Solar water heating sector on ice

A solar water heater on the roof of a rural house. Picture: Simphiwe Mbokazi

A solar water heater on the roof of a rural house. Picture: Simphiwe Mbokazi

Published Jan 24, 2015

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The sun is no longer shining on South Africa’s solar water heating industry, which has had to shed nearly 6 000 jobs and has been branded a “cadaver”.

This has been blamed on technical red tape by the government that deals with the percentage of local content required in the manufacture and procurement of low-pressure solar water heaters, and the “inefficiencies” of Eskom.

The result is a sector that has become “catatonic” in the past 18 months, with more than 30 000 units sitting in mothballed factories, says James Green, the chairman of the solar water heating division at the Sustainable Energy Society of Southern Africa.

The society represents more than 400 companies in the sector.

Green says rules introduced by the Department of Trade and Industry in 2012 are responsible for the problems.

The tank and the collector tubes, which absorb the sun’s radiation and warm the water, must comprise 70 percent local content.

This disqualifies nine in 10 manufacturers of low-pressure solar water heaters.

The sector for high-pressure systems has also been hit hard – by a government decision to discontinue the rebate.

Green believes the industry “has been destroyed by red tape completely unnecessarily”.

The department amended the content specifications in June, but “this did nothing to resolve the issues”.

The government had planned to roll out one million solar water heaters by March this year. Only 400 000 have been installed – the bulk as part of the low pressure solar water heater scheme programme. “But rather than thriving, the industry is a cadaver.”

Since the end of 2012, not a single low-pressure solar water heater had been installed because of the rules.

“In the previous two years, 300 000 were installed. In the high-pressure market, only 30 000 have been installed in the past two years,” said Green.

In 2013, however, a contract was awarded to City Power to provide 120 000 low-pressure solar water heaters in Gauteng.

The government hopes to install 4 million solar water heaters by 2030.

In 2012, Eskom – the managers of the solar water heater programme – invited tenders for the low-cost systems, but none complied with the local content rules.

Eskom cannot deviate from this rule, says spokesman Andrew Etzinger.

He disagreed that Eskom had managed the programme inefficiently. “The proof of the pudding… is that at the height of our programme, we created 8 000 jobs and were installing 30 000 solar water heaters a month.”

It is “widely understood” that few suppliers, if any, can comply with the local content rules, Etzinger says.

Green says that in a survey of 100 respondents in the sector, Eskom’s performance was rated as “poor” and “very poor” in every category, from programme management and communications to technical expertise and administration.

The department has said it believes there are several companies that can comply with the local content procurement rules, which are to remain in force – at least until June.

“Small and medium businesses and black solar water heater installers around the country have, almost without exception, gone into liquidation,” Green says.

“Many people have been bankrupted, lost their homes and investments. Hundreds of people who have been trained to install have been laid off.

“These were the same people who responded to government policy to do one million solar water heaters, but this was stopped because of Eskom’s inability to get tenders out in the marketplace and the (department’s) ruling.”

The Electricity Governance Initiative said in 2013 that the demand for solar water heaters “has not grown at the same rate as the supply in the industry. Something needs to be done to stimulate the demand side of the market… for substantial market growth to occur.”

One black-owned manufacturer and installer, who did not want to be named, spoke of her frustrations.

“We’ve all had to downscale. There’s nothing happening in the industry because of all this bureaucracy,” she said.

“We were told this was a lucrative, booming industry. Now we are sitting with stock and we don’t know where we’ll get the orders from. We’ve had to get rid of people we’ve employed. We also went into this industry to save the environment and help Eskom, but now they are killing us.”

- Saturday Star

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