THE National Solar Water Heater Programme (NSWHP) has come under scrutiny after incurring R324.8 million in fruitless and wasteful expenditure for storage costs.

Thabo Kekana, the deputy director-general of the Department of Mineral Resources and Energy, updated the Portfolio Committee on electricity and energy on the NSWHP on Friday.

Kekana said that Eskom introduced a Demand Side Management programme to shift peak demand and reduce total demand. In 2009, the government launched the NSWHP, and the target was to install one million solar water heaters (SWH) by 2014. It was revised to five million through the National Development Plan by 2030.

However, only 87 206 units were purchased in 2015. Since then, 59 009 installations have been completed. He said 6 123 units from a supplier are faulty and uninstallable.

The SWH was identified as one of the technologies that could contribute to the Renewable Energy and Energy Efficiency programmes.

Kekana said research found that water heating represents about 40% of a household’s electricity usage and that the solar water heaters could save between 150 and 400 kilowatt hours (kWh) per month of transmitted electricity.

He said four matters are in the litigation process in different municipalities to recover 13 429 units held with suppliers, adding that 2 974 installations must be done by April 2025. Kekana said installations were still taking place in eThekwini and Polokwane.

Problems with suppliers include:

Refused to deliver, demanding more and unreasonable money.
Supplied faulty systems due to poor workmanship.
Could not meet their contractual obligations regarding delivery.

To mitigate problems, Kekana said the Central Energy Fund (CEF), a South African state-owned institution, has withdrawn from being the implementing agent. The CEF was responsible for the procurement of consumables (components used to finalise installations).

“The department will now inspect consignments before delivery to ensure compliance with specifications,” he said.

Kekana said the department had requested bids for the manufacturing, and supply, delivery, and warehousing of the solar water heaters with the intention to install them at designated municipalities as identified.

He stated the geysers were manufactured but not installed and housed in the suppliers' warehouses over and above the three months stipulated in the contracts.

According to Kekana, the department did not take into account the suppliers' charges for the solar water heaters' safekeeping, adding that storage costs have now been completely eradicated.

No further storage costs were paid in the financial year 2024/25, as all units have been moved out of cost-bearing storage.

“The department had to pay for storage until they are ready to be installed or an alternative warehousing is determined. Expenditure incurred could have been avoided had careful planning been done.

“Despite the challenges in the past, the need for the programme to continue as a government-led initiative remains because it will continue to help cushion poor households from high energy costs. It will contribute to lowering households' energy intensity and, therefore, their carbon footprint. There are also high localisation and job creation benefits,” Kekana said.

The development of a draft concept paper for the NSWH Programme 2.0 is under way for implementation in 2027/2028.

Deputy Minister of Electricity and Energy Samantha Graham-Maré said this was a long-standing issue and that this programme has been fraught with several issues. She said they will look at whether a programme like this is viable in the new financial year.

“The idea behind the solar water heaters was a good idea, but unfortunately, it was one of those things where good ideas are followed by unintended consequences and poor implementation. The exorbitant costs in terms of storage, which should never have happened. It is not a programme that we present with any sort of pride to this committee,” she said.

Mogamad Paulson, a member of the portfolio committee, said it was unacceptable that nobody was taken to task for what had happened.

“This matter must not disappear silently. There is a huge cover-up here," he said.