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Alternatives to Eskom

Advances in technology make small-scale solar systems more reliable, and they’re getting much cheaper.

Regular power interruptions started at least 10 years ago when problems at Eskom first surfaced. Since then, the situation has become worse every time a new crisis has hit the bungling state power utility. No amount of damage to the economy or taxpayer outrage seemed to result in any visible and effective efforts to ensure reliable electricity at competitive rates.

A lot of people and businesses, especially small and medium-sized enterprises, have invested in generators and other alternatives to ensure electricity during load shedding. Most guest houses, filling stations, retailers, restaurants and whoever else seeks a competitive advantage during power cuts have installed some equipment to keep their businesses going during power failures.

These back-up installations range from a small generator on the back porch or a battery-powered power supply and inverter to quite large installations comprising big back-up generators that can power a business without interruption for hours, even if quite expensive to run.

Lately, a new trend has started to emerge. Not only are households and businesses investing in their own generating capacity to ensure electricity during power failures, they are increasingly aiming to become totally independent of Eskom.

Solar systems economically viable  

Rapid advances in technology has pushed renewable energy sources from an expensive option that only environmentalists advocated to an economically viable alternative worldwide.

The International Renewable Energy Agency (Irena) says in a recent study that the cost of renewable energy sources like wind and solar continue to fall drastically and will start to become cheaper than fossil fuels by 2020.

Irena based its research on the cost of new and completed projects worldwide. While solar projects are still relatively expensive in comparison to hydro power, onshore wind and geothermal sources, the cost of solar plants has dropped by more than 70% since 2010 and continues to fall, says the report. “Auction prices [tender prices in SA] for photovoltaic projects have reached a record low per kWh (kilowatt hour] in Dubai, Mexico, Chile, Brazil, Canada and Germany. By 2020, all renewable power generation technologies that are now in use are expected to be comparable with fossil fuel, with most at the lower end of the range or undercutting fossil fuel.”

The lower prices of solar systems due to technological advances and more competition in the solar industry globally has resulted in a big drop in the capital cost to install a solar system for a small business or a household in SA too. Meanwhile, Eskom’s slow decline motivated people to look for alternatives.

Significant increase in demand locally

Peter Bergs, managing director of Specialized Solar Systems, says demand for solar installations has increased significantly in the last few years. “More and more businesses are installing photovoltaic solar systems to reduce their energy cost. In addition, it gives them back-up power during power failures.”

He says demand for residential installations has also increased sharply during the last two years as electricity prices have increased, while the cost of solar systems has fallen dramatically and the effectiveness of new generating technology has improved tremendously. “We are receiving a lot more enquiries lately because of the recent wave of load-shedding,” he adds.

The cost of off-grid solar installations has decreased significantly over the last 10 years, with the prices of some components falling nearly 70%, according to Specialized Solar Systems’ website.

“The price of solar panels has decreased to around R5 per watt generating capacity compared to between R11 and R12 per watt 10 years ago,” says Bergs. This means that a 100-watt solar panel costs some R500 today compared to R1 200 in 2008.

Inverters – the heart of a solar system that converts 12 volt direct current to 220 volt alternating current to run household appliances – have also decreased in price, while their capacity, quality, effectiveness and features have improved significantly. For instance, most modern pure sine wave inverters are cheaper than the older modified sine wave inverters, and even cheaper than the bigger and bulkier square wave inverters of years ago.

Modern inverters combine charging controllers, battery management, seamless switch-over from different power sources and computerised operation in one compact unit. Good quality inverters produce pure, stable electricity without dips and surges, which results in electrical and electronic appliances working better.

Grid-tied vs off-grid

Bergs says it is notable that people are increasingly enquiring about off-grid systems that make businesses and households totally independent from the national energy grid rather than grid-tied systems.

Grid-tied systems are connected to the national electricity network, largely to reduce electricity costs. In short, grid-tied systems consist of solar panels (or a wind turbine) and an inverter, but do not include a battery bank. Energy from the solar panels is converted into electricity and used to power appliances, with the excess electricity feeding into the national grid.

Electricity from the grid is used when the house or business uses more electricity that its system generates, for instance, during the evening.

Off-grid systems include a battery bank to store electricity generated by the solar panels and are not connected to the local electricity network at all. Unfortunately, deep discharge solar batteries and more modern power walls are still very expensive, equal to about half the cost of a typical solar installation.

However, these off-grid systems offer total independence from the woes of the local municipality and Eskom’s troubles, and electricity failures are limited to times when it rains for a week without sunshine.

Bergs says the cost of off-grid systems has declined sharply in the last eight to 10 years. He estimates that the current cost to install an off-grid system to power a medium-sized house will be around R150 000 to R190 000, compared to more than R300 000 a decade ago.

