Why aren't we warming to solar?

By Eamonn Ryan

 Is installing a solar geyser still a financial decision or has it become an ethical decision?

Barry Bredenkamp, general manager for Energy Efficiency at The South African National Energy Development Institute (SANEDI). Credit: Eamonn RyanSolar water heaters offer individuals an opportunity to choose to make a difference through their own personal choices and actions. Solar geysers save on electricity and cold showers during load shedding – but due to their high upfront costs haven't always made financial sense unless one is consciously making a moral choice. In contrast, selling someone a household solar PV system by convincing them they’ll recoup the cost of their investment within an unrealistic timeframe is morally debatable.

With electricity prices already high, and more big power price increases on the way, that is changing – but not quite as rapidly as one might think, if one is factoring in some degree of moral consciousness.

All stick and no carrot

Barry Bredenkamp, general manager for Energy Efficiency at The South African National Energy Development Institute (SANEDI), points to the two types of solar water heating systems currently available: “The low-pressure system which is typically installed in low-cost/RDP housing free of charge by government does not have a financial benefit because it is solely a social programme that goes to people who would not otherwise be using energy to heat water. This may even be increasing energy consumption if it comes with a back-up energy unit. Pay-back periods don’t come into the equation. This has been quite clearly categorised as a social development rather than an energy efficiency programme.

“The high-pressure system is what is generally used by middle- to high-income families, and this is where people have to make a financial decision as to whether they are going to convert to solar heating or not. Most people will do an upgrade but keep an electrical back-up system.”

He points to the need for this: at the time of the interview, Johannesburg was in the midst of a week-long drought-breaking tropical rain-fest in which the sun hadn’t once appeared through the overcast conditions. “Anyone without an electrical back-up would have had nothing but cold water. That’s the downside of converting to solar heated water. Because it is a substantial investment (of between R12 000 and R20 000), most people wait until their current geyser ‘pops’”. Considering a normal 3kW geyser today is designed to last from five to seven years, this ought to be quite a frequent occurrence.

Reinforcing the idea that installing a solar water heater is indeed purely a financial decision, Bredenkamp says that the greatest take up of solar by far was during the period that Eskom offered its rebate system when between
300 000 and 400 000 units were installed; and now what may spur increased demand is that after strong government lobbying, some forward-thinking insurers have, over the past few years, been offering policyholders the option to replace their traditional geyser with a solar heater, when they burst.

The downside is that the additional cost is shared between insurer and policyholder (through a significantly increased excess), though there is a degree of subsidy from the insurer. He explains that insurers find this worthwhile because statistics reveal solar systems last longer than electrical geysers, and also minimise consequential wall and carpet damage. Unfortunately, he says, the take up on this is not as high as one might expect, “because a burst geyser is an emotional event for most residents who simply want hot water on tap as soon as possible.”

“At the time your geyser pops, the average person is not thinking logically about replacing it with an energy-saving alternative, but rather getting the geyser fixed as soon as possible – especially if it’s in the middle of winter, and even more so if there’s incidental damage to your wall or carpet, even if they’re environmentally-aware people.

“A relatively small number of people make the choice to go solar entirely for environmental reasons, to reduce the load on the network and minimise their carbon footprint. But that is a highly niche market. What we are finding among the rest of the population is a growing realisation that the electric geyser is the biggest user of power in their home, and with sharp increases in the electricity tariff, people are looking for alternative solutions.

 Low pressure systems are a social rather than an energy efficiency project. Credit: Green Building Africa

“The decision therefore is more a financial than an ethical one. Government’s focus in this regard, after abandoning the Eskom rebate system in 2014/15, is on the lower end of the market: state subsidised homes. It bought a large number of the low-pressure units in bulk and so has got a good price, and those are getting rolled out to RDP or social housing,” says Bredenkamp.

During the height of the Eskom rebate era, there had been as many as 120 installer/suppliers, but these have now reduced to about 20 serious competitors, he says. “The market has been extremely competitive, but with the lesser number of plumbers and installers you are seeing greater resistance to reducing process, even as the price per unit steadily falls.”

Most people and companies installing solar water heating systems go through such a qualified installer. The difficulty of choosing a brand oneself is that one then has to find a plumber or installer trained in that exact system, which might defeat the purpose of buying personally to get a good deal, says Bredenkamp.

“Installation requires knowing what you’re doing, as some houses are orientated in such a position that they really can’t be converted to solar heating, while others find the promised benefits don’t materialise due to poor installation.”

“A relatively small number of people make the choice to go solar entirely for environmental reasons, to reduce the load on the network and minimise their carbon footprint. But that is a highly niche market.”

He gives the example of the former Department of Energy Minister, Dipua Peters, who was a vocal advocate of solar water heating, promoting the installation of one million units in South Africa. It was decided to convert her official residence in Waterkloof, Tshwane, as a pilot project and case study, but it was found that its location in the lee of a forested cliffside meant it was literally impossible to convert. “That is more the exception than the rule but shows why you need someone who knows what he’s doing before embarking on a R20 000 installation.”

What is likely to enforce an increase in uptake of solar water heating systems is the continued increase in Eskom tariffs, says Bredenkamp: “The forecast is for double-digit increases in tariff for the next couple of years and I think this may bring about a resurgence in interest in them in the middle to higher income group.”

If it’s not an ethical decision, how does the financial case work?

Many of the savings on alternative water heating systems, whether solar or heat pumps, involve changes in behaviour, which is not a financial matter. Even oft-touted timers on geysers are shown to bring about savings only by changing people’s behaviour rather than actual energy efficiency. These calculations often rely on financial gymnastics such as families changing their bath and shower times to maximise solar heating of water, or are sometimes based on cheaper systems with tanks too small to be effective.

Installing a solar water heating system remains a serious investment. While a long enough investment horizon for that investment will undoubtedly save money, that kind of horizon requires certainty one will be in one’s home for that period of time (or that one can sell the home for a price that includes the cost of the solar system), as well as taking the risk that the unit lasts the full working life of 15 to 20 years.

One way to look at it is how much electricity one will be able to buy over the next five years for the price of a solar geyser, and how much that electricity saved will be worth. This is done by working out the monthly repayment that would be due for an option if it were fully financed over five years at the current prime interest rate. Then calculate how much electricity that monthly repayment amount would buy over the next five years, using the current municipal electricity rate in Johannesburg as it is due to escalate over the coming years and a 3% inflation increase in price for 2022 and 2023.

In conclusion

The rule of thumb is that solar systems are assumed to save around 50% on water heating costs, and real-world testing in South Africa has corroborated that number.

At the moment, solar water heaters are ‘sold’ rather than ‘bought’ and a change in the financial case is what would be needed to cause that resurgence more than all the talk in the world about Climate Change.

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