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Review of South Africa’s Solar Water Heating Rebate Programme

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Beset by power outages and a long-term electricity supply shortfall, Eskom, the South African national electricity utility, introduced a cash rebate for installing residential Solar Water Heaters (SWH) in 2008. This rebate targeted the residential sector as it accounts for 35% of electricity demand in peak hours. Almost all residential hot water in South Africa is heated by electric resistance elements and the electricity use for this accounts for approximately 40% of monthly electricity consumption for middle income households. The rebate programme set an ambitious target of 925 000 SWH installations by 2013, but was suspended in 2015 with only 102 498 rebate payments made, 11% of the initial target. By any metric, achievement of 11% of the target set, is poor, however, South Africa had an existing SWH industry in 2008, with growing volumes, albeit from a small base. Ultimately the SWH rebate programme managed to stimulate the supply-, but not the demand-side of the market, causing long-term damage to the SWH industry. In this paper, an overview of the Eskom rebate programme is given, after which the programme is measured against international best practices to achieve success, namely; i) Quality installation standards; ii) Certainty and long term commitment; iii) System performance targeted to avoid over-sized / over-priced systems; iv) Strong marketing campaign; v) Holistic contractor training and customer education and; vi) Mandatory regulations for new buildings. The study found that only one of the best practices was adequately met, leading to the conclusion that the programme was ineffective and should be withdrawn. If it is to be reintroduced , it is recommended that the new programme is carefully planned to address identified weaknesses. The result of this study reaffirms the need for strong planning and commitment in all government support programmes. Failing which the support programme is likely to not only fail to reach its original objectives, but damage the long term prospects of the existing industry.
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Review of South Africa’s Solar Water Heating Rebate Programme
Theo Covary, Unlimited Energy, Johannesburg, South Africa
Karin Kritzinger, Stellenbosch University, Stellenbsoch, South Africa
Abstract
Beset by power outages and a long-term electricity supply shortfall, Eskom, the South African
national electricity utility, introduced a cash rebate for installing residential Solar Water Heaters (SWH)
in 2008.
This rebate targeted the residential sector as it accounts for 35% of electricity demand in peak
hours. Almost all residential hot water in South Africa is heated by electric resistance elements and the
electricity use for this accounts for approximately 40% of monthly electricity consumption for middle
income households. The rebate programme set an ambitious target of 925 000 SWH installations by 2013,
but was suspended in 2015 with only 102 498 rebate payments made, 11% of the initial target. By any
metric, achievement of 11% of the target set, is poor, however, South Africa had an existing SWH industry
in 2008, with growing volumes, albeit from a small base. Ultimately the SWH rebate programme managed
to stimulate the supply-, but not the demand-side of the market, causing long-term damage to the SWH
industry. In this paper, an overview of the Eskom rebate programme is given, after which the programme
is measured against international best practices to achieve success, namely; i) Quality installation
standards; ii) Certainty and long term commitment; iii) System performance targeted to avoid over-sized
/ over- priced systems; iv) Strong marketing campaign; v) Holistic contractor training and customer
education and; vi) Mandatory regulations for new buildings.
The study found that only one of the best practices was adequately met, leading to the conclusion
that the programme was ineffective and should be withdrawn. If it is to be re-introduced, it is
recommended that the new programme is carefully planned to address identified weaknesses.
The result of this study reaffirms the need for strong planning and commitment in all government
support programmes. Failing which the support programme is likely to not only fail to reach its original
objectives, but damage the long term prospects of the existing industry.
Introduction, Contextual Background and Methodology
Country Facts
South Africa is a middle-income, emerging country with an abundant supply of natural resources,
both renewable and non-renewable. The country has large deposits of coal, which it has successfully
exploited to generate 85% of its net maximum electricity capacity of 42 GW [1]. The national utility,
Eskom, generates more than 95% of the country’s electricity. Eskom has long prided itself for being stable,
meeting and exceeding internationally accepted reserve margin norms and having the lowest tariffs in the
world. A combination of factors, including but not limited to: the country’s electrification programme
which started in the late 1990’s; increased electricity demand due to economic growth; and construction
delays of two new coal generation plants in the 2000’s resulted in national rolling blackouts in 2008.
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Supply remains constrained with blackouts being experienced regularly with the situation only expected
to improve by 2018, when the two new coal power plants (9 600 MW) and the country’s flagship
renewable energy programme (>5 000 MW) are fully commissioned.
Solar Water Heater Facts
Solar water heaters are made up of a collector and a tank, but there are many different
configurations in the market. For the purposes of this study, the only technology distinction made is
between low pressure (LP) and high pressure (HP) systems.
In the South African SWH market, the middle to high income market is almost exclusively HP
systems, these systems are made up of a solar collector and a pressurized tank with an electrical back up
element. The low income SWH market is dominated by LP systems, consisting of a solar collector and a
low pressure tank, typically with no back up electric element. The price differential between the two is
typically a factor of five, but high-end imported HP systems can cost as much as 10 to 15 times more than
a low pressure system.
Energy savings from SWH are derived from two sources, the equipment and how it is operated.
Poorly installed or inferior quality will have a direct consequence on the performance of the unit. Likewise,
changing usage habits to align with the sun’s heating cycle will increase energy savings significantly.
