Power
South Africa manufacturing needs structural reform, say experts
Experts at the C&I Energy+Storage Summit warn that short-term relief measures alone will not secure South Africa's industrial future.
Key points
- Structural inefficiencies across electricity, transport, water, and logistics threaten South African manufacturing.
- Concessionary tariffs provide temporary relief but must be paired with fundamental cost reductions.
- Renewable energy, mineral wealth, and regional gas offer significant long-term competitive advantages.
What happened
South Africa's manufacturing sector requires coordinated action to resolve deep-seated structural inefficiencies rather than relying exclusively on short-term interventions, according to industry experts reporting by ESI Africa. Speaking at a keynote panel during the C&I Energy+Storage Summit and the Energy Intensive User's Group Conference, panellists examined the threats and opportunities facing the country's industrial base.
Kay Walsh, Managing Director at Nova Economics, noted that while concessionary electricity tariffs and targeted trade measures offer immediate relief, they serve merely as temporary bridging mechanisms. Lubabalo Luyaba of the World Bank emphasised the close interdependence of water, electricity, and industrial output, pointing to progress in structural reform and concessional financing.
What comes next
To counter mounting competition from international markets, panellists argued that South Africa must intentionally leverage its renewable energy resources, mineral wealth, and access to regional gas and hydropower. Charles Dos Santos of Air Products South Africa highlighted the potential to displace imported fuels with local alternatives such as green hydrogen for heavy transport.
However, realising these advantages requires more than expanded generation capacity. Reliable transmission networks and affordable firm capacity remain essential for energy-intensive industries. Walsh suggested that technology-neutral flexibility auctions could help identify least-cost firming solutions.
Why it matters
Industrial competitiveness across the African continent depends heavily on reliable, cost-effective power supply and robust infrastructure. With South Africa recording an electricity use per person of 3,308.2 kWh in 2024, according to World Bank figures provided by the CEII, industrial consumers face distinct pressures in balancing continuous power requirements with operational costs.
For investors and policymakers across Africa, the South African experience illustrates the delicate balance required between immediate economic relief and long-term structural overhaul. Sustainable industrial growth relies on addressing underlying constraints in power and logistics rather than temporary fixes, ensuring that regional manufacturing can compete globally as energy transitions accelerate.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Grids decide whether generation becomes power that homes and businesses can rely on. Generation mix, transmission and distribution losses, and tariffs together shape reliability and the case for investment.
90.2% of people in South Africa had electricity in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
