Release of Renewable Energy Master Plan a positive step for industry in South Africa

Released on 26 March, the SAREM provides a comprehensive framework for the further development of South Africa’s renewable energy industry, initially focusing on developing solar and wind energy and lithium and vanadium-based battery technologies, aligning with domestic supply-side capabilities.

Jurg van Dyk, an expert in construction and engineering law at Pinsent Masons, said: “The approval of the SAREM demonstrates the South African government’s long-term commitment and support to the renewable energy and battery storage industries, which is a critical factor in de-risking investments, raising capital and driving innovation to ensure the sustainable growth of the renewable energy industry.” 

“The SAREM envisages the industrial development of the local renewable energy value chain through the manufacturing of key components like solar panels and wind turbine towers, and the importance of investing in the establishment of industrial hubs and special economic zones for manufacturing services,” he said. 

“This provides the private sector with an opportunity to identify investment opportunities, quickly invest in manufacturing and supply chains and achieve first mover advantage in the emergent market. Investors could potentially derive long-term returns on their investments through export markets.”

The framework sets out a blueprint for South Africa to seize opportunities as it develops its renewable energy and storage supply chains to meet the growing demand for renewable energy. 

The majority of the country’s energy is generated from coal, with renewable energy providing 8.8% of electricity in the power grid in the 2023-24 financial year.

Van Dyk said: “Although the approval of the SAREM is a step forward in terms of providing investors with policy certainty, the delayed finalisation and implementation of the Integrated Resource Plan (IRP) 2025, which outlines the country’s long-term energy mix, creates some uncertainty as to the government’s direction and focus on the various sources of energy. 

“We are at a critical stage in the country, especially in respect of the development of additional baseload capacity, and the finalisation of the IRP 2025 is essential in determining the direction of development,” he said.

“Investors need to familiarise themselves with the SAREM so they can anticipate future market trends and capitalise on the growing demand for renewable energy and its associated technologies.”