Cape Town – Exponential growth in the market for solar water heaters forms the backbone of the green economy part of the government’s new Industrial Policy Action Plan (Ipap2).

The plan’s objective is to increase the installation of solar water heaters from the current 35 000 a year to 250 000 a year over the next three years, and to increase domestic production from 20 000 units to 200 000 units a year. The department of energy plans to have one million installed solar water heaters by 2014.  The department is working on a new subsidy scheme for solar water heaters that will be announced in the second quarter of the 2010/11 financial year.

By the third quarter of the new financial year, the department of trade and industry must publish amended building regulations to make solar water heating compulsory in new buildings and building renovations from March 2011.

By the second quarter the department must ensure that legislation has been introduced to make it compulsory to install solar water heaters when existing geysers need replacement.

Those drafting the plan say importation of solar water heaters is growing rapidly, and importers collared 40% of the market last year.  South Africa’s 11 million or so houses mean that the potential market for solar water heaters is huge. Industrial use of solar water heating will considerably boost demand. The industry’s total sales amount to about R220m a year.

The industry has so far been characterised by small-scale manufacturing and importation. About 700 people work in the sector, 200 of whom are in manufacturing and 400 in installation.  These include a large number of independent installers, including plumbers, who do not concentrate exclusively on installing solar water heaters.

In terms of the plan, most solar water heaters have a positive net current value because future savings in electricity and maintenance costs will be higher than the capital outlay for installing the system.  But savings are currently not recoverable over a short enough period to persuade householders to install solar water heaters, and the department of energy is therefore working on a new funding model.

According to the plan the industry has the potential for export earnings, particularly in the rest of Africa.  Countries such as Australia and Israel have, through successful marketing, established an internationally competitive manufacturing industry.

Article by Francois Williams, courtesy of News24 website