By:Cbn

THE slow uptake of electric vehicles (EVs) has inadvertently led to a battery price drop, resulting in cheaper solar storage on the continent, says African Solar Industry Association (AFSIA) CEO John van Zuylen. EV sales were expected to show strong global growth, but this has not materialised. Goldman Sachs says rising concerns around EV capital costs, uncertainty around the numerous elections in 2024, and worries over a shortage of rapid-charging stations all contributed to the headwinds faced by the EV market.

EV slowdown leads to battery price drop, boosting solar sector

With EV demand depressed, battery makers were left with excess production capacity and stock, which in turn boosted the solar energy sector.

“A lot of companies have invested in manufacturing capacity. And luckily for us, a bit too much,” said van Zuylen at the Africa Energy Indaba in Cape Town in March.

This has led to a sharp fall in prices. In 2024, there was an 18% decrease, following the 13% drop in 2023. The scale of the decrease can be seen in the price of batteries falling faster than the price of solar panels over the last 15 years.

When it comes to running a solar system, batteries have long been the most expensive element, but this is changing at an alarming rate.

“Suddenly, we’re reaching that point where batteries are just one element of a normal solar installation. And every percentage point that they become cheaper, there’s always that next customer who says, ‘Now it’s commercially viable for me.’ And it’s just a snowball effect,” said van Zuylen.

Battery price drop sparks solar energy storage boom in Africa

The AFSIA’s ‘Africa Solar 2025 Outlook’ report highlighted the impact of the battery price drop on energy storage on the continent.

“While the annual capacity recorded by AFSIA stalled around 50 MWh (excluding solar home systems and residential systems) until 2022, the use of storage tripled in 2023 and then experienced another tenfold increase in 2024.”

The report did not expect to see a slowdown in energy storage projects. “This exponential growth is likely to continue, as AFSIA has already identified 18 GWh worth of projects under development.”

Battery price drop drives shift to affordable lithium tech

Aside from cheaper batteries, the shift in technology to lithium batteries has also boosted the solar industry.

“They’re a lot more user-friendly. They’re much easier to use. They were expensive, and then they became significantly cheaper,” van Zuylen said.

Battery price drop attracts private investors to solar energy

The drop in battery prices and the adoption of lithium batteries is supporting a trend that sees private investors backing the commercial and industrial (C&I) segment in the solar industry.

Van Zuylen said this trend has been growing for the past five years and represents an expansion of funding from large development agency-backed mega-projects and donor-funded home Solar Home Systems.

The C&I segment in South Africa has been especially strong, as local businesses have been investing in solar to secure their own electricity supply as a way to cope with the energy crisis.

Battery price drop turns load shedding crisis into opportunity

Though load shedding has hurt the economy, van Zuylen said it has also helped develop the country’s solar industry to the extent that there are now dedicated financing products and even local battery producers.

“South Africa is now home to three African giants of battery manufacturing—Solar MD, Freedom Won, and, BlueNova. These are, in my little solar world, our unicorns.”