Solar Heating Systems by Henkoly in South AfricaWhile many South Africans will get a warm feeling from watching Prince William and Kate Middleton’s wedding on April 29, it is also the date from which Eskom’s generous solar geyser rebate is amended downwards, following a highly successful subsidy campaign introduced in 2008.

More than 60,000 solar geysers have been installed around the country since Eskom announced its rebate system to encourage mainly households to reduce their reliance on the national electricity grid.

The National Energy Regulator of SA (Nersa) made provisions for Eskom to provide subsidies worth 1.1 billion rand over a three-year period and that allocation has almost been fully allocated, prompting Eskom to adjust its subsidy system.

“The subsidy budget for the 2011-12 year is just under 330 million rand. At current take-up levels that would have been exhausted within little more than three months. We had to adjust the rebate to ensure that more people could benefit from the rebate system,” explained Hilary Joffe, Eskom’s spokesperson.

According to Joffe, solar geyser rebates vary depending on the size and type of the unit. The average subsidy per unit has been r4,000 for low-pressure solar geysers, which covers the entire cost, and about r7,000 for high-pressure solar geysers installed in higher-income areas.

“Discounts vary according to the size of the system installed and its associated electricity-saving potential, or capability to replace electricity. Systems therefore carry different rebate values,” said Joffe.

“From April 29, the average rebate currently offered per system category will become the maximum rebate value. Current rebate values lower than the new maximum value will remain at their current level. This applies to both low-pressure and high-pressure solar water heaters.”

Joffe said that locally produced, reasonably priced systems should hardly be affected by the change in rebate.

She pointed out that a year ago, the solar geyser rebate was doubled to simulate demand “but we said at the time we would reduce rebates back to the regulatory benchmark, which is what we have now done”.

Testing Eskom’s rebate change in the marketplace, I-Net Bridge made an online enquiry to a solar geyser supplier. This was the response received, naturally directed at landing a sale: “I heard today that it (the rebate) was going to be cut by 25% in two months’ time. This was always the plan from Eskom because the loss of rebate will be offset by the higher cost of electricity. More importantly, I urge you not to delay because there will be a shortage of installation skills when the public turn to solar in a big way. The net price of our non-rebated systems is still competitive or more cost-effective than other rebated systems.”

Meanwhile, Eskom’s solar geyser rebate change comes shortly after the second tranche of a three-year electricity hike has come into force.

Nersa last year granted Eskom price increases of 24.8% for 2010-11, 25.8% for 2011-12 and 25.9% for 2012-13. Eskom had wanted increases of 35% a year for the three years to help it raise about 385 billion rand, mainly for capital expenditure programmes to provide additional grid capacity.

At the time of granting the three-year price increase, Nersa said the three tranches represented the “slowest” phasing in of the required increase needed to ensure that Eskom retained minimum levels of economic health in the short to medium term.

Although there are no indications that SA is in imminent danger of repeating the load-shedding chaos of 2008, Eskom has warned that it is expecting a colder winter in 2011 than was the case in 2010.

The power utility has estimated that, for every fall of one degree in temperature, electricity demand rises by between 600 and 700 megawatts during evening peak demand periods.

In an unrelated development, the National Union of Mineworkers said that Eskom must sign a minimum service level agreement or face possible strike action.

The union claims that about 16,000 of Eskom’s 40,000-strong workforce are among its members.

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