You can sell excess solar power back to govt – but it may take around 7 years to break even
Major municipalities across South Africa are allowing commercial and residential property owners to feed renewable energy back into the power grid. That means small-scale embedded generators (SSEG) are now reaping double the benefits of solar photovoltaic (PV) systems – but recouping the initial capital is a long and often complicated process.
South African homeowners looking to unshackle themselves from Eskom’s erratic supply and surging electricity tariffs are increasingly turning towards solar-powered systems. It is estimated that South Africa’s electricity tariffs have increased by 300% over the last decade, while renewable energy is becoming more affordable, with the cost of solar dropping by 90% since 2000.
Municipalities, which act as grid overseers and the links between Eskom and properties, have now developed SSEG regulations aimed at benefitting private property owners – and city supplies.
Energy experts say municipalities still have many details to iron out regarding the purchase of privately produced power, but the City of Cape Town is leading the charge through trial and error. In 2017, the City revised its SSEG regulations and a year later intensified its registration process; all energy systems which aim to feed energy back into the grid needs to submit an SSEG application.
Individual needs will determine the size and capacity of private solar power systems. For those looking to supplement their municipal consumption, solar panels without separate batteries will supply adequate power during clear days. This is the cheapest option, with small 340W panels retailing for under R2,000 apiece.
A sustainable solar power system, which has the ability to supply power throughout the day through battery storage, becomes more expensive depending on the property’s specific needs. It’s typically these systems which allow generated power to be fed back into the municipal gird.
An entry-level solar power system for supplementing supply in a small home can be installed for around R60,000. This system will power most appliances, lights, and electronic equipment but the electricity stored in the batteries will be drained too quickly when connected to geysers and stoves.
Depending on the size of the property and its electrical needs, these supplementary systems, which do not produce a noticeable amount of excess power, can cost up to R200,000 for 10 kilowatt hours (kWh).
Producing excess electricity, which can then be fed back into the grid for a feed-in tariff, requires more work. In turn, the savings on electricity coupled with the municipal feed-in, which credits the specialised meter according to kWh supplied, decreases the amount of time needed to recoup the initial capital investment.
“The municipality will install a bi-directional electricity meter, but they will charge you for that,” says Argon Poorun, Energy Services Desk Analyst at Greencape, in detailing the processes and extra costs associated with the supplying power back into the grid.
“You’ll also be charged a fixed rate for the installation, which in Cape Town is around R12.36 per day.”
“So what happens to your bill at the end of the month is they [the municipality] quote you for your fixed rate, and based on how much energy you’ve used within the household, they’ll subtract the amount of energy you’ve fed in at 72 cents.”
“It becomes a case of weighing up, based on the fixed charge, based on energy you feed back and based on how much the system is going to cost, whether it makes sense to actually install a larger system and feed back into the grid.”
Any solar-powered system installed will save electricity at varying rates and, in that way, pay for itself over a number of years. A bigger system, with feed-in potential, will cost more but has the potential to generate municipal credits via the bi-directional meter which controls input, taking from the grid, and output, feeding back into the grid, when there is excess energy available.
The question is whether saving 30% on your monthly electricity bill with a cheaper system will break even in the same amount of time that saving close to 100% will on a more costly system, explains Poorun. And ultimately, he adds, it’s about what the property owner can afford and what level of self-reliance the user desires.
“It’s all dependent on your load profile and if you want to look at how much you’re saving per kilowatt, currently the residential tariff is around R2.30 per unit and for every unit powered by the solar panel, you’re saving that amount per month.”
Using these savings, and the credit earned by feed-in tariffs, Poorun estimates that a high-end SSEG system – which could end up costing around R300,000 – could be paid-off between five and seven years.
“So, in those seven years, you’ll still be paying back and the systems generally have a lifespan, depending on the maintenance, of between 15 to 25 years, so its about the balance between those years that you’re essentially saving and [then] making money on your investment,” says Poorun.
That could change.
There are not-insignificant challenges for regulatory reform lodged by those with SSEG systems, Poorun confirms. Many owners are calling for feed-in tariffs to be increased to make SSEGs more lucrative. If they succeed, better compensation for private producers will see initial investments being paid off at a faster rate.