The outlook for South Africa’s struggling construction industry remains uncertain, hovering between the massive infrastructure expenditure figures being publicly mooted and the state’s seeming inability to implement its economic recovery plans.
At this year’s AfriSam Budget Breakdown event, now a regular highlight on the construction sector calendar, Econometrix Economist Dr. Azar Jammine pointed to raised expenditure targets for infrastructure. Dr. Jammine said he was encouraged by the growth from R812 billion to R903 billion in the estimates for public sector infrastructure expenditure from the 2023/24 to 2025/26 financial years.
“These numbers are so big that if we were to see their full implementation, it would be a game changer not only for the construction sector, but for the entire economy,” he said. “Where the real hope lies is in government getting its act together and starting to implement its capital projects.”
He noted the importance of how Finance Minister Enoch Godongwana dealt with plans to restructure Eskom’s capital debt, as any worsening of the energy crisis could undermine the economic predictions in the budget speech. If loadshedding was exacerbated, he felt that the country may not even reach its meagre 0,9% growth target for the year. In such a scenario, government’s own spending plans would be further dampened by lower tax revenues.
The question he posed was whether there was the political will within the governing party to allow Eskom’s debt restructuring to take place. Such a move was inevitable, however, as he foresaw a complete realignment of politics in the general elections of 2024.
Focusing on the construction industry, Dr Jammine once again painted a sobering picture – but highlighted the sector’s potential to deliver economic benefits. He reminded his audience that construction provides 7,8% of the country’s employment, even though it makes up just 2,6% of GDP.
“Implementing government’s infrastructure projects would spark massive job creation, and the economy would grow by 5-6% a year,” he said. As it was, business confidence among building contractors continued to deteriorate, although last year this deterioration had slowed.
Commenting on Dr Jammine’s presentation, Richard Tomes, Sales and Marketing Executive at AfriSam said: “Although the operating environment remains challenging, one of the positive elements AfriSam has noted is the increase in the infrastructure spend budget allocation, and we remain hopeful that the implementation of the infrastructure projects will gain momentum and start delivering true value for the construction industry.”
Considerable overcapacity was still evident in the non-residential building sector, especially commercial office and retail space. The value of non-residential building plans passed averaged just about R1 billion in value compared to R3 billion in 2016. The brief recovery in the residential building sector – as homeowners renovated for home offices – had tailed off. Cement demand suffered negative growth in 2022, and was expected to improve only marginally over the next few years, he said.
AfriSam SA Budget Breakdown Event
About this annual event itself, Tomes remarked that AfriSam’s purpose is to make valuable information available to the various stakeholders that interact with its business. “With many of us operating in the same industry, material matters such as the external environment we operate within not only relates to AfriSam but also to our stakeholders’ businesses. We hope that the information being shared at an event like this will not only provide them with insight about some of the decisions that AfriSam takes but will also provide them with valuable insights to enable decision-making in their own businesses or organisations to ensure their future success and sustainability.
Huawei FusionSolar smart photovoltaic (PV) and energy storage system (ESS) solutions are an ideal option for power hungry sub-Saharan African mining operations looking to prevent production losses owing to energy disruptions. “Whether used as back-up power or an off-grid solution, in terms of cost per kilowatt-hour, the combination of PV and battery storage outperforms diesel-driven generators used to supplement energy needs in the mining industry, and eliminates the impact of increasingly common diesel supply constraints and price hikes on profitability,” says Gregor Küpper, managing director of SOLARWORLD Africa.
When it comes to costs, FusionSolar ESS solution is very competitive, especially when considering the rising price of grid-based power, with struggling national power utility Eskom planning to apply for a 32% tariff increase from April 2023/24 as it battles loadshedding.
Küpper shares: “The FusionSolar product range offers the best containerised solution for utility-scale storage that I’ve seen up to now on the market. Not only is the range reliable and easy to implement, but it also offers attractive efficiencies. The product concept, availability and technical features are brilliant.” SOLARWORLD became the first to introduce FusionSolar Smart PV solutions in South Africa in 2014 after being presented with FusionSolar Smart PV solutions at solar industry exhibition InterSolar Europe in Munich in 2014.
Today, SOLARWORLD offers Huawei FusionSolar Smart PV solutions such as the LUNA2000 smart string ESS. Equipped with lithium-ion batteries, the LUNA2000 is a compact, space-optimised solution in a 20-foot container that provides 2 MWh storage capacity. Generation capability can be increased in 200 kW increments following a minimum 1 MW installed capacity, offering the same energy storage capacity as the 40-foot containerised solution supplied by its competitors. FusionSolar regional manager, Quintin Zeeman, says: “While reducing the cost of performing general maintenance, this feature also saves the cost of having a technician travel to site to conduct that maintenance.” He further emphasises that by optimising its AI (artificial intelligence) technology, Huawei aims to eliminate unnecessary costs for its partners. “SOLARWORLD just made the latest version available. We went from a 0.5C battery C-rate, which is equal to a 120-minute charge and discharge rate, to a 1C battery C-rate, which is equal to 60 minutes. Many projects that are under development are now reconsidering the use of 1C-rated batteries,” says Küpper.
To ensure the longevity of its batteries, the LUNA2000 employs a temperature controlled environment to prevent battery degradation when operating in hot operating conditions, which are synonymous with Africa. It is also designed to ensure that the entire capacity of the 2 MWh storage container is not lost while a battery pack is being replaced.
Küpper adds that another important aspect to consider when investing in an ESS is whether the inverter, battery and management system come from the same source. Performance issues with small- and large-scale storage systems always arise when combining products from different brands, even when manufacturers guarantee that they are compatible with other solutions and their protocols.
Equipped with artificial intelligence, FusionSolar’s utility-scale, commercial and residential solutions offer significantly reduced operation and maintenance (O&M) costs, especially where projects are located in remote locations. Using cloud-based monitoring software, users can check the status of battery cells to identify problems remotely and reduce on-site working hours by conducting automatic calibrations.
Zeeman explains that, in terms of energy storage, a traditional battery ESS 100 MW system with 50 battery systems may require up to 300 man-days to be dedicated to manual battery pack calibrations across the plant. Huawei completely eliminates the need for manual calibration through pack optimisers to achieve automatic state-of-charge calibration without shutting down the system to do so. “It’s all about cost effectiveness. Deploying teams to conduct O&M on site, especially at remote sites, is challenging as there is a certain period in which you need to react to faults,” Zeeman explains.
While reducing the cost of performing general maintenance, this feature also saves the cost of having a technician travel to site to conduct that maintenance,” he states, emphasising that by optimising its AI technology, Huawei aims to eliminate unnecessary costs for its partners.