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Complacency, opportunism and self-interest are behind government’s’ lack of innovation with thermal solar heating. Why else would it give State entities, for which this potentially massive job creating technology represents a direct competitive threat, the responsibility for rolling it out? It’s a compelling argument this author puts forward, one backed by everything we know about current cynical Zuptoid-led government behavior. The opportunism comes at election time when hugely cut-rate solar thermal heaters are offered to communities, the self interest in the way in which tenders are usually granted and the complacency is about our abundant coal and uranium reserves. Like electricity, why would they ever run short? And why change from coal-fired power stations when the provider tender kickbacks can gain you a lifetime of credit from Gupta-owned entities, not to mention a suddenly swollen bank account? Solar-powered thermal heating can create tens of thousands of jobs and save people money, not to mention being planet-friendly. One has to ask why we have just 2% solar energy penetration in South Africa compared to 50%-90% in comparable countries? – Chris Bateman.
By Chuck Stephens*
Why Is Solar-Thermal Failing?
Several questions have been perturbing me of late. Ask yourself these questions the next time you notice a lot of solar water heaters on all the rooftops of some neighbourhood:
- Why is a country with such an ideal climate for Solar energy stuck at less than 2% penetration? (When countries with similar sunny climates like India and Australia have reached 90% and 50% levels respectively?)
- Why are most of the 400 000 solar water heaters that have been installed so far, on the rooftops of RDP houses? Since when are the poor worrying about Climate Change?
- Why has the most efficient Solar technology failed to take off in the midst of global pleas for the planet to “Go Green”?
- Every time the subject of Unemployment comes up, the accepted panacea seems to be Training or “skills development”. Knowing that a Solar Fitter can be trained and certified in less than 2 weeks, why aren’t the parking lots outside hardware stores filling up with them – like the ubiquitous Tilers?
First a distinction must be made between “solar-thermal” and “solar-electric”. Both of course tap sunshine, but “thermal” means the source of energy to heat water is the sun’s heat. Whereas in “solar-electric”, energy is derived from the sun’s light, and converts that into charging power for your cell phone or an “off-grid” lighting system.
In other words, “solar-electric” generates electricity. But “solar-thermal” saves electricity. But then, “a kilowatt saved is a kilowatt earned”!
The story of “solar-electric” is another one altogether. It is getting more news coverage these days because Eskom is resisting buying the power generated by Renewable Energy producers (REEEIPs). But the “solar-thermal” niche is narrower – it has no prospect of on-selling surpluses into the grid. It simply heats water for your house, thereby saving you a lot of money.
The savings varies from RDP houses up to middle-class homes:
- The average RDP homes uses 400 kilowatts of electricity per year. In monetary terms this translates to about R600 or R50 per month. The knock-on effect is that those homeowners can spend more of their income on other needs. This is the main social benefit of these SWHs.
- There is the additional socio-economic benefit of time-saving. Because heating your bath-or-shower-water in a kettle or on a stove takes a lot of time. So this frees up time for the household as well as money.
- For a middle-class homeowner who buys a Solar Water Heater, once it is paid off, the savings are even more. They get free water heating for about 20 years thereafter! In such calculations, the money saved on electricity during the first 4 years or so, pays off the appliance. Then you free up a lot of spending money, maybe R600 – R1000 a month!
Often, people with larger homes like to have a hot bath when they get home from work. So aside from overall savings – from Eskom’s perspective – the “peak load” in the evening is reduced too. This is another important benefit for the country. There is an “evening peak” or “spike” of demand, and from Eskom’s perspective, heating water by “solar-thermal” helps – not all day long, but to get over this daily “surge”.
The truth is that a LOT of electricity can be saved. Thus the National Development Plan calls for a 50% density (i.e. one home out of two) by 2030. This frees up electricity for other national priorities.
There are also some HUGE environmental benefits. Because it takes over 2 tonnes of coal to generate enough electricity to keep one electric geyser heated for one year. So in the 25-year life-span of a SWH, one homeowner can reduce South Africa’s carbon footprint by 50 tonnes. Just think of the multiplier effect on this when you think of the NDP’s benchmark of 50% density! Six million homes (i.e. 50 percent) x 25 years x 2 tonnes per year is 300 million tonnes of coal! Of course coal is not the problem, but carbon.
