ECDC Solar Power investment positions Eastern Cape as leader in renewable energy

ECDC solar power investment positions Eastern Cape as leader in renewable energy
Deal is worth R33 million.
A R20 million Eastern Cape Development Corporation (ECDC) investment into solar water heater manufacturer, Matla Solar in the East London Industrial Development Zone (IDZ,) has positioned the Eastern Cape as a leading player in the renewable energy sector.

The total funding from ECDC, Matla Solar and its international investors is R33 million. The company is already operational at the East London IDZ and it expects its first manufactured item to be off the line before the end of June.

The capacity of its first phase is 300 000 units a year. An agreement with Matla’s technical partners allows the plant to ramp up production rapidly if the market matures during the next two years.

“Matla approached ECDC for funding to establish a solar manufacturing plant with their Taiwanese partners at the East London IDZ. ECDC went to Taiwan with Matla to conduct an investigation followed by a viability study which was positive.

“ECDC considers this investment crucial particularly with the challenges we are facing in the energy sector. The corporation must be at the forefront of encouraging the growth of innovative and green industries. ECDC holds 15% equity in the firm, Matla 53% and Ming Yang 32%,” says ECDC account manager Pinky Madosi.

Madosi says Human Settlements department is moving towards solar energy for RDP housing. Buffalo City Municipality is also encouraging household geysers to go solar.

Although it ranks as the fourth largest potential market for renewable energy in South Africa, the Eastern Cape has made significant steps in implementing renewable energy. The Nelson Mandela metro is likely to be one of the first metros to implement its first citywide solar water heater campaign. The Blue Crane Municipality is developing photovoltaic capacity, while various wind, geothermal and other renewable energy projects have been evaluated or initiated.

Matla chief investment officer Chia Chao Wu says the East London plant will manufacture flat panel high efficiency solar water heaters and ultra affordable vacuum tube based sola water heaters.

“Our current focus is South Africa and the SADC countries. The size of these units makes it advantageous to manufacture closer to the market. We believe that our manufactured unit will have cost advantage over imported products. These will be even more competitive than those imported from countries such as China with very competitive cost structures.

“Depending on the growth of the market, we anticipate to create at least 100 to 150 skilled manufacturing jobs in the Eastern Cape, and around 50 to 100 in our national distribution and consumer support networks,” says Wu.

For this reason, says Wu, we believe the Eastern Cape can become not only a big player in the sector, but this will position it to be an attractive destination for significant local and foreign investment which Trade and Industry minister Rob Davies has projected in the Industrial Policy Action Plan.

The renewable energy sector in South Africa is still emerging. However, government has placed significant emphasis on solar water heater after Energy Minister Dipuo Peters announced her strategy in November last year.

“At the moment we anticipate that the government will be able to install 1 million solar water heaters by 2013, which estimates the market to be between R1.5 billion to R2 billion a year over the next four years,” adds Wu.
This does not include the broader renewable energy market such as wind, geothermal and photovoltaic which makes the total renewable market to be at least R3 billion a year by 2012.

Wu says more opportunities can be created if other municipalities in the Eastern Cape can identify and develop effective renewable energy programs. It may also allow the province to develop into the industry hub for renewable energy in South Africa.

This may allow the province to enjoy strong growth as experienced by the different focused regional industry hubs in China, Korea and other Far Eastern countries when a clear strategy in a strong growth sector was implemented.