A case study of off-grid solar PV in South Africa

A case study of off-grid solar PV
in South Africa
Louise Tait and Gisela Prasad
LCEDN conference
4 – 5 April 2012
SA’s electrification programme
• Wide-scale national grid electrification programme postdemocracy to extend services to previously excluded
• To date approximately 5.2 million households have been
electrified since 1994. Approximately 75% of the
population have access to electricity. Most of the remaining
un-electrified are in rural areas
• But recent slowdown in connection rates – budgetary
constraints, lack of bulk distribution infrastructure, unelectrifiable settlements, lack of capacity at municipal level
• Connection and consumption subsidies – poor households
receive 50kWh per month free
SA’s off-grid solar programme
• 1998 Gov adopted Off-Grid Solar Home System
(SHS) Programme – to speed up access for
remote and rural areas where extension of grid
not feasible
• Target was to electrify 300,000 households using
solar PV
• 50Wp panel and battery – 4 lights, small B&W TV,
radio and small fan for a few hours each night
• Concession model with private sector - six
concession areas granted – 50,000 installations
SA’s off-grid solar programme
• Government provided capital cost subsidy and
operational subsidy to concessionaires
• Fee-for-service model – households pay
monthly fee for solar service (covers
maintenance and battery replacement)
• Concessionaires also to make provision for
thermal needs of rural households – supplying
cook stoves, LPG and paraffin in rural energy
Delivery models of concessionaires
• Capital cost subsidy from gov  +- 80% of cost of system.
Concessionaires must finance the rest themselves
• In 2008 system cost around R5,600 ($740) and received gov
subsidy of R4,060 ($535)
• Customers pay upfront connection fee of R100 ($13) and
monthly service fee of R61 ($8) – found to be unaffordable
and government extended FBE subsidy to off-grid
programme – paying R40 ($5) of service fee.
• Payments collected through regional energy centres or
using local ‘runners’ who collect from households
• Systems have an ‘energy management unit’ – manages
battery and credit, disconnects load when credit expired,
uses data transfer tokens
Policy problems
• Programme has seen many delays and cutbacks in funding
• In 2003 after awarding tenders, government drastically cuts
back number of installations it will provide subsidy for
• Delays in awarding new tenders for third phase – no new
tenders awarded for 4 years  from 2006 – 2010
• Department of Energy cite difficulties in identifying new
• There appears to be a lack of political support to drive the
• Payment of FBE subsidy to offgrid programme at discretion
of local municipalities – payments irregular and sometimes
Other challenges
• Lack of integration with electrification planning – grid
has extended into off-grid service areas, making SHS’s
• Non-payment by customers – contributed to by
irregular subsidy payments by municipalities and
inflexible monthly charges
• Perceptions and attitudes of customers towards solar –
grid is preferred, solar service seen to be limited, fears
that it will jeopardise chances of getting the grid
• Rurality and lack of infrastructure – lack of roads, poor
Current status of concessionaires
• Currently a total of about 30,000 installations in place
across the concession areas (compared to goal of
• In 2010 four concessionaires granted new tenders for a
total of 10,500 installations
• Many SHS removed due to grid expansion, vandalism,
theft, non-payment etc.
• Conducting maintenance only not viable business
model and 2 went out of business.
• The rest currently just breaking even – probably
surviving as long as they have due to international
Implications for delivery models
• Capital and operational subsidies essential
• Gov cutback and delays – negative impacts on
order and stocks, staff retention, insurance,
investor confidence, lost opportunities with
investors and customers
• Small installed base has not proved to be viable
business model. Need to expand installations but
policy caps and delays have prevented this.
• Irregular FBE subsidy payments negatively
impacts customer satisfaction and monthly
payment rates
Successes and weaknesses of
the programme
• Model does not reach poorer households
• Public private partnership has not proved successful – gov
has not delivered in the partnership and policy delays have
stifled innovation and threatened business viability
• Private sector shown remarkable staying power to deal
with challenges – developing systems in rural areas with no
infrastructure, policy delays
• Off-grid does not offer substantial returns in the short
term, takes particular private sector players with
commitment and to show innovation
• Going forward – need to integrate into electrification
planning, government and concessionaires need to engage
with municipalities over subsidy payments

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