A dynamic business
Photovoltaic module manufacturer Tenesol is gearing up for growth in the South African marketplace. Kevin Robinson talks to Gay Sutton about the dynamics of the market and his vision for the future of the Cape Town plant.
South Africa ought to be an ideal location for the use of solar power generation. It has abundant sun all the year round and a population that is consuming an exponentially increasing amount of power for anything from air conditioning and electronic gadgets to the lighting for the new World Cup football stadia and the ever proliferating shopping malls. Combine that with the rising public awareness of the need to cut carbon emissions and you have a convincing case for the use of photovoltaic (PV) technology.
ÔÇ£There is certainly a lot of publicity generated about the need to cut carbon emissions,ÔÇØ says Kevin Robinson, sales manager at Tenesol Manufacturing South Africa. ÔÇ£However, electricity in South Africa is very cheap at the moment while the upfront cost of installing PV generators, particularly where they are connected to the grid, is high in comparison.ÔÇØ┬á
The main use for PV in South Africa is providing electrification for villages, clinics, schools and farms in isolated areas of rural communities where there is no access to the national grid. There have been several sensitive and high-profile customersÔÇömost of the lodges in the Kruger National Park for example, where the laying of power lines would be environmentally disruptive, are powered using renewable energy. And PVs are very popular for electrifying game fences.
ÔÇ£Our other main regional market is in telecoms, oil and gas,ÔÇØ Robinson says. ÔÇ£In the past three years we, as a group, have supplied power generation cells for around 600 base stations in Africa.ÔÇØ┬á
The economic weighting against solar power generation as too expensive for the general public could well soon change. In October 2009 the National Energy Regulator of South Africa (NERSA) announced that it would be introducing feed-in tariffs for large scale renewable power generation facilities as part of the GovernmentÔÇÖs target for renewable power generation. ÔÇ£At the moment these feed-in tariffs are restricted to solar plants greater than 1MW,ÔÇØ explains Robinson.
In Germany and Spain, feed-in tariffs on small generators have been in operation for a number of years and this has encouraged a huge growth in the domestic PV market. ÔÇ£WeÔÇÖre hoping that during the course of 2010, feed-in tariffs will be published for smaller generators. If that happens, it will encourage a lot more people to invest.ÔÇØ
The cost of the PV units has also fallen during the last year, largely because the cost of raw materials has dropped by almost a third. ÔÇ£We have also been affected by the age-old story of supply and demand. In 2008 there was a huge demand for PVs in Spain, which accounted for approximately 40 per cent of the global market. But in conjunction with the global economic crisis, the Spanish government changed the entire structure of the feed-in tariffs and tax incentives, and the market totally collapsed.ÔÇØ This led to a surplus of products on the European market which again drove prices down.
Lower prices will make solar power more attractive to a whole new market of customers, particularly as the dynamics of power generation in Africa are changing. For example, the South African national power company Eskom is in the process of phasing out its power agreements with neighbouring Namibia and Botswana. ÔÇ£So there will be a huge market opening up to us in those countries, as well as Zimbabwe and Mozambique,ÔÇØ says Robinson.
The Tenesol Manufacturing plant in Cape Town is part of the Tenesol Group, a global organisation headquartered in France and owned by Total and EDF. The group is a leading designer and manufacturer of PV technology, producing a wide range of products and services from standard single PV units to complete turnkey solutions. The South Africa plant has, until recently, manufactured high PV modules exclusively for export to the Tenesol Group, from where the design and fulfilment has been coordinated. ÔÇ£This year, however, our focus has shifted slightly to address the local market needs,ÔÇØ says Robinson. ÔÇ£Initially we will be focusing on module sales only in southern Africa, and establishing relationships with our customers. But from next year we will be offering a range of additional products and services ourselves.ÔÇØ
Recruitment and staff training is already underway in preparation for this expanded role, and the company is busy identifying and validating partners who will perform the vital onsite work. ÔÇ£WeÔÇÖre aiming to have this new service fully running by the second half of next year,ÔÇØ Robinson says. And with only about two per cent of Cape Town production currently destined for use in southern Africa, there is huge scope for growth as demand increases.
Considerable investment and process improvements have been taking place at the Cape Town plant to increase efficiency, cut costs and support this projected growth. The company has been implementing a 5S programme and has introduced the principles of kaizen (continuous improvement) via an improvement suggestion scheme. A new production line was installed at the plant in 2009 and further investments are planned for 2010 to increase production capacity once again.
Efforts are being made to use local suppliers where possible; however, many materials and parts are highly specified and are imported from around the globe. The glass, for example, is made with specialised raw materials. ÔÇ£We have worked with some local suppliers, but at this point in time we havenÔÇÖt been able to achieve the quality and type of glass that we require,ÔÇØ Robinson says. Most supplies are delivered by sea and the delivery dates are consequently difficult to pin down, ÔÇ£but we are working towards implementing just-in-time delivery. WeÔÇÖve also been reducing inventory at our warehouses and installing automated systems.ÔÇØ
There are many really interesting and challenging solar energy projects currently happening in Europe, ÔÇ£and we havenÔÇÖt been involved in these,ÔÇØ Robinson says. ÔÇ£But we are starting to get some interesting enquires and I think itÔÇÖs only a matter of time before we see those projects happening here.ÔÇØ And when they doÔÇöRobinson has recently begun negotiations for the first projectÔÇöall the manufacturing and service capability, along with fully trained staff, will be in place for Tenesol South Africa to deliver on those contracts.
