Review of South Africa’s Solar Home System Concession Programme

Solar Home System station of Nura Concession company, rural Kwa-Zulu Natal, South Africa

Since the introduction of the solar home system (SHS) concession programme in 1999, the involved companies and customers have had to adapt to many changes over the years. Government introduced for example the Free Basic Electricity policy in alongside the SHS subsidy and only irregularly awarded tenders for the actual installation of SHSs; companies have split and concession areas have been renegotiated. Despite these changing conditions some companies have managed to stay in business and are still willing to install systems for new customers. The questions are: who managed to adapt to these changes, and what do the business models of the companies look like?
Rural electrification remains a challenge for government and the private sector. High connection costs, low consumption rates and high poverty rates constrain the roll-out of electricity in rural areas. The SHS concession programme was introduced with the objective to „speed up universal access to electricity‟, and aimed to „attract larger, better organised private companies with their own sources of financing‟ in the hope that „the strong financial and maintenance control characteristic of the private sector should facilitate the channelling of international development funding‟. The programme was also meant to motivate the service providers to „adopt a delivery model that promotes a range of fuels such as gas or kerosene, in addition to SHS or mini-grid systems‟ (Kotze, 2000).
Earlier research has been helpful in identifying shortcomings of the programme (for example Energy Research Centre, 2005 and Energy Research Centre, 2004) but, in order to advise policy makers, it is of particular interest to examine the survival strategies the SHS companies adopted.

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