1. National Solar Water Heater Programme Update May 2014 Slide 1

2. Outline of Presentation 1.Objectives – Solar Water Heater ProgrammeObjectives – Solar Water Heater Programme 2.Problems with current delivery model 2 3.Transition to localization effort 4.Contracting models 5.Project Implementation – Status Update 6.Participation in the Installation Programme

3. 3 ObjectiveActivities/InterventionsTargetOutcome 1 Reducing electricity demand by transferring the water heating load from the grid to a renewable energy source (solar) Facilitation of switching from electric geysers to swh in high consumption domestic segment 5 million high income households converted to swh Reduced electricity demand in the residential segment defers power station investment 2 Mitigation of adverse climate change through an environmentally benign technology for water heating Installation of swh in the low income domestic segment 4.6 million low income households who use electricity for water heating Increased uptake of clean energy for water heating purposes 3 Cushioning the poor from rising electricity tariffs Universal access in the domestic low income segment 4.6 million low income households who use electricity for water heating Reduction in the domestic electricity bill due to water heating being provided by swh 4Creating job opportunities through increased local manufacturing and industrialization Setting up local factories for supplying the swh systems and taking installers through an accredited training programme About 7 swh factories set up to take up the demand as soon as possible Maximum local content of the swh systems utilized under the NSWHP, and the displacement of imported systems Objectives - Solar Water Heaters

4. 4 Problem 1 – there is little impact on electricity demand Problem 2 – there is little local manufacturing Problem 3 – measuring the local content of products is difficult Problem 4 – there is no technology standardization there are too many different products Problem 5 – the life cycle management of installed systems is inadequate Problems with old delivery model Installations to Date (May 2012) SHW TypeNumber installed (Rebate)FiscalTotal LP171 73024 293196023 HP48 94148 961 Total220 67124 293244 964 The prevalent technology type that has been installed is the evacuated tube type 600+ accredited products on the Eskom database not clear as to who is responsible for maintaining the swh over its 10-15 year life

5. Designation of swh in August 2013 Product not limited to local standard Call by SABS for submission of local content declarations by all participants in the NSHWHP, in line with SABS 1286 Analysis of the “local content scoring” of the various existing products WRAPPING UP PHASE - SUPPLY OF PRODUCT UP TO ~x SYSTEMS? 1 QUALIFICATION PHASE – CONVERSION TO LOCAL PRODUCT AS SPECIFIED 2 Selection of qualified product suppliers, using audit outcomes from SABS 1286 process Contracting by Eskom for manufacturing subsidies (only with qualified suppliers) EXCLUSIVE PHASE – ONLY LOCAL STANDARD PRODUCT IS SUPPORTED 3 Transition to localization effort 5 Selection of target municipalities after “feasibility” assessment and acceptance of conditions Training of installers

6. 6 Contracting Model

7. 7 Contracting Model…

8. 8 CONTRACTDESCRIPTIONREADINESSRESPONSIBLE A Funding agreement between Eskom and DoE for the NSWHP DoneDoE/Eskom List of municipalities to participate under the 2014/15 NSWH Programme (confirmation subject to feasibility report ) Draft completedDoE C Service Level Agreement between municipalities and Eskom Not yet. Draft under consideration Eskom/DoE/ Municipalities D Assessment of local content of manufacturerers by SABS Draft completed. Board ratification underwaySABS EAgreement between manufacturers and Eskom regarding supply rebates Not yet, awaiting SABS local content verification process Eskom PROJECT IMPLEMENTATION – STATUS UPDATE

9. 9 I Contract between Eskom and various installation and maintenance service providers If this option adopted, Eskom to procure the services Eskom J Contract between municipalities and various installation and maintenance service providers If this option is adopted, the standard provisions to be prescribed for the municipalities to mirror the funding agreement between Eskom/government Eskom KInstallation service providers training and accreditation framework For ensuring that there is a pool of trained and accredited service providers to participate in the NSWHP SETAs PROJECT IMPLEMENTATION – STATUS UPDATE…

10. 10 Municipalities participate subject to: Service Level Agreement with Eskom – outlines conditions Lets discuss swh@energy.gov.za Participation in Installation Programme - discussion

11. THANK YOU 11