Study Objectives
The objective of the study was to frame key success factors common to internationally successful
SWH rebate programmes and compare these to what occurred in South Africa. The research identified the
events that took place and provides an international case study of the South African experience.
In 2005, Eskom introduced a Demand Side Management (DSM) Programme to reduce peak and
overall electricity demand. This programme was funded via a surcharge on the electricity tariff, which
was approved by the National Energy Regulator of South Africa (NERSA). The onus was on Eskom to
demonstrate actual electricity savings to NERSA and the rate per MW saved was fixed in advance under
the Multi-Year Price Determination (MYPD) application for annual tariff increases. In 2008, under this
DSM programme, Eskom announced a rebate for the conversion of 925 000 [2] electric resistance water
heaters to high pressure (HP) SWH in residential houses over a five-year period. This conversion was
expected to yield 3 500 GWh of electricity savings annually. In 2009, the Department of Energy (DoE)
announced the National SWH Programme that introduced low pressure (LP) SWH to the existing HP
programme and set a combined target of 1 million installed units by 2014. Both the HP and LP
programmes would be administered by Eskom, each programme administered by a separate team. In 2015,
seven years after the launch of the first programme only 102 498 HP SWH systems had been installed
under the rebate programme. In early 2015, the DoE announced that it would be taking over the HP SWH
rebate programme. By January 2016 there were no rebates available for HP SWH. The objective of this
study is to ascertain the reasons why Eskom was only able to achieve the installation of 11% of its original
target of 925 000 HP systems. Asthe LP SWH programme had a different structure, whereby the rebate
took the form of large scale free installations to indigent households, it is excluded from this study.
Research Methodology
Data and information was sourced; 1) From a review of existing local and international literature,
including published research papers; industry publications and reports and relevant government
documents. 2) Via an electronic survey to all SWH industry participants, including manufacturers;
distributors; installers; academics and any entity directly connected to the industry. The researchers had
contact details for 458 individuals / companies. In addition, the SWH industry association (Sustainable
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Energy Society of South Africa or SESSA) sent an invitation to all their members (163) to complete the
survey. There was most probably an overlap for some of these contacts, but as SESSA was not willing to
share their mailing list, this was not possible for the researchers to validate. 3) Twenty semi-structured
interviews with the primary role-players directly involved and on both ‘sides’ of the rebate programme,
i.e: design and implementation (Eskom and its consultants; the South African Bureau of Standards and
others) and rebate beneficiaries (claimants).
Literature Review of Financial Incentives (FI) and International SWH Programmes
Overview
Energy performance improvements in residential appliances are an essential part of any
Government's portfolio of energy efficiency policies. Programmes that replace cost-ineffective, energy
wasting products with cost effective, energy-efficient technologies, have been in place for many years and
are being adopted by an increasing number of countries. Programmes that aim to increase the market
penetration of efficient technologies can be voluntary, mandatory, or both. Programmes that are carefully
considered and well implemented can offer large energy savings in a cost effective manner, while still
treating all consumers equally.
The most effective way to shift the market towards more energy efficient equipment is achieved
when the available instruments, such as R&D; incentives and financing; regulations and voluntary
programmes, are used in conjunction with other policy instruments [3]. Ultimately, a successful strategy
will combine various instruments that result in a permanent market transformation.
Critical Success Factors for the Large Scale Uptake of SWH
Most appliances achieve improved energy performance as an additional feature (usually at a cost
premium), but are essentially a like for like replacement. However, programmes to promote the uptake of
SWH focus on different instruments to those used for residential appliances as the SWH, technology is
significantly different to the electric water heater it replaces, especially from the consumer point of view.
Some of these differences are;
Electric water heaters are not accessed regularly and are aesthetically unattractive to many households,
they are thus installed out of sight.
To maximise energy savings: SWH need larger tanks; usage habits must be modified or timers
installed to stop the electrical back up element from heating the water before the sun is able to do so.
SWHs are significantly more expensive and more complex to install than electric resistance heaters.
Menanteau [4] identifies three policy measures to assist the SWH market: 1) They must reduce the
barrier to investment and improve cost effectiveness (direct subsidies, low-interest loans, tax exemptions,
third-party financing, etc); 2) Regulations must compel all new buildings to install SWH; and 3) Technical
standards and quality labels must be introduced. These measures are more effective when they are
combined to create synergy between policy measures. Examples include: 1) Linking direct subsidies and
access to loans to improve cost effectiveness while limiting investment constraints; or 2) Making access
to economic incentives contingent upon the use of products with quality labels to encourage the diffusion
of high-performance installations.
A study by Jones and Mowris [5] that examined the attributes of internationally successful SWH
incentive programmes and case studies of European and American programmes, identified five best
practices to achieve success: The first is the inclusion of quality installation standards. The second
requirement is the establishment of a long term incentive programme to provide certainty to the market.
The third aspect relates to this incentive, which must be designed around system performance as opposed
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to size and cost. In fourth place, the programme must be supported by a strong marketing campaign; and
finally, contractor training and customer education should include information about comprehensive hot
water energy efficiency measures. The same study identified actions which will jeopardise a programme
and which must be avoided. Such actions include stopping and starting a programme as this causes more
damage to the industry than not having an incentive at all. Also, discussing or even announcing a future
scheme results in a decline in sales while the market delays investment until the programme is in place.
