Presentation outline

Presentation outline Solar Water Heating Update Select Committee on Economic Development 25 January 2011 -Confidential-

Background Presentation outline -Confidential-

Presentation outline Experience with Tariff Based Rebate Program - Eskom -Confidential-

Commentsfrommarketon rebate programme “We are currently averaging 100 – 200 per month (reflected in Eskom stats)” - One big national player “Burst geyser is not good time to sell SWH” “Rebate programme just isn’t doing it for market” “Market needs a serious shake-up” “It would be embarrassing to give you our sales numbers” 3126 installed on Eskom rebate from Jan 2009 – Apr 2010 Average for new rebate level (Feb 2010 to April 2010) = 443 units per month

Experience with new diversified approach Presentation outline Cumulative total per month ** August shows total figures since programme inception. August figures for residential and Low pressure not split Update October figures for Eskom’s Standard residential claims not yet available -Confidential-

Municipal areas with active roll-out programmes (using Eskom rebate) Presentation outline -Confidential-

Other projects - Solar Water Heating Presentation outline -Confidential-

Market Activity: Rebated Solar Water Heating Presentation outline • As at 31 Dec 2010 there are presently: • 108 accredited suppliers, • 245 registered distributors and • 124 registered independent installers • From April to December 2010, 26 768 units were installed whilst a cumulative total of 30 974 has been achieved since the rebate programme kicked-off in November 2008. • The above figures exclude systems that have been installed but not yet claimed by programme participants. -Confidential-

Provincial breakdown – Rebate Program Presentation outline -Confidential-

Municipal breakdown – Fiscal Program Presentation outline • Program funded from 2009/10 fiscal allocations (via Eskom) to install a total of 30 768 systems • Tshwane (15 094), • Sol Plaatje (7 837) • Naledi (7 837) • Additional funding in 2011/12 (via municipalities) to install more systems -Confidential-

What is in the pipeline? ... Presentation outline • Infrastructure structure challenges, especially water reticulation & household plumbing are stalling the rollout especially in Naledi & Sol Plaatje • Programme to address hot water provision in rural areas – Managed by Department of Rural Development and Land Reform. • Programme to install in government owned residential dwellings – Managed by Department of Public Works. • New building regulations will enforce energy efficient practices in new buildings (including SWH and other technologies). The regulation was gazetted for public comment and is in process of being signed off for promulgation by Minister of DTI. -Confidential-

What is in the pipeline? ... Presentation outline • Tax incentive for implementing energy efficiency, as per the regulations issued under the Energy Act: • Concurrence of Minister of DTI obtained • Conditional concurrence of Minister of Finance obtained • Allows companies to fast track energy efficiency, including SWH through tax breaks -Confidential-

What is in the pipeline? ... Presentation outline • Energy Efficiency and Demand Side Management Policy (Standard Offer Model) • Minister of Energy pronounced on a Standard Offer incentive scheme that will fund all Energy Efficiency and Demand Side Management (EEDSM) interventions through the electricity tariff. • This scheme is aimed at creating an expanded opportunity for attracting the much-needed sustainable financial stimulus into the EEDSM programme. • Initially the Standard Offer and the rebate programme will complement each other and merged over time -Confidential-

What is in the pipeline? ... Presentation outline • New building regulations will enforce energy efficient practices in new buildings (including SWH and other technologies such as heat pumps). The regulation was gazetted for public comment towards the end of last year and is in process of being signed off for promulgation by Minister of DTI. • Programme to install SWH in government owned residential dwellings – DPW in collaboration with DoE. -Confidential-

What are the key challenges that will increase rate of rollout if addressed? Presentation outline • Capital cost of components and systems is too high (pricing ranges from R9000 to R35000 for a 200 litre system) • Funding for capital costs of units • Large uninformed consumer base i.e. lack of consumer awareness of the solar water heating (SWH) benefits • Funding for education and awareness campaigns • Skills shortages – necessary for safe scaled up installations -Confidential-

Addressing the challenges ... Presentation outline • Training • Skills program initiated with CETA, eSETA, donors – unit standards developed and accredited training available for • NQF Level 4 : Solar Water Heating plumber • NQF Level 2 : Hot water installer • Localisation • Many companies supply Solar Water Units as importers or as knock-down units and assemble locally. There are initiatives to manufacture locally e.g. factory has been set up in the Eastern Cape (East London IDZ). Discussions are also underway with suppliers to set up other factories in Eastern Cape and Gauteng -Confidential-

Addressing the challenges ... Presentation outline • Localisation... • Further CEF (Pty) Ltd. signed an MoU with a Chinese company for setting up a SWH manufacturing plant. • Preference will be applied for local systems when rebates are applied for. • DTI is spearheading the second Industrial Policy Action Plan (IPAP 2) process which encourages local manufacture of SWH. • SABS is scaling up testing capacity, particularly in the regions, to remove any bottlenecks the industry may experience in launching new products -Confidential-

Addressing the challenges ... Presentation outline • Education and Awareness • DoE has developed a comprehensive above-and-below-the-line education and awareness plan. We are seeking partnerships with labour, civil society and the private sector to execute the plan. • Funding • Additional fiscal allocations applied for • Tariff-based rebate cemented in Integrated Resource Plan (Nersa will be compelled to make adequate rebates available in the future) -Confidential-

Addressing the challenges ... Presentation outline Skills Development, Training & Education: • There is a need to focus & improve skills development & training in the SWH sector. This can be done with the assistance of the academic institutions, professional training bodies, DPE, & SETAs thus enabling community workers to; • Get know-how of the SWH technology i.e. get trained/skilled; • Qualify as installers and/or plumbers; • Provide after sales services i.e. maintenance • Be able to participate in: • consumer awareness raising campaigns; and • facilitating end-users education. • Play a significant role in mobilizing the youth, women, & other vulnerable groups (reducing unemployment). -Confidential-

Addressing the challenges ... Presentation outline • Qualifications: • At the end of 2008, new plumbing qualifications were developed to include the solar water heater training. • A solar water heating installation uses three levels of plumbing staff: • NQF Level 4 : Qualified Solar Water Heating plumber • NQF Level 2 : Hot water installer • Assistants/Helpers • The aforementioned qualifications will come in handy for enhancing employability of the DoE’s Community Workers. -Confidential-

Conclusion Presentation outline • Target of 1 million systems by 2014 can be achieved, especially when the electricity tariff doubles in 2013 • We will exceed threshold of 55 000 systems this financial year • Education and awareness building is critical for increased uptake • SWH is a key component of the industrial policy action plan to create jobs and has to be intensified Illustrative affordability challenge Rands -Confidential-

Presentation outline