most significant advantages of solar energy is how quickly it can be deployed. Residential installations can be completed in a single day, while larger commercial systems typically take just a few months. Financial institutions have responded by offering tailored financing solutions, making solar more accessible to homeowners. Initially, uncertainty around how solar systems worked posed a barrier, but as adoption grows and success stories are shared, that uncertainty is quickly fading into distant memory.

What’s driving solar forward?

In the short term, the most significant opportunities lie in continued residential and commercial uptake, especially as electricity prices continue to rise by more than 10% annually. Financing mechanisms such as home loan integration, leasing options, and short-term payment plans are helping to drive this growth forward.

On the utility scale front, however, opportunities are shaped by external factors like grid capacity, government infrastructure programmes, and the evolution of energy trading models. The recent government tender for transmission infrastructure to  Independent Power Producers has been a pivotal step towards unlocking further solar potential and uptake. With battery prices falling, South Africa is nearing a point where solar-plus-storage solutions can compete with wind energy, opening the door to more widespread deployment.

Utility-scale solar: unlocking greater impact

Utility-scale solar projects also bring substantial socio-economic benefits. Construction phases for these types of projects typically employ between 1 000 and 1 500 workers and can stimulate local economies through supplier development and local community investment.

The proliferation of shorter-term power purchase agreements (PPAs), ranging from five to ten years, and even monthly contracts, has made solar more accessible to medium-sized energy buyers who were previously deterred by the long-term commitments of traditional 20-year PPAs.

Challenges facing solar uptake

Despite these obvious gains, challenges do remain. Grid capacity in South Africa is a major constraint, and while solar is easier and faster to deploy than wind, wind still dominates utility-scale demand due to its generation profile. Additionally, import duties on solar panels have created cost pressures in a market where local manufacturing is not yet viable at a larger scale.

Unlocking further investment

To unlock further investment, future bid rounds under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) should include battery storage as a standard requirement, as was done under the risk mitigation programme. Municipalities, which account for around 40% of national electricity demand, represent a largely untapped customer base. However, wheeling policies and municipal debt issues must be addressed to enable generators to serve these customers more effectively.

Eskom’s recent announcement of its first-ever Renewable Energy Offtake Programme is a noteworthy development, but questions remain around funding, and capacity. While these challenges are not insurmountable, they will take time to resolve and are unlikely to significantly impact the market in the short-term.

The relationship between solar and BESS

Battery Energy Storage Systems (BESS) are also playing a critical role in stabilising the grid. By smoothing the feed of electricity into the grid, especially when cloud cover affects solar generation potential, BESS helps maintain a stable supply. It also has the ability to support grid code requirements, potentially replacing the need for capacitor banks or STATCOMS, while adding broader value.

Most importantly, BESS allows solar energy to be stored and dispatched during peak demand periods when the sun isn’t shining, making solar energy, which is fleeting in nature, a more reliable and dispatchable source of power to service South Africa’s energy needs.

Closing thoughts – the way forward for solar

At Mulilo, we are proud to be contributing meaningfully to South Africa’s energy future through our projects. In addition to our wind and BESS projects, we currently operate four solar plants with a combined capacity of 205MWp. Three additional projects, currently under construction, will add 350MWp, and by year-end, we plan to begin construction on three additional projects totalling, 880MWp. By 2027, Mulilo’s solar portfolio will generate approximately 2.56 million MWh annually, enough to power nearly one million households, and create around 3 000 construction jobs each year. Beyond energy generation, these projects bring lasting value to communities through local economic development.

However, going forward, we believe that more emphasis needs to be placed on contractor development rather than manufacturing. The shortage of capable contractors across the built environment is a major constraint, which often results in projects being delayed or compromised quality-wise. Construction offers immediate job creation and economic relief, especially in our country with high unemployment rates. Through our work, Mulilo is committed to making a meaningful difference, by helping to solve the energy crisis, creating jobs where they’re needed most, and partnering closely with communities to deliver lasting impact.

In closing, solar energy is not just a solution to loadshedding, it’s a pathway to a more resilient, inclusive, and sustainable energy future for South Africa.