Bad news for Eskom

Smaller generating systems – whether solar panels or big standby generators –  are no longer a rarity and, if the trend continues, will add to Eskom’s challenges.

Ultimately, it is Eskom’s paying customers who are leaving the fold.

Last week, the City of Cape Town started a legal process to get permission to purchase electricity directly from the so-called independent power producers (IPPs). Current legislation prescribes that private wind and solar farms can only sell their electricity to Eskom.

If the application succeeds, it will break Eskom’s monopoly and open the door to free-market competition and result in the development of more independent power producers. Other municipalities are investigating similar moves to reduce their dependence on Eskom.

George Municipality has announced that it is looking at proposals for a biomass power station that will use wood chips from saw mills and other sections in the forestry industry to generate electricity.

GreenCape, an organisation that advances sustainable development, has joined forces with the City of Cape Town to encourage the installation of grid-tied rooftop solar systems to feed electricity into the local network. The idea behind the programme is that businesses and households can help to generate green electricity in a way that makes financial sense.

GreenCape says that at current installation costs and current electricity prices, the repayment of a solar system is as little as five years. “With solar panels that have a 25-year production warranty, it’s very much like buying 25 years worth of prepaid electricity by paying for five years’ electricity at current prices.”

There are also tax advantages for businesses as section 12B of the Income Tax Act provides for an accelerated depreciation allowance on the total cost of a solar system with a capacity of less than one megawatt. “A maximum of 28% of the cost can be saved in the first year through a reduced tax bill,” says GreenCape.

On a personal note

I haven’t paid for electricity for nearly 10 years after installing a small solar system in 2009. At the time, since a transformer and a cable to my secluded cabin would have cost R60 000, a solar system made more sense.

My first 150-watt solar panel cost me R2 600 in 2009; the last one, bought from the same supplier last year, was R1 400. I slowly added batteries to my battery bank and had to trade up to a better inverter because of lack of experience (and a much smaller variety to choose from) when I started off.

I quickly learnt that appliances use much more electricity than their specifications promise, and that components in the solar panels produce slightly less than their labels claim. 

Admittedly, I do not use a lot of electricity. Besides, the first step in going the solar route is to reduce electricity consumption. I also learned to adapt my consumption to whatever is available, especially on the second and third rainy day.

My small R40 000 system powers what I need, but cannot handle a tumble dryer, multiple refrigerators and fridges, heaters and almost anything with a big heat element. A gas stove and gas geyser work better than their electric counterparts, and burning black wattle logs in a fireplace in winter is much better – and nicer –than the glow from an electric heater.

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COMMENTS   47

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This is the kind of every day financial journalism that can habe an immediate impact on a families financial status and quality of life. While all the big stories are important, and the financial planning and investment journalism is equally so, these kind of articles are sadly lacking in frequency.

I’d like to see tables of comparable data showing what off grid components cost from which suppliers, just as much as I want to see what banks charge the man on the street for the use of their services.

Thank you Adriaan.

And if you don’t have the cash, just take out a bond and pay off your electricity supply system by diverting your monthly spend from Eksdom to your bank. Your bond payments won’t increase by the same percentage Eksdom is getting annually so it makes total financial sense even for the less off home owner. Eventually Eksdom will be producing electricity only for those who get it for free.

The unquantified economic cost of all of this capital being wasted on backup for something for which we should be able to rely on the state is going to be staggering. Money spent on this, which is ultimately fruitless and grudge expenditure, will not be spent or invested elsewhere in the economy.

Jip, it is the more affluent customers that can afford to go ‘off-grid’. What if Escom is one day left with no more paying customers? And just in case you are reading this, mr Gordan; No, I will not pay ‘license’ fees or taxes for my ‘off-grid’ system as the state did not subsidise it.

Owners of newly design & built houses should have their houses designed with a solar PV and water heating system installed from the onset.

Yes, this is exactly correct. In the area where I work, Kyalami, there are so many new housing developments, yet very few of them appear to have solar installed. Extremely short-sighted of the developers as this is a very strong selling point for most people as the price of Eskom electricity continues to climb. Most of South Africa gets excellent solar coverage, with the exception of Durban, so it makes perfect sense to harness this abundant source of energy. At the very least, a solar geyser is a must.

beware the gangs of newly expert solar installers.

Unfortunately batteries are still effectively the same cost (over 250c/kWh) as diesel – just smell better and are quiet. The solar generation part is VERY cheap, less than half residential prices per kWh.

If Cape Town really wanted to promote rooftop solar it could simply overhaul its SSEG scheme.

Dead right. I bought an inverter and battery system about 3 years ago. It was supposed to be able to run low-wattage appliances for up to 8 hours. Except the batteries are already failing. Barely lasts 2 hours. Not worth the money I’m afraid.

What batteries do you have AGM, GEL? They should last 10 to 12 years if used correctly.

The time that a battery + inverter system will supply power is dependent on the battery capacity, not the inverter. As batteries age, they hold less charge. They can be reconditioned or you can replace them or you can add more battery capacity. Also, some appliances draw more power as they get older.
Learn about maintenance. re-measure your batteries and recalculate capacity and demand requirements.

There’s a catch 22 here.

Going off the grid means EKSDOM makes less revenue, losses balloon and taxpayers are forced to cough up more for the bailout.

One way or the other, you can’t escape… unless government immediately sells the utility to a local/foreign enterprise and stops throwing good money after bad.

This is a fundamental point and is known internationally as the classic utility “death-spiral”. As the utility enters financial and operating distress, it seeks to raise the unit price of power to claw its way back. These increases act as a stimulus for those who can afford electricity (and who actually pay their bills) to go off the grid or to curtail use, consuming fewer units and leading to materially less revenue and cash collection for the ailing utility. The utility responds by pleading poverty and demanding unit tariff increases and the cycle continues until the business model properly implodes.

Sounds about right..

Also since business or people who go off the grid are usually wealthier and reliable customers, ESKOM will be left holding a bag of riff raff, bad debts and slow paying accounts.

Case studies by the dozen will be written about how ESKOM’s demies were met and how the taxpayer paid to get off the grid and then paid again to bury the beast.

Spot on. Start small, inverter/charger, battery and add on. +-R3500 for a 1200w system to power led lights, tv, pc etc.

A significant catch is that when in a Municipal area, an availability charge is levied for the electrical connection to your property. I do not think that anyone has yet succeeded in having this cancelled… So while the amount saved by going for alternative energy sources can be significant, they do not completely negate the municipal charge.

About 40 years ago I had similar problem with water in the Randburg area. I lived on a smallholding and used only borehole water, but still had to pay for municipal water without using a drop. Nothing prevents the municipality to increase this availability charge. What about increasing it drastically and including the first 100-200kWh consumption even if you use less?

The reason you have to register your generator or solar system, is so that in the near future, the government can implement a tax, in order to cover the non paying Soweto comrades.

The DA, aka ANC-Lite have already kicked off this process in Cape Town.

Be careful who you vote for on May 8.

If you don’t vote for DA in May the ANC may take over in Cape Town. I agree the DA is dysfunctional but the ANC is a million times more dysfunctional so yes, be careful who you vote for May 8.

We in SA, have the peculiarity of where the paying users are more readily cut off and the non-paying users are not cut off as the ANC led municipalities deemed it too bad for (ANC) votes to cut off in places like Soweto.

Eskom is not really a power utility, it is a vote buying and comrade fattening machine.

Sadly all the SOE’s have become ANC patronage machines – but all badly run and bankrupt.

We built a house 2 yrs ago and designed so as to incorporate solar (I hate seeing wires run along walls). Unfortunately the solar market in SA still has a large number of “fly by night” installers. If you go this route, do your due diligence on who installs. A man with a bakkie and ladder does not qualify. Ask around and get recommendations. After sales service is key ….. get the best you can afford, not the cheapest. Work with a reputable company at all costs.

“No amount of damage to the economy or taxpayer outrage seemed to result in any visible and effective efforts to ensure reliable electricity at competitive rates.”

When did ‘outrage’ or ‘economic stability’ ever stop this government stealing from the fiscus?

We need more articles like this – Solutions for the man in the street – Yes the ANC is useless but read about the two white Afrikaans engineers that took Eskom for billions – Also the French and USA companies that were paid billions for quality control – Shocking!

Those, like many other cases, were due to shockingly poor procurement management and shockingly poor (I like the puns) project management by Eskom. They mean it to be so – in order to cover up irregular contract awards: guess where the missing money can be found?

The Achilles heel of a PV system is still the battery. The panels are very affordable right now and can last in excess of 25 years. The lead-acid deep cycle batteries are the problem. They will cost more than the panels and last maybe 8 years, with luck. A top of the line lithium battery is incredibly expensive for the small guy. The moment a more affordable and longer lasting battery solution is found, kiss Eskom goodnight and tuck it into bed.

The solar panels can provide all power during the day. Make use of a small battery for nighttime (PC, TV, Lights). Cook with gas.

Precisely and quite true.

The hurdle to be overcome, scientifically, is efficient storage of energy. Pumped water storage (like Ingula) works, but there is entropy produced (efficiency losses) due to having to use energy to pump to higher levels, then not all of this can be recovered in the downflow generation.

Batteries, as energy storage, are also not fully efficient, but “better than nothing.” So far, battery improvement technologies like Lithium-ion and Vanadium redox flow are evolutionary (progressive) rather than revolutionary (disruptive).

If only science could be kicked in the proverbial rear to get a move on with it. Maybe one day ….

Go pre paid, the units are slightly more but you do not pay availability.
Then solar for water, gas to cook and LED lights and just the tv and a pc. Done.

If Eskom and the country was run by a logical group of people then they would be pushing for as much distributed energy (such as solar + batteries) as possible, the maximum demand on the system would fall and they would be able to close perennially broken power stations and significantly reduce their wage, maintenance and fuel bill in the process. That is why breaking up Eskom is important, it requires the generator to be cost efficient or they will be priced out by other generators who can come in cheaper. Eskom would not be able to shield their massively over efficient operation by hiding behind transmission/distribution and the system would in theory operate a helluva lot better.

But where would the clueless go for employment?

Parliment

Jip, I also did solar in 2015, haven’t looked back since. What is happening now with the NERSA regulation on private power generation? I remember that there might need to be registration and fees…

The formal part of municipality councils have a iron grip on formal parts of society. All experimenting the same of a downgraded service.
Slowly resembling informal parts, to become one. The only difference on that road is bills to pay. Water/electricity and rates as major. Paying for service is the only approved part of era apartheid having the blessing of the free informal. all others are racial. Coming to free electricity for formal is a attack on the informal. Councils are gearing up for laws preventing that ever happening. Majority rule is informal. With elections proven results.

Please excuse my skepticism. I have made some quick calculations with prices available on the internet. A 1kW solar system with 1,5hr battery capacity at 30% depth of discharge will (conservatively) cost roughly R31000, excluding installation. Cost breakdown, without going into technical detail:
6 X 400W solar panels = R3000 X 6 = R18000
4 x 100Ah batteries = R2000 x 4 = R8000
1kW solar inverter = R5000

Lets compare to municipal supplied power, currently around R1,36 per kW hour. Say you are lucky and get 12kW hours per day from your system. Saving per day is then R16,32. Breakeven will take R31000/R16,32 days = 1899,5 days or roughly 5,2 years. You will be lucky if your batteries survive that long.

My opinion solar power should only be considered where there is no alternative. Perhaps the author can provide detailed calculations which prove me wrong.

Yes but if you pay R1.36 kw/hour you are using a bill of years ago…
CoCt average now +_ R2.20/kwh…thus for 10 kwh consumption per day = 10 x R2.2 = R22.00. equating R31000/22.00 = 1409 day = 3.85 year payback.

As prices increase ( >inflation) your payback reduce further so your payback are most probably at 3 years. The systems stay expensive, the easiest still to reduce consumption then do PV. MY house ( circe 300 m2) now on 8.5 units per day, without PV.

Bear in mind the rand will be weaker by the time you need a new battery. A full depreciation of 100% in the last 9 years.

Hopefully Moores law of declining tech prices will contain that a bit.

R1,36 is current CoJ Step 2 tariff. Network charge excluded. Network charge is payable independent of usage. I agree best to reduce consumption. I assume 8.5 units per day implies gas cooking.

Mostly, yes. This will be similar (maybe not same) for most households in ZA.
You can include gas for water heating in your exercise too.
It is very difficult to beat the cost of main-line grid electricity.

Maybe we all want to be well-behaved greenies, but despite what the renewables promo brigade promise (“but the prices are coming down…”, “but also consider the effects on the environment/ sky/ sea/ turtles/ sparrows…”) it’s not always cheap, easy, consistent or sustainable.

We a have “exported” our capacity ( read human capital/Engineers) in a couple of years we will “import” our electricity from abroad of from our homes to industry.

Dear Moneyweb contributor Adriaan Kruger, you are not alone. Thousands of Soweto residents have also not paid for their electricity for many, many years. Not just Soweto but country-wide and no action is taken against them. Us gfuys who pay for our electricity will soon be history, either left the country or using our own solar supply],which cannot be taxed [not yet, but I bet some schemers are working on some method to get to our wallets to support their luxurious life-style].

The other alternative to Eskom is, of course, an air ticket to a First World country ….. buying a lotto ticket later.

This is where it is getting interesting with some actual figures posted, agree with eaeh, LeonP4, Trying to Retire, I reduced consumption in 3 bedroom house with pool with LED’s, Gas cooking, Solar geyser on timer, most energy efficient appliances available and are using approximately 10kw/h per day at a cost of approximately R 400 per month. R 400 gives me 50Kwh @ 1.100 + 242Kwh @ 1.2081 in the West Rand. I dont think it makes sense at this cost to look at solar except as LeonP4 indicated to go very small and maybe convert lights to solar and so forth?

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