Off-grid Solar Home System Programme South Africa
Households in South Africa far from the electric grid may have long to wait to benefit from the government's universal access to electricity targets, which focusses predominantly on grid electrification. This project describes the South African government's experience with an off-grid solar PV programme to provide isolated and rural households with electricity. This was undertaken in partnership with the private sector, with local concessionaires acting as project implementors and receiving subsidy support from the government. The programme has faced a number of challenges associated both with the inherent difficulties in servicing rural households but also because of administrative and policy problems which have limited the growth of the programme.
This project falls within the government's Integrated National Electrification Programme (INEP) which has a target of access to electricity for all formal households by 2025 The objective of the Solar Home System (SHS) programme is to provide energy access to remote areas far from the national grid which are technically and/or economically difficult to electrify.
This project is aimed at providing rural, non-electrified households with access to solar home systems for lighting and other basic electrical needs.
To date the programme has achieved approximately 30,000 installations in rural households. Households have been provided with access to a 50Wp solar photovoltaic panel, inverter and battery. Concessionaires are also required to provide access to fuels (such as kerosene or LPG) for thermal needs like cooking, heating and ironing through rural energy shops.
The programme has fallen short of initial expectations and has achieved just 22% of the original target of 300,000 installations in rural households. The major problem delaying roll-out has been government cutbacks in funding for the programme and delays in awarding new tenders to concessionaires (private companies who deliver).
This government-initiated solar PV project in South Africa programme was designed to augment the grid electrification programme for those remote rural areas that are difficult to electrify. Rural grid electrification of rural communities typically fails to recover operating costs (DoE, 2012) and therefore an off-grid programme delivering solar panels was considered a more feasible alternative. Remote rural areas that do not have any electrification plans for the next 3 years are identified and granted as concessions to private companies who are given exclusive rights to operate in those areas. The concessionaire acts like a small local utility that provides an electricity service to households.
The programme is a fee-for-service model whereby households pay a monthly fee to cover maintenance and costs of replacing the batteries. Government decided on this choice of model (rather than outright sales) to ensure that concession companies retained a local presence in the area and would provide after sales service and maintenance. The programme also requires the concessionaire to establish their local presence through establishing rural energy stores or office and to address the thermal needs of households as well by supplying fuels such as liquid petroleum gas (LPG) and kerosene and improved cook stoves at the local level.
The government provides subsidy support for the programme by providing both a capital cost subsidy for the price of the unit and operational cost subsidies for on-going maintenance. The capital subsidy provided by government is 80% of the cost of the system, with the rest being financed by the concessionaire (DoE, 2012). In 2008, it cost around $740 to install a system (Aitken et al, 2009). Customers pay an upfront fee of $13 when they receive the system and then a monthly service fee of $8. This monthly service fee however proved to be too expensive for some of the poorer households and so a consumption subsidy of approximately $5 is also provided, paid out by the relevant local municipality directly to the concessionaires. This was to extend the financial equivalent of the consumption subsidy (Free Basic Electricity) that electrified households receive, to non-grid electrified households in this programme. The Free Basic Electricity subsidy provides poor grid-connected households with 50kWh free per month.
The programme, as it is currently designed, is dependent on government subsidies. Although the sustainability of such a subsidy dependent programme is questionable, designing cost recovering rural energy programmes is challenging, primarily because of the low purchasing power of rural customers which makes it difficult to recover capital and operations costs from tariffs alone.
The SHS programme forms part of the government's Integrated National Electrification Programme (INEP) and as such, the Department of Energy has produced a Non-Grid Electrification Policy (DoE, 2012) to guide implementation. Furthermore the government subsidises part of the capital costs and monthly service fees paid by households to facilitate affordability by poor households. Despite this seemingly supportive policy environment, the actual implementation thereof has been slow and there appears to be a lack of political will to drive the programme. There have been severe cutbacks in funding available for subsidising new systems and delays in awarding new tenders (Wlokas, 2011).
The success of the SHS programme also requires the buy-in and support at a local municipal level for service agreements and accessing the subsidy towards the monthly service fee. Payment of the Free Basic Electricity subsidy towards the SHS programme is at the discretion of the relevant local municipality. Many do not see the value in supporting the off-grid programme and prioritise spending on other services instead (e.g. sanitation or water). Payments paid by municipalities are therefore non-existent in some areas and in others are made on an irregular basis. The Department of Energy does not exert pressure on municipalities to support the programme.
