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APPENDIX l: Brief on Market Sounding Exercise Solar Water Heating Roll-out for the Department of Energy THIS IS NOT A TENDERING EXERCISE 1. Introduction The Department of Energy intends to offer the first 200 000 subsidies for a mass roll-out of Solar Water Heating Systems, as part of its attempt to deliver one million solar water heating systems by 2014, and to reduce the load placed on the electricity grid. 1.1. This Market Sounding Exercise is to ascertain market capacity, capability, as well as the level of interest to provide the requisite services for the roll-out of the Solar Water Heating Systems. In addition, we would also like to obtain views and suggestions on operational requirements. 1.2. This document sets out the objectives of the Exercise, provides background information and outlines the scope of services to be provided by the prospective service providers. It does not constitute the beginning of a service procurement process. Any submission received by the Department of Energy in response to this exercise does not constitute any contractual agreement between the respondent and the Department of Energy 2. Objective of the Market Sounding Exercise 2.1. The objectives of the Exercise are to obtain up-to-date information and feedback from public and private sector service providers on the following: (a) Level of interest; (b) Capacity and Capability of service providers to provide the service (c) Operational and commercial arrangements. 3. Background Historically, the focus has been placed on balancing demand and supply by increasing supply. The current focus is on reducing demand, since the associated opportunity-costs support the reduction of demand rather than increasing supply. The Minister of Energy approved the Standard Offer Policy on the 24th May 2010. This policy is available at www.energy.gov.za/clean energy/policies. The Standard Offer Concept is based on providing a financial incentive for the energy savings to be derived from an initiative, irrespective of the technology applied to achieve such savings. It is an intervention that is outcomes based with the incentive flowing after delivery of the outcome, and subject to verification of the energy savings. NERSA is currently working on the rules and rebate level to enable the implementation of the Standard Offer. It is anticipated that NERSA will publish the rules and rebate/subsidy level for public consultation shortly. Applying the Standard Offer to Solar Water Heating, it is intended that the rebate/subsidy level for the deemed energy savings will reflect a Rand-value per installed Solar Water Heater per month for the period of time required to redeem the cost of the investment. Once the rules and rebate/subsidy levels are pronounced as final, the Department of Energy intends to issue the first 200 000 offering of subsidies for the installation of Solar Water Heating Systems on the basis of the Standard Offer. The Solar Water Heater framework is premised on the home owner being issued with a solar water heating system and the supplier of that Solar Water Heating system will recover the capital cost of the investment by benefitting from the rebate applied to the deemed energy savings of a working solar water heating system over a period of time. 4. Possible Scope of Public and Private Sector Service Provision 4.1. To meet the target of rolling out one million solar water heating systems by 2014, The Department of Energy will be looking for the following services Provision of solar water heating systems Installation and maintenance of solar water heating systems. Independent measurement and verification of the achieved savings. 4.2. We will also welcome any innovative ideas to assist in meeting the target. 5. Approach to Market Sounding Exercise 5.1. This Market Sounding Exercise is published on the Department of Energy’s website (http://www.energy.gov.za, All active and prospective service providers, and other relevant parties, are invited to partake in the market sounding exercise. Interested parties who wish to take part in the Exercise should respond to the questions listed in Appendix II. 5.2. In responding, interested parties should recognize that detailed and lengthy submissions are not necessary at this stage. Nonetheless, we welcome pertinent information on your company’s capacity, capability and views. 5.3. Respondent’s views will not be individually identified or revealed to third parties. Information gathered will be used to streamline the procurement exercise planned for the future. All information provided in this exercise will be treated in confidence and will NOT be considered in any future procurement evaluation exercise. 5.4. If you have any enquiry on the Exercise, please contact Ms. Moira Leukes of the Department of Energy at (082) 991 0052 [e-mail: [email protected]]. 5.5. This is NOT a tendering exercise. Neither the Department of Energy nor any of its agents will be bound by responses to the Exercise. Respondents should note that the Department of Energy will not be responsible for any costs and expenses that may be incurred in the preparation of the necessary information and materials. 5.6. While the intellectual property rights of the response to this Exercise will remain the property of the respondent, the Department of Energy shall have the right to copy, modify and do anything necessary to all materials submitted by the respondents in connection with the Exercise. - END -