Government’s ambitious national solar water heating (SWH) rebate programme, which was suspended in February until further notice, has left investors and businesses in limbo. Print Send to Friend 1 2 The programme was launched in 2008 to help mitigate energy system constraints by installing a million solar geysers in homes across the country by 2013. However, the programme has since only managed to roll out about 424 790 solar geysers.
Shortly after having taken the reins of the national solar water heater (SWH) programme from State-owned power utility Eskom, the Department of Energy (DoE) on Thursday announced its plans to revitalise the stalled industry.
Eskom exited the SWH rebate programme, which had been under way since 2008, with the DoE taking responsibility, effective February 1, for any future funding and the continuation of the programme.
Government believed the roll-out of SWHs could contribute 23% of its overall energy savings target.
However, the SWH programme, which offered rebates of between R5 000 and R12 000 depending on the size of the geyser, had fallen short of its target of one-million subsidised installations by 2014, with only 417 000 installed as at September 30, 2014.
Several factors had slowed the deployment of SWHs, including Eskom’s lengthy procurement process; a misalignment with the targeted electricity demand reductions, owing to focus having been placed on SWH installations in low electricity consumption areas; and unreliable verification of the number and location of installed systems, owing to a lack of systematic reporting and independent verification.
Further, poor quality installations, a lack of maintenance obligations by the suppliers and poor workmanship, which resulted in SWHs being dysfunctional, also contributed to the challenges faced by the ambitious programme.
Eskom’s handover, in addition to the local content requirements implemented by the Department of Trade and Industry, had further stalled the programme, with stakeholders publicly raising the alarm on the impact of the disruption, short notice and potential transitional delays.
However, the DoE, which aimed to leverage the replacement of failed electric geysers to further accelerate the installation of SWH systems, particularly in the high electricity consumption sector, on Thursday announced some of its plans for the programme.
A cap would be placed on the number of subsidies allowed during the transitional phase, while a new rebate scheme was being introduced.
The DoE said a maximum of 5 000 subsidies – at the current Eskom rebate levels, together with the payment services – would be offered, with no further subsidies available under this programme once this cap was exceeded.
“Going forward, a new rebate scheme will be introduced and subsidies will be offered [taking into consideration] local content. A sliding scale commensurate with local content will apply and products with the highest verified local content will attract the highest rebates,” the department said in a statement.
The DoE had also developed a mandatory electronic data collection and verification system, for which training would be offered from February 23.
The electronic record relating to any installation would – at the very minimum – contain a photograph, GPS coordinate, name of product supplier and installer, product size and name of beneficiary.
Further, the department-sponsored South African Bureau of Standards (SABS) verification process, as prescribed under SABS: SATS 1286, had been completed in respect of all product offerings that were submitted to the DoE.
“Only those products that have met the SABS verification requirements will be eligible for receiving subsidies under the social programme,” the DoE pointed out.
The department would provide further information about the registration of product suppliers and installation companies, besides other matters, by March 31.
Cape Town - The local low-pressure solar water heater industry says it has been killed because of “technical red tape”.
It says almost all South African companies have been disqualified from manufacturing these geysers for the government’s mass installation programme.
For the last 18 months the industry has made appeals to the Department of Trade and Industry (DTi) to change the technicality, which deals with the percentage of local content required.
In December 2012, Eskom stopped the mass roll-out of its low-pressure solar water heater scheme to the poor, intending to replace it with a contract tender scheme.
But this never happened and Eskom says it was because no companies qualified under the DTi’s requirements.
A survey by Sustainable Energy Society of Southern Africa (Sessa), which represents about 400 solar water heater companies, estimated that at least 4 500 jobs had been lost, with some investors having lost their homes and pensions. Factories have closed down or have been mothballed and thousands of brand-new low-pressure geysers have been sitting in warehouses for 18 months.
James Green, chairman of Sessa’s solar water heating division, said yesterday: “An industry has been destroyed by red tape. It is a tragedy that hundreds of companies have been put out of business. This has caused severe financial hardship to many small SMMEs that set up locally around the country, creating local employment.”
In July 2013, the department made the low-pressure solar water geyser a “designated product” under government procurement rules. It ruled that both the tank and the collector tubes, which absorb the sun’s radiation to heat the water, must each have 70 percent local content. However, there is not a single manufacturer of tubes in South Africa.
Green said local companies made the tanks and frames, but although several companieshad looked into setting up tube factories, they could not compete with the low costs of China, which had cornered the world market.
“You would have to import the raw material from China or Turkey, you would need a 100 percent reliable electricity supply and you would have to have a workforce cheaper than China,” he said.
With no local tube manufacturers, companies could not qualify under the government procurement rules, and the industry ground to a halt.
“If the DTi made it a 70 percent overall local content, there would be no problem, because overall we’re already at over 80 percent local content. But they won’t.”
Most jobs were created in the installation and maintenance of solar geysers.