There is no other function in the household that exceeds water heating in terms of energy consumption (this varies from 35% to 60%). So the single “silver bullet” to cut carbon emissions – if there is one – is to “convert” domestic geysers from coal-generated electricity to “solar-thermal”.
Every kilowatt-hour generated by an electrical geyser produces 1 kilogram of carbon, and utilizes 1 litre of water. So there are water-savings as well as the reduced carbon footprint.
A related point is that there are different tariffs for domestic, industrial, etc. In the context of load-shedding, domestic tariffs get hit relatively hard by the stopping-and-starting.
At the moment, Eskom has some small surpluses, so excessive Demand is not squeezing Supply like it was during that period of load-shedding. But that can turn around quickly. For example, if Kariba Dam falls, and takes out Caborra Bassa with it. In that domino-disaster scenario, South Africa would lose 5 percent of its Supply overnight. Load shedding would be back. The good news of solar-thermal is that load-shedding or not, you will always have hot water waiting for you when you get home from work!
There are other economic benefits associated to going “solar-thermal” as well:
- A very few jobs created in the factories that produce these devices
- Installation work by “solar fitters” – a vocation in between Plumber and Electrician – has the potential to provide sustainable jobs for thousands of unemployed youth
- Export to a few African countries (SABS standards are very high, so competitors from other countries under-bid our products. But ours are known for their quality.)
In fact, to oversimplify, there are about 12 million homes in South Africa. About 400 000 homes are already converted (less than 4%). So to reach the 50% threshold we need to convert another 5.5 million homes. At about R12 000 per installation that comes to over R50 billion. Between now and 2030! That is about R9 billion per province. That should start a kind of gold rush, but a number of factors are restraining that from happening:
- So far, roll-out has been supply-driven. Government will get resources from a donor, or draw from its own budget, and then tender from 10 000 to 15 000 units in one contract. This basically has the same effect as distributing free imported food aid in a famine area – on the local farmers. It is a disincentive, and although hungry people do get to eat, it has a detrimental effect on farming that proves difficult to correct when the rain returns.
- We all know that problems emerge around the “tenderpreneurs”. This “bulk” approach to roll-out is no exception. In this case, though, it was not so much about tender rigging or inflated pricing, as it was about cutting corners. Sadly, this in turn gave solar-thermal devices a bad name. “You never get a second chance to make a first impression.” The fact is, it is far better to use the one-installation-at-a-time demand-driven approach that creates a niche market and is much easier to regulate.
- There has been some level of “tied aid”. That is, donations from partner countries for the conversion to Solar, that come with strings attached – like that hardware from their country must be used in roll-out.
- The low volumes of this niche market work against the local-content proportion. For example, manufacturing “evacuated tubes” in South Africa would require investment levels that exceed by far what demand levels presently support. In fact, about 75% of the models approved by SABS are imported.
- Government put entities in charge of this “silver bullet” who by nature have no reason to want it to succeed. For example, Eskom handled the Rebate that was offered courtesy of the Department of Energy – until it was suspended. Why would a butcher sell beans? Why would a brewer sell soft drinks? Why would a vegetarian sell meat? Eskom’s core business is to sell electricity, so what incentive did it ever have to make a success out of the roll-out of devices that reduce consumption? The rebate payments from Deloittes were delayed to the point of giving “solar-thermal” a bad reputation that it does not deserve.
- The same can be said of local municipalities. The only money-spinner they have is selling electricity. So they do not share the excitement that green activists have to lower our carbon footprint by saving electricity, or that economists have that sustainable jobs are created mostly by small businesses (like “solar fitters”).
Is there any economic activity that doesn’t boil down to the political phenomenon of patronage? (That’s why they call it “crony capitalism”, neh?) Carte-blanche roll-out is impressive and most of the credit to date has been enjoyed by the ruling party.
Letting a sustainable industry grow takes too much time and is relatively “invisible”. However, this “quick-wins” strategy is back-firing and voters could punish government in 2019 for the high unemployment rates that result from their tendency towards centralized control. The municipal elections last year suggest that voters are looking for a new way of thinking?
Perhaps the biggest bottleneck of all to the roll-out of “solar-thermal” is that confusion reigns about who is leading the charge? It almost seems like everyone assumes that someone else is. So no one is!
