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A case study of off-grid solar PV in South Africa Louise Tait and Gisela Prasad LCEDN conference 4 – 5 April 2012.

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Presentation on theme: "A case study of off-grid solar PV in South Africa Louise Tait and Gisela Prasad LCEDN conference 4 – 5 April 2012."— Presentation transcript:

1 A case study of off-grid solar PV in South Africa Louise Tait and Gisela Prasad LCEDN conference 4 – 5 April 2012

2 SA’s electrification programme Wide-scale national grid electrification programme post- democracy to extend services to previously excluded population To date approximately 5.2 million households have been electrified since Approximately 75% of the population have access to electricity. Most of the remaining un-electrified are in rural areas But recent slowdown in connection rates – budgetary constraints, lack of bulk distribution infrastructure, un- electrifiable settlements, lack of capacity at municipal level Connection and consumption subsidies – poor households receive 50kWh per month free

3 SA’s off-grid solar programme 1998 Gov adopted Off-Grid Solar Home System (SHS) Programme – to speed up access for remote and rural areas where extension of grid not feasible Target was to electrify 300,000 households using solar PV 50Wp panel and battery – 4 lights, small B&W TV, radio and small fan for a few hours each night Concession model with private sector - six concession areas granted – 50,000 installations each

4 SA’s off-grid solar programme Government provided capital cost subsidy and operational subsidy to concessionaires Fee-for-service model – households pay monthly fee for solar service (covers maintenance and battery replacement) Concessionaires also to make provision for thermal needs of rural households – supplying cook stoves, LPG and paraffin in rural energy shops

5 Delivery models of concessionaires Capital cost subsidy from gov  +- 80% of cost of system. Concessionaires must finance the rest themselves In 2008 system cost around R5,600 ($740) and received gov subsidy of R4,060 ($535) Customers pay upfront connection fee of R100 ($13) and monthly service fee of R61 ($8) – found to be unaffordable and government extended FBE subsidy to off-grid programme – paying R40 ($5) of service fee. Payments collected through regional energy centres or using local ‘runners’ who collect from households Systems have an ‘energy management unit’ – manages battery and credit, disconnects load when credit expired, uses data transfer tokens

6 Policy problems Programme has seen many delays and cutbacks in funding In 2003 after awarding tenders, government drastically cuts back number of installations it will provide subsidy for Delays in awarding new tenders for third phase – no new tenders awarded for 4 years  from 2006 – 2010 Department of Energy cite difficulties in identifying new areas There appears to be a lack of political support to drive the programme Payment of FBE subsidy to offgrid programme at discretion of local municipalities – payments irregular and sometimes non-existent

7 Other challenges Lack of integration with electrification planning – grid has extended into off-grid service areas, making SHS’s undesirable Non-payment by customers – contributed to by irregular subsidy payments by municipalities and inflexible monthly charges Perceptions and attitudes of customers towards solar – grid is preferred, solar service seen to be limited, fears that it will jeopardise chances of getting the grid Rurality and lack of infrastructure – lack of roads, poor communications

8 Current status of concessionaires Currently a total of about 30,000 installations in place across the concession areas (compared to goal of 300,000) In 2010 four concessionaires granted new tenders for a total of 10,500 installations Many SHS removed due to grid expansion, vandalism, theft, non-payment etc. Conducting maintenance only not viable business model and 2 went out of business. The rest currently just breaking even – probably surviving as long as they have due to international funding

9 Implications for delivery models Capital and operational subsidies essential Gov cutback and delays – negative impacts on order and stocks, staff retention, insurance, investor confidence, lost opportunities with investors and customers Small installed base has not proved to be viable business model. Need to expand installations but policy caps and delays have prevented this. Irregular FBE subsidy payments negatively impacts customer satisfaction and monthly payment rates

10 Successes and weaknesses of the programme Model does not reach poorer households Public private partnership has not proved successful – gov has not delivered in the partnership and policy delays have stifled innovation and threatened business viability Private sector shown remarkable staying power to deal with challenges – developing systems in rural areas with no infrastructure, policy delays Off-grid does not offer substantial returns in the short term, takes particular private sector players with commitment and to show innovation Going forward – need to integrate into electrification planning, government and concessionaires need to engage with municipalities over subsidy payments

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