Remixing Eskom’s Old Solar Water Heater Rebate Program For Battery Storage Could Help Ease Load-Shedding

South Africa has had power supply problems for some time. This has forced Eskom, the national utility, to implement load shedding. The domestic sector accounts for about 35% of peak electricity demand in South Africa.

As in most of southern Africa, hot water production is primarily provided by electrical resistance heating elements in boilers popularly known as geysers. These geysers usually take the form of cylindrical metal tanks that contain around 200 liters of water. Water heating accounts for about 40% of most households’ electricity bills. Increased adoption of solar water heating in hot and sunny South Africa is one of the key avenues to unburden the grid and over time save consumers on electricity bills as well. These solar water heaters are usually placed on the roofs of houses.

In order to incentivize the adoption of solar water heaters and relieve pressure on the electricity grid, Eskom launched a rebate program in 2008 to encourage households to switch to solar water heaters. In the paper “Review of South Africa’s Solar Water Heating Rebate Programme,” Theo Covary and Karin Kritzinger say that the program originally aimed for 925,000 solar hot water installations by 2013. Eskom’s COP 17 factsheet on the Solar Water Heating Rebate Program says: “More By the end of 2011, more than 38,000 high pressure and 84,000 low pressure systems had been deployed across the country. This resulted in energy savings of around 60 GWh/year. The program also had a positive impact on job creation. South Africa’s market for solar water heating grew from just 20 suppliers in 1997 to more than 400 suppliers in 2011.” These advances have shown initial success in the implementation of the project. 60,000 MWh/year is quite remarkable. However, the South African electricity grid is mainly coal-fired, so for every GWh saved, 0.99kt of CO2 is avoided, resulting in a saving of around 60kt of CO2 per year.

Eskom’s bulletin also shows that by the end of September 2011, 156,000 rebate requests had been received for installed systems. In the discount program, the discounts varied depending on the size of the solar hot water heating system installed and the associated electricity saving potential. Discounts ranged from R3,280 to R8,964 ($440 to $1,200 at the exchange rate at the time) depending on the system purchased. The cost of the solar water heating systems ranged from R7,000 to R35,000 ($940 to $4,670 based on the exchange rate of the time), depending on size, type and whether they were imported or locally manufactured.

The IEA sums up quite nicely how the rebate program worked and how it was funded. “The program was funded by a tariff charged by NERSA (National Energy Regulator of South Africa) on consumers’ electricity bills. Eskom managed the program through input from a wide range of stakeholders including local industry, government, NERSA and the Department of Minerals and Energy (DME). Buyers of solar water heaters received a direct rebate after submitting a rebate claim to Eskom auditors.”

However, Theo Covary and Karin Kritzinger’s article notes that by 2015, after 7 years, only 102,498 high pressure solar water heater systems had been installed, 11% of the original target. The program was suspended until 2016. While the original goal wasn’t reached, 102,498 units is still pretty significant. Keep that number of 102,498 in mind as we will come back to it later in this article.

Perhaps given the ongoing load shedding in South Africa, the rebate program can be reconsidered. Adjusting the rebate scheme for residential battery storage systems could help reduce some of the load shedding. Eskom’s load-shedding program is phased, with Eskom shedding a certain amount of load from the grid to stabilize the grid. So, depending on the severity of the crisis, the load shedding will be performed in stages from stage 1 to stage 8, where stage 1 will shed 1000 MW load from the grid and in a stage 8 scenario Eskom will remove 8,000 MW load from the grid. Depending on the severity of the crisis, load shedding takes place on a rotation basis over 2-hour or 4-hour blocks. However, level 8 means that most consumers will experience a power outage for around 12 hours.

To get a good idea of ​​how powerful aggregation in residential battery storage systems can be, let’s look at what happened in California last week. As Zachary Shahan said in his article: “S&P Global notes that California had about 884 megawatts (MW) of power from small battery systems available in early August. That’s about 77,000 homes and businessesand it adds ~4,000MW of utility-scale battery storage capacity. It’s also a perfect example of how many small actions can add up to a big impact.“

Now do you recall that the number of high pressure solar hot water systems installed in South Africa under the rebate program was 102,498? That’s 25,498 more than the 77,000 homes and businesses that may have contributed 884 MW of power capacity in California last week when the power grid was under stress. The leading residential solar and battery storage company in the US, Sunrun, shipped 18,000 home battery storage systems daily to handle the pressure. Local solar companies could help play a similar role in South Africa. We could potentially see similar growth in job opportunities just as the solar water heating rebate scheme has helped increase the number of players in the market.

The 884 MW in California is almost enough to help to some extent with Stage 1 load shedding in South Africa. Let’s say we take the discount of up to $1,200 for the $4,670 high pressure solar water heater, that’s a discount of up to 26%. If Eskom, NERSA and the Department of Minerals and Energy could now offer a workable rebate of up to 26% or similar on domestic battery storage, it could boost domestic battery installations in South Africa to a level where these aggregate domestic batteries could help to ease the pressure for some phases of load shedding in the near future. S&P Global’s report notes that just two years ago, California barely had about 200MW of battery capacity available, showing that these home battery installations could be ramped up fairly quickly. These battery storage systems are also well suited for homes and apartments that may not have enough space for rooftop solar panels, giving more people across the country access to home battery systems.

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