Financial Incentives
Globally, investment by residential consumers in energy efficient equipment is far below the cost
effective level [6]. Identifying and addressing the barriers to low investment is the primary objective of
energy efficiency government policies. These barriers are diverse and can vary from country to country,
but for SWH the high upfront cost compared to electric water heaters is key. In parallel to removing market
barriers, Financial incentives (FIs) can remedy some market imperfections. As energy prices paid by
consumers do not include externalities, such as environmental and social costs, FI to consumers can correct
under investment in EE [6]. The two most common approaches to structure financial incentives are
government / international agency subsidies and legislation.
Funding Financial Incentives. Incentive programmes are expensive, as they require the payment
of money for each qualifying unit sold as well as an administration cost to manage the programme. For FI
programmes to achieve the objective of transforming markets, schemes must be viable over the long-term
and this requires fixed and committed funding. Government programmes are typically funded by the
general budget, financed by taxpayers. [7] Table 2 summarises the various FI options:
Table 1: Financial Incentive Options
Direct Incentives
Tax Incentives
A tax credit reduces the taxes paid by the consumer.
Rebates
The different components of the value chain are targeted. Downstream
incentives give consumers a price reduction to purchase an EE appliance.
Midstream programmes target retailers and distributors, while upstream
programmes pay the rebate directly to the manufacturers.
Early Retirement
Programmes
Existing inefficient equipment is replaced with higher efficiency equipment
before the end of their useful life.
Indirect Incentives
Reward Programmes
Holistic programmes that promote low carbon lifestyles by raising consumer
awareness and responsibility are prevalent in South Korea and Japan.
Subsidised Loans
These can take the form of low interest government loans or On-Bill financing.
A common failing of government incentive programmes is that insufficient time, effort and
resources are allocated to evaluate their performance. This is especially true if the programme seeks to
address multiple goals emanating from different ministries. [7]
Appropriately designed FI programmes can be a cost effective way to manage energy demand
growth and if successfully implemented, can avert the need for new power stations and manage peak
demand. Additional benefits can also accrue such as jobs, competitiveness, environmental benefits etc.
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The upfront costs of funding these programmes can be recouped from taxes or other government funds. A
variety of options exist to raise these funds. FI programmes can be implemented by the government,
utilities or agencies. Success is more likely if the government shows political will through clear mandates,
dedicated and secure budgets; and long term strategies. Moreover, the programme must be carefully
designed, implemented and managed by a dedicated team with the necessary skills and financial resources.
Programme evaluation is crucial and must occur regularly with corrective action taken, if necessary.
History of SWH Industry in SA Pre and Post introduction of the rebate
SWHs have a long history in South Africa dating back to the early 1970’s. Their history is covered
in two phases. Phase I describes the period up to the introduction of the SWH rebate programme and Phase
II covers the rebate period itself.
Phase I: Pre Eskom SWH rebate Programme - 1978 to 2008
Following the international energy crisis in the 1970s, the South African Government supported,
promoted and funded the SWH industry. The market comprised six companies and by 1983 about
27 000m² of solar collectors was being installed annually Figure 1, making South Africa a world leader
[8]. The market stagnated from 1983 as government funding was decreased and later terminated. The
market decreased again after a major cold snap in the country’s biggest city, Johannesburg destroyed a
large percentage of systems when temperatures dropped to -5°C in just a few hours. This coincided with
a decrease, in real terms, of tariffs as the country shifted into an over-supply of electricity. The SWH
market stalled and the advantages of mass markets never materialised, leading to the second phase of the
industry’s evolution.
Source: Holm (2005)
Figure 1: Glazed and unglazed SWH shipments in SA (m²)
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The withdrawal of supportive policies resulted in the market collapsing [9] and stagnating to a
mere 13 000m² [10] of annual installations, where it bottomed out in 1991 (Figure 1). The demand for
unglazed collectors (98% of which are used for swimming pools) continued to grow during this period.
The World Summit on Sustainable Development, held in Johannesburg in 2002, sparked renewed
interest in renewable energy options. In the following year (2003), the Department of Minerals and Energy
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Collector area per SWH can be roughly calculated at 3-4m2. Unglazed collectors mostly refer to the plastic piping used to
heat swimming pools and are not relevant here.
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released the White Paper on Renewable Energy. In 2004, the Renewable Energy Market Transformation
Project (REMT) [11] identified SWH as a ‘low hanging fruit’ that could contribute as much as 23% to the
2013 RE target. The National Energy Efficiency Strategy (NEES) of 2005 [18] set a national voluntary
target for energy efficiency improvement of 12% by 2015 (using a 2000 baseline). The electricity supply
crisis that resulted in devastating rolling blackouts in 2007 and 2008, made better demand side
management an imperative. The renewed interest in the industry sparked some early growth: from 2005
to 2008 growth averaged 72% year-on-year [12].
