Contents

Background

Why South Africa is a High Potential Solar Water Heater Market

Challenges for the Market

Target Market andMarket Segmentation.

Positioning

Strategy

Key Lessons from the Development Of the Taiwan Solar Water Heater Market.

Background

The Dark Days of Apartheid and Pulling Back the Curtain

Apartheid (1948 – 1994)

Definition: A political system of discrimination and oppression, entrenched in the law of the country.

Characterised by:

Violence

Segregation

Isolation from the world

Color Bar

Passbooks

“State” education system (Propoganda)

The End of Apartheid.

South Africa becomes a symbol of a vibrant democracy and triumph over adversity.

South Africa wins the 1995 Rugby World Cup after 21 years of isolation.

With the end of Apartheid came an urgent need to transform the economy.

South Africa's economy completely overhauled since democracy in 1994.

Since September 1999 - the longest period of economic expansion.

Bold macroeconomic reforms have boosted competitiveness, growing the economy, creating jobs and opening South Africa up to world markets.

Despite lower taxes across the board the upbeat economy has seen government revenue surge, hitting R475.8-billion in 2006/07 - over three times the figure for 1996/97.

(Data source: Statistics South Africa)

GDP growth in South Africa

Key Challenge for South Africa.

Redress 48 years of social upheaval.

South Africa faces the dual challenge of pursuing economic growth and environmental protection.

Solar Water Heaters offer the potential to do both.

Why South Africa is a High Potential Market.

Reliance on coal.

70% of the primary energy supply and fuels 93% of electricity production.

Top twenty GHG emitters in the world, (379 million tons of carbon dioxide equivalent per year, or 8.61 tons per capita).

Black Economic Empowerment (BEE).

Higher disposable income.

Booming economy.

61920 systems (total collector area of 247,680 meters squared ) installed by 2007.

Vast untapped market of available housing and other structures.

White Paper on Renewable Energy Policy (2003) 10,000 GWh of electricity from renewable resources by 2013.

35,000 jobs, adding R5 billion to GDP and R687 million to the incomes of low-income households.

High income inequality.

Government recognizing SWHs could make a significant reduction to poverty alleviation.

Reconstruction and Development Housing Project (RDP)

R23,000 (US$ 2,978).

Access to finance.

Rogers’ Diffusion of Innovations

40 square meter RDP house

Data Source: Statistics SA

South Africa has one of the highest insolation rates in the world, between 4.5kWh/m2 and 6.5 kWh/m2 and receives about 2,500 hours of sunshine a year.

The cumulative energy savings by end of 2007 was 15,760 tons (17,701,260 liters) of oil equivalent.

CO2 emissions reduction in South Africa was 51,146 tons (2007).

Peak Demand.

Eskom’s Demand Side Management Program.

Key result of rapid economic growth was constrained capacity.

One of the key challenges is energy supply has been out stripped by accelerated demand resulting from high economic growth.

SESSA umbrella organization (standards, quality control, R&D).

Primary energy costs have increased from R13040 million in 2006/7 to R18314 million in 2007/8.

Target Market and Market Segmentation

Traditionally, middle to upper class represented the niche market.

Now, Black Economic Empowerment (BEE) and the Reconstruction and Development Program (RDP), could be the main driver of widespread diffusion Greatest need and doorway to Africa).

More black people are becoming affluent.

Positioning

The global renewable energy market is forecast to have a value of $398.7 billion by 2012, which is an increase of 62% from 2007.

Strategy

2 Strategic Objectives: End user and Interest Groups (manufacturers, government and NGOs).

Online presence, website and focusing on interest and focus groups.

Social Media Networking (Facebook and Linked In).

Online Trade Organizations.

A team of professional installers.

Networking with people I know in South Africa.

Unique Selling Proposition (USP) – To provide high quality systems at an affordable price, and to provide high service standards.

Key Lessons to be Learned from Taiwan SWH Market Development

Mobilizing, co-ordinating and focusing government departments and resources.

Providing clear achievable objectives.

Providing an accessible testing facility at an affordable cost.

Standards

Utilizing research institutions such as the NCKURF to R&D, gain data and carry the tasks of the program.

Open, sharing of information.

Legislation : REDB vs Cape Town City By-Law.

Demonstration sites.

Massive marketing campaign.

Investment : Nuclear Free Homeland Action Plan provided an annual $3 trillion dollars for the development of the solar water heater market.

Leading by example, government buildings should all be fitted with SWHs.

Acceleration of entry of new players.

Forging of relationships and partnerships with successful SWH companies (Taiwan).