President Jacob Zuma had said 1 million solar geysers would be installed by March this year. The Treasury allocated R4.7 billion to the Department of Energy, of which R3bn was to be used for a mass roll-out of low-pressure solar water heaters installed at no cost to consumers on low-cost houses. About R1.5bn would go to pay consumers rebates on solar geysers of between 25 to 40 percent for high-pressure geysers.
Eskom spokesman Andrew Etzinger said to date about 400 000 solar geysers of the government’s million target had been installed, of which about 80 000 were high pressure and 320 000 low pressure. Eskom had received R2.471bn from the Department of Energy and would be returning R1.8bn to the department at the end of the month when it takes over as the implementing agent.
Etzinger said: “The industry can do 75 to 80 percent local content overall. A solution would be to combine the two parts and look at an aggregate level.” Eskom had gone to tender for the low-pressure systems, but no system had complied with the requirement, so no tender had been granted.
The DTi’s Gerhard Fourie said it had no intention of changing the 70 percent requirement for both the collector tubes and the tank. He believed nine companies did qualify under the rules for local content in collectors. However, these were for flatplate, not tube, collectors.
But Green said flatplate collectors were not used with low-pressure solar geysers because they were inefficient, expensive and not freeze-proof. “DTi’s asking us to make a product that doesn’t work.”
The Department of Energy said it would comment later this month when it announced how it would take over implementation of the solar water heater programme.
It is Eskom’s job to produce energy, not to save it. But as its power station maintenance comes into focus the utility says breathing room of about 5 000MW is needed to avoid load-shedding and, to achieve this, energy saving is imperative.
The government’s ambitious solar water heating rebate programme could have gone a long way in helping reach this level of energy saving. But the project, entrusted to the power utility, has fallen dismally short of its target.
Now the project will, by January 31, move to the department of energy where it could potentially be bolstered. But the department’s silence has detractors worried that the industry, and the jobs it has created, could be at risk.
When the solar water heating rebate programme was launched in 2008 – when rolling blackouts first took hold of South Africa – it was hoped that a rebate would encourage consumers to heat water, one of the most intensive household activities, with solar power and result in “maximum power savings”.
The government aims for 10 000GWh to be replaced by power from renewable sources, and the department of energy believes 23% of this target can be achieved by solar water heating.
By Lance Greyling
I will today write a letter to Minister of Energy, Tina Joemat-Pettersson, requesting that she confirm on record that the Department of Energy (DOE) has plans and processes in place to allow for the smooth transition of the solar water heater rebate programme from Eskom to the DOE.
Eskom now risks creating a major disruption in the solar water heater industry with its woefully inadequate notice of withdrawing from the program.
If a new rebate programme does not start running immediately after Eskom withdraws, there will be a complete stop in installation and many companies and thousands of employees will be out of business and work.
The Solar Water Heater industry should have seen massive growth over the past five years given the importance of solar water heaters in reducing energy demand on the grid. Instead what we have witnessed is the government falling woefully short of its target of installing 1 million solar water heaters by 2014. The industry is also facing a precarious financial state due to the uncertainty given to the market by government's constantly changing policies. In fact the government only recently ended an 18 month moratorium on the installation of low pressure solar water heaters, which has already had a devastating effect on this industry.
The government's revised policy also repeats the mistakes of its past programme in that priority is given to the installation of low pressure units whereas it is only the high pressure units that actually achieve the goal of demand reduction.
Since its inception in 2008 the rebate programme has subsidised the installation of solar water heaters in low-cost housing projects, 417 000 as at 30 September 2014. The complete system was funded by Eskom, with households getting the geyser at no cost.
Rebates range from around R5 000 and R12 000 depending on the size of the geyser and achieved energy savings of up to 50% to households.
The government's energy savings target requires 10 000GWh to be replaced by power from renewable sources. The DOE believes that 23% of this target can be achieved by solar water heating.
This latest move by Eskom is indicative of an entity in complete disarray, looking for any and all ways to remove themselves from delivering on their mandate.
This state of affairs must not be allowed to negatively affect an entire industry, risk jobs and threaten the livelihoods of those most in need of support. We need a proper government plan for solar water heaters that can urgently reduce demand to the grid and provide certainty to the industry so that it can flourish and provide much needed jobs.
This latest development unfortunately works counter to both these objectives.
Lance Greyling, Shadow Minister of Energy
CAPE Town has embarked on an aggressive drive to roll out solar-water heaters that will see "creditworthy residents" being offered finance for the installation of the heaters.
Speaking at the launch of the city’s residential solar water heater accreditation programme on Monday, mayor Patricia de Lille said accredited suppliers’ had entered into a formal partnership with financial institutions to offer installation finance to residents.
Eskom is in talks with the insurance industry in a bid to get the industry to replace clients’ broken hot water geysers with solar water geysers.
If successful, the move could see the uptake of solar water geysers increase substantially, as the insurance industry replaces on average 200 000 to 300 000 broken electric geysers every year.
The insurance industry would then make use of Eskom’s rebate programme for solar water geysers, launched in 2008, which aims to install one million partially subsidised solar water geysers in the country by the end of 2013.
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