As with other electricity users in this country, I pay a levy on my usage to fund demand side management (DSM) programmes, intended to reduce overall Âelectricity consumption.
I was keen to get some of this money back in the form of the new incentive or subsidy available via Eskom to promote the use of solar water heaters. The DSM levy, which collects about R600-million a year, will be used by Eskom for a R2-billion subsidy in the next five years to help move the country to use more sun power.
The idea is that up to 33% of the cost of a solar water heater is paid for by the DSM funds, depending on the energy efficiency of the unit.
The programme is long-awaited, but, with auditors Deloitte managing its implementation, it is now up and running.
I started with the Yellow Pages, Âasking the eight or so listed suppliers the cost of supplying and installing a unit sufficient for a household of four people. I also asked if they are hooked up to the subsidy and how much this would take off the cost.
Only one, Solar Heat Exchangers, is accredited, my informant telling me that this was “from last Wednesday”.
One supplier directed me to an Eskom website (www.eskomdsm.co.za), which includes a page of accredited suppliers. There were two, Solar Heat Exchangers and Atlantic Solar. The latter is Cape-based, but from next week will offer its products and services in ÂGauteng as well.
By mid-week the number had grown to three, but only two can supply Johannesburg at present. Most (non-accredited) suppliers I spoke to, including a number listed as suppliers on the website of the sustainable energy society of South Africa, Sessa, appear to be unsure of the status of the subsidy programme or are convinced that it is unnecessarily complex and burdensome.
“If you want to buy a solar geyser without a subsidy it will cost R23Â 000,” said one, articulating my general impression from talking to suppliers, “with the subsidy it will cost R30Â 000.”
There is also confusion around the pricing. Deloitte says the installer must claim the subsidy, while one installer insisted I would have to pay the full price and then claim the subsidy portion from Deloitte. He said the process had to work this way or it would play havoc with his cash flow — which it would if he was installing, say, 50 units a month.
But Deloitte appears to be firm on this: “The suppliers will pass the subsidy on to the customer and then claim it back from Eskom by submitting their claims to Deloitte for checking and payment,” it said in response to my questions.
“In terms of the programme, payment must be made within two weeks of receiving the complete set of claim documents.”
My first subsidised option comes in at R12 517 for a 200-litre unit. The subsidy is worth R2 166 and the installation cost between R1 500 and R1 800.
The other option is a 187-litre unit priced at R19 186 installed with a subsidy worth R2 388
Installation costs can vary depending on whether the roof is pitched or flat. The smaller 200-litre or so units vary in price from R8 500 to R20 000.
There appears to be little agreement among industry players. Some will tell you that the imported units cost more, others say that where unit prices are high it is because the units are locally made or assembled.
John Ledger, whose company Gauteng Solar Solutions has the most competitively priced option I came across, and who doubles as Sessa’s chair, says he will not register with Eskom’s programme for the time being because he is “hell of busy”, with a waiting list of three months.
SABS approval can cost R45 000 a unit, leading to complaints from suppliers who have a wide range that these costs are prohibitive.
Deloitte says the programme was launched in December last year and accreditation commenced last month.
“It is difficult to estimate exactly how many installations have been completed, as suppliers have not yet submitted their claims,” says Deloitte’s Wendy Smith. “We estimate that so far approximately 10 installations are complete or are in progress.”
Two takes
Eskom’s Andrew Etzinger says the solar water heating (SWH) programme “must succeed”. “Unfortunately we are faced with the challenge of developing an industry which is very small. There are bound to be teething problems and we will work together with the SWH suppliers to see how these can be resolved as soon as possible.”
Etzinger says the challenges are:
- lan effective quality standard has to be in place — hence the need for SABS testing;
- a certificate of electrical compliance for installations involving changes to electrical systems;
- the supplier has to be in good standing commercially; and
- a timer has to be installed to make the most of a SWH (otherwise the electrical backup element will kick in after hot water is used in the morning before the sun rises).
Etzinger says these points seem to be the underlying cause of the frustration experienced by certain potential suppliers.
Sessa chair John Ledger estimates that more than 100 electrical geysers are installed on any working day in Gauteng. These installations are made by people who learned on the job to do the wiring required.
In the case of Eskom’s scheme, the use of public money means requirements that can be onerous. These include a certificate of compliance from a qualified electrician and a time switch to make sure that the heater maximises heat gain from the sun and minimises the use of the back-up electrical element.
The supplier may also be subject to external audit, which not too many small companies would welcome, irrespective of how long they have been in business.
Ledger says the system is cumbersome, bureaucratic and “very, very problematic”.
A better system, he says, would be to adopt the Australian model where the householder is issued a tradeable certificate linked to the international price of carbon.