1

Solar Water Heating Update

Presentation to the Select Committee on Economic Development

09 November 2010

2

BACKGROUND

Households number vs Income levels

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

250

550

650

750

850

950

1,05

0

1,15

0

1,30

0

1,50

0

1,80

0

2,25

0

2,75

0

3,50

0

4,50

0

5,50

0

6,50

0

7,50

0

8,50

0

9,50

0

10,5

00

11,5

00

13,0

00

15,0

00

18,0

00

22,5

00

27,5

00

35,0

00

50,0

00

Monthly income Rands

Num

ber

of h

ouse

hold

s

Non Electrified housholds

Electrified without a geyser

Electrified with a geyser

Upper income geysers• Market 1.38 million• Income > R16 000/month

Middle income geysers• Market 2.17 million• Income R6 000 - R16 000/month

Stove based water heating• Market 6.32 million• Poor/low/medium income market

Poor/Low income geysers• Market 1.38 million• Income < R 6 000/month • Indigent income market

No electricity• Market 1.24 million• Poor/low income market

Households number vs Income levels

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

250

550

650

750

850

950

1,05

0

1,15

0

1,30

0

1,50

0

1,80

0

2,25

0

2,75

0

3,50

0

4,50

0

5,50

0

6,50

0

7,50

0

8,50

0

9,50

0

10,5

00

11,5

00

13,0

00

15,0

00

18,0

00

22,5

00

27,5

00

35,0

00

50,0

00

Monthly income Rands

Num

ber

of h

ouse

hold

s

Non Electrified housholds

Electrified without a geyser

Electrified with a geyser

Upper income geysers• Market 1.38 million• Income > R16 000/month

Middle income geysers• Market 2.17 million• Income R6 000 - R16 000/month

Stove based water heating• Market 6.32 million• Poor/low/medium income market

Poor/Low income geysers• Market 1.38 million• Income < R 6 000/month • Indigent income market

No electricity• Market 1.24 million• Poor/low income market

Presentation outline

3-Confidential-

Residential targets 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 By 2014 By 2019Upper income subsidy 16,500 27,500 55,000 66,000 71,500 71,500 82,500 66,000 66,000 27,500 236,500 550,000

150 litre SWH System 2,475 4,125 8,250 9,900 10,725 10,725 12,375 9,900 9,900 4,125 35,475 82,500200 litre SWH System 9,075 15,125 30,250 36,300 39,325 39,325 45,375 36,300 36,300 15,125 130,075 302,500250 litre SWH System 1,650 2,750 5,500 6,600 7,150 7,150 8,250 6,600 6,600 2,750 23,650 55,000300 litre SWH System 3,300 5,500 11,000 13,200 14,300 14,300 16,500 13,200 13,200 5,500 47,300 110,000

Mid/low income geyser 25,200 49,412 88,941 128,471 148,235 247,059 252,000 247,059 247,059 246,624 440,259 1,680,059Closed coupled 20,160 39,529 71,153 102,776 118,588 197,647 201,600 197,647 197,647 197,299 352,207 1,344,047

Split unit 5,040 9,882 17,788 25,694 29,647 49,412 50,400 49,412 49,412 49,325 88,052 336,012Non Geyser delivery 6,732 29,221 64,730 108,270 174,436 350,649 472,932 548,100 477,900 467,100 383,389 2,700,071

100lt Roof mounted 4,039 17,532 38,838 64,962 104,662 210,390 283,759 328,860 286,740 280,260 230,034 1,620,043100lt Pole mounted 2,020 8,766 19,419 32,481 52,331 105,195 141,880 164,430 143,370 140,130 115,017 810,021

55lt Pole with hand pump 673 2,922 6,473 10,827 17,444 35,065 47,293 54,810 47,790 46,710 38,339 270,007Insurance replacement 2,090 5,224 7,313 8,358 8,358 8,358 8,358 8,358 8,358 5,224 31,343 70,000Totals 50,522 111,356 215,984 311,099 402,530 677,566 815,791 869,517 799,317 746,448 1,091,492 5,000,131

BACKGROUND

Presentation outline

4-Confidential-

Experience with Tariff Based Rebate Program - Eskom

Comments from Market on Rebate Programme

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“We are currently averaging 100 – 200 per month (reflected in Eskom stats)” - One big national player

“Burst geyser is not good time to sell SWH”

“Rebate programme just isn’t doing it for market”

“Market needs a serious shake-up”

“It would be embarrassing to give you our sales numbers”

3126 installed on Eskom rebate from Jan 2009 – Apr 2010Average for new rebate level (Feb 2010 to April 2010) = 443 units per month

