Last week in her budget speech to Parliament, Energy Minister Dipuo Peters committed her department to boosting levels of local content in solar water heaters.
She said demanding higher levels of local content would benefit the manufacturing industry and create jobs.
Referring to the local procurement, energy efficiency and skills development accords that government concluded under the auspices of the New Growth Path social partners forum, she said the intention was to make sure these agreements had practical meaning, especially in implementing the integrated resource plan and the biofuels strategy.
“While we are recording good progress with the implementation of the solar water heating (SWH) programme, I need to also indicate that the majority of these systems, particularly the low pressure type that we install in the RDP (Reconstruction and Development Programme) and medium-income residential sectors, are imported,” she said.
“This is clearly untenable and the time has arrived for us to intervene if we are to make a difference in creating local job opportunities. I have therefore decided that from this year, the SWH programme will work on a different model. In essence, only those suppliers who commit to localise their product will be able to participate in the government-funded subsidy programme. We will be announcing the details of a new approach to support only those suppliers who install units from manufacturers who commit to bring their factories to South Africa.”
The Sustainable Energy Society of Southern Africa (Sessa) welcomes the department’s commitment to job creation and looks forward to seeing a clear medium- to long-term plan.
A quick turnaround on this front will remove the current uncertainty in the market and allow the industry to draw up its own plans and get to work.
The biggest challenge is how to balance the installation of 1 million water heaters by 2014 (and about 5 million by 2019) against creating local capacity and jobs to manufacture while ensuring the market does not collapse as soon as the subsidy is withdrawn or reduced. And the situation is compounded by one very large stumbling block: it costs more to manufacture solar water heaters than to import them.
At the moment, most of the solar water heaters being installed in this country are imported from China, where exporting manufacturers receive huge incentives.
The government is implementing two programmes. The first goes back to the introduction of the Eskom rebates in response to the blackouts. Here, the objective was to reduce reliance on the grid and targeted 925 000 installed units in five years.
The second is the social upliftment programme, which provides solar geysers to houses never before connected to the grid. This, however, does not reduce overall demand and pressure on the grid.
The two programmes, therefore, require two separate strategies.
Given its finite budget, the government therefore has two options: to either pay more for solar water heaters and install fewer units to promote local jobs, or to install imported products to increase the sustainable energy footprint and remove the maximum demand possible from the grid.
Sessa’s first priority is sustainability. As such, we believe the urgent task should be to get solar water heaters on roofs.
Theo Covary is the acting chief executive at the Sustainable Energy Society of Southern Africa.