After recently having a domestic hot water geyser fail and investigating the potential of replacing it with a solar unit, I definitely saw the need for something different to advance the penetration of solar water heating in South Africa. While replacing my electric geyser costs R 5,500, an equivalent solar installation costs around R 25,000. Eskom, the state electricity generator, provides a subsidy of around R 3,000 and indicates a payback period is 5 to 8 years.
So why would one buy a solar water heater system? why not switch the electric geyser off periodically to save carbon, shower less or even put it on a timer?
This type of reaction and the lack of impact of Eskom’s subsidy system, seems to be what has driven the South African Department of Mineral and Energy Affairs (DME) to develop a South African Solar Water Heating Strategy and Implementation Plan. The plan aims to install one million solar water heaters by 2014, achieve a 50% penetration of SWHs in the residential sector by 2020 and create jobs through the establishment of new manufacturing capacity.
This strategy is being finalised and will be presented to the minister on 4 December 2009. However, the draft strategy presented at the public participation meeting on 5 November has apparently been accepted and represents what will be presented to the minister.
National SWH Entity
As we have come to expect in South Africa the first focus of the plan is the creation of a National SWH Entity, under the Public Finance Management Act. Its role would be to implement the strategy, facilitate funding and “orchestrate” delivery to the unserviced residential market sectors.
It will have the right to obtain and allocate revenue from carbon offsets, demand-side management (DSM) and other revenue streams to achieve the national SWH plan.
The key aims of the entity are to ensure affordability by procuring low-cost quality systems through bulk buying and large contracts, to obtain and manage funding, to rigorously manage the supply chain, to manage the disciplined deployment of numerous subcontractors, to protect consumer rights and to be accountable to government, funding bodies and consumers.
Is the Devil In the Detail?
The entity would be self sustaining with individual programmes ensuring that costs are covered by a subsidy plus a customer contribution. Prices will be ‘stepped’ from the highest level for upper-income homes to the lowest level for poor households.
The entity would not rely on direct support from Treasury, although some of the funding could be indirect such as that recently announced by the Department of Environmental Affairs, namely a $500-million ‘infusion’ through the Clean Technology Fund.
DME notes that neither the business model nor the funding have been finalised. This is rather concerning because the implementation schedule calls for manufacturing tenders covering implementation, marketing, sourcing, installations, maintenance, financing to go out in April 2010..
The other concern is that although the creation of a manufacturing industry is listed as a benefit in the strategy there is no sign in the plan of how this will be achieved.
Although the overall objective and approach are easy to support there seems to be a lack of detail which might scupper the attainment of the goal. Will this be another case, like the biofuels strategy, where the goal and principles are talked about but little movement towards the goal achieved.
Image by Dave ‘Coconuts’ Kleinschmidt on Flickr under a Creative Commons license.
Reprinted with permission from Ecoworldly