The renewable energy sector has cautioned against proposed tariffs of up to 30% on components used in the manufacture and assembly of solar photovoltaics (PV), saying this would lead to a rise in the cost of residential and commercial solar installations.
In a letter to the International Trade Administration Commission (Itac), the Association for Renewable Energy Practitioners (Arep) warned that the commission’s proposal was particularly harmful to small-scale users of solar, including households and SMEs, who already face high upfront costs and limited access to financing.
The Arep letter — which Business Times has seen — was sent to Itac late last month in response to its proposed tariffs on solar PV components, some as high as 30%. Itac’s proposal was gazetted in May.
In the letter, Arep said Itac’s proposed tariff structure adjustments would directly raise the cost of residential and commercial solar installations. “By increasing system prices, the tariffs risk placing solar energy further out of reach for lower- and middle-income consumers, contradicting national objectives around energy access, affordability, and just energy transition.”
Arep pointed out that several of the harmonised system codes referenced in Itac’s gazetted notice were outdated, inaccurately applied or did not align with the realities of the renewable energy value chain. “This increases the risk of misclassification at ports of entry, resulting in arbitrary detentions, protracted customs disputes, and financial losses for legitimate importers.”
We welcome the opportunity to collaborate with Itac and all relevant government entities to co-develop a more strategic, phased, and evidence-based approach to import tariff reform.
It said solar modules were frequently misclassified… despite the creation of a rebate item in 2024 to address the issue. “Numerous listed products are either not applicable to the renewable energy sector or are generic components used across a wide range of industries.
“Imposing duties on such items could have far-reaching, unintended consequences well beyond the scope of the policy’s stated objectives. Examples include screws, nuts and bolts, and... machinery for rope or cable-making.”
Arep said the presence of duplicate entries within the schedule suggested a lack of due diligence in compiling the list of components targeted for tariffs. The association recommended that Itac conduct a review with industry experts to validate the relevance and accuracy of the listed items. “We believe that [the] notice... in its current form, risks disrupting the renewable energy market, constraining local manufacturing, and undermining job creation.
“We welcome the opportunity to collaborate with Itac and all relevant government entities to co-develop a more strategic, phased, and evidence-based approach to import tariff reform.”
It recommended that Itac withdraw the current tariff proposal and align its tariff strategy with South Africa’s Renewable Energy Masterplan goals. It also asked that a dedicated working group be established with Itac, Sars, other key departments, and industry to monitor classification issues and ensure transparent engagement on future tariff changes.
Speaking to Business Times on the sidelines of this week’s Africa Energy Forum in Cape Town, Seriti Green CEO Peter Venn said that to yield the benefits of a tariff aimed at supporting a local renewables industry, South Africa would have to first ensure the industry and demand are well established.
“I think putting any kind of tariffs on renewable energy now has the potential to slow down the growth and ... affect jobs, and we all know that unemployment is right in our top three priorities. So, [we are] totally against the tariff proposals that are out there,” he said.
Venn called for Itac and the government to engage more with the sector and consider a “more phased-in approach rather than some kind of overnight change in tariff” structure. He said South Africa needed an urgent bolstering of the transmission, and Eskom could leverage fees on consumers to do so.
“I think there are opportunities for taxes, in the broader sense of the word, to be used to bolster, not only renewables but communities that renewables operate within. I think that is important. But to just impose it on the importation of renewable energy parts isn’t correct.”
Harry Doyne-Ditmas, specialty growth leader at Marsh Africa, said Itac’s proposed tariffs on renewable energy components of between 5% and 30% are expected to increase the cost of renewable energy components, ultimately increasing total project development costs.
“While the intention of the tariffs is to boost job creation and local manufacturing capability, the ability to create a value chain necessary to deliver components that are cost competitive could be extremely difficult and likely require wider public and private engagement... to ensure the quality and reliability of products manufactured in South Africa meets the necessary criteria.”
New manufacturers may not be able to provide competitive component warranties, an important source of protection for project owners in the event of breakdown.
“As a result of the above, there may be unintended complications with financiers agreeing to use components new to the market when other cheaper, well-manufactured products are available.”
Itac did not respond to questions from Business Times this week, but previously said it received several requests for extensions from interested parties who need more time to prepare submissions.
The investigation will also reveal demand performance of the various sub-sectors of the industry, and this would be taken into account before any final decisions are taken, Itac said in previous correspondence.
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