Blog
Will the UN’s Climate Change Fund solve South Africa’s energy problems?
Recently the UN announced the establishment of a new Climate Change Fund that will be designed to invest more than $100 billion per year to implement cleantechnologies in the poorest countries of the world.
The question is whether this fund will solve our energy problems.
I believe that such a fund can only succeed if the fund is administered in such a way as to allow a large group of service providers to compete in this emerging industry. If the funds are given to the usual suspects like GE, Siemens 3M etc…
One of the key benefits of decentralized renewable energy generation such as solar thermal heating and cooling and solar pv is that smaller players can compete to provide an efficient solution to clients’ energy needs.
How South Africa can Avoid Going Back to the Dark Ages
An Open Letter to President Jacob Zuma
By Daniel Schwab, Founder and President Kayema Group, May 11th 2011
On April 28th 2010 President Jacob Zuma announced the formal launching of the South African Government’s program to ensure that 1 million solar water heating systems are installed by 2014. Over the past two years millions of Rand has been spent on promoting the adoption of Solar Water Heaters. Three questions may arise in light of these developments. Firstly is this policy justified; secondly, what is needed to successfully implement such policy and thirdly is it practically possible to achieve this goal.
The Government’s Policy is Justified
As per countless presentations from Eskom, we know that the current generating capacity is not able to cope with current demand. Secondly, Eskom’s new build program will not go online in time to meet current and future demand. We are being inundated with news of delays , increasing costs and other concerns such as environmental issues relating to Shale Gas and nuclear power in the wake of the Japan earthquake and tsunami ordeal.
The installation of 1 million solar water heaters is expected to save approximately 650MW of electricity demand. The minimum potential South African market is estimated at 5 million households.
Installing solar water heaters and heat pumps will reduce the load on our strained electrical grid and at a fraction of the cost and shorter time line than building new power stations. For this reason, government’s policy is definitely justified.
Requirements to Achieve Our Goal
Unfortunately as per the current installation figures, as reported by Eskom, over the past 2 years it is unlikely this goal will be achieved unless a fundamental change in the regulator and government’s mindset is achieved. As per Eskom’s weekly report April 5th 2011, since 2008 only 31,288 Low Pressure systems and 18,738 High Pressured systems have been installed. The same report indicates that the rate of installations is approximately 1,000 units per months throughout the country.
At this rate it will take approximately 1,000 months or 83 years to reach the goal of 1,000,000 systems. Since we have only 42 months left before the end of 2014, the rate of installation needs to increase to an average of 22,619 systems per month to install the remaining 950,000 units. This is simple mathematics.
The real challenge is how do we as a country increase installation rates by a factor of 22 times within such a short time period?
From our experience and our peers in the market, reaching such scale can be practically achieved provided the following interventions take place:
Increase Demand
The most important factor to achieve the above is to increase demand far beyond what is currently being achieved today.
Every year about 400,000 electrical geysers are installed in houses per year mainly through replacement of broken geysers but also via the installation of geysers on new houses. It is hard to imagine a starker dichotomy where on the one hand government is trying to install large quantities of solar water heaters and at the same time, the market is providing a financial disincentive to achieving the government’s goal. This market failure needs to be addressed in various ways, however key catalyst requires legislation.
1. New Build
Legislation and standards requiring the installation for SWH and/or Heat Pumps has been drafted and discussed for the past two years. This standard SANS 10400 X-A is a step in the right direction. We now need the Department of Trade and Industry to ratify this standard and secure legislation that will backup its implementation.
2. Insurance Industry
Legislation needs to be put in place so that insurance companies may not be allowed to pay out a claim if a client does not agree to put in a SWH or a HP. The responsibility should be the client’s to explain why they cannot install either one of these devices. Insurance companies are trying to adopt voluntary standards however this has not achieved the required results. Karin Kritzinger, a student at Stellenbosch University recently completed her thesis on the reasons why the insurance industry has not been successful in adopting solar water heaters and/or heat pumps. Miss. Kritzinger’s conclusion is that the status quo is too strong and can only be achieved through strong leadership and legislation.
3. Residential and Commercial Users Consuming more than 350kWh per month
All households who meet the minimum amount of electrical usage of 350kWh per month should be given 24 months to convert their geysers to a Solar Water Heater or a Heat Pump. Failure to do so should result in a onetime financial penalty.
