Solar Water Heating Component Export to South Africa

Adriana HaubAllie CassMaira Da Silva

Alejandra AriasEsther LeeZuri Giang

Group # 2:

Meet South Africa

• Official Name: The Republic of South Africa • Location: Southern tip of Africa; 2,798 kil. between South Atlantic and Indian Oceans• Capitals: Pretoria (executive), Bloemfontein (judicial), Cape Town (legislative)• Largest City: Johannesburg• Population: 51.19 million (2012 World Bank)• Official Languages: Afrikaans, English• Government: Parliamentary Republic

- President Jacob Zuma (both Head of State and Government)• GDP: 384.3 billion USD (2012 World Bank)• Growth Rate: 2.5% (2012 est.)

The SWH System Market

Government Incentive and Regulations

Imports are Cost-efficient and Higher Quality

Opportunity:• Higher quality at a lower cost• Customized After-sale Support• Assembled locally• Economy Incentive and Job creation

Issues with current imports:• Systems are big to ship• Difficult to install and maintain• Unfit for local households• No customised after-sale support

• Component of the collector for the solar water heater system

• Absorbs sunlight and converts it to usable heat

• Top quality borosilicate glass • Inner tubing has a solar absorbing

coating: ensures an optimal and even thermal output under the worst weather condition

• Manufactured in the U.S.• Life expectancy of more than 30 years

Product: Solar Evacuated Tube

Price and Packaging

• Price ranging from $400 to $500 per set of 100 pipes

- Negotiable• South African Consumer Protection Act• All descriptions, instructions, warnings,

and labeling on the package will be in English

• Indicate details of the official South African service distributor and less about the importer

Product Service Offering

• Guaranteed No-cost Ten-year Warranty - product service, - technical support - training

• Limited Lifetime Manufacturer’s Warranty

Target Segment

• Commercial: SWH Manufacturing Companies in Northern Region of South Africa

• Limpopo, North West, and Mpumalanga

• Lowest number of installations• Expected growth with government

program assistance and growth of manufacturers

SWH Manufacturing Companies

Regions Manufacturing Companies

Limpopo Solar Vision, Solartech Limpopo North

Mpumalanga ASG Solar Solution, Gener-8 Witbank, Solar Focus, Solar Tech

North West Gener-8 Potch

Cities: Johannesburg & Gauteng

Geco Lighting, Genersys South Africa, GoSolar CC, Kwikot (Pty) Ltd

Potential Customers: List of Solar Water Heater Manufacturers in Northern South Africa

Sources: Energy Source Guides and ESKOM

South Africa’s Demand

Government Involvement• Government implementing

Programs such as Solar Water Heating Programme.

• These Programs implement and subsidize installation of Solar water systems throughout the country

• Expected installation on 1 million Units by 2015

• 5.6 millions by 2020 Source: Presentation of Raj Pandaram, Eskom, 7 March 2013

Local Importers

• The majority of Solar Water Heating Systems and its components are Imported Into South Africa

• Local Importers Include Solardome SA, Easy Solar PTY. Ltd, and Enerjetic Distributors

• China:

- Lower quality materials, cheaper product, not durable, usually 5 year warranty, tubes usually range 200-600 (US Dollars)

• Germany:

- Limited exports, higher price, usually 5 year warranty, tube price from 1000( US Dollars)

Major Export Competitors

Regulations on SWH Systems

• 2009 National Solar Water Heating Plan- 5.6 millions installations by 2020

• 2009 National SWH Rebate Programme - Supports implementation and development

• South African Bureau of Standards (SABS)- Inspect and certify installed system to be *Eskom

Rebated• 2011 Energy Usage in Buildings

- 50% of hot-water demand MUST come from sustainable source

*Eskom generates 95% of South Africa electricity and implements the Rebate Programme.

Regulations and Tariffs2011 Preferential Procurement Policy Framework Act (PPPFA) 70% local minimum content threshold SWH components

Importing Solar Evaporated Tube Tariffs • 20% Duty rate/14% sales tax• Export Declaration (SED) required • May be subject to Letter of Authorization (LOA)

Distribution Channel

● Formal institutions require use of an intermediary● Indirect method using a foreign based distributor● Product and customer characteristics require little control and after

sale service of the component● Pros of using a foreign-based distributor:

- Upfront/direct payment- Avoidance of issues concerning shipping, customs, and

publicity- Knowledge of the local market and its demand

Distribution Channel

Our Company

South African Based

Distributor

Renewable Energy

Equipment Manufacturer

Residential End Users

Retailers

Transfer of Ownership

Q & A