Presentation and Discussion of Results
4.5 Raising Awareness
Table 4.4. Finance Mechanisms and the Benefits thereof
Finance Mechanism Benefit
SWH financed at low interest rate over 5 years
Can be beneficial when electricity prices increase and best return is on high-end (expensive) systems.
Using an ESCO to provide hot water service Reduced cost of hot water when ESCO rate is lower than equivalent electricity tariff
SWH Rental (from finance house)
Financial benefit to the end user due to lower rental payments. However, it is not a viable option for finance houses
Insurance Reimbursement (claim applicable to valid policy holders)
Assists with some capital but can only be exercised when the EWH fails.
Green Bonds Low service cost and subsidised interest rates
Respondent 3 argued that SWHs do not have a good enough “business case.” That is, the low cost of electricity does not allow payback periods equivalent to the warranty period (5 years) and therefore there is “marginal” benefit (Respondent 3). It is further stated that other benefits, such as “security of energy or environmental motives” (Respondent 3) have to be examined to justify the business case. The power shortages (load shedding) have raised awareness, but not to the expected level. Consumers were asked to reduce their consumption by 10% in 2008 and this impact was poorly seen on the electricity consumption figures, reducing by only 2% (Eskom Annual Report, 2009, p. 46).
Respondent 2 draws attention to increasing awareness by “pre announced higher electricity prices, including externalities.” This means that the publicity around the forthcoming electricity price increases could result in the consumer being more responsive because the electricity price increase is going to affect the cost of living and ultimately each household’s budget. Many consumers have already been affected by the above inflation electricity price increases of 27% in 2008 and 31% in 2009. Eskom’s intended price increase of 35% over the next three years will definitely send a strong signal to the consumer that every unit of electricity energy used is going to add to the electricity bill. Consumers are therefore going to be looking for methods to reduce their electricity bill by reducing their electricity consumption. The obvious answer for many is to look towards other technologies, particularly solar water heating, to provide the electricity savings that are required.
The question of how does awareness need to be created is an interesting one and can be answered by simply looking around you. For example, are you aware of solar water heating? If yes, then did you enquire more about the product or technology? There is common agreement among respondents that the awareness campaigns are lacking and more tactical awareness plans must be devised. Table 4.5 highlights responses on whether there was sufficient consumer awareness of SWHs.
Table 4.5. Summary of Respondents Comments on Awareness
Respondent Awareness
1 No, insufficient education, starts at schools with awareness campaigns as well as marketing campaigns in newspapers.
2 No, Pre-announced multi-year introduction of carbon taxes.
3
No, there is not and it is simply because there is no business case. Who in his right mind will spend 25K on a solar retrofit system if the payback is longer than the warranty period? RE lives between the differential of the capital cost and the savings to be had and as long as the cost of electricity is under priced the business case is marginal, except if you look at the other motives being security of energy or environmental motives.
4 Yes
5 On television many times a day.
6 No, as above a national advertising and awareness campaign is required.
However, this must include provision of installers and an increased subsidy.
7 There is a need to have awareness programs at schools and universities on the value of alternative energy.
Respondent 4 mentioned that there is sufficient awareness. The explanation could be because of load shedding and pre-announced electricity price increases.
The subject of climate change is an international concern that requires attention from all individuals living on this planet. Once this culture is inculcated in individuals, the awareness of environmental pollution becomes noticeable. This culture change should be introduced at schools because this period in the individual lives requires compulsory learning. Learners can then share their education with their parents and others who had unfortunately missed the lessons. Therefore, education on climate and the environmental erosion is crucial.
The introduction of carbon taxes would sensitise people to the amount of carbon pollution that is prevalent in the atmosphere (Respondent 2). This means that if end users use electricity that produces carbon gases as a by-product, they will be subjected to these taxes. The so called ‘carbon footprint’ is also an interesting concept that could create awareness on the detrimental effect of carbon gases. Individuals can measure their carbon footprint by examining all their tasks and measuring the quantities of the carbon gas released by the execution of each of their tasks.
The return on investment on the SWH varies the SWH business case as it is dependent on the price of electricity. In some systems, the return on investment can be 4 years while others systems may take up to 15 years to payback. The consumer cannot decide which option is best for the household and delays this buying decision because of the uncertainty. The financial figures look good but the end user questions the ideal payback period for this type of investment. The majority of suppliers offer a 5-year warranty (Eskom DSM, 2009) on the SWH and claim that it will payback in 5 years. A 10-year warranty is available by some suppliers but at an additional cost. The specified life cycle on some SWHs is 20 years. Therefore, an ideal return of investment period should be between 10 and 15 years. This accommodates premature failure of the SWH and the end user can use the savings obtained after payback, to finance the next SWH.
The media that could be responsible for creating awareness are television and radio broadcasts. Radios consume the lowest amount of energy and are embedded in cellular phones, computers, the internet, flash drives and as portable devices that are sold for less than R 20 in some instances. The end user can easily absorb the information disseminated by the radio and the broadcast is widely available but limited to an audio signal. Television would provide a pictorial broadcast that could show the different types of SWHs, a typical installation and the function of the SWH components to produce hot water. However, the cost of advertising will be expensive and has to be borne by either the supplier or some other stakeholder.
With the power shortages in South Africa almost ceasing, the consumers have resumed old habits by using electricity inefficiently. There is anticipation by Eskom, that the future electricity price increases will a motivating factor to reduce electricity consumption.