Solar photovoltaic manufacturing in Africa: Opportunity or mirage?

Introduction

Solar photovoltaic (PV) technology is a key clean energy technology and an important source of clean electricity critical for the global green transition. As the world grapples with climate change, the demand for cleaner and more sustainable energy sources has never been greater. In this context, solar PV technology has emerged as a pivotal component of the global energy shift. This paper explores how Africa, with its abundant natural resources, can leverage its critical minerals, trade capacities, and latent productive capabilities to develop a solar PV manufacturing sector.

However, while Africa’s potential in solar PV manufacturing is promising, the region faces several challenges. These include the concentrated nature of the global solar PV value chain, entry barriers imposed by established global players, and a lack of technological capacity in many African countries. Despite these challenges, Africa holds a natural competitive advantage in solar energy generation due to its favorable geographic conditions. Solar power generation could provide a sustainable solution to meet the continent’s growing energy deficit, promote industrial development, and drive economic growth. This paper delves into the critical questions surrounding Africa’s role in solar PV manufacturing, the opportunities for regional integration, and the strategic policy interventions needed to turn potential into reality.

Overview of Solar PV Technology and Global Trends

Solar PV technology has been at the forefront of the renewable energy revolution, helping the world transition to a low-carbon future. The technology has grown exponentially in recent years, with global installations rising from 40 gigawatts (GW) in 2010 to over 1,000 GW in 2022. As of 2022, solar PV energy accounted for approximately 14% of the total renewable energy generation worldwide.

The global solar PV market is largely dominated by crystalline silicon (c-Si) technology, which constitutes more than 95% of solar PV production. This dominance can be attributed to the lower material and manufacturing costs of c-Si technology, making it the most cost-effective option for large-scale solar electricity generation. Moreover, c-Si technology is mature and has benefited from continuous innovation, resulting in higher efficiencies and lower costs over time. Consequently, solar PV has become a vital tool for countries seeking to decarbonize their energy systems, reduce reliance on fossil fuels, and enhance energy security.

Africa, with its vast landmass and abundant sunlight, is geographically well-positioned to take advantage of the global growth in solar PV. Many African countries experience high levels of solar irradiance, providing them with a natural advantage in solar energy generation. However, despite these favorable conditions, Africa remains largely marginalized in the global solar PV market, both in terms of manufacturing and deployment.

Africa’s Solar PV Manufacturing Potential: Opportunities

Africa’s natural resource endowments present a unique opportunity for the continent to enter the global solar PV value chain. Key minerals required for solar PV production—such as copper, tin, and silicon—are found in significant quantities in several African countries. For instance, the Democratic Republic of Congo (DRC) and Zambia are home to some of the world’s largest copper reserves, a critical material for solar PV systems. Copper is used extensively in solar PV systems for wiring and electrical connections, making it a vital component of solar electricity generation.

Tin, another essential material used in solar PV technology for soldering components, is also abundant in Africa. Nigeria and Rwanda are notable producers of tin, although their production capacities remain underdeveloped. Silicon, a key input for the production of c-Si solar PV cells, is also found in Africa, albeit in smaller quantities compared to global leaders like China. Nonetheless, Africa’s mineral wealth represents a significant opportunity for the continent to leverage its natural resources to become a player in the global solar PV market.

In addition to mineral resources, Africa’s vast solar potential is a major opportunity for the continent. Most African countries experience high levels of horizontal solar irradiance, meaning they receive more sunlight per square meter than many other parts of the world. This gives African countries a natural competitive advantage in solar power generation. The International Renewable Energy Agency (IRENA) estimates that solar power could play a critical role in meeting Africa’s growing energy needs, particularly in rural areas where electrification rates are low. Currently, approximately 43% of the African population lacks access to electricity, with the figure exceeding 80% in rural areas. Solar power offers a sustainable solution to this energy deficit, helping to improve access to electricity while also driving economic development.

However, despite Africa’s natural advantages in terms of resources and solar potential, the continent’s opportunities in solar PV manufacturing remain limited and fragmented. Individually, most African countries lack the financial resources, technological capabilities, and infrastructure needed to develop a competitive solar PV manufacturing sector. Moreover, the global solar PV market is highly concentrated, with China dominating nearly every segment of the value chain. This dominance creates significant entry barriers for African countries seeking to establish local solar PV industries.

