By: Ana Majavu
The government’s Renewable Energy Masterplan draft says a “transformation fund” must be established to finance SMMEs that want to make and sell solar power components and ensure that they take up places in the supply chains of big renewable energy corporations. So far, most of the parts needed for renewable energy systems have been imported, leaving larger companies with the job of installing solar and wind systems and very little opportunity for SMMEs to get involved in what is sure to become a huge industry.
The master plan, which aims to set up an inclusive economic environment in the renewable energy sector by 2030, concedes that efforts by the government to involve SMMEs in manufacturing renewable energy components “remain insufficient”. “Local suppliers in the renewable energy and storage value chain face a number of finance-related challenges. A dedicated fund targeting new entrants and emerging suppliers is required to support their growth,” it says.
The proposed transformation fund will provide SMMEs with finance, pay for any warranties or guarantees that small renewable energy businesses need to operate, and subsidise competitive rates for factory investment capital. The plan has a strong focus on the local manufacture of all the parts needed to set up renewable energy systems and the large-scale batteries which store solar power. Localising the industry “opens the door for both demand- and supply-side opportunities” for SMMEs in industrial supply chains, the plan says.
But it is not clear exactly how much new money the proposed transformation fund will direct towards SMMEs – or if most of the money will be sourced from existing, already oversubscribed funds managed by the Department of Small Business Development. The master plan says the fund “will aim to catalyse existing (and additional) funding streams in the sector”.
But at least some of the benefits to SMMEs will be directed in the form of incentives from the Department of Trade, Industry and Competition (DTIC) towards large companies who “support, nurture and develop the capacity of SMMEs within their supply chain”. The plan is also the latest government document to promise support for SMMEs who want to install renewable energy systems to keep their businesses going. It says the R1.3 billion Energy Resilience Scheme announced by DTIC in March this year will be up and running within one year, ready to offer grants to rural and township SMMEs who want to install solar systems.
There will also be a dedicated SMME Energy Relief Fund Mechanism and SMME Energy Security Fund to help equip struggling SMMEs with solar power. Within a year of launching, it has vowed that the government will set up renewable energy storage in industrial parks. But most SMMEs are based outside of these parks. The plan has been released for public consultation, with comments due by 31 July.