Presentation outline

6-Confidential-04/21/23

** August shows total figures since programme inception. August figures for residential and Low pressure not split Update October figures for Eskom’s Standard residential claims not yet available

Experience with New Diversified Approach

Cu

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lativ

e t

ota

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th

Presentation outline

7-Confidential-04/21/23

Municipal Areas with Active Roll-out Programmes for Low Pressure Systems (using Eskom rebate)

MunicipalityRoll-out Start

dateInstalled in Oct

2010

NMBM 20-Jul-10 5000Mossel Bay 27-Sep-10 300Saldanha 4-Oct-10 100Kroonstad 1-Sep-10 800Mangaung (Bloemfontein

27-Sep-10 400

Potchefstroom 27-Sep-10 400Theewaterskloof Oct 2010 150

Presentation outline

8-Confidential-04/21/23

Other Implementations of Solar Water Heating

Company Initiatives Implemented

BMW 6500 litre per day system

SABS Rosslyn Change rooms 8 units

Western Cape Environmental Affairs

1000 units (in Darling)

Japanese embassyInstalled 410 solar panels which includes water heating needs

Hotel Da Vinci (Sandton) 30000 litre per day system

Presentation outline

9-Confidential-04/21/23

What is in the pipeline? ... (1)

• Program funded from fiscus to install 30 000 systems

in Tshwane, Sol Plaatjie and Naledi by end March

2011. Eskom is the implementing agent. It gave

contractors a letter of intent to commence, whilst

contracting is being finalised. Installation expected to

commence end of November 2010.

• Program involving local banks and insurance industry

to install residential systems without any rebates.

• Voluntary program by industry in lieu of their

contribution to energy efficiency.

Presentation outline

10-Confidential-04/21/23

What is in the pipeline? ...(2)

• Programme to address hot water provision in rural

areas – Managed by Department of Rural

Development and Land Reform.

• Programme to install in government owned residential

dwellings – Managed by Department of Public Works.

• New building regulations will enforce energy efficient

practices in new buildings (including SWH and other

technologies). The regulation was gazetted for public

comment and is in process of being signed off for

promulgation by Minister of DTI.

Presentation outline

11-Confidential-04/21/23

What is in the pipeline? ...(3)

Tax incentive for implementing energy efficiency• Awaiting concurrence of Minister of Finance

Other Municipal Programmes• Ekurhuleni• eThekwini• Noupoort

Presentation outline

12-Confidential-04/21/23

What are the Key Challenges that will Increase Rate of Rollout if Addressed?

• Capital cost of components and systems is too high

(pricing ranges from R9000 to R35000 for a 200 litre

system)

• Funding for capital costs of units

• Large uninformed consumer base i.e. lack of

consumer awareness of the solar water heating

(SWH) benefits

• Funding for education and awareness campaigns

• Skills shortages – necessary for safe scaled up

installations

Presentation outline

13-Confidential-04/21/23

Addressing the challenges ...(1)

Training• Skills program initiated with CETA, eSETA, donors –

unit standards developed and accredited training available for

- NQF Level 4 : Solar Water Heating plumber- NQF Level 2 : Hot water installer

Presentation outline

14-Confidential-04/21/23

Addressing the challenges ...(1)Localisation• Many companies supply Solar Water Units as importers or as

knock-down units and assemble locally. There are initiatives to manufacture locally e.g A factory is being set up in the Eastern Cape. Discussions are also underway with suppliers to set up additional factories in Eastern Cape and Gauteng.

• Preference will be applied for local systems when rebates are applied for.

• The Department of Trade and Industry (DTI) is spearheading the second Industrial Policy Action Plan (IPAP 2) process which provides for local manufacture of SWH. A working group on SWH localisation is being established.

• SABS reports that they are scaling up testing capacity, particularly in the regions, to remove any bottlenecks the industry may experience in launching new products

Presentation outline

15-Confidential-04/21/23

Education and Awareness

• Department of Energy has developed a

comprehensive above-and-below-the-line education

and awareness plan. The Department is seeking

partnerships with the private sector to execute the

plan.

Funding

• Additional fiscal allocations applied for

• Tariff-based rebate cemented in Integrated Resource

Plan (Nersa will be compelled to make adequate

rebates available in the future)

Addressing the challenges ...(2)

Presentation outline

16-Confidential-04/21/23

Conclusion

• Target of 1 million systems by 2014 can be achieved, especially when the electricity tariff doubles in 2013

• We will exceed threshold of 55 000 systems this financial year• Education and awareness building is critical for increased uptake• SWH is a key component of the industrial policy action plan to

create jobs and has to be intensified

Ra

nd

s

Illustrative affordability challenge