Electrical Power & Protection

South Africa’s solar boom

February 2024 Electrical Power & Protection

Dominic Goncalves, decarbonisation advisor at Cresco Project Finance.

South Africa has installed more rooftop and on-site solar systems that are contracted to private consumers in the last year and a half than in the last ten years under government programmes. For industry experts, this is a staggering figure. What took almost ten years under public programmes took little over a year once regulations were lifted and load-shedding incentivised the private residential, commercial, industrial and agricultural sectors to build their own resilience and get off the grid.

Renewable energy initiatives

In 2010, South Africa set up the Renewable Energy Independent Power Producer Procurement Programme (REIPPP), which at the time was one of the most highly regarded, best practice ways of implementing renewable energy globally. I was involved in three of these projects at the beginning of the programme, Khi, Kaxu and Xina Solar One. These now produce about 250 MW of solar power into the grid in the Northern Cape. Of these projects, 92 were installed during the period 2011 to 2016 − some 6300 MW of solar and wind – before they came to a grinding halt as Eskom and government forces put a stop to the programme, arguably to force through a nuclear deal with Russia instead.

After a three year hiatus, this programme was continued again, and the installed base was 3443 MW of wind and 2287 MW of solar as of late August 2023. But the loadshedding deterioration that occurred from mid-2022 onward has caused progressive thinking South Africans to explore ways to get off Eskom’s grid. Solar power has become cheaper than Eskom power in almost every application. Although it only works roughly 30% of the year when the sun is shining, during this 30% you can have your own power at a cheaper rate than you would pay for Eskom when there is no loadshedding and in off-peak hours.

The solar boom

In the space of little over a year, the installed base of solar not contracted to Eskom or government programmes has leaped from 981 MW in March 2022 to 4740 MW by August 2023. What took ten years to achieve in these highly applauded government programmes took less than one year once regulations were opened up to allow for residents and businesses to do the same.

Three main factors contributed to the explosion in domestic and commercial solar installations:

1. The price of solar decreased more than 90% from 2008 to 2023. Solar is cheaper than Eskom power, meaning one can achieve savings on installing a system. There is an increasingly lower payback period and the business case makes sense.

2. Regulations prevented private consumers from installing projects above 1 MW until 2021. Once permitted, a flurry of demand from mines, smelters, industrial facilities, data centres, hospitals, shopping malls and other larger loads all began developing solar projects – ideally on their roofs and onsite if enough space – otherwise, ‘wheeled’ from other parts of the country, using Eskom’s grid to transport this power.

3. There was increased loadshedding. Diesel is approximately eight to ten times the cost of solar power. Diesel works all of the time, while solar works 30% of the time. The best way you can get your diesel cost down is to install solar to offset your diesel when the solar is operating.

Eskom’s winter outlook

In May 2023 Eskom published its winter outlook. It looked bleak. Power plants were continuing to break down, and those under maintenance were delayed from coming back online. Eskom assumed that demand on the grid would be similar to the previous year – around 34 GW. Surprisingly demand was only 31 GW. This was 3000 MW less than expected and roughly the same amount as the new solar energy installed that was not connected to Eskom’s grid.

One cannot attribute solar power taking consumers off the grid as being the sole cause of this reduction in national demand; but it is one of the main ones. Here are some of the other factors that caused this drop in national demand:

• Increased wind generation in the first weeks of winter.

• Increased commercial, industrial and agricultural usage of onsite solar PV and BESS systems, the rapid adoption of which is driven by the need for resilience to the high levels of loadshedding.

• High winter prices for the Eskom Megaflex tariff starting 1 June 2023 for industrial, mining and energy-intensive industries, on top of the high Eskom average electricity price increase on 1 April 2023. This ‘double tariff increase’ caused some smelters and heavy operations to reduce their loads.

• A weak economy and low business confidence.

• Energy switching to gas for domestic heating and cooking.

In late August 2023, the national demand figures were revised further downward. Moving into the summer months, demand decreased even more, from 34 GW to 31 GW to 28,5 GW. Some 328 MW of solar was reported to be installed between June and August 2023.

Challenges and benefits of solar power

Eskom considers solar to be a double-edged sword, as do most utilities globally, and any operation that requires 24/7 power. Solar is variable: it’s great when it’s producing, but even with batteries, it cannot store power for long periods. This means that during winter months when there are extended periods of no sun, that fleet of gigawatts of solar power can be of no use at all. It is during these times when the power is often needed the most. Still, this can be factored in. It is well known prior to installing that it will only work 30% of the time, during daylight hours and with high seasonality – more in summer, less in winter. This can be planned and worked around.

What solar does is to free up strain on the grid for Eskom to conduct much-needed maintenance. It relieves the consumer of needing to burn diesel generators which are much more expensive. It enables consumers – whether residential or commercial or industrial – to retain some autonomy over their electricity supply in their homes and their businesses in a country where public service delivery, especially electricity, has a very poor track record, with little expectation of improvement in the short to medium term.

Global and local solar trends

Solar is booming globally and in South Africa. It is good for the climate and good for the environment, and there are few if any drawbacks to installing it to become more in control of own your electricity supply and therefore your own home and business. It will be interesting to see in five years time how much more solar is installed, how much load this takes off Eskom’s grid, and how much loadshedding it will avoid. It may not be the only silver bullet against loadshedding, but it is certainly one of the main ones.

For more information contact Mbali Makhubo, Fenix Marketing, +27 72 407 9780, pr@fenixmarketing.co.za, www.fenixