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Presentation outline Solar Water Heating Programme Progress Report 28 February 2011 *-Confidential-* – PowerPoint PPT presentation

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Title: Presentation outline


1
Presentation outline
Solar Water Heating Programme Progress
Report 28 February 2011
2
Presentation outline
Strategic Plan - Intermediate Outcome 1 of 2
Demand side, efficiency and diversified energy
mix programmes implemented
  • In her 2009 budget vote speech, the Minister of
    Energy, Ms Dipuo Peters announced a target of 1
    million Solar Water Heaters installed by 2014
    /2015.
  • The overall programme focused on both tariff and
    fiscal funded programmes in residential and
    commercial sectors.
  • Initially, the SWH programme took off very slowly
    till mid 2010.
  • The fiscal funded were are rolled out through
    both Schedule 6 (i.e. Direct transfer to the
    municipalities) and through Schedule 7 (i.e.
    Transfer to Eskom as an implementing agent) of
    the Division of Revenue Act (DoRA) .

3
Presentation outline
Strategic Plan - Intermediate Outcome 1 of 2
Demand side, efficiency and diversified energy
mix programmes implemented
  • In 2011/2012 financial year, the SWH programme
    started on a baseline of 55,000 units installed,
    with target of 250, 041 units.
  • There was an overlap on implementation from
    2010/2011 for completion of a roll out with
    Tshwane, Naledi and Sol Plaatjie.
  • In all the municipalities implementation was
    through Schedule 7 of the Division of Revenue Act
    (DoRA).

4
Presentation outline
Implementation overlap from 2010/2011 to
2011/2012
Municipality Approved project value (m) Planned Units MW GWh Status Actual Units Installed
Naledi (i.e. Stella and Vryburg) R54,450 7 837 2.2 5.9 Incomplete 1 362
Sol Plaatjie R54, 450 7 837 2.2 5.9 Installation completed 7837
Tshwane R74 15 094 4.2 11.9 Installation completed 15094
Total R182,900 30 868 8.6 22.7
Jobs created per municipality Sol Plaatjie
156 persons appointed Naledi 9 persons
Tshwane 130 persons
5
Presentation outline
Implementation challenges in Naledi Municipality
  • In July 2011, water quality challenges
    experienced in Naledi Municipality
  • Some beneficiaries had no water connected
    directly to the house which is one of the
    fundamental requirements to SWH installation
    this challenge was resolved by providing the
    required funds for water reticulation (connection
    and maintenance)
  • Bad roof structures and old pipes that cannot be
    tapped into
  • Hard water the prevalence of hard water could
    have a severe impact on the direct functionality
    of SWH and its lifespan
  • Naledi Municipality later confirmed the hard
    water condition for the entire area

6
Presentation outline
Implementation challenges in Naledi Municipality
Cont
  • Two solutions were presented
  • Solution 1 Removing calcium and iron mass
  • Solution 2 Chemically treat the water through
    reverse Osmosis
  • Cost breakdown for solution 1 the budget cost
    per SWH was R1 195 and the cost of 7 837 was R 9
    365 215. 00
  • Maintenance for solution 1 the filter needs to
    be changed as soon as it is visibly blocked and
    the replacement depends on the solids present in
    the raw feed to the geyser (i.e. at most within
    six months)
  • Cost breakdown for Solution 1 Cost for filter at
    R25.00 and Cost of NanoPhos at R125.80 per kg
    R7 837 every six months, or to R 1 2m
  • After analysing all the project challenges, it
    was clear that the cost associated with water
    quality would make the project unviable and that
    systems would need to be replaced on a regular
    basis.

7
Presentation outline
Implementation challenges in Naledi Municipality
Cont
  • Cost breakdown for solution 2 Reverse Osmosis
    (operates at high pressure and removes all ions,
    bacteria, viruses, etc).
  • Solution 2 excludes maintenance and running
    costs.