The social justification for this is that millions of people in this country do not have electricity for basic requirements such as lighting which is further increasing the gap between the rich and poor in this country including safety and security issues in areas where there are no street lights.
Is Our Goal Practical
Naysayers and critics often acknowledge the need for converting to Solar but don’t believe that we as a country have the required human capital to achieve our goal of 1 million systems installed by 2014. I believe they have been proven wrong. Since 2008 hundreds of installers have been trained to install solar systems. On a daily basis we are providing a professional service and our clients are happy. We believe there are several other companies who are doing an excellent job at installing systems as well. Our installers who come from the plumbing industry are telling us that they have huge spare capacity due to the current economic slowdown. They are telling us that if it weren’t for solar they would have no work. So there are thousands of plumbers ready to step in provided there is demand.
I would like to appeal to all decisions makers whether in government, commerce, industry or even if you are simply a concerned citizen to work together with our industry to help South Africa weather the electrical drought and thereby avoid to some extent a human and economic disaster.
Kayema Energy Solutions Confirm Appointment of New Managing Director
Kayema Energy Solutions has announced the appointment of Dr Dino Petrarolo as Managing Director of Kayema Energy Solutions (PTY) Ltd effective from May 1st 2011; he will be based in Johannesburg.
Prior to joining Kayema, Dr Petrarolo was Managing Director of Shatterprufe a division of PG Group with revenues of more than R1 bn and 1,500 employees. Before joining PG Group, Dr Petrarolo held various roles at SABMiller plc over more than ten years ending up as Global Head of Manufacturing Development. Dr Petrarolo also worked previously at Price Waterhouse and the Highveld Steel and Vanadium Group. Dr Petrarolo has a PhD and MSc in Industrial Engineering, as well as a BSc Computer Science.
Daniel Schwab, Founder and previously Managing Director at Kayema Energy Solutions (PTY) Ltd. will continue as Director and President of the Kayema Group, supporting the new Managing Director to build the business and develop new opportunities for the Group.
Commenting on Dr Petrarolo’s appointment as the new Managing Director, Schwab said “I am looking forward to working with Dino to further grow the business on the foundation that has been put in place over the past three years. Dino is a person of high integrity and a consummate professional who is passionate about the need for renewable energy in Southern Africa”.
Chairman of Kayema, Mr Craig Lyons further added “Kayema has gone through a significant growth spurt over the past three years. On behalf of the board I would like to thank Daniel for his hard work and efforts during the critical start up phase of the business. Dr Dino Petrarolo is perfectly suited to take Kayema to the next level as a leading renewable energy service provider in Southern Africa and the board and I are looking forward to working with Dino to make this happen”.
About Kayema Energy Solutions (PTY) Ltd.
Kayema Energy Solutions is a leading integrator of solar energy systems in Africa. The company has a dedicated team of internationally renowned solar energy engineers and offers several renewable energy solutions for utility, domestic and commercial clients in South Africa and several other countries on the African continent. Kayema is one of the most experienced suppliers of solar water heating and sustainable energy systems in Africa receiving the award for “2010 Energy Company of the Year” by the South African Association for Energy Efficiency. For more information www.kayema.co.za
Kayema Solar Water Heaters More Competitive Following Revised Eskom Rebate System
With the recent announcement from Eskom regarding a change in it’s Solar Water Heater Rebate policy, Kayema’s Solar Water Heating Systems are about to become even more competitive.
Why?
James Shirley, General Manager at Kayema explains, “Previously, The Eskom Solar Water Heater Rebate was all about how much heat goes into the geyser resulting in a higher rebate for those who over specified their system (which often resulted in overheating with water reaching temperatures upward of 85º Celsius).
According to Shirley, “Many of the imported systems have to date benefited greatly from over inflated rebate amounts. This rebate allowed them to mitigate their costs to a large extent and remain competitive in the market place by giving the impression that a higher rebate meant a better system.
The recent announcement from Eskom means that the Eskom Solar Water Heater Rebate structure is now based on the amount of energy actually required by the system to heat the water to the correct temperatures, improving system lifespan and reliability.
