Green economy (re)industrialisation in South Africa: unlocking prospects for local construction and manufacturing industries through grid expansion
Project period:
2023 – 2026
Project Description:
South Africa requires reliable access to electrical power in order to achieve the structural transformation that is needed to promote economic growth and create jobs. A key component of enabling this access to electricity is the infrastructure that transports electricity from power stations across long distances to the various substations, from which it is subsequently distributed to households and businesses that rely on it in their daily operations.
With very limited spare capacity, the transmission grid has become one of the biggest barriers for deploying much needed new generation. As a result, there’s increasingly greater consensus amongst stakeholders that expanding the power transmission infrastructure or grid should be at the centre of energy planning. In line with the Transmission Development Plan, South Africa needs to embark on an accelerated build out of the transmission infrastructure. However, within the grid expansion imperative is also an opportunity for industrialisation. According to the ‘Better Finance, Better Grid’ consultation paper launched by the Centre for Sustainability Transitions (CST) and Blended Finance Taskforce (BFT) in March 2023, the national grid infrastructure requires a build-rate of at least 1500km per annum. Currently, the overall local value chain is able to deliver at a build rate of approximately 400km per annum. Therefore, the grid expansion challenge creates an opportunity for revitalizing the local industry and stimulating (re)industrialisation by encouraging local firms to expand their capacities and capabilities.
The purpose of this study is to understand the requisite policy, financial and institutional conditions under which local industries in the grid construction value chain can scale up their capacity in order to service the grid expansion project. Findings can be used to inform industrial strategies and policy, and aims to include both Engineering, Procurement & Construction (EPCs) companies as well as manufacturing companies further upstream of the value chain.
