South Africa Shifts Focus to Wind Energy Amid Renewable Push

South Africa Shifts Focus to Wind Energy Amid Renewable Push

Civil construction activity remains robust, driven by renewable energy projects, particularly a notable shift from solar to wind energy.

The FNB/BER Civil Confidence Index fell slightly from an eight-year high of 47 in Q1 2024 to 44 in Q2 2024.

This decline indicates that over 55% of respondents are dissatisfied with current business conditions, reflecting a slight dip in business sentiment and a slowdown in activity. Despite this, the growth indicator remains well above its long-term average.

Statistics South Africa (Stats SA) reported a 7.8% year-on-year increase in the real value of construction work in Q1 2024, with expectations of a more optimistic reading for Q2 2024.

“The survey results from recent quarters are not as pessimistic as Stats SA data suggests. This is largely because the survey focuses on large contractors working in the private sector,” said Siphamandla Mkhwanazi, Senior Economist at FNB.

Future work prospects look promising, with the rating of the lack of new demand as a business constraint—the proxy for order books—reaching its best level since 2008.

“The significant improvement in order books is a very positive development, indicating future work prospects similar to those seen during the 2010 FIFA World Cup construction peak,” Mkhwanazi noted.

Activity growth, although slightly lower, remained strong, and the pipeline of work improved significantly. Projects related to renewable energy continue to sustain civil construction activity, with a noticeable shift from solar to wind projects.

While South Africa experienced a solar boom in 2023 due to increased load shedding, solar energy’s limitations during nighttime or cloudy conditions restrict its potential. Wind energy, harnessable at any time, offers a better source of baseload power.

Overall, despite the positive growth, sentiment in the civil construction industry remains relatively low.

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