Posted on March, 01 2012

Solar shines with help from carbon finance

Cape Town, South Africa, is cited as a leading non-OECD city for renewable energy. This is due largely to its work to equip 10% of all households and 10% of city-owned housing with solar water heaters by 2010. With the help of the Clean Development Mechanism, the Kuyasa Project has installed thousands of solar water heaters in a low-income housing area, as well as insulated ceilings and put in energy efficient lamps. Solar water heating has large potential in South Africa and many other developing nations.



Keywords: solar water heating, clean development mechanism, certified emissions reductions

Cape Town has been among the leading cities outside the OECD for strategic work on renewable energy (see also Cape Town Climate plan). The background of the Kuyasa Project is the goal set by Cape Town for 10% of all households and 10% of city-owned housing to have solar water heaters by 2010. The city established its Solar Water Heater Advancement Programme with aims that include requiring installation on all new buildings and multi-source financing (see also Barcelona and Rizhao).

Solar water heating
Solar water heating is one of the most widely used applications of solar thermal technology. It is practical not only in individual homes but also for larger-scale applications like hotels (swimming pools), hospitals, and industries like paper, food processing, and textiles. Among the advantages of solar water heating are its use of renewable energy and therefore mitigation of climate change, simple construction and installation, low maintenance costs, ease of retrofit to existing buildings, and absence of local pollution.

Using the CDM in South Africa
The goal for the Kuyasa Project was to place 6,300 solar water heaters in a low-income housing area, together with insulated ceilings and energy efficient lamps, financed largely as a clean development mechanism (CDM). The CDM was established under the Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC): it enables industrialised countries to buy Certified Emissions Reductions (CERs) from projects in developing countries that meet various requirements, such as demonstrable reductions in emissions against a selected baseline. Industrial countries can use these CERs to meet their emissions reductions targets.

The Kuyasa Project is estimated to generate emissions reductions of 1.29 tCO2/household/yr versus heating with coal-fired electricity (the main energy alternative). Indeed, South Africa is only one of many hot and sunny developing countries where fossil fuels still provide the main energy for heating water. This is also a financial issue, where funds are urgently needed for other goals than paying for fossil fuels.

Potential for renewables
South Africa has a strong potential for solar energy with one of the world’s best solar regimes (approx. 6 kWh/m2/day). Solar water heating is of special interest given that nearly half (40%) of home energy use is for water heating. One study found that solar water heaters would be a “negative-cost” mitigation option (i.e. zero cost, producing positive income). Another study finds that solar water heating is much less expensive than electricity or liquefied petroleum (LPG) on a life-cycle basis. Both of these studies focused on lower-income households. Kuyasa households are estimated to save USD 100/yr through their clean energy installations.

By at least one estimate, 90% of South Africa's electricity originates from coal, such that South Africa has one of the world’s most polluting electricity supplies. This is also in a context of near-total monopoly. Electricity in South Africa is both regulated and almost entirely supplied by one actor, the Electricity Supply Commission (Eskom), generating 95% of the electricity used in South Africa. Openings for new suppliers of renewable energy are limited. Municipalities themselves earn large revenues from re-selling Eskom’s electricity to their residents. Indeed, a study from 2000 found a miniscule market share for solar water heating in South Africa: only 0.8%.

Renewables in Africa
The rapid growth of urbanisation and demand for energy in Africa is another motivation for solar water heating. The decentralised structure of renewable energy forms can be of particular help in a context where larger-scale infrastructure – at the city, regional, or national levels – cannot keep pace with demand. A key problem is when investment is needed for renewable energy. Here is where environmentally-oriented financing mechanisms are relevant, such as the Clean Development Mechanism. Thus far, Africa’s participation in the CDM has been very small, estimated in recent years at between 2- 5% of the world total. But for Africa as for China, growth in renewable energy could be a driver of economic growth, and Africa’s untapped resource of solar power is important here.

Other cited barriers to the larger-scale use of solar energy and CDMs are:

• external partners have not sufficiently transferred the project development skills
• lack of clear business cases
• lack of financing and credit systems
• subsidised electricity from fossil-fuel generation
• solar energy considered to be of lower social status than conventional electricity
• undeveloped industries and markets for e.g. solar water heaters
• perverse results from baselines chosen, e.g. kerosene stoves make baselines too high for the Certified Emissions Reductions (CERs) to be attractively priced
• too narrow a scope for applications of the CDM

References
Cape Town Municipality, http://www.capetown.gov.za/EN/ENVIRONMENTALRESOURCEMANAGEMENT/PROJECTS/CLIMATECHANGE/
Pages/SolarWaterHeaterAdvancementProgramme.aspx

Ulrich Mans, 2010, “Renewable Energy in Cape Town”, Proceedings of the 46th ISOCARP Congress, Nairobi, Kenya

OECD/IEA (International Energy Agency), 2009, Cities, Towns and Renewable Energy – Yes In My Front Yard

Gregor Pfeifer, Geoff Stiles, 2008, “Carbon Finance in Africa”, Policy Paper for the Africa Partnership Forum, www.africapractice.com

Rachel Pinderhughes, “Alternative urban futures: designing urban infrastructures that prioritize human needs, are less damaging to the natural resource base, and produce less waste”, in Heberle, Lauren C. (Editor); Opp, Susan M. (Editor), Local Sustainable Urban Development in a Globalized World, Abingdon, UK: Ashgate Publishing Group, 2008

Randall Spalding-Fecher, Steve Thorne, Njeri Wamukonya, 2002, “Residential solar water heating as a potential Clean Development Mechanism Project: A South African Case Study”, Mitigation and Adaptation Strategies for Global Change 7: 135–153

Key data are retrieved from the UN World Urbanization Prospects: The 2011 Revision, http://esa.un.org/unup/unup/index_panel2.html


Text by: Aaron Thomas