As can be seen in Figure 1, the glazed SWH industry had stabilised by 2002 and started to show
signs of growth. The market was characterised by a few profitable companies, in a small but growing
market. Most of these companies operated regionally or within municipal boundaries and consisted of
importers, manufacturers and installers. Cawood and Morris [10] identified 6 market participants. Holm’s
[8] market survey identified 11 participants in 2005.
Phase II: Eskom SWH Rebate Programme
The SWH rebate programme in South Africa consists of two phases. The first is the Eskom
programme (2008-2010) and the second the national SWH programme (2010-2015). Eskom administered
both programmes.
Eskom SWH Rebate Programme 2008-2010. Within weeks of the February 2008 rolling
blackouts, Eskom launched a SWH rebate scheme as part of the Power Conservation Programme. This
SWH rebate programme aimed to convert 925 000 electric geysers to SWHs over a five-year period, to
save 3 500 GWh of electricity annually. The programme targeted middle- to high- income groups and the
programme was limited to HP. Only registered installers would qualify for the rebate and to do so, they
had to: 1) Meet minimum standards as set out by the SA Bureau of Standards (SABS); 2) SWH storage
had to better the allowable standing loss (kWh/24 hours) of electric water heaters by 25%; and 3) Have a
load control device (timer) installed by a registered electrician. Initially, the installer was required to claim
the rebate from Eskom, but this was changed to the household submitting a claim when it was recognized
that installers cash flow was adversely affected by the 6-8 week processing period. This was a positive
and necessary change as it resolved the issue for the installers and also ‘forced’ Eskom to reduce the time
required to process claims as it was now dealing directly with the public. There was no evidence to suggest
that this change had an adverse effect on the number of SWH installations.
The first year of Eskom’s rebate scheme saw little growth in market demand with less than 1 000
installations via the scheme in 2008 (South African Government, 2009a: 15-16). To stimulate demand,
the Eskom rebates were increased by 50-120% in January 2010. By stimulating demand, Eskom believed
that: 1) Prices would reduce because of economies of scale and installers reducing their margins to increase
market share; and 2) More households would participate in the programme. Once a level of critical mass
was reached that was sufficient to support the industry, the rebate would be reduced. Figure 2 shows how
Eskom was planning to implement the annual rebate reductions. The decrease would have been calculated
according to Eskom electricity increases each year [13].
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Figure 2: Eskom Rebate Plan, illustrating the expected decline in the approximate value (in South African
Rand) of the rebate per collector size, over a five-year period
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National SWH Rebate Programme. The Minister of Energy announced the National Solar Water
Heating Programme (NSWHP) in 2009. This programme had a medium-term target of installing
one million SWHs by 2014. The NSWHP implementation plan identified three residential markets based
on household income levels and current delivery of water heating services: upper income households (the
majority which have electric water heaters); middle/low income households (with and without electric
water heaters); and, low-income householders, (most of which do not have electric water heaters and some
of which do not have access to electricity). [14]. The Department of Trade and Industry (dti) estimated
that the local manufacturing industry could produce 20 000 units per annum. In November 2011, the
building regulations (SANS 10400-XA) were modified so ‘that not more than 50% of the annual volume
of domestic hot water may be heated using electricityto make the installation of SWH, heat pumps, gas
or similar mandatory on all newly built and renovated buildings. Table 2 lists the various programme
targets.
Performance of the SWH Rebate Programme
The high pressure SWH rebate programme was managed by Eskom from its launch in Q1 2008
until Q2 of 2015. To start, the rebate programme only considered HP systems for middle to high-income
households. LP systems for low income households were introduced in 2010. Table 2 summarises how
the target volumes and dates evolved during this period. When the programme was terminated in Q1 2015,
only 102 498 HP systems had been installed under the rebate programme, or 11% of the original target
including an additional two years.
Table 2: SWH Rebate programme targets
Year
Installation
Target
Target Year
Announced by
2008
925 000
2013
Eskom
2009
1 000 000
2014
Minister of Energy
2010
1 000 000
5 000 000
2015
2020
State President Official launch of
NSWHP
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ZAR EUR average annual exchange rates: 2008 ZAR12; 2009 ZAR11.67; 2010 ZAR 9.70; 2011 ZAR 10.08; 2012 ZAR 10.55;
2013 ZAR 12.82
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2015
1 000 000
2016
Memorandum of Agreement between
Eskom and DoE
Over the course of the rebate programme, the following is evident:
The target dates and volumes were changed three times.
A new technology was added.
The rebate was increased regularly and arbitrarily.
Only 11% of the original target for HP systems was met.
Prior to the announcement of the SWH rebate programme, there were less than 20 SWH
companies [8], by 2009 there were 100 companies and by 2010, once the NSWHP programme had been
announced, the Sustainable Energy Society of South Africa (SESSA), had over 450 registered SWH
members
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. However, whereas the rebate succeeded in stimulating the supply side of the SWH industry,
it failed to stimulate the demand. Companies were now competing for the same small market.
