Current Manufacturing Capacity

The African continent is home to a limited number of facilities producing components such as photovoltaic (PV) panels, wind turbine parts and energy storage systems. South Africa, through its Renewable Energy Independent Power Producer Procurement Program, has been able to attract investment in local manufacturing for wind and solar energy components, with the program's requirement for local content fostering job creation and developing expertise in component assembly. Nordex Energy South Africa announced plans in March to manufacture wind turbine towers in the Eastern Cape by May 2025, creating 300 jobs in the region and supplying wind farms totaling 336 MW of installed capacity.

Renewable energy manufacturing capacity is also steadily expanding across North and East Africa. Morocco has established itself as a leader in the manufacture of solar components, leveraging its advanced industrial base and proximity to European markets. Six agreements signed in Egypt last month with Chinese companies, totaling over $1.1 billion, aim to develop new manufacturing projects and industrial facilities, including a $100-million factory for producing N-type solar cells with a 2 GW capacity and a commitment from China Energy to accelerate the establishment of factories and production centers for renewable energy technologies. Targeting first production by Q1 2025 and representing a $60-million investment, Toyo Co. announced plans earlier this month to establish a 2 GW solar cell manufacturing plant in Ethiopia, leveraging the country’s favorable investment policies, advantageous tariff exemptions on solar cells and abundant hydropower.

Investment Gap and Incentives

In the renewable energy sector, current investment flows tend to focus on large-scale infrastructure and generation, rather than on the supply chain and manufacturing base. Despite being a regional leader in the sector, South Africa's PV demand, for instance, remains five times larger than its PV module assembly capacity. This investment gap presents substantial opportunities for investors, particularly in the production of solar panels, battery storage systems and components for wind turbines. For example, investment in localized battery production can support the rollout of decentralized solar power systems, especially in off-grid and remote areas. Similarly, establishing facilities for assembling wind turbine components in coastal areas could reduce logistics costs and support the development of wind farms in resource-rich regions like the Horn of Africa.

To help bridge the investment gap, several African countries have introduced policies and incentives to stimulate the development of renewable energy manufacturing hubs. These include special economic zones, tax breaks and public-private partnerships aimed at reducing the cost of setting up production facilities. Kenya, for instance, has established SEZs that offer tax incentives and streamlined processes for renewable energy manufacturers, positioning the country as a hub for solar equipment assembly in East Africa. In July, South Africa imposed a 10% import tariff on solar PV modules and panels, aimed at protecting local manufacturers and strengthening the domestic value chain. Furthermore, the African Continental Free Trade Area (AfCFTA) provides a framework for countries to scale up their manufacturing capacities. By facilitating the free movement of goods and reducing tariffs across the continent, AfCFTA helps create a larger market for locally manufactured clean energy products, encouraging economies of scale and lowering production costs.

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