Impacts of Locally-Assembled Systems on Local Businesses and Economy

Overview

Locally-assembled renewable energy systems can lower costs, reduce imports and stimulate the development of national commercial renewable energy markets by increasing the local value- chain share. They allow more people to gain access to off-grid electricity, particularly in rural areas. Locally-assembled renewable energy systems are also found in a wide variety of forms – from solar PV to wind turbines to improved cook stoves.[1] It should, however, be noted that locally-assembled systems potentially have some weaknesses. 

These weaknesses mayinclude: less regulation, insufficient training or a lack of supervision during the assembling of the product resulting in lower quality merchandise.  Incorrectly assembled systems can also result in technology being discredited, thereby potentially reducing the product’s dissemination rate for years to come.  It is therefore vital that the national implementation and usage of locally-assembled systems is well managed to maximise positive economic development and renewable energy expansion.

Initiating Locally-Assembled Systems

 

The first step towards increasing the prevalence of locally assembled systems is to encourage he spread of local assembly kits. This encouragement can be from a local government or an external organisation by contributing of funds, training or assembly kits. Once a locally assembled kit is properly regulated and ingrained within a country’s renewable energy strategy, components of the kit can also be manufactured locally. Manufacturing is more likely to be successfully undertaken in developing countries that have a well-developed industrial infrastructure sector (such as the Philippines) while less industrialised developing countries (such as Zimbabwe) are less likely to have the manufacturing capacity and will therefore be more reliant on importing kits to be locally assembled in their entirety.

Another method of encouraging locally assembled systems is by reducing or abolishing import duties and taxes on the incoming kits.  While this will reduce the overall cost of the locally-assembled kits, it could potentially hinder efforts to establish local production.

 

Experiences with Locally-Assembled Systems

India is one country that is particularly focused on locally-assembled solar. During 2010 the Indian Government mandated that all national solar projects were required to use modules and cells manufactured in India.[1] After this policy was implemented the Gujarat Solar Park was developed in less with the co-operation of 21 international companies.  Investment in the Indian solar energy sector also increased to $4.2bn in 2011 from almost nothing in 2010.[2] Along with larger investments it has also resulted in smaller scale solar usage, particularly in rural areas. 

More recently India offered financial incentives for new solar manufacturing facilities, subsidising up to 25% of capital cost under the Modified Special Incentive Package Scheme (M-SIPS).[3] These initialtives is also supports larger, international solar corperations such as Renesolar who announced plans to supply 250 MW of locally-assembled modules in India in 2016.[4]