In some municipalities energy forum meetings are held with various stakeholders including municipalities and concession companies. These have proved very successful in creating mutually beneficial arrangements between the players and payment of subsidies and general working relationships seem to be better in areas where such meetings are held (Wlokas, 2011).
There are challenges with undertaking local maintenance in rural areas which can affect business models of concession companies as there are high costs associated with travelling long distances to remote households. Establishing skills within local communities to undertake basic maintenance could be beneficial for both customers and concessionaire's business models.
Several of the concessionaires emphasised community ownership and involvement in their operations. One concessionaire, NuRa is part owned with employees through a trust which has a 20% shareholding (Aitken et al, 2009) and others such as Shine the Way and Solar Vision also have local ownership components.
The programme delivers socio-economic benefits to households. The provision of an energy source that provides high quality lighting that is clean and convenient has many positive impacts for rural households. It also provides households with energy for radios, charging cellphones and a small black and white television. This energy source also has positive impacts by displacing other energy sources such as candles or kerosene for lighting which can have associated fire and indoor air quality risks as well as associated emissions reductions.
A major problem that the programme faces is a lack of integration with grid electrification planning. One of the criteria for allocation of non-grid service provision is that off-grid systems should not be installed within 2 kilometres from a gridline and in areas where in the next 3 years electricity will not be rolled out (DoE, 2012). However there is often a lack of transparency in the electrification roll-out plans and several concessionaires have experienced the arrival of the grid in their concession areas. This has effectively put them out of business in those areas. Households tend to prefer grid electricity, which offers a more comprehensive service to solar and so they opt to cease paying for their SHS.
The rural nature of the areas in which SHS's are located also creates challenges in terms of installing and maintaining systems. Roads are often poor and sometimes non-existent with some households inaccessible by road and installers having to carry equipment into sparsely populated valleys. One concessionaire, NuRa, estimates that approximately 14% of customer home visits have to be repeated because the technicians did not find the consumer at home at the time of the visit (Aitken et al, 2009). Another problem with the delivery model is that solar home systems are installed on customer premises under their control but not under their ownership and there are many cases of vandalism, neglect and misuse (Prasad, 2007).
Non-payment levels are also relatively high, estimated to be around 30 percent at any one time (Aitken et al, 2009). This may be exacerbated by the irregular way in which the operational subsidies by municipalities are paid out, for example some municipalities do not make these payments every month. As a result, customers in these areas see their tariffs fluctuate between $2.5 a month (while the service provider received balance from the subsidy), then suddenly climb to $8 (when the subsidy is no longer available). This makes it challenging for both households and concessionaires to manage their finances and budgets.
This programme is run by government and implemented by private concessionaires. Some concessionaires have local stakeholder involvement in their business models. See section 8 above.
The Department of Energy monitors the number of new installations made, however it is unclear whether and what other kind of on-going monitoring they undertake.
The programme has a strong potential for both replicability and scale-up. However there appears to have been a lack of political will to drive the programme forward and expand it in a significant way, or indeed in line with the original intentions. But since 2013 the programme is revitalized and will also be implemented in other than concession areas.
- Aitken, R. et al. 2009. NuRa indepth case study. Report for REEEP.
- Clark, A. 2005. Innovations in South Africa's Off-grid Concession Programme. Human Sciences Research Council.
- DoE. 2012. Non-grid electrification policy guidelines. Department of Energy. Pretoria, South Africa.
- Prasad, G. 2007. Electricity from solar home systems in South Africa. Create Acceptance Case Study. Energy Research Centre, University of Cape Town.
- Wlokas, H. 2011. A review of the solar home system concession programme in South Africa, Energy Research Centre, University of Cape Town.
Name:Off-grid Solar Home System Programme South Africa
Public private partnership between the Department of Energy and private companies that include:
- KwaZulu Energy Services (KES);
- Nuon RAPS Utility (Pty) Ltd;
- Solar vision (Pty) Ltd;
- Ilitha Cooperative;
- Summer Sun Trading (Pty) Ltd; and
- Shine the Way cc.
- Energy supply
Project status:Operational project
Implementing approach:Public private partnership