Friday, November 19, 2010

Questions Around Eskom's Solar hot water Subsidy

THE Eskom subsidy for solar water heaters should be used to support the local industry and create local jobs, said Mr Michael Bagraim, the new President of the Cape Chamber of Commerce. At present Eskom subsidises all SABS-approved solar geysers, but many of them are made in Europe, Israel and Australia.

“The question we should be asking is why are we subsidising imported products?” asked Mr Bagraim. “Would it not make more sense to put the money into local products and in the process turbo charge our manufacturing industries and create new jobs?”

He said the imported solar geysers were good products but so were the solar systems manufactured in South Africa. “If we can develop the local industry, achieve the economies of scale and make solar water heaters more affordable we will be bringing the benefits of solar power to more people and, at the same time, help Eskom to deal with the demand for electricity.”

Industry sources have told the Chamber that about half the solar systems being installed in terms of the Eskom programme were imported and that in some areas the figure might be as high as 70 percent.

“I have no doubt that, given the necessary encouragement, South African engineers and artisans can produce a superior product for local use and for export,” Mr Bagraim said.

Manufacturing industries in South Africa had been hit hard by the strong rand which undermined exports and made imports cheaper. “Targeting the subsidy to support local products is good way to help our factories and workers and we should be doing this instead subsidising their competitors.”

Mr Bagraim pointed out that most consumers in Cape Town were already paying between 90 cents and R1.20c per unit for electricity and over the next three or four years this would double. The growth of the solar industry was assured and “we should do everything in our power to make sure that it is our industry and that it makes jobs for our workers,” he said.



SAAEA said...

Craig has left a new comment....

Exclusive subsidisation of local manufacturing is not the way to achieve sustainable job creation and competitiveness. The rebate program has injected significant liquidity into an otherwise poorly developed industry, and that in itself should be sufficient to provide the impetus for job creation and growth. Our problem however remains our own productivity and competetiveness - we must stop blamimg rand strength and other import-related considerations for the fundamental problem that we have a largely unskilled and unproductive workforce aspiring to European wage rates. If we're not prepared to work like the Chinese and the Indians, we have no manufacturing future in this country.

Anonymous said...

I agree with Craig. The view that only manufacturing will create SWH jobs is flawed. The real job creation lies with the installation. It takes a 4-5 team half a day to install just one system. Installation of imported systems thus employs far more people than manufacturing.

If local manufacturers can compete in terms of cost and quality then they should. But to try and force growth would be counter productive. Let the market decide.