In conclusion, the rebate programme did not meet its objectives and performed poorly. The market
size was estimated at between 10 and 15 thousand units per year [8] prior to the rebate, and rebate claims
peaked in 2011 (16 650 units), but total SWH sales were higher, as SWH were also sold outside of the
programme. However, it is estimated that the sales outside of the programme was probably not more than
20% of sales on the rebate system as it is presumed by the researchers that all rational consumers would
have chosen to buy a SWH through the programme to benefit from the rebate. In addition, the slightly
increased sales volumes were now shared by a few hundred companies, as opposed to being shared by the
20 who were operating prior to the rebate. In 2015 many of the original companies, as well as companies
that entered the market because of the rebate, had withdrawn or gone out of business
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. In addition, it
appears that the SANS 10400-XA
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regulations making >50% of hot water to be sourced by non-electrical
resistance elements mandatory on newly built or renovated houses, is not contributing materially to SWH
sales either.
Evaluation of the Eskom SWH Programme
The literature review identified five best practices to achieve success [5]. Menantaneu’s call for
regulations to mandate SWH is added to this list. The proposed approach to what actually happened in the
Eskom programme is analysed in Table 23. The information has been sourced from an industry survey
and interviews.
Table 3: Comparison of identified ‘success factors’ to Eskom SWH Programme
Success Factor
Performance of Eskom SWH
Programme in relation to ‘success factor’
Research Finding
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It was an Eskom programme requirement for companies to be members of SESSA.
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All four companies that took part in the original pre-rebate pilot government SWH rebate programme suffered serious decline
in business since 2007, with one company liquidated, another closing its manufacturing section, one other forced into selling
and the last currently only focusing on the industrial and commercial market.
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This is due: 1) Municipal building control officers not being aware of the new regulatory requirements; 2) households opting for
alternate technology, such as heat pumps or gas; or 3) plans being approved subject to the installation of a SWH which is
not installed but as the houses are not inspected no enforcement takes place
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1: Quality Installation
Standards
Adherence to the national standard was a
requirement. However, the standards are
local (formulated by industry) raising
questions regarding vested interests.
International standards were largely
ignored. Component testing is not
permitted. System tests are onerous, time
consuming and expensive (> 8k / system).
As large sales volumes never materialised,
many companies could not afford to certify
all their products. The certification process
was also time consuming and unnecessarily
complex.
The national standard did
increase consumer confidence,
but as they were largely
inappropriate, they have created
new barriers. Specifically,
increased production and
administration costs.
2: Rebates must be
certain and long term
From the programme inception, Eskom
would not commit to the value or the
duration of the rebate. Industry requested
assurances on numerous occasions, but
were told that due to the funding process
requirements from the National Energy
Regulator (NERSA) this was not possible.
The rebate was:
Introduced: February 2008
Doubled: January 2010
Reduced: February 2011
Increased: October 2012
Suspended: March 2015
The effects of the uncertainty
cannot be quantified but there is
sufficient anecdotal evidence to
suggest that investments in new
SWH companies (installation
and / or manufacturing plants)
were delayed or withdrawn and
that larger companies abstained
altogether. The greatest damage
caused was to the consumer,
who received mixed and
confused messages.
3: Target system
performance to avoid
over-sized / over-
priced systems
The size of the rebate was linked to the
thermal efficiency (Q-factor) and thus the
anticipated energy saving of the system
installed [15]. Eskom was on record that
higher Q-factor will receive a higher rebate.
A 2012 Eskom survey [16] found that
although satisfied (84%), 66% could not
quantify their savings.
There was no evidence to
suggest that installers were
selling over-sized or over-priced
systems. However, 66% of all
rebate recipients were identified
as free riders i.e households
intending to install a SWH
regardless of the availability of a
rebate [16]. Having committed
to installing a SWH, they could
have 1) used the rebate to buy a
bigger system; or 2) Purchase at
the full price and take the rebate
as a ‘discount’
4: Strong marketing
campaign
The 2012 Eskom survey [16] found that
although 84% of households were aware of
the rebate programme, primarily from
media (40%), suppliers (19%) and word of
Having committed to a
comprehensive campaign, little
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mouth (17%) the communication campaign
was poor to average. The findings were
accepted by Eskom who committed to,
amongst other things, to make the campaign
more visible; focus on the high income
market rather than introducing the
technology to all sectors of the population
and; develop a specific campaign to target
the building profession.
to no action was taken. The
reasons are not known.
5: Holistic contractor
training and customer
education
Training received the necessary attention by
the Plumbing Institute Registration Board
(PIRB), and in total over 8 000 plumbers
were trained on how to install a SWH. As
sales volumes did not materialize, these
individuals were lost to the industry.
The success factor of contractor
training was met. The extent to
which customer education
materialised and energy savings
from a SWH were maximised is
not known
6: Mandatory
regulations for new
buildings
SANS 10400-XA came into effect in
November, 2011 and made it mandatory
that ‘Not more than 50% of the annual
volume of domestic hot water may be heated
using electricity’ Building plans in South
Africa are approved by local authorities,
most of who did not fully understand the
new regulations. The sector was also
adversely impacted by the global financial
crisis of 2009.
The training of building control
officers has improved since
2011 and plans are passed on the
understanding that SWH will be
installed. This is not often the
case and a lack of site
inspections has resulted in poor
compliance with the regulation.
Conclusion
In 2008, Eskom set a target of 925 000 SWH installations, equating to 3 500 GWh / annum. In
April 2012, Eskom reported that they had installed 123 408 SWH, made up of 38 731 HP and 84 677 LP.
