There should be a simple enough formula that could marry our abundance of sun with the mountain of loot Trevor Manuel is sitting on, to fix the electricity crisis, quick sticks.
The latest treasury figures show that the budget surplus this year will be R18,5-billion. Manuel’s new tax of two cents a kilowatt hour on electricity usage will bring in R10-billion in the next three years, but even though this is billed as a green tax, the bulk — R8-billion — simply goes to the general public purse, said one critic, noting that some of this money will go to fund Eskom’s massive expansion of coal-fired capacity.
If we understand one thing about energy in South Africa it’s that nothing beats the cost of coal power. But look at how much it costs. The latest estimates for Medupi, the giant coal station under construction in Limpopo, is R16-million a megawatt.
By one estimate, solar water heating, by comparison, is just R6-million a megawatt. This is not the end of the comparison, though, as Eskom’s Andrew Etzinger says, because Medupi will have a lifespan of 60 years, while solar panels last for perhaps 15 or 20 years.
The WWF’s Peet du Plooy counters that solar has little or no running costs, while Medupi will consume vast amounts of coal over its lifespan.
For Etzinger this is not an either-or equation. It’s Medupi, plus solar. My guess is that most South Africans would agree with this, given the technology options available to us right now, but is solar given a fair shake of the whip?
Eskom has a support programme running for solar water heaters, with about R2-billion to spend over the next five years. This works out to a subsidy of about R2Â 000 a heater or R3,5-million a megawatt.
So Eskom will spend R16-million per megawatt building coal plants, but only R3,5-million supporting solar heating.
This is despite the fact that solar water heating, on Eskom’s figures, can contribute just less than 5Â 000 megawatts of power to winter peak. This, according to Michael Cherry, writing in The Weekender, is about 13% of winter peak load, more or less the same capacity of Medupi, which is costing R80-billion to build.
While residential electricity usage is a relatively low 17% of total, in peak times this jumps to about a third, with water heating alone counting for 17% of consumption.
Clearly solar can make a significant contribution to easing the electricity supply crisis.
The solar support is funded by Eskom’s demand-side management programme raised by a levy on electricity sales. The programme has been criticised for being parsimonious, overly bureaucratic and not friendly to installers from a cash-flow point of view.
Installers have to have their products SABS approved on a product-by-product basis at some cost and have to carry the cost of the subsidy until refunded by the auditing firm appointed to administer the programme.
The system is designed around the fact that the solar industry in South Africa is tiny, it is doubtful that it installs even 10Â 000 units a year. It also correctly insists on quality standards less consumers find that their investments have turned to rubbish within a short period of time.
But there is a case for product approval to be on a product basis, paid for by demand-side management funds, so that consumers get the SABS mark without each installer having to separately pay for the approval of each product line offered.
And while the country has a tiny solar industry, it has massive capacity in contractors who install electrical geysers. It is quite easy to see them also offering solar installations if the two options were more or less evenly priced.
For consumers the solar geysers would mean lower electricity bills and less susceptibility to load-shedding. For Eskom it would mean freeing up about 5Â 000 MW of power with significantly less stress at peak times.
Eskom knows this and has set itself the target of installing one million solar geysers by 2025. As Cherry says, this is too little, too late.
The answer, it seems to me, is to persuade Manuel to put some of his surplus into solar water heating, using the tax system as the primary agent for managing the process. This may be a novelty in South Africa, but many countries offer tax rebates and incentives for such desirable economic and environmental outcomes.
If R28-billion is required, treasury and private homeowners could split the cost in a public-private partnership, perhaps drawing down on the rebate over three years. This would effectively halve the cost of solar water heaters, more or less putting them at the same price as electrical geysers, but would offer homeowners lower running costs and greater energy security.
Etzinger says the solar water industry is severely constrained in terms of its ability to deliver and install large volumes and this won’t be fixed by simply increasing subsidies.
“South Africa needs a fundamentally different approach to solar- water heaters encouraging mass production and training of installers.
He says there is an estimate that this could create 5Â 000 jobs. Etzinger adds that Eskom is constrained by policy on the extent to which we pay for solar-water heaters. This amounts to R3,5-million per megawatt saved.
He says the bottom line is that solar-water heating is the most viable renewable energy, but fundamental market restructuring is required to realise the benefits. Eskom is doing what it can to stimulate the industry within its mandate but much more is needed.
But if you think we have an energy crisis, worthy of aggressive roll outs and targets, as well as bold new financing schemes, this is yet to reach the department of finance.
The treasury’s Thoraya Pandy says solar geysers are a relatively small part of total demand-side management initiatives mainly because the actual supply of geysers at this stage is small — about 10Â 000 a year. “As far as I have been informed, they are all imported and we don’t have South African production.”
But we also do not make the huge boilers that cost R20-billion a pop, used for the giant power stations. I am all for importing them, but think the same kind of thinking should apply to solar while we build domestic capability based on local demand.
Pandy says the Department of Trade and Industry is looking at the issue of South African production facilities for solar geysers, as well as the issue of import duties on the geysers. “The Department of Minerals and Energy is talking about legislation towards making it compulsory for every new home and every home being bought or sold to be equipped with a solar geyser. This will allow better alignment with supply, but may have an effect on the ability to buy and sell homes if solar geyser supply constraints persist.”
It is understood that geyser initiatives, which are constrained by supply at this stage, are geyser blanket installations and shower rose replacement, as well as facilities to selectively shed are geyser loads, such as smart metering.
Pandy says the “quicker gains at this stage, with lower supply constraints, are to made on ‘free’ compact fluorescent lighting rollout in exchange for incandescent light bulbs which will be destroyed”.