Why is solar water heating a failure in SA?

By James Green, CEO of Ubersolar and member of the SESSA Council

The biggest problem is money.

With over eight million electric geysers, an almost perfect climate for solar, a huge solar product range to choose from, and rising electricity prices, how is it possible that South Africa has achieved less than 2% conversion to solar water heating?

Perhaps equally important questions are why is the government hell-bent on going nuclear when water heating consumes 18% of Eskom’s power output and even more during the evening peak periods? When removing power off the grid is far cheaper, more efficient, has greater socio-economic uplift, more job creation opportunities, and can be one of the biggest contributors to saving carbons and climate change mitigation? 

These are some big questions, which, while there are several contributing factors to the answer, all boil down to one key area: money.

Eskom, as the country’s major power generator and distributor, wants to keep control and sell as much electricity as it can. It is their raison d’être. Saving energy is not in their interest and when power-saving campaigns have been launched (2008–2014), it was only ever to help them meet their evening peak constraints (MW peak) — not to save consumption (GWhs).

The recent and ongoing fight between Eskom and the large-scale renewable wind and solar electric farms comes down to their financial models. Why connect these renewable projects to the grid when (now that Eskom has a surplus of power) they can supply coal fire generated kWh and make a profit from it. Clean energy is, despite anything Eskom says, in conflict.

End user renewables, solar water heaters, and solar electric generation (photovoltaic, or PV) are also in conflict with Eskom’s models and potentially can save even more than the large-scale renewable energy generation. A kWh saved is even greater than a clean kWh generated, as it does not suffer transmission losses. A kWh saved by the solar end user directly benefits the end user financially. From a carbon saving perspective, it is the most efficient of all.

So, money is the conflicting problem. When large investments into areas such as nuclear generation (which is almost certainly not needed for another 20 years, if ever) are brought into the equation, the opportunities for enrichment to a favoured few is obvious.

Money is also the biggest problem for adoption of end user renewables.

South Africa’s demographics show remarkably low levels of savings and most of the population living on credit from month to month. Simply put, not enough is left at the end of each month to even consider solar as an option and as an outright purchase. Much higher priorities include education, bond payments, car finance, medical insurance, and holidays.

Will solar sales accelerate in the future?

Solar water heaters and solar PV are also not an attractive proposition to lenders. Their concern has been a lack of a second-hand or pre-owned market and being left with a defaulting customer. The asset on a stand-alone basis (without recourse to other security) is not the same as a car or photocopier, for example, which can readily be sold at auction. In my opinion, this is a spurious argument in that if the solar system is saving money it will always have a value, even if somebody has to remove it. The lack of easy credit combined with high interest rates has made it difficult to go solar, even when consumers know what they want to buy.

Solar water heaters have also suffered from associated reputational risk. Perceived as being expensive, the supplier and installer industry has done itself few favours by selling systems without any real meaningful information as to what the solar system will do, or the financial information relating to the system’s performance.

Will solar sales accelerate in the future? Inevitably, as the price of electricity rises, the real cost of solar will reduce in monetary terms, with improving returns on investment and faster payback. This, in turn, will lead to greater opportunities. For example, companies could offer finance to their employees, where the monthly instalment on a solar purchase is just a deduction from their salary.

Sadly, with a power company that has little interest beyond their primary mandate, assistance in helping consumers to embrace renewables will be limited — money, or rather the shortage of it, will be the greatest impediment to nationwide adoption.

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