Cumulatively they were delivering 60 GWh of savings per annum [17]. Even if no electricity saving is
assumed for LP, the resultant saving is a fraction of what was originally anticipated.
It is unlikely that this under-performance can be attributed to one factor. A comprehensive
technical study or internal Eskom monitoring and verification (M&V) reports could shed more light on
the technical performance of the installed units. Achieving energy savings from SWH is based on two
factors. The first is the unit itself where the primary requirements are: quality; installed correctly;
favourable orientation; un-obscured; and appropriately sized. The second has to do with usage. An over-
reliance on the electric back-up element will yield marginal savings. It is thus crucial that the entire
household is aware of how to maximise savings and change their habits (as much as is practically
possible). The rebate programme tried to influence usage through the requirement of a timer that
disconnected the element during morning and evening peaks. These timers are easily changed or bypassed
by households, resulting in sub-optimal savings.
From this research, it is concluded that the rebate programme in its current format was ineffective
and should be withdrawn. Should the government of South Africa decide to re-introduce a FI for SWH,
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the recommendation is that this new programme is carefully planned, considers the weaknesses of the
previous programme and takes appropriate steps to address them. At a minimum:
National standards require a review to make them relevant and affordable.
The rebate must offer a net decrease in the price of the SWH. Should additional programme
requirements add to the cost of a SWH, this should be taken into consideration.
The programme must have committed funding for a pre-specified period of time, ideally for 5
years.
The FI should not be arbitrarily increased and decreased the market seeks surety, stability and
certainty.
Consumer awareness and marketing should be substantially increased. This was possibly the
biggest weakness of the rebate programme, as per the Eskom survey [12] and substantiated by the
research findings .
Agree to the level of involvement with industry associations upfront and build a relationship based
on trust. Recognise the role they can play and the funding challenges they face, especially when
all their members are SMEs.
Consider international experiences and learn from these. International agencies can also provide
valuable assistance.
A rebate programme requires a robust M&V and feedback programme to confirm actual savings
and provide information for the project team.
Rebates for HP SWH are not required in South Africa. If there is funding available that has been
specifically allocated to HP SWH, our recommendation is that it would be better spent on
comprehensive market awareness programmes.
The findings of this research, which may benefit SWH rebate programmes being planned in other
countries, is a strong recommendation for the programme design planning to carefully consider
international best practise and lessons learned, while ensuring that the programme has sufficient flexibility
to introduce changes if weaknesses are identified.
References
[1] Eskom, Annual Report 2012, 31 March 2012 www.eskom.co.za/c/84/annual-report/. A
summary annual report can be downloaded at: www.eskom.co.za/content/AnnualResultsfinal~1.pdf.
Accessed December, 2014.
[2] Eskom (2009): Eskom Solar Water Heater Rebate Programme
http://active.cput.ac.za/energy/past_papers/DUE/2009/PPT/Presentation%20-%20Worthmann%20C.pdf
[3] Wiel, S. McMahon, J (2005): Energy Efficiency Labels and Standards: A Guidebook for
Appliances, Equipment and Lighting. CLASP
[4] Menanteu, P. (2007) Policy measures to support solar water heating: information, incentives
and regulations. ADEME and World Energy Council
[5] Jones, e. and Mowris, R. (2010) California’s solar water heating programme: Scaling up to
install 200,000 systems by 2020 ACEEE
12
[6] de la Rue du Can, S; Shah, N. and Phadke, A. (2011) Country review of energy efficiency
financial incentives in the residential sector. Lawrence Berkeley National Laboratory
[7] de la Rue du Can, S; Leventis, G; Gopal, A; and Phadke, A. (2013) Design of incentive
programmes for accelerating the penetration of energy efficient appliances. Science Direct
[8] Holm, D. (2005): Market Survey for Solar Water Heating in South Africa. Energy Development
Corporation
[9] Prasad, G. (2007) Case 19: Solar water heaters. Energy Research Centre University of Cape
Town
[10] Cawood, W and Morris G. (2002) Baseline study solar energy in South Africa. Department
of Minerals and Energy Pretoria. Capacity building in energy efficiency and renewable energy Report No:
2.3.4-13
[11] World Bank (2004) South Africa: Renewable Energy Market Transformation Project.
Connigarth Economists
[12] Theobald, S and Cawood. W. (2009) The South African solar water heating industry. A report
based on a survey commissioned by Eskom Distribution
[13] Eskom (2010) Eskom Rebate Increase Announcement (Letter to Eskom solar programme
participants)
[14] Afrane-Okese. Y (2009) Development of the South African National Solar Water Heating
Strategy and Implementation Plan. Department of Energy. Presentation at the SWH Conference on 5
November 2009
[15] Eskom (2009) Solar Water Heating Rebate Programme Presentation by Cedric Worthman
[16] Eskom (2012) Solar Water Heater Customer Behaviour and Satisfaction Survey Study funded
by Eskom IDM. Report available from authors
[17] Eskom (2012) An overview of Eskom’s view of energy efficiency and programmes available.
