Local-content rules for renewables projects don't always work

Abstract

Some countries with large renewables markets have sought to create domestic supply chains and jobs by implementing local-content requirements. We focus on three key renewables markets with local-content requirements – Brazil, India and South Africa – and analyze whether these rules have helped create local manufacturing capacity or benefited local companies. We find that companies in all three countries have tended to take on roles that are more easily borrowed from other industries, such as project development or ancillary services. It is more difficult to set up manufacturing capacity and such growth as there has been is in less sophisticated components. We also find that local content rules have contributed to increasing project costs.

Keywords

• Renewable energy
• Local-content requirements
• Local supply chains
• Brazil
• India
• South Africa