When power-starved South Africa meets China's new energy

Europe and the United States have recently begun to amplify the notion of China's supposed "overcapacity" and assert that it poses a "threat" to the global market, and solar panels are one of the main areas. However, it's worth considering what impact this "overcapacity" could have on developing nations that face energy shortages. South Africa, for example, is a country struggling with electricity gaps. Could China's abundant solar energy production capacity offer solutions to South Africa's energy problems?

On April 19, South African economist Jaya Josie published a commentary in local media outlets. Josie analyzed China's successful experiences in rural electrification and poverty alleviation, suggesting that South Africa could learn from these practices to address its electricity supply-demand imbalance. As the head of the Human Sciences Research Council (HSRC) BRICS Research Centre, Josie is specialized in infrastructure finance targeting sustainable development.

He highlighted the stark reality of energy access in Africa. About 600 million people in Africa lack electricity entirely, and in South Africa alone, over 3.5 million households have no reliable power for basic needs like lighting, cooking and heating. Even those fortunate enough to have electricity struggle with power instability and outages. Josie himself experiences daily power cuts. Millions in rural areas and towns go without electricity for most of the time. The South African government acknowledges the challenge, but its current electrification rate won't achieve nationwide grid access by 2030.

In July 2023, Power Construction Corporation of China (PowerChina) signed a deal for the Darmragt 123-megawatt photovoltaic (PV) project with Irish developer Mainstream, marking the first large-scale ground PV power plant project signed by a Chinese company in South Africa. The project will provide about 300 million kilowatt hours of clean power to the South African national grid each year, providing much-needed support to alleviate the local power crisis and promote economic and social development.

Developing countries like South Africa face not only energy shortages but also a significant investment gap in new energy. Rebecca Grynspan, secretary-general of the United Nations Conference on Trade and Development (UNCTAD), emphasizes the crucial importance of significantly increasing investment in renewable energy systems in these countries to achieve global climate goals by 2030. According to UNCTAD, achieving the 1.5-degree Celsius warming target by 2050 requires an investment in renewable energy systems equivalent to 1.5 times the current global GDP, with developing countries needing several times more investment in grids, transmission lines and storage facilities than developed countries.

However, UN statistics reveal a stark gap: developing countries require approximately $1.7 trillion in renewable energy investment annually but only attracted $544 billion in 2022.

According to the "Energy Transition Investment Trends 2024" report, China remains the largest contributor to energy transition investment, comprising 38 percent of the global total at $676 billion. Akinwumi Adesina, president of the African Development Bank, believes China's experience in new energy technology can help Africa bridge the investment gap and achieve a successful energy transition.

Globally, green capacity is not excessive, but is actually in dire scarcity. The problem now is not "overcapacity" but "over-anxiety," said Xie Feng, Chinese ambassador to the U.S., at the opening ceremony of the Harvard Kennedy School China Conference 2024 on April 19.

David Fickling, a Bloomberg Opinion columnist specializing in climate change and energy, argues that the paranoia of China's "overcapacity" in clean energy is a "false proposition." In his article "China is keeping the wind power revolution blowing," Fickling said "that protectionism is wrong on the economics, and will serve only to slow the energy transition."

Promoting the fourth industrial revolution to rewire the world's energy systems requires welcoming government support, whether it is in China, the U.S. or Europe, rather than kicking off a destructive trade battle, he added.

(Cover image via CFP)