Since Kayema‘s Solar Water Heating System was designed with the correct specifications from the outset, we are largely unaffected by this new announcement, so we sit at just below the new maximum rebate values. The result is that our systems are now less expensive than competing systems of equal quality after the rebate, without compromising any of our performance.”
“The superiority of a Kayema Solar Water Heating System has already been recognized early on by major corporates such as Investec Bank, Standard Bank and Group Five with several other blue chip corporate clients entrusting Kayema to roll out employee Solar Water Heating programs nationwide.
Daniel Schwab, Managing Director of Kayema concluded saying “We look forward to continuing our leadership position within the Solar Thermal Heating and Cooling market in South Africa through superior technology based on world class engineered systems and local installation and project management capabilities”.
Bloomberg.com angle on Nuclear post Japan 2011
The debate of how much nuclear energy will play a role in our economy following the Nuclear crisis in Japan is going to get hot. This interview with Bloomberg New Energy Finance’s Chris Gadomski discusses the outlook for nuclear power use in the U.S. Gadomski also speaks about prospects for solar energy.
Annual Electricity Price Increases Well Above Inflation up to 2021
It is common knowledge that South Africa is undergoing major increases of electricity prices over the next few years. What is not well known is how long are these increases expected to last. An article recently published by EE Publishers, a reputable Electrical Engineering publication in South Africa explains that increases above inflation are sure to continue until at least 2021. All of our ROI calculations are based on much more conservative increases so this news means that our clients will benefit significantly more than what we predicated before.
CNBC Africa Interview on Climate Change
CATCH KAYEMA ENERGY SOLUTIONS
CEO DANIEL SCHWAB
ON CNBC AFRICA
(Channel 410 on DSTV)
TODAY WED 2 FEB AT 1PM
Join Daniel together with Alex McNamara, Senior Consultant at Camco Global as they tackle many of the key issues around South African business and its response to climate change.
Topics will include:
What are the likely primary impacts of climate change?
What is the global political consensus on these issues?
What happened at Copenhagen?
What is carbon trading?
What role has South Africa played in the global discussions to date?
Are concerns about climate change more important than development and poverty alleviation?
How committed are South African politicians, business and other leaders to this issue?
Sectors at risk and sectors with promise
The way forward Challenges for individuals, communities, governments and companies. Integrating Climate Change agendas with development and poverty alleviation goals. Where to invest to take advantage of economic shifts brought on by climate change and secondary effects.
Calculating Energy Savings of Solar Water Heating
The following table provides a way to calculate energy savings for installing a solar water heater.
Solar Water Heating Energy Savings Calculations
Response Letter to Collusion Allegations
26 January 2010
To Whom it May Concern:
I am the GM of a respectable player in the solar industry, and would like to be first in line to stomp out any collusion or price fixing, however I have serious questions to the accuracy of the claims. The mere fact alone that there are currently so many companies offering solar services means that this industry is highly competitive, and that home owners are smart enough to get multiple quotes before selecting their solar water heating provider of choice, and that price is always the first and most important factor considered.
In response to Deputy Director Aphane’s allegations on collusion in the solar water heating industry, I have the following questions:
1. Can Mr. Aphane provide some actual figures to substantiate his claims.
2. Is the 40% an average across all types of systems, or does it refer to a specific type system, systems from a specific country of origin, or systems all using a particular component which may have increased in price?
3. Does the 40% mentioned include the cost of additional requirements (SABS testing & Mark requirements, controller/timer supply & installation, relevant association membership fees, certificates of compliance etc), all required by Eskom in order for systems to qualify for the DSM rebate, or is it over and above?
4. Does the 40% take into account the fact that the price of copper has increased 35%, from around $7000/t in 2008 to around $9500/t in 2010, and the significant knock on effect for all solar and plumbing components because of this, or is it over and above?
I can understand that the prices are higher in South Africa than overseas as our market is still very small and unit pricing is function of sales volume – this is a major concern for us and is already being addressed with the advice and assistance of industry partners from overseas.
While I can certainly confirm that my company is NOT involved in any sort of price fixing, I am concerned that these statements, without substantiation and/or specific offenders mentioned, will lead to negative press and effects for the whole solar industry, when the reality is that people have been working incredibly hard to help government achieve its targets.
Best Regards,
James Shirley
General Manager
Kayema Energy Solutions
Kayema Updates