SPECIAL FOCUS
Renewable
energy for
low-cost
housing is
in crisis
I
n June this year, Deputy President
Cyril Ramaphosa addressed the
AGM of the Black Business Council,
discussing South Africa’s economic
progress over the last 20 years. He
chose to highlight the solar water
heating industry as one example of a
manufacturing success story.
“In 2008 there was very little or no local
manufacturing to support the production of
solar water heating panels. Today we have a
thriving solar water heating manufacturing
industry. More than 60% of the content
towards solar water heating panels is locally
produced,” he stated.
While this story is often mentioned by
municipal and national government as a
shining example of how South Africans
have taken our unique characteristics and
built a working model that can be replicated
around the world, in truth, the solar water
heater industry – which was once poised
for success – is stagnating. And it’s all
because of a small problem with the official
definition of what constitutes a solar water
heater.
The heaters in question are the lowpressure systems that were being installed
as part of a mass roll-out by government
Solar heating has become a major focus of renewable
energy projects for low-cost housing. Unfortunately,
not a single solar water heater has been installed for
nearly two years under the Department of Energy and
Eskom programmes, and the industry is at a standstill.
By Georgina Guedes
to low-cost housing around South Africa
(higher income homes pay for and install
high-pressure geysers and receive an
Eskom subsidy). As water heating is one
of the biggest drains of electricity in any
household, it has received the greatest focus
among renewable energy projects.
According to the Preferential
Procurement Regulations, all low-pressure
solar water heaters had to be 70% locally
manufactured to receive approval for
installation. This shouldn’t have presented
a challenge, as 80% of the parts of the
low-pressure heaters in production were
manufactured locally, except for a small
problem with definitions.
The Department of Trade and Industry
(dti) informed National Treasury of a
definition of solar water heaters that broke
the geysers down into two component
parts. The way that the definition was
interpreted meant that 70% of both
components had to be manufactured
locally. And that’s where the problem lies.
The evacuated tubes (EVTs), which make
up only 20% of the total solar water heater,
are manufactured mainly in China. South
Africa cannot cost effectively make these
parts here.
“The raw material – silica sand – would
need to be imported into South Africa,” says
James Green, Chairman of the Sustainable
Energy Society of Southern Africa’s Solar
Water Heating division. “The cost of a
complete EVT is cheaper imported, than
the parts imported and effectively glued
together, as the complete unit is subsidised
by the Chinese government.”
In light of this, it is not possible for this
component of a solar water heater to be
manufactured locally, and even though the
remaining 80% can be, the dti definition
doesn’t allow for this. What seems like a
tiny ribbon of red tape has brought the solar
water industry to a standstill.
AN INDUSTRY IN CRISIS
“The market is in a state of total stagnation,
and is turning rapidly into a cadaver,” says
Green. “It is catatonic as the result of interministry fighting. Since the end of 2012, not
a single low-pressure solar water heater has
been installed in a low-cost house, around
250 companies have gone bankrupt and up
to 6 000 people have lost their jobs.”
Never mind the crippling loss to the
individuals and companies involved, this
inactivity is hobbling government’s ability ▶
Edition 12 | BANKERSA
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