Andrew Etzinger
[18] Government of South Africa (2005): National Energy Efficiency Strategy of the Republic of
South Africa http://www.energy.gov.za/files/esources/electricity/ee_strategy_05.pdf
... The DoE estimated that 23% of this target can be met through the implementation of SWH [11], [15]. However, research also highlights the success and failures of the SWH initiative in South Africa and the failures of the programme were attributed to several factors [9], [11], [17], [20], [22]. ...
... The DoE further reported that the efficiency of imported products declined due to poor and low performance in local climatic conditions [11]. Although the SWH provide hot water at no energy cost [16], the system and how it is operated determines the energy savings [22]. A poorly installed SWH system will have a direct impact on the performance of the system [22]. ...
... Although the SWH provide hot water at no energy cost [16], the system and how it is operated determines the energy savings [22]. A poorly installed SWH system will have a direct impact on the performance of the system [22]. ...
Conference Paper
Full-text available
The heating of water for domestic purposes is an important component of human daily activities, especially during cold weather conditions. In South Africa, it is estimated that households spend an average of 40% of their electricity on domestic water heating alone. This alone threatens energy affordability and access due to the high cost of electricity. The South African government seeing that the majority of low-income households do not afford electricity, introduced solar water heating (SWH) geysers as a possible affordable energy alternative technology. The massive roll-out of the solar water geysers began in 2008 managed to install 443 486 SWH geysers. The aim of the desktop study was to evaluate the implementation of the strategy and ends by investigating the effectiveness of the SWH geysers on reducing household grid energy demand between 2009 and 2017. The results indicated that the failures of the SWH geysers programme were attributed to the quality of the installation, lack of training and maintenance, lack of standards for the testing of SWH geysers and inadequate public awareness. The successes of the programme included the introduction of the SANS 10400-XA, reduction in the use of paraffin and wood and a stabilized grid. The implementation of the SWH was a good step towards renewable energy and diversifying the energy mix in the country. However, the study recommends that the failures of the programme be addressed to ensure further success and sustainability of the programme.
... As geysers account for up to 40% of a household's total electricity bill, solar geysers can lower electricity demand and offer hot water during power outages. Unfortunately, after almost half a million solar geysers were installed, the programme was terminated, as it was deemed ineffective in stimulating demand (Steyn, 2015;Kritzinger and Covary, 2016). The subsidy scheme was part of South Africa's alternative sources of energy strategy, which included hydro, gas, solar, nuclear, centralized solar plants and wind (Department of Energy (DoE), 2013). ...
Article
Full-text available
Despite rolling blackouts, high electricity prices, a favorable climate and the size of the South African economy, rooftop photovoltaic (PV) solar products have low levels of middle-income residential market penetration. This study sought to establish the reasons for this. It was found, firstly, that households opt rather for demand side management (DSM) tools such as energy-efficient lamps or inverters. Secondly, they switch to gas (at least for cooking) or a generator rather than solar. This is because rooftop PV is expensive, in part due to costly batteries and inverters, but also as support measures such as feed-in tariff funding, tax rebates and subsidies are non-existent. In addition, South African banks are reluctant to finance rooftop PV, as return on investment (ROI) is extremely long term, and there are few, if any, bank-accredited PV suppliers. There is also no political pressure on banks to provide attractive PV financing. Furthermore, middle-income consumers struggle to understand PV technology and do not trust the suppliers thereof. For instance, rooftop PV companies seldom market themselves or their products adequately, and most do not sell PV with a maintenance service plan or offer credit. It is recommended that rooftop PV companies work with banks offer innovative, cost-effective modular PV packages, and build their brand to create a relationship of trust with the community to increase sales.
... Auxiliary heaters, which were the primary heating choice, significantly contributed to the high demand for peak power and regular power rationing. This program was supposed to save 3,500 GWh of electricity per year, but Eskom could only complete 11% of the project after seven years [9]. ...
Article
Full-text available
A solar water heating system is a device that takes energy from the sun radiation to raise the water temperature for use of water supply in the home. Water heating is the second-largest household electricity user. Replacing EWHs with a SWHs with an electrical backup can reduce electricity usage. An experimental setup and POLYSUN program were used for a simulation-based approach for evaluating the comparison between (SWHs) and (EWHs) for three different cities in the Kurdistan region of Iraq. The investigated setup consists of a flat plate solar water heating system with a total area of 2.01 m² and a 200 L storage tank, and it suits a single-family house composed of four people. The numerical simulation results reveal that the use of SWHs decreases substantial energy consumption. For Duhok, Erbil, and Sulaymaniyah cities, the annual saved energy is 1365 kWh, 1383 kWh, and 1459 kWh, constituting a solar fraction of 39.4%, 40.4%, and 34.2% with an annual CO2 reduction of 771 kg, 781 kg, and 824 kg, respectively. The experimental work was also conducted in January 2021 in Erbil City, in the Kurdistan Region. A comparison of electricity consumption between SWHs and EWHs was demonstrated.
Article
In many countries, especially those that produce petrol, electricity consumption is often subsidized. This policy leads to very low electricity costs and precludes the widespread use of solar water heaters, which have proven to be economically viable and are extensively utilized in other countries. Herein, we propose a new demand-side planning methodology to deal with such cases and perform an experimental finding–based economic assessment to study the feasibility of reducing subsidies in return for providing brand new solar water heaters to consumers. Specifically, solar water heaters are proposed to be supplied and installed free of charge as part of a demand-side management program in the Erbil province (Kurdistan region, Iraq). Assuming a duration of ten years, we show that the proposed project has a net present value of approximately US$776.6 million and requires an investment of US$90 million, further demonstrating that the successful launch of this project should dramatically reduce the winter peak load of 54 MW.
