South Africa Eyes Battery Gigafactories to Power Green Energy Growth

South Africa is steadily emerging as a strong contender in the global green energy space, especially in battery manufacturing. A recent feasibility study has revealed that the country can support up to three large-scale battery “giga-factories,” focusing on lithium iron phosphate (LFP) battery cells. These batteries are widely preferred for renewable energy storage due to their safety, durability, and lower cost.

The study, conducted by EY Parthenon for the Localisation Support Fund, found that factories with a capacity of 5 to 10 gigawatt-hours (GWh) would be commercially viable. This comes at a time when demand for battery energy storage systems (BESS) in Southern Africa is expected to grow rapidly, reaching around 55 GWh by 2034. Such systems are critical for balancing electricity supply and demand, especially as more solar and wind energy are added to the grid.

South Africa has several advantages that make it suitable for this industry. The country already has a strong industrial base, a skilled workforce, and access to important raw materials needed for battery production. In addition, partnerships with neighboring countries like Zimbabwe and Mozambique can help ensure a stable supply of key minerals such as lithium and graphite.

To encourage investment in this sector, the government is introducing supportive policies and financial incentives. From 2026, companies investing in battery manufacturing will be able to claim a 150% tax deduction on their capital expenses. The government has also allocated around $53 million to support local manufacturing and assembly activities.

Special Economic Zones (SEZs) have been identified as ideal locations for setting up these factories. Areas such as Coega in Gqeberha and the Tshwane Automotive SEZ offer ready infrastructure, lower tax rates, and easier access to ports. These benefits can help reduce costs and improve efficiency for manufacturers.

Developing a local battery manufacturing industry will bring multiple benefits. It will strengthen energy security, create thousands of jobs, and support the growth of the electric vehicle sector. It will also help South Africa become an important player in the global clean energy transition.

With the right mix of government support, investment, and regional cooperation, South Africa is well positioned to become a key hub for green energy technology in the coming years.