Summary
This project supports the installation of solar water heaters, compact
fluorescent lighting, a cooking option using LP Gas, solar cookers
and/or gelfuel, and electricity generation for households in
Welbedacht, KwaZulu-Natal. The Credible Carbon® fund will finance the
loan funding shortfall of the beneficiaries and thereby ensure the
continued operation of the carbon-saving energy technologies.
Aim of the project
To ensure long-term financial
sustainability of Low Income, Energy
Efficient Housing & Climate Change Project in Welbedacht, KwaZulu-Natal
South Africa
Stakeholders
This project formed part of a development
programme which was managed by Project Preparation Trust (http://www.pptrust.co.za/) and Parallax (http://www.parallaxonline.net ). The
beneficiaries of the installations were 40 households from the Welbedacht community
in KZN.
Interview with Mbali Ntuli
Project Overview
This project is the third stage of a process designed
to demonstrate appropriate energy efficient technologies in low-income
households in various locations in KwaZulu-Natal (KZN), South Africa. The first
step was an investigation of potential technologies and an assessment of the
priorities for successful application. The second stage was the installation and
supply of the identified technologies in Welbedacht, KZN and the introduction
of the financial mechanism to pay for the installations. This, the third phase,
is the initiation of the long term sustainability mechanism of the
project.
The implementation of the project commenced at the
end of May 2006 and the final installations, including coverage of more
low-income households than originally expected, were completed by the end of
September 2006. At the end of the implementation phase the energy technologies were
successfully installed with positive feedback from customers. This represented the effective use of alternative
energy supplies, which are more cost-effective, reduce grid-electricity
consumption and limit the emission of greenhouse gases.
Technology Overview
The most
appropriate technologies for implementation in the area were initially
identified from visits to the target locations. The conclusion at this stage
was to focus on solar water heaters (SWH), Compact Fluorescent Lighting (CFL), a cooking
option using LP Gas, solar cookers and/or gelfuel, electricity generation for
non-grid households using individual household solar or wind systems and
ceilings for improved insulation.
The following packages were therefore
offered to households
- Package 1: SWH & CFL
- Package 2: SWH & CFL & solar cooker
- Package 3: SWH & CFL & LPG/gelfuel
- Package 4: SWH & CFL & Elec Gen option
- Package 5: CFL & Elec Gen option
Financial Model
A balance of loan
and grant finance provided the financing for packages to be installed in
relevant households. The grant funding was provided by the United States Agency
for International Development (USAID). A 24 month payback period was used for
repayment of the loan component. No
interest was charged during the project on the loan component of financing to
further increase the attraction of the demonstration. Ownership of the systems
reverted to the householder immediately after installation – this avoids any
disputes in the event of theft/damage. An agreement regarding conditions of
payment and ownership was signed with PPT by each householder involved in the
project. These conditions included the
repercussions of non-payment which, in principle, would lead to removal of the
systems.
For the duration
of the 24 month repayment period associated with this project, the loan to
customers was provided from the project budget.
This loan was fully committed after signing contracts with the heads of
the target households before the end of September. Repayment of the loan is made on a monthly
basis, using a local spaza shop in Welbedacht.
These representatives receive an incentive of 10% of the fees
collected. This provides an
income-generating opportunity for the local structures, and encourages further
interest in this energy initiative with motivation to supply relevant fuels and
appliances at commercial prices to households not participating in the project.
As an example,
if the cost of a package was R6,500 with USAID providing a grant of R3,500 and
a loan of R3,000, repayments of R150/month for 2 years (allowing up to 4
months’ non-payment) could be collected.
Long Term Sustainability
If the project
approach is seen to be successful, future replication could be achieved through
a R3,500 subsidy from agencies such as the National Energy Regulator (NERSA). However,
one key obstacles to long term success of the project is the inability of the
beneficiaries to pay back their loan allocations. In Welbedacht, approximately 60%
of the loan funding had been paid back by the end of the 24 month period.
Households were generally repaying their loans in smaller tranches or paying
every alternative month.
The recovered
loan funding is allocated for maintenance of the packages and without the
repayments being received the mechanism to repair and maintain the system is being
compromised. There have already been instances of faulty equipment with no
capacity or budget to repair them. As a result the long term sustainability of
the intervention is doubtful without further external support.
Credible Carbon® Contribution
The Credible
Carbon ® fund will finance the loan funding shortfall of the beneficiaries in
the Welbedacht community. In the first phase, households who receive support
from Credible Carbon ® will be selected randomly and their total outstanding
loans will be paid. In the second phase of support, only those households who
have made regular payments will be eligible for Credible Carbon Finance, to
incentivize repayments and so ensure the long-term sustainability of the
program.
The PPT has also
expressed a interest in extending the project to other regions in KZN,
including Richmond and Umdoni, provided a sustainable business model can be demonstrated.
Interview with Neliswe Dlamini
|
