Solar geyser components to be SA-made

Designation of an economic sector, subsector or industry means the government will set a minimum local content for the goods it procures.

The aim is to encourage the growth of sectors of the economy identified as strategic.

The potential of the solar water heater sector is large as the government has targeted the installation of 1-million units by 2014-15 and has allocated R4,7bn over the next three years to achieve this goal. So far 244964 units have been installed, according to data from the Department of Energy.

Nimrod Zalk, trade and industry deputy director-general, said the designation would prescribe a level of local content depending on the capacity of local industry to manufacture the solar water heater components.

"At the moment SA does not have the capacity to produce the cells for the panels but we can produce other things, such as the frames and glass," Mr Zalk said.

"We would not designate an area where we do not have capacity but doing so could potentially lead to further investment in the underlying substrate."

Designation would prevent municipalities using cheaper imported products for mass housing programmes, as was often the case. This practice had led to a number of local suppliers in the Western Cape having to close up shop, Mr Zalk said. A large proportion of the solar water heaters used in SA come from China and Mr Zalk was concerned that a lot of the imported products did not meet acceptable standards of reliability and longevity.

He conceded that more needed to be done to encourage middle-class homeowners to install solar water heaters in their homes. Some kind of financing arrangement was needed so the large upfront cost could be paid back in instalments to Eskom.

He said a task team was working on this and also engaging with the insurance industry for solar water heating systems to be installed when electrical geysers broke down.

Department of Energy chief director Mokgadi Modise told the portfolio committee on energy in a separate briefing this week that about 200000 electric geysers a year were replaced via the insurance industry.

In the Green Economy Accord signed by the government, business, labour and community organisations in November, business committed to a wider rollout of solar water heaters by the insurance industry by next year. The state committed to developing local standards for local manufacture of the units via the South African Bureau of Standards.

Ms Modise said the Industrial Development Corporation (IDC), the Development Bank of Southern Africa and Eskom were exploring various funding models for solar water heaters. The IDC had already provided about R150m to the sector.

The government has also amended building regulations and all new buildings have to install a solar water heating system or a similar type of technology.

Source: Business Day