The Chinese government has announced changes to its export tax rebate policy, effective December 1. These adjustments are expected to raise the prices of Chinese-manufactured photovoltaics (PV) modules and battery energy storage systems (BESS) with significant implications for renewable energy markets globally and in South Africa.

A statement by China’s Ministry of Finance confirms the government’s elimination of the 13% tax rebate on aluminium and copper exports and reduced rebates for PV modules, batteries and non-metallic mineral products from 13% to 9%.

Aluminium prices have already risen by 8,5% on the London Metal Exchange following the announcement and analysts predict further inflationary pressures. According to an ING Commodities report, China produces nearly half of the world’s aluminium and limited capacity elsewhere could create a global deficit by 2026.

For South Africa, where renewable energy projects depend heavily on Chinese imports, the rebate reduction is expected to increase costs significantly. Lucile Rio, Marketing and Communication Manager at Odyssey Energy Solutions, estimates prices of PV modules could increase by 0,02 yuan (R0,05) to 0,03 yuan (R0,075) per watt.

These changes will particularly affect unassembled solar cells and assembled PV modules. With renewable energy projects expanding, the Chinese government’s policy shift could result in higher upfront costs for PV modules and BESS as well as potential supply chain disruptions, Rio says. “While overall trends in solar technology pricing have been downward, this tax policy shift introduces short-term pricing pressures. In response, South African OEMs are accelerating purchases to secure current pricing for projects planned for the coming year.”