Areas Daily Consumption Remedial Costs
Stella 6 M l R15, 000, 000.00
Huhudi 9 Ml R18, 600,000.00
Vryburg Coldridge 18 Ml R45, 000,000.00
Dithakwaneng 2 Ml R6, 200, 000.00
Devondale 1 Ml R3, 100,000.00
Total R88, 400,000.00
8
Presentation outline
Recommendations to resolve water quality problem
  • Based on an analysis of all the costs presented
    above, projects are moved to a new and more
    suitable area. All SWH Units for Naledi had
    already been procured when the project was
    terminated.
  • Selection of a new area Relocation form Naledi
    to Maluti-a-Phofung.
  • Free State Province had already engaged the DoE
    on a Business Plan to roll out SWH Units.
  • Maluti-a-Phofung was then approved to take over
    the roll out from Naledi Municipality .
  • Eskom has submitted a report confirming that a
    feasibility study is underway prior to the start
    of the actual installations.

9
Presentation outline
2011/2012 SWH Fiscal update
  • Emfuleni , Musina and Umsobomvu approved for the
    current financial year. An allocation of R54,400m
    each was approved for the current financial year
    under schedule 7 of DoRA, whilst
  • R60 million was allocated to Umsobomvu
    municipality, under schedule 6.
  • 1st and 2nd Quarters of the financial year
    focused on the finalisation of the business plans
    and contracts.
  • A feasibility study is necessarily undertaken in
    each municipality to allow clear remedial actions
    prior to the start of the roll out.
  • Musina Municipality has appointed Roschcon to
    undertake the feasibility study and Umsobomvu has
    issued an advertisement in January 2012 and
    currently finalising the procurement process. The
    actual installations planned to start in
    March/April 2012.

10
Presentation outline
SWH Rebate Level Revision
  • In June 2011, Eskom revised the claim rates due a
    threat on diminishing rebate funds. The above
    constraint prompted Eskom to review the Rebate
    Progamme as follows
  • On 11 April 2011 Eskom announced the downward
    revision of the rebate levels as shown on the
    table below and later approved R500 million to
    continue.

11
Presentation outline
Installations per Region
Above graph represents total installations to
date, including installations received but not
yet processed. This includes Eskom funded (rebate
and contracts) and DoE funded (Tshwane, Sol
Plaatjie and Naledi).
12
Presentation outline
Installations to date
13
Presentation outline
Standard Offer Model Update
  • Concept of the Standard Offer Model has been
    finalised
  • A one year Business Plan for SWH Pilot phase has
    been completed and ready for approval and
    implementation as of 1 April 2012
  • The SO implementation will start with the roll
    out of about 250 000 units within the allocated
    R1 billion.

14
Presentation outline
Standard Offer Model Recap
  • The Standard Offer Concept is based on the
    energy savings to be derived from an initiative,
    irrespective of the technology applied to achieve
    such savings. It is an intervention that is
    outcome based with the incentive flowing after
    delivery of the intervention, and subject to
    verification of the savings. The solar water
    heating system will have a deemed savings value.
    It is envisaged that the rebate will be
    attractive initially, in order to kick-start the
    market. Over time, it is predicted that costs
    will be reduced through economies of scale.

15
Funding requirements
Total funding required for Solar Water Heating
units
Pool of funding required to service debt
Source of immediate funding
Owner /user
Cost of installed units (making allowance for
reduced cost due to volume)
Commercial Debt
To be serviced by
To be obtained from
Fiscal
Carbon Credit
Concessionary Debt
MYPD
Interest on debt
Grants
16
Presentation outline
Cost Benefit Analysis
Residential market targets Total Potential Reducing electricity demand MW Universal access Offset rising electricity cost Accelerated service delivery Renewable energy targets GWh/annum Climate change '000 tons
Upper income geyser replacement 560,000 1,200,000 47 347 Completely equitable across the markets. Plus frees grid capacity lt60 of water heating costs   672 679
Mid/low income geyser replacement 1,750,000 3,000,000 58 1,085 Completely equitable across the markets. Plus frees grid capacity lt70 of water heating costs Major impact 2,100 2121
Non Geyser delivery 2,690,000 6,600,000 41 1,668 Completely equitable across the markets. Plus frees grid capacity lt80 of water heating costs Major impact 3,228 3260
Insurance geyser replacement 55,000 0   34 66 67
New build 110,000 0   68 132 133
5,165,000 10,800,000 48 3,202 6,000 6,060

