The Generator and Transformer Industry in South Africa 2024

Generators and transformers contribute to power generation, transmission, distribution, energy storage and grid management. Power cuts fuelled a surge in demand for back-up generators and alternative energy generation systems. Manufacturing sales and imports of transformers, electric generators and motors, increased significantly in 2023. Power utility Eskom’s performance has improved significantly since April 2024. Energy security remains at risk due to Eskom’s high debt, ageing power plants, overloading of transformers, theft and vandalism of electricity infrastructure, and weather-related damage. The new Electricity Regulation Amendment Act provides for an independent electricity transmission system operator and aims to create an enabling environment for private renewable energy investment and to promote energy security.

Opportunities

• Demand for transformers from IPPs for micro- and hybrid grids.
• Eskom’s need to replace ageing infrastructure, in addition to new capital expansion projects.
• Ongoing opportunities in the power rental market.
• Public procurement of locally-made products.
• The growth of intra-African trade provides potential opportunities to supply generators and transformers to other African countries.
• The manufacture and supply of generators powered by renewable energy.
• The proposed expansion of the electricity transmission network provides opportunities for local transformer manufacturers.
• The rollout of data centres presents an opportunity for providers of transformers and substations.
• Transformers are required in renewable energy systems to prevent power fluctuations.

Challenges

• Margins continue to be eroded by rising production costs, notably fuel and energy, as well as the cost of imported inputs.
• Port and logistics inefficiencies result in lengthy delays and drive up costs.
• Reliance on imported components.
• South Africa’s low-growth economy influences the demand for electricity, which influences how much new generator and transformer capacity must be added to the grid.
• The impact of Eskom’s debt crisis on capital expenditure, which could affect the implementation of the proposed transmission network expansion project.
• The introduction of new utility-scale independent renewable energy power supply to Eskom is being constrained by the lack of capacity on the national grid.

Trends

New embedded power and renewable energy projects are eroding demand for generators. The high cost of diesel is driving energy users and innovators to search for more affordable options, reducing demand for diesel generators. The maintenance and repair of power generation infrastructure and proposed grid expansion are driving demand for transformers. Uptake of generators powered by renewable energy and hybrid generator systems that combine diesel generators with renewable energy systems.

Outlook

The rapidly-evolving energy market presents challenges and opportunities for manufacturers and suppliers of generators and transformers. South Africa is moving towards a decentralised electricity system and increased demand for wind and solar-powered generators. Despite improved electricity supply recently, the risk of future outages remains high and will continue to drive demand for back-up generators. Transformers are a key component for integrating renewables and electrifying transportation. The proposed expansion of the transmission network provides significant opportunities for the transformer industry and its supply chain.

Report coverage

This report on the generator and transformer industry in South Africa includes information on power generation, transmission and distribution, manufacturing sales, notable players, corporate actions, imports and regulations. There is also information on influencing factors such as environmental issues, government support, input costs and the competitive environment.

There are profiles of 25 notable companies including Cummins, Siemens, ABB South Africa, Actom, Matlakse, Weg Group and FGW Generators,