- We visited Department of Human Settlements in Pretoria. As they drive the RDP housing, we supposed that they would also know a lot about “solar-thermal”. DHS has four buildings in Arcadia. But there is not one desk or salary devoted to solar water heating. DHS claims that 4.2 million RDP homes have been built (that would be one-third of all the homes in South Africa). About 10% of them have already been fitted with “solar-thermal”. By following existing policy, government could just keep ignoring the other 8 million homes, even though they constitute a HUGE opportunity for unemployed youth. This opportunity will not “click” if they keep on contracting 10 – 15000 in each tender.
- Department of Energy has suspended the Rebate – giving all the more advantage to the approach of mass tenders. Whereas the demand-driven approach would be more sustainable in the long run. Having said that, no one has made a killing in this niche market so far, and a lot of actors have gone out of business.
- So DOE needs to re-think how to present incentives to drive a niche market. Unless its real interest is just to bless voters in the run-up to the 2019 elections? “A politician thinks of the next election; a statesman thinks of the next generation.” Government needs to replace its top-down approach. The problem of this so-called “trickle-down” model – from those “whose cup runneth over” to the less fortunate – (according to Pope Francis) is that the “cup” keeps getting bigger.
- The Department of Environmental Affairs has had its mind on Climate Change issues, but not to the exclusion of Job Creation. It has recently woken up to the fact that someone in government needs to lead the charge. However, DEA’s rationale is ultimately the War on Carbon, not the War on Unemployment and Inequality.
- The Department of Small Business Development and its new SEFA bank could help “solar fitters” with start-up support. However, this will only work if government makes an intentional, overall commitment to adopt the demand-driven approach. Not to using SWHs for electioneering.
- Eskom is distracted by other priorities and never was a logical driver for ‘solar-thermal”. It is even resisting wind turbines and “solar-electric” (i.e. REEEIPs) that can add value to the grid. Eskom should leave SWHs alone because these are at odds with its core business.
- Local municipalities should also decline to engage in SWH roll-out, to be consistent with their desire to sell electricity. They can however support Job Creation initiatives especially for youth.
- The Energy and Water SETA has taken steps to train unemployed youth how to be “solar fitters”. But installers need more than training to make a successful start-up. They need tools, credit for their customers, and affordable/reliable hardware to make a go of it. So who are the other actors that can combine forces with training?
- Provinces and Districts could also try to re-jig the allocation of resources in their constituencies into this niche market – in the direction of youth unemployment and micro-enterprise development. Speaking of provinces, it would be most fitting for these changes to emerge from Mpumalanga province – the carbon belt where 18 coal-fired plants generate 80 percent of the electricity for South Africa. And where the watershed is, where rivers rise to flow out in all directions.
- Coalition and opposition governments can champion this alternative strategy. They should not get in an auction mentality to see who can run the biggest or even “cleanest” tenders. Adopt the demand-driven approach.
- International Donors like the German Development Service can channel support to foster the emergence of Financial Cooperatives devoted to narrow niches like “solar-thermal”. Similar entities in Germany made huge contributions to its economic development over the past several centuries.
- National Entities like DBSA, IDT, Green Fund and Jobs Fund should champion the demand-driven approach, by placing resources at the disposal of non-state actors.
- NGOs like SESA (Solar Energy South Africa) can increase public awareness.
A whole new approach is required to capture the HUGE potential of “solar-thermal”. It has the potential to concurrently address diverse issues like:
- Youth unemployment
- The energy crisis
- Freeing up spending money and time
- Climate change
- Citizen participation
Simply put, converting from electrical to solar water heating is nothing less than an act of good citizenship. We should all do it. For our own good. And for the good of our planet. Like quitting smoking, or fastening our seatbelts. Government should be creating an enabling environment for us to do so, instead of getting in the way.
A key factor inhibiting the growth of “solar-thermal” (and also at home “solar-electric” for that matter) is that both National and Local government do not prioritize such disruptive technologies to be part of South Africa’s energy mix going forward. They are ignored as they are perceived to be at odds with opportunities for exploiting large coal, nuclear, gas (fracking) or even renewable energy generation. Saving consumption is not ranked up there with generating energy, for some crazy reason.
If South Africa did not have the natural resources in abundance, (e.g. coal, uranium) they would be forced to consider “solar-thermal” more seriously in the same way as Israel and Cyprus, where it is law to have solar on every home.
- Chuck Stephens is the executive director of a nonprofit organization called the Desmond Tutu Centre for Leadership, based in White River, Mpumalanga.