SA’s electricity consumers are becoming increasingly fed up, making their own plans for supply and quitting the grid — years before the cost is expected to almost double.
Business Day said that if the National Energy Regulator of SA announces that Eskom can hike its tariffs by the additional 8% it is requesting this year, the total increase of 16.6% will be more than double the expected rate of inflation and would mark the 12th year of above-inflation tariff increases.
On top of Eskom’s tariff, municipalities that distribute electricity to their residents add their own margin, using profit on electricity sales to subsidise other services.
This will give further impetus to householders planning to go partly or wholly off the grid, which in the long run will erode revenue for Eskom and the municipalities.
Mila Loubser, head of energy reporting at Energy Partners, says the main reason householders are installing solar photovoltaic (PV) panels is to reduce their electricity bills rather than to maintain supply during load shedding. She says Eskom’s annual tariff increases are expected to continue outpacing inflation until 2022, when power supply and tariffs could stabilise.
From 1988, when a typical householder was paying R0.14 per kilowatt hour (kWh,) typical tariffs will have risen to R2.18/kWh if Eskom is granted its latest tariff application. Over the next eight years, Loubser forecasts the average householder’s electricity bill will rise 93%.
Frank Spencer, chairman of the embedded generation committee of the South African Photovoltaic Industry Association, says it is likely that to date a few thousand households have gone wholly or partly off grid with solar installations. No precise figures are available because if households go wholly off grid, which is possible with sufficient solar panels and batteries, they do not need permission to do so. If they use part solar PV, part Eskom-sourced power, they need permission from their service provider — a municipality or Eskom. However, many people do not obtain permission, partly because some municipalities don’t have the policies in place to allow it, he says.
It is technically possible to generate enough household power wholly from solar PV panels, but not everyone can afford it.
Spencer says that in dollar terms the cost of solar panels and batteries has fallen, but because of rand weakness the local price has not changed much. Although solar PV and batteries are made locally, a lot of the materials are imported and the quality of locally made equipment is not yet as good as the imports.
Councillor Ernest Sonnenberg, Cape Town’s mayoral committee member for utility services, does not have statistics on how many households have gone off grid.
"It is a costly exercise to become completely grid independent, particularly because the output from PV in winter is just a fraction of that produced in summer and consumers must be able to power themselves from alternative sources for long periods of time."
Loubser says studies by Energy Partners show the solution that minimises capital outlay and maximises savings is to generate 40%-50% of power needs from solar and batteries, and to draw the balance from a municipality or Eskom in a controlled way. Using smart load management, a household can spread its energy use throughout the day to make the best use of its solar installation. Certain municipalities apply "time of use" tariffs, so a household can bring down its energy bill by running energy-intensive appliances at off-peak periods.
Loubser says a middle-income, higher-consumption household with an electricity bill of R2,000 a month will pay more than R1m for electricity over the next 20 years. A solar panel and battery installation, combined with energy-saving technologies such as heat pumps, can cut this in half, paying for itself three or four times over.
These systems can be leased or bought with a multiyear finance package to minimise upfront costs. Sonnenberg says a far more cost-effective option than going wholly off grid is for householders to install small-scale renewable energy generation and connect it to the grid.
Cape Town will compensate consumers for selling power back to the city, as long as they remain net consumers — in other words buy more electricity over a year than they feed back to the grid. The rate at which they are compensated is about the same rate that the city would have paid Eskom for the power at the time it was fed into the grid. Cape Town is one of a few municipalities buying electricity from householders, energy experts say.
Spencer says municipalities should develop new policies, because over the next five to 10 years they will lose more electricity customers.
Municipalities need to start putting strategies in place for the time when they can source electricity more cheaply from households or from their own solar-wind-biomass-landfill installations than from Eskom.
Globally, electricity utilities are selling fewer kilowatt hours because of energy efficiency and embedded generation, Sonnenberg says.
Source: Business Day