Article
Full-text available
Incentives are policy tools that sway purchase, retail stocking, and production decisions toward energy-efficient products. Incentives complement mandatory standards and labeling policies by accelerating market penetration of products that are more energy efficient than required by existing standards and by preparing the market for more stringent future mandatory requirements. Incentives can be directed at different points in the appliance׳s supply chain; one point may be more effective than another depending on the technology׳s maturity and market penetration. This paper seeks to inform future policy and program design by categorizing the main elements of incentive programs from around the world. We identify advantages and disadvantages of program designs through a qualitative overview of incentive programs worldwide. We find that financial incentive programs have greater impact when they target highly efficient technologies with a small market share, and that program designs depend on the market barriers addressed, the target equipment, and the local market context. No program design is inherently superior to another. The key to successful program design and implementation is a thorough understanding of the market and identification of the most important local obstacles to the penetration of energy-efficient technologies.
Article
Full-text available
Energy-performance improvements in consumer products are an essential element in any government's portfolio of energy-efficiency and climate change mitigation programs. Governments need to develop balanced programs, both voluntary and regulatory, that remove cost-ineffective, energy-wasting products from the marketplace and stimulate the development of cost-effective, energy-efficient technology. Energy-efficiency labels and standards for appliances, equipment, and lighting products deserve to be among the first policy tools considered by a country's energy policy makers. The U.S. Agency for International Development (USAID) and the United Nations Foundation (UNF) recognize the need to support policy makers in their efforts to implement energy-efficiency standards and labeling programs and have developed this guidebook, together with the Collaborative Labeling and Appliance Standards Program (CLASP), as a primary reference. This guidebook was prepared over the course of the past year with significant contribution from the authors and reviewers mentioned previously. Their diligent participation has made this the international guidance tool it was intended to be. The lead authors would also like to thank the following individuals for their support in the development, production, and distribution of the guidebook: Marcy Beck, Elisa Derby, Diana Dhunke, Ted Gartner, and Julie Osborn of Lawrence Berkeley National Laboratory as well as Anthony Ma of Bevilacqua-Knight, Inc. This guidebook is designed as a manual for government officials and others around the world responsible for developing, implementing, enforcing, monitoring, and maintaining labeling and standards-setting programs. It discusses the pros and cons of adopting energy-efficiency labels and standards and describes the data, facilities, and institutional and human resources needed for these programs. It provides guidance on the design, development, implementation, maintenance, and evaluation of the programs and on the design of the labels and standards themselves. In addition, it directs the reader to references and other resources likely to be useful in conducting the activities described and includes a chapter on energy policies and programs that complement appliance efficiency labels and standards. This guidebook attempts to reflect the essential framework of labeling and standards programs. It is the intent of the authors and sponsors to distribute copies of this book worldwide at no charge for the general public benefit. The guidebook is also available on the web at www.CLASPonline.org and can be downloaded to be used intact or piecemeal for whatever beneficial purposes readers may conceive.
National Energy Efficiency Strategy of the Republic of South Africa http
  • Andrew Etzinger
Andrew Etzinger [18] Government of South Africa (2005): National Energy Efficiency Strategy of the Republic of South Africa http://www.energy.gov.za/files/esources/electricity/ee_strategy_05.pdf
Development of the South African National Solar Water Heating Strategy and Implementation Plan. Department of Energy. Presentation at the SWH Conference on
  • Afrane-Okese
Afrane-Okese. Y (2009) Development of the South African National Solar Water Heating Strategy and Implementation Plan. Department of Energy. Presentation at the SWH Conference on 5 November 2009
  • Eskom
Eskom, Annual Report 2012, 31 March 2012 www.eskom.co.za/c/84/annual-report/. A summary annual report can be downloaded at: www.eskom.co.za/content/AnnualResultsfinal~1.pdf. Accessed December, 2014.
Policy measures to support solar water heating: information, incentives and regulations
  • P Menanteu
Menanteu, P. (2007) Policy measures to support solar water heating: information, incentives and regulations. ADEME and World Energy Council
California's solar water heating programme: Scaling up to install 200,000 systems by 2020 ACEEE
  • E Jones
  • R Mowris
Jones, e. and Mowris, R. (2010) California's solar water heating programme: Scaling up to install 200,000 systems by 2020 ACEEE
Market Survey for Solar Water Heating in South Africa
  • D Holm
Holm, D. (2005): Market Survey for Solar Water Heating in South Africa. Energy Development Corporation
Baseline study -solar energy in South Africa
  • Morris G Cawood
Cawood, W and Morris G. (2002) Baseline study -solar energy in South Africa. Department of Minerals and Energy Pretoria. Capacity building in energy efficiency and renewable energy Report No: 2.3.4-13
South Africa: Renewable Energy Market Transformation Project
  • World Bank
World Bank (2004) South Africa: Renewable Energy Market Transformation Project. Connigarth Economists