Illuminated but not electrified: An assessment of the impact of Solar Home System on rural households in South Africa

Abstract

8The introduction of the off-grid electrification program in South Africa using the Solar Home System (SHS) 9 was a central component of the government policy aimed at bringing development to un-electrified 10households. An assessment of the performance of SHS in many countries provided little evidence to support 11 the development impact of the system. The general perception is that the SHS program is wasting 12 government funds and has no hope of achieving the set objectives. Previous scientific reports have 13 concluded that SHS is the most viable technology for bringing about socio-economic development to rural 14 households. Most of these conclusions have been based on one sided arguments and largely on anecdotal 15evidence. This study provides a pluralistic view of the subject from the perspective of the energy service 16 companies (ESCOs) and the households using the equipment. The development impact of SHS is subjected 17 to scientific analysis by investigating the economic and social dimensions of the program. Additionally, the 18 sustainability of the South African SHS program is assessed by investigating the challenges facing the 19ESCOs and the households. The study reveals that illumination provided by SHS electricity has profound 20 impact on the livelihoods of rural households. Due to the limited capacity of SHS for productive and thermal 21 use, there are limited direct economic benefits to the households. The associated economic impact is 22 peripheral to the secondary usage of SHS electricity. SHS has improved the productivity of small scale 23 business owners who utilize the light from SHS to do business at night. Irregularities in payment of subsidy 24 funds and energy bills, high operation cost, non-optimal use of SHS, grid encroachment, and lack of 25 customer satisfaction contribute to make the business unsustainable for the ESCOs. 26 27 2 28 Introduction 29The change in political governance in South Africa in 1994 also led to a major policy review of the energy 30 sector [1]. The government changed the focus of an energy policy based on separate development to an 31 inclusive policy that embraces the energy needs of disadvantaged households. This was evident with the 32 implementation of the National Electrification Program (NEP), a precursor to the Electricity-For-All 33 program of 1994 [2]. The objective in the revised policies is to extend development to the large segments 34 of the population that were deprived during the apartheid regime. One of the basic elements of NEP is the 35Free Basic Electrification (FBE) policy, which is aimed at providing access to electricity to all South 36Africans [3]. This policy seeks to provide ways and means through which government interventions can 37 bring about relief to poor un-electrified households and ensure optimal socio-economic benefits from the 38 NEP [4]. 39In order to achieve this objective the Department of Energy (DOE) awarded contracts to provide electricity 40 to un-electrified rural households to six consortia known as the ...

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