Wendy Engel
Worldwide Fund for Nature, South Africa
Nicole Wagner
Western Cape Department of Agriculture, Agricultural Economics Services
S
outh Africa’s (SA) globally
recognised export focused
Fruit and Wine industry
relies heavily on electricity
in farming and processing activities.
Hence this industry has been significantly impacted by year on year
electricity cost increases ranging
from 7% to 31% from 2008 to
2013 and beyond. Recognising
these challenges, an innovative sustainable agriculture partnership between an NGO called the World
Wide Fund for Nature (WWF) SA
and private commercial bank
Nedbank; aimed at designing incentives to enable behaviour change
towards wider scale adoption of
sustainable agriculture practices
promotes and supports wider
adoption of renewable energy in
this industry. This Partnership together with support from Western
Cape Department of Agriculture
provided an entry point for sources
of data collection in a study to determine current solar (photo voltaic)
PV market uptake in SA agriculture,
identify key factors that inform decision to install solar PV in Fruit and
Wine sector and to better under-
stand role of finance to improve
adoption of solar PV.
Study results show current incentives fall into categories of cash
grants, tax incentives, preferential
debt tenors and interest rates offered by commercial banks and development finance institutions as
well as free technical advisory services. Survey responses indicated
that debt financing from banks and
the use of own equity were the
main sources of financing for installing solar PV. It was also noted
that reducing energy costs was the
main driver for solar PV installation
(46%). Further survey responses
suggested a lack of knowledge or
information on benefits of solar PV,
payback periods, awareness of free
energy audits, tax incentives and
available .
The study highlighted the need for
an improved information exchange
protocol within different banking
divisions to provide clarity and communicate clearly on solar PV financing solutions in terms of loan due
diligence requirements, debt tenors
and interest rate to prospective agriculture clients.
The study further suggested potential for leveraging non-technical
solutions such as energy audits,
portal to access key information
and exchange with other clients for
e.g. chat room or email list serve,
information or exhibition days with
technology providers, technical advisory service and extension services
to improve uptake.
An improved understanding of the
determinants of demand is critical
to developing incentives to enable
wider scale adoption of renewable
energy to reduce production cost,
enable farmers to lower their carbon footprint which has increasingly become a market access requirement for export markets and support development of shift to diversified energy mix and green economy.
For more information, contact:
Wendy Engel
[email protected]
Nicole Wagner
[email protected]
(Paper available upon request)