Residential market targets Total Potential Reducing electricity demand MW Access across all markets Offset rising electricity cost Accelerated service delivery Renewable energy targets GWh/annum Climate change '000 tons
Upper income geyser replacement 236,500 1,380,000 17 142 Completely equitable across the markets. Grid capacity freed lt60 of water heating costs   284 358
Mid/low income geyser replacement 440,259 3,550,000 12 264 Completely equitable across the markets. Grid capacity freed lt70 of water heating costs Major impact 528 1248
Non Geyser delivery 383,389 6,320,000 6 115 Completely equitable across the markets. Grid capacity freed lt80 of water heating costs Major impact 460 842
Insurance geyser replacement 31,343     19 38 91
New build - SWH over geyser 123,631     74 148 182
New build -non geyser delivery 142,000     43 1,458 2,721
1,357,122 11,250,000 12 657
17
Presentation outline
Cost Benefit Analysis
Programme MYPD Subsidy Needs    
Residential market targets 2010 2011 2012 2013 2014 2015
Upper income geyser 92,089,800 143,250,800 255,805,000 270,130,080 252,735,340 212,829,760
150 litre SWH System 10,788,525 16,782,150 29,968,125 31,646,340 29,608,508 24,933,480
200 litre SWH System 49,838,085 77,525,910 138,439,125 146,191,716 136,777,856 115,181,352
250 litre SWH System 9,468,360 14,728,560 26,301,000 27,773,856 25,985,388 21,882,432
300 litre SWH System 21,994,830 34,214,180 61,096,750 64,518,168 60,363,589 50,832,496
Mid/low income geyser 76,708,800 150,409,412 270,736,941 391,064,471 451,228,235 752,047,059
Closed coupled 61,367,040 120,327,529 216,589,553 312,851,576 360,982,588 601,637,647
Split unit 15,341,760 30,081,882 54,147,388 78,212,894 90,245,647 150,409,412
Non Geyser delivery 14,016,324 60,834,740 134,761,117 225,407,313 363,159,065 730,016,883
100lt Roof mounted 8,806,068 38,220,779 84,666,670 141,617,160 228,162,764 458,649,351
100lt Pole mounted 4,403,034 19,110,390 42,333,335 70,808,580 114,081,382 229,324,675
55lt Pole with hand pump 807,223 3,503,571 7,761,111 12,981,573 20,914,920 42,042,857
Insurance replacement 11,475,403 26,775,940 33,469,925 33,661,182 29,071,021 24,480,860
Totals 194,290,327 381,270,892 694,772,983 920,263,046 1,096,193,662 1,719,374,562

Programme MYPD CDM Needs    
Residential market targets 2010 2011 2012 2013 2014 2015
Upper income subsidy 0 0 0 0 0 0
150 litre SWH System 0 0 0 0 0 0
200 litre SWH System 0 0 0 0 0 0
250 litre SWH System 0 0 0 0 0 0
300 litre SWH System 0 0 0 0 0 0
Mid/low income geyser 77,333,357 151,634,033 272,941,259 394,248,486 454,902,099 758,170,165
Closed coupled 61,866,685 121,307,226 218,353,007 315,398,789 363,921,679 606,536,132
Split unit 15,466,671 30,326,807 54,588,252 78,849,697 90,980,420 151,634,033
Non Geyser delivery 10,502,649 45,584,416 100,978,597 168,901,200 272,120,727 547,012,987
100lt Roof mounted 6,301,590 27,350,649 60,587,158 101,340,720 163,272,436 328,207,792
100lt Pole mounted 3,150,795 13,675,325 30,293,579 50,670,360 81,636,218 164,103,896
55lt Pole with hand pump 1,050,265 4,558,442 10,097,860 16,890,120 27,212,073 54,701,299
Insurance replacement 0 0 0 0 0 0
Totals 87,836,006 197,218,449 373,919,857 563,149,686 727,022,826 1,305,183,152
18
Presentation outline
SWH Localisation
  • Government and our social partners signed a Green
    Economy Accord on 17 November 2011, as an outcome
    of social dialogue on the New Growth Path.
  • The Accord has been signed on behalf Organised
    Labour, Business, Community and Government.
  • The Green Economy Accord recognise that the
    installation of SWH systems can help with
    climate-change goals and increase the number of
    South Africans who have access to hot water while
    creating jobs in manufacturing and installation.
  • Business committed to working with Government to
    develop, establish and then publicise a
    sustainable funding plan to support the
    installation of 1 million SWH systems.
  • It should be noted that the success of
    localisation within the Green Economy Accord
    depends on its implementation together with other
    Accords such as Local Procurement Accord,
    National Skills Development Accord and Basic
    Education Accord because of cross cutting
    elements

