How insurers could help solve the energy crisis

The South African Insurance Association hopes to soon finalise an agreement that could save South African households millions in energy costs.

Would you replace your geyser with a solat water heater? Take part in our poll.
 

The Green Geyser Replacement Project aims to replace electric geysers with solar geysers, or solar water heaters. 

The project includes a number of benefits not only for the insurance and energy industries but also for households and the environment.

Ben Webbstock, SAIA's Project Manager for Insurance Risks, told Jacarandafm that everyone would benefit from this project including Eskom. 

"Installing the volume of geysers we're talking about, into people's homes, could certainly reduce the demand placed on our already strained energy grid," he said. 

Households will also benefit as a solar water heater would significantly reduce monthly energy cost. 

James Shirley, chairman of the Sustainable Energy Society of Southern Africa, said a solar water heater on average also has a much longer lifespan, saving both insurance companies and consumers on repair costs as they would need to be replaced less frequently. 

"It doesn't make sense to put in a poor quality system, because of the fact that the insurer would ultimately be the one replacing that geyser if it ends up bursting again," said Webbstock.

The 'Green-print'

The SAIA, on behalf of the short term insurance industry, and the Department of Energy, are currently locked in discussions to launch the project. 

These discussions started in 2012. 

It is too early to determine when or if they will reach an agreement, but Webbstock said their recent engagements have been encouraging. 

The idea is when a geyser bursts, if the claim is viable, your insurer will replace it with a solar water heater. 

According to Webbstock they also hope that home owners would be willing to speed up the process by allowing insurers to pro-actively replace geysers before they burst.

Costumers however have the final say, as it remains their decision on whether they want to make the switch or not. 

"Insurers can't force anyone to convert from an electric geyser to a solar water heater. In the absence of regulation they'll always have a right to choose between the two technologies," said Webbstock.  

The project will also help educate consumers to better understand the benefits of solar energy before they make a decision. 

In order for the project to succeed customers have to understand that they would not only benefit themselves, but the country as a whole. 

Part of this is why SAIA is trying to keep the expenses as low as possible for the consumer.

If nature does not pay, who does?

Webbstock said from the insurance industry's point of view, the difference in cost between a solar water heater and an electric geyser, is one of the biggest challenges. 

The cost difference between the two varies significantly.

A solar water heater, according the SAIA's figures, would cost around R19 000 per unit. 

"Now that is in comparison to an electric geyser installation, which would cost approximately R6 000," said Webbstock. 

As a result, consumers will presumable have to come up with the money to balance the cost difference. 

This in turn might see very few households switching to solar power.

This is mainly why a partnership with government and other possible funders is so important. 

In order for the Green Geyser Replacement Project to succeed, the insurance industry needs to cut costs wherever possible.

Apart from an agreement with government to carry some of the costs, the SAIA has also considered carbon credits, one of which represents the reduction of one tonne of greenhouse gas emissions. 

Webbstock said they have also considered the economics of scale, which could see lower prices if insurance companies can afford to purchase in large quantities.

Ultimately, the client would only have to pay a small fee, which makes the transition process much easier and much more attractive. 

Webbstock said the hope is that consumers carry no costs whatsoever regardless of making the switch pro-actively or otherwise. 

This however will depend on the individual insurer. Should an agreement eventually materialise Webbstock believes the benefits to all involved could be massive.

The good news of going green

The true benefits lay in the long term. 

Not only will individual households and businesses save on electricity costs, but the lower demand will considerably reduce pressure on the power grid. 

According to Eskom, the 5.4 million electric geysers currently in use in South Africa contribute roughly 2 940 MW of electricity. 

This is enough to power a relative size city such as Durban and will considerably reduce load shedding.

INFOGRAPHIC: The myths behind electric geysers.

Households and businesses could benefit on a monthly basis. 

Webbstock said the energy consumption by an electric geyser make up around 40 per cent of an average household's electricity. 

By switching to a solar system, the costs of heating water would be cut by two thirds. 

This is only when the solar water heater does not get enough sunlight to be dependent on solar energy alone.

In some cases, households have no electricity costs for heating water. 

Shirley said households sometimes completely turn off their back-up supply in summer. 

Only when the weather is less favourable do families switch their back-up supply back on to ensure there is always warm water. 

This is the remaining third consumers will spend on heating water when there is not enough sunlight.

Shirley added solar water heaters last much longer on average. 

He explained the average lifespan of solar water heaters are around 20 years. 

"Generally a normal electric geyser comes with a five year guarantee, most of the solar water heaters will come with a 10 year warranty," he said.

The insurance industry aims to replace 200 000 geysers per annum. 

Essentially in five years a million geysers could potentially be replaced. 

That is close to one fifth of all the electric geysers in the country and, in terms of energy saved, would be equal to the energy output of a large coal fired power station.

-JacaNews