The key requirements for the establishment of a successful renewable energy manufacturing hub in Atlantis

Abrahams, Fernel (2012-03)

Thesis (MBA)--Stellenbosch University, 2012.


In January 2011, the Western Cape Department of Economic Development, in partnership with the City of Cape Town, decided to establish a renewable energy manufacturing hub in Atlantis. This initiative was based on the opportunity emanating from the large-scale deployment of renewable energy in South Africa, of which the Western Cape would receive a significant proportion. This would result in billions of rands in investment in the province; the key would be to ensure that the expenditure on renewable energy equipment translates into local manufacturing. The project was therefore based on two key considerations: firstly, that the location of renewable energy power plants in the Western Cape holds potential for localising manufacturing in this sector, and secondly, that the location of a number of catalytic investors in a manufacturing hub would likely attract suppliers and related manufacturers to co-locate in the area. This research report set out to identify the critical factors for the successful establishment of a renewable energy manufacturing hub in Atlantis. The aim of the study was to provide the Provincial Government of the Western Cape (PGWC) with an assessment of the likelihood of a renewable energy manufacturing hub being successfully established in Atlantis. The literature review examined industry trends, company reports and journal articles on the state of the renewable energy industry globally. The literature review then focused on the role that policy plays in supporting the industry, contrasting various support measures implemented in different regions of the world; further, it examined the implications that South Africa’s policy choices have on the development of a renewable energy industry. The literature review identified the following key considerations that would impact the success of the project: • Renewable energy demand or market growth in terms of the Integrated Resource Plan for Electricity (IRP2010-2030) or the government’s renewable energy procurement programme (RFP); • Supply-side considerations, including manufacturer capabilities and supplier relationships; • Availability of skilled labour; • Physical location and infrastructure; • Availability/access to research and development (R&D); • Manufacturing incentives; and, • Supportive regional government. The research report concluded that all of these factors play a role in manufacturing companies’ investment decisions – notably, companies would likely set up manufacturing facilities in a location such as Atlantis on the basis of demand for their product and the potential of manufacturing their product competitively at that location. The Atlantis project would be deemed successful if it attracted manufacturing investment of approximately R450 million in the renewable energy hub in the first three years. The report concluded that the development of a renewable energy manufacturing hub in Atlantis was feasible. However, success is dependent on a complex interplay of these factors; many of which do not lie within the remit of the PGWC. Finally, it was discovered that external factors such as stable and sustained demand for products or the availability of manufacturing incentives have a greater impact on whether a local renewable energy manufacturing sector will be established on a significant scale than conditions relating specifically to Atlantis as a potential location of a manufacturing hub. In other words, no matter how attractive Atlantis may be as a manufacturing investment location, unless the national regulatory environment promotes local manufacturing, achieving success with a renewable energy manufacturing hub will be a major challenge.

Please refer to this item in SUNScholar by using the following persistent URL:
This item appears in the following collections: