Turning South Africa’s Special Economic Zones into energy ecosystems

By Viren Sookhun, Managing Director at Oxyon People Solutions

The Special Economic Zones (SEZs) in Saldanha Bay, Richards Bay, and East London have massive potential to be turned into energy ecosystems. Not only will this help to solve South Africa’s energy problems, but it will move us forward in reducing carbon emissions, and even possibly allow the country to sell excess power generation to neighbouring countries once more. While there are numerous considerations around turning the SEZs into such hubs, including government and investor involvement, a key component will be labour and skills development. Turnkey employment services from a reputable and experienced Temporary Employment Services (TES) provider will prove invaluable on this journey.

Bringing it back home

With the push toward renewable and sustainable energy, South Africa has once again turned to importing components at scale because the supply chain is not in place to meet requirements locally. However, we have the facilities, the capabilities and the infrastructure needed to produce many of these components as well as renewables systems and solutions in-country. This includes solar panels and blades for wind turbines, cabling, and accessories for a variety of solutions and even electrolysers for green hydrogen.

Not only will local manufacture make these components more cost-effective to source, but it will also reduce the carbon footprint involved in deploying them, further assisting with emissions reduction. However, to achieve this and turn the SEZs into energy ecosystems, they need to be designed and planned to support energy production, distribution, and consumption.

This will require significant investments in energy infrastructure, including renewable energy systems, smart grid technologies, and energy storage solutions. It also needs support from the government in terms of policies and incentives, as well as regulations, to encourage private sector investment and ensure the sustainability and effectiveness of the energy ecosystems.

Ideally located

South Africa’s SEZs offer huge potential for setting up entire supply chains around renewables, bringing this together for easier distribution and deployment. They are ideally located at the ports which are essential for transport, and have access to both road and rail as well. Furthermore, there is land available for setting up large-scale manufacturing facilities that are essential for solar and wind component manufacturing.

There are also tax incentives available for setting up a business in a SEZ in South Africa. These incentives include a reduced corporate tax rate of 15% for qualifying businesses, accelerated depreciation allowances for capital assets, and customs duty and VAT exemptions on imported materials and goods used in the production process. Additionally, businesses located in SEZs may be eligible for employment tax incentives, such as a Youth Employment Tax Incentive and a Learnership Tax Incentive.

The SEZs are also well located for sourcing and drawing labour as there may already be skilled workers with the technical expertise required to cross-skill and re-skill in component manufacturing. There is also a large pool of available workforce to draw on, and collectivising this by upskilling communities can prove to be hugely beneficial in the long term.

Turnkey employment solutions

A turnkey TES solutions provider can offer a host of services that will facilitate the development of energy ecosystems and add value for businesses. Aspects such as recruiting, vetting, training, and placing staff, typically admin-intensive and costly, are taken on by the TES to ensure that workers are always available and with the appropriate skill sets. In addition, a TES will engage in training and development programs, safety and compliance management, and workforce management solutions.

Services specific to the manufacturing of wind and solar components can also be provided, such as quality control and assurance, logistics and supply chain management, and technical support for assembly and installation processes. Certain providers also offer added value in the form of benefits such as funeral cover and medical insurance and can assist with claiming back on labour-related tax incentives in the SEZs. A turnkey employment partner can assist with staffing and labour-related activities from construction through to distribution, helping to create the energy ecosystems South Africa needs.

Making energy ecosystems a reality

Achieving the goal of turning our SEZs into energy ecosystems will require a collective effort by the government, private sector, and investors. The government needs to actively market and promote South Africa as a destination of choice for businesses in the energy sector to attract the required investment and should look at offering feasibility studies to assist investors with market analytics, return on investment and more. A supportive environment in terms of policy, infrastructure, access to finance and skills development is key.

Investors should look to partner with local businesses, communities, and government entities to create a mutually beneficial environment for all stakeholders with a focus on sustainable business practices for the long term. A turnkey employment solutions provider is invaluable in this, from the setup of manufacturing facilities right through to operations. This will help investors and businesses navigate the complexity of the local labour environment to build successful energy ecosystems in South Africa.

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