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Nairobi, Kenya — <\/span>China’s decision to end value-added tax exemptions on solar panel exports and phase out incentives for making battery storage equipment could increase the cost of solar installations in Africa, which is heavily dependent on imported Chinese technology.<\/p>\n The changes, set to take effect April 1 for solar panels and starting next year for batteries, could complicate efforts to expand renewable energy to close huge power gaps across Africa, though experts say the impact is likely to be manageable. <\/p>\n “We are likely to see an increase in solar panel prices in Africa as most of the inputs come from China,” said Wangari Muchiri, an energy analyst who focuses on Africa’s clean energy sector. \u201cRemoving the exemptions will increase existing costs, especially when you consider shipping, logistics and other import fees.\u201d<\/p>\n Africa already pays significantly more for solar equipment than other regions due to transportation costs, low import volumes and tariffs. <\/p>\n China’s policy change reflects a broader shift after fierce competition among Chinese manufacturers pushed solar module prices to $0.07 per watt in 2025, from $0.25 in 2022. This helped drive global adoption of solar energy, but many companies suffered huge losses.<\/p>\n Some Chinese companies factored VAT rebates into their export pricing, effectively transferring those subsidies to their foreign buyers. But Beijing has cut back on those payments as it reins in overcapacity and moves toward more advanced technologies.<\/p>\n Instead of a sharp shock in prices, the loss of such discounts would cause prices to rise gradually, thereby strengthening the global price level. <\/p>\n \u201cThe changes are significant, but not catastrophic,\u201d said John van Zuylen, CEO of the Africa Solar Industry Association. <\/p>\n \u201cThe whole solar boom recently was built on artificially cheap Chinese pricing,\u201d Van Zuylen said. \u201cThat era is now coming to an end.\u201d<\/p>\n “When a structural rebate is removed, exporters typically either absorb the cost, raise prices, or reduce the rebate,” Van Zuylen said. \u201cAfrican countries will feel this as a gradual upward shift in pricing rather than a dramatic surge.\u201d<\/p>\n Muchiri said that despite the slight increase in prices, solar energy is expected to remain competitive in most parts of the continent as it is the cheapest source of energy in Africa. <\/p>\n “Despite the higher prices of the panels, it will still be significantly cheaper than alternatives such as diesel,” he said. <\/p>\n “This will slightly increase project costs and could lead to delays in the project construction pipeline due to supply chain shortages and contract changes, storage congestion, congestion in shipments to countries highly dependent on Chinese imports,” said Sonia Dunlop, CEO of the industry association Global Solar Council.<\/p>\n Battery storage, which is crucial for providing power after sunset, may face a major challenge as the incentives phase out by 2027. Van Zuylen said the higher costs could hit smaller users the most. <\/p>\n \u201cBatteries make more sense for Africa than panels because storage is what makes solar power reliable for off-grid and backup users,\u201d he said.<\/p>\n Basil Abia, co-founder of Nigerian energy research firm Truva Intelligence, said that “batteries have historically been expensive, and many solar installations in Africa were built without them.” <\/p>\n \u201cJust recently we have started to see more systems combining solar energy with battery storage,\u201d Abia said.<\/p>\n Even without rebates, solar modules remain relatively affordable, he said. By 2024 and early 2025, module prices will fall sharply to $0.07 per watt, down from about $0.25 per watt in previous years.<\/p>\n Demand for solar power, which now supplies 3% of electricity generation in Africa, is expected to grow as storage reliability improves. Meanwhile, heavy reliance on Chinese equipment is drawing attention to limited local manufacturing capacity.<\/p>\n “Removing the VAT will slow, but not reverse, Africa’s clean energy transition,” Abia said. “Countries that use this moment to accelerate local manufacturing will emerge stronger. Those that do not will be left exposed to Beijing’s next industrial policy adjustment.”<\/p>\n ___<\/p>\n The Associated Press’ climate and environmental coverage receives financial support from several private foundations. AP is solely responsible for all content. find api standards<\/a> A list of philanthropies to work with, supporters and funded coverage areas ap.org<\/a>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Nairobi, Kenya — China’s decision to end value-added tax exemptions on solar panel exports and phase out incentives for making battery storage equipment could increase the cost of solar installations in Africa, which is heavily dependent on imported Chinese technology. 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