19
Presentation outline
SWH Localisation
  • The following localisation issues are addressed
    under Commitment One (Green Economy Accord)
  • Increase the rollout to one million units In
    order to achieve the targets for SWH
    installations, it will require financing,
    enterprise development, training and policy
    coordinated across all stakeholders. Business
    committed to working with Government to develop,
    establish and then publicise a sustainable
    funding plan to support the installation of 1
    million SWH systems
  • Improve localisation of the components All
    parties commit to the drive to increased
    localisation of the components of the SWH
    systems. Government committed to ensure that
    incentives and regulatory measures are in place
    to promote greater local manufacturing of
    components of the SWH systems. Specific
    opportunities for localisation to be identified
    and support localisation accordingly
  • Secure support from the industry for replaced
    units Approximately 200 000 electric geysers are
    replaced annually by householders through
    payments via the insurance industry, to promote
    the use of locally-manufactured SWH for
    replacement of a damaged electric hot-water
    geyser

20
Presentation outline
SWH Localisation...
  • Secure support from the industry for replaced
    units Business will work with the insurance
    industry to approve a manageable selection of
    suitable systems to be used by insurers. Business
    will implement a pilot by 2012 followed by a
    wider SWH roll-out by the insurance industry in
    2013.
  • Secure guarantees on installed units The parties
    identified a potential risk with the guarantees
    on the SWH units, particularly i.r.o start up
    companies who may no longer be in business when
    warranties needed to be honoured. Business,
    government and various funding institutions
    including Eskom are engaging to develop proposals
    on warranty systems, standards and funding
    mechanisms to address this risk.
  • Promote the marketing of SWH systems The parties
    recognise that it is imperative that consumers
    embrace the technological shift to SWH. Business
    therefore committed to develop with Government as
    well as organised labour and community
    organisations, national communication campaign,
    linked to local community initiatives and
    campaigns like Lead SA, Proudly SA and 49m, to
    educate South Africans about SWH and its benefits

21
Presentation outline
SWH Localisation...
  • The following localisation issues are addressed
    under Commitment One of the Green Economy Accord
  • Promote uniform technical and performance
    standards for SWH The parties recognised that
    given South Africas unique climate conditions,
    the need to develop local standards for the
    different component parts of SWH, in order to not
    only support local technological development, but
    to also ensure that we can facilitate the
    introduction of imported technologies for local
    manufacturers. Government committed to develop
    the standards for the different components that
    make SWH units, through SABS. Business undertook
    to support the development of local standards for
    SHW at component level.

22
Presentation outline
SWH Allocation for 2012/13 2014/2015
  • An amount of R 4.7 billion has been allocated to
    achieve 1 million SWH units by 2014/2015

Financial Year Amount (R)
2012/2013 1 billion
2013/2014 1.7 billion
2014/2015 2 billion
23
Presentation outline
Conclusion
  • Progress made to date on the Solar Water Heating
    programme, challenges encountered and they are
    being resolved
  • That from the above figures, it is evident that
    the cumulative target of 250, 041 installations
    for the current financial year is still in sight
    given that about 82 of the targeted units have
    been installed.
  • Budget allocated to achieve 1 million SWH units
    by 2014/2015.
  • Commitments already made with respect to the
    Green Economy Accord to address the localisation
    issues to create more jobs.
  • That work is in progress with all stakeholders to
    intensify the operationalisation of all
    identified key factors to localisation.
  • Energy savings will only be improved through
    penetration of high end market, through the
    Standard Offer Concept
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