PHOTON International The Photovoltaic Magazine

South African poverty tariff gets head start for off-grid ratepayers

A temporary poverty tariff for off-grid households in South Africa intended to buy down nearly 70 percent of the monthly fees on electricity generated by solar home systems (SHS) was approved by the Department of Minerals and Energy (DME) at the end of January. Its introduction through five companies, each of which won exclusive five-year concessions in 1999 to install up to 50,000 fee-for-service SHS in different off-grid areas (see 5/2002, p. 10), was staggered through March.

	© Solar Vision and Scan Solar SA (Pty) Ltd.
Workload: Solar Vision, which uses modules from the Power4Africa facility in Namibia, says SHS applications increased four-fold after a poverty tariff was finally announced.

The DME has made 3 million ZAR ($381,000) available through July 1, when the long-awaited national program is scheduled to take over. The poverty tariff reduces the 58 ZAR ($7.36) monthly fees on SHS installations by 40 ZAR ($5.08).

According to Gary Whalley, managing director of Solar Vision, a local SHS integrator backed by the Norwegian module manufacturer SolEnergy with a concession area in the Northern Province, applications for SHS through his firm increased four-fold directly after the announcement. He expects weekly levels to hit 100 by the beginning of May, increasing to 125 by June. The poverty tariff has been budgeted till July 2006 and will be followed by annual reviews. Whalley says the concessionaires are in discussions with the DME »to get some kind of assurance that it will last much longer,« or at least be phased out rather than abruptly terminated.

But questions about the level of a 3,500 ZAR ($444) capital subsidy paid by the DME to the companies for each installed system are still dogging the program. In Jan. 2002, the concessionaires complained that fluctuations of the rand against the dollar, the currency in which most of their equipment is purchased, had played havoc with marketing plans. The value of the subsidy had been reduced to about $301. Instead, they opted for truncated schemes (see PI 5/2002, p. 10), which are now ending and will be followed by a six-month review. Whalley says that although the concessionaires have not yet made a formal request, the DME »has bandied some numbers about.« He declined to give details, but according to one source, the concessionaires want the subsidy raised to 4,000 ZAR ($508). The change is unlikely, however, since the value of the rand against the dollar has improved nearly 50 percent since their initial complaint.