Challenges Facing Solar PV Manufacturing in Africa

While Africa’s resource endowment and solar potential are undeniable, the continent faces numerous challenges in its efforts to develop a solar PV manufacturing sector. The global solar PV value chain is characterized by high levels of market concentration, with a few countries—chiefly China—dominating production. China currently controls over 80% of the global solar PV value chain, from raw material extraction to final module assembly. This concentration has created strong barriers to entry for other countries, particularly those in the Global South, including Africa.

One of the major challenges facing African countries is the capital-intensive nature of solar PV manufacturing. The production of polysilicon, the primary material used in c-Si PV cells, is an energy-intensive process that requires advanced technology and significant financial investment. Polysilicon production alone accounts for approximately 30% of a solar module’s total value and is dominated by a small number of global players, primarily in China. The high costs associated with polysilicon production make it difficult for African countries to compete in this segment of the value chain.

In addition to financial barriers, African countries also lack the technological capabilities needed to produce solar PV components at scale. The production of solar PV cells, modules, and other components requires advanced manufacturing processes, skilled labor, and well-developed infrastructure. Unfortunately, many African countries lack the necessary industrial base to support solar PV manufacturing. The semiconductor and electronics industries, which are closely related to solar PV manufacturing, are also underdeveloped in most African countries. Only a handful of countries, such as Tunisia and São Tomé and Príncipe, have demonstrated any significant comparative advantage in these sectors.

Furthermore, foreign direct investment (FDI) in Africa’s renewable energy sector has been relatively low compared to other regions. Although there has been some investment in solar power projects, particularly in countries like South Africa, Egypt, and Morocco, the overall level of investment remains insufficient to support the development of a large-scale solar PV manufacturing industry. This lack of investment is exacerbated by political instability, regulatory uncertainty, and a lack of infrastructure in many African countries, which deter potential investors from committing significant capital to the region.

Africa’s Integration into the Global Solar PV Value Chain

Despite the challenges outlined above, there are opportunities for Africa to integrate into the global solar PV value chain, particularly through the export of raw materials. Africa is already a significant exporter of key minerals required for solar PV production, including copper and tin. However, much of Africa’s mineral exports are in unprocessed or semi-processed forms, meaning that the continent captures only a small share of the value generated from these resources. To maximize the benefits of its mineral wealth, Africa must develop its beneficiation and processing capabilities to move up the value chain.

The global demand for solar PV minerals is expected to increase as more countries ramp up their efforts to transition to clean energy. This presents an opportunity for African countries to capitalize on their mineral endowments by attracting investment in mineral processing and manufacturing industries. However, to achieve this, African countries will need to improve their infrastructure, develop technological capabilities, and create favorable regulatory environments that attract both domestic and international investment.

One potential avenue for African countries to integrate into the global solar PV value chain is through regional cooperation and integration. By pooling resources, sharing expertise, and coordinating policy efforts, African countries can overcome many of the individual challenges they face in entering the solar PV market. A regional approach would also allow countries to take advantage of economies of scale, reducing the costs associated with solar PV manufacturing and making African-produced solar technologies more competitive on the global market.

Strategic Recommendations

Given the fragmented nature of Africa’s solar PV manufacturing potential, the paper strongly recommends the adoption of a regionalized solar PV strategy. This strategy should focus on consolidating the continent’s mineral resources, technological capacities, and investment opportunities to create an integrated solar PV value chain that spans multiple African countries. A regional approach would enable African countries to overcome the individual limitations they face and build a more competitive solar PV sector.

Conclusion

Africa has significant potential to become a leader in solar power generation and solar PV manufacturing. However, the continent faces several challenges, including market concentration, technological limitations, and financial constraints. A regionalized solar PV strategy offers the best pathway for African countries to overcome these challenges and build a competitive solar PV sector. By leveraging their natural resource endowments, fostering regional cooperation, and investing in technological development, African countries can contribute to the global green transition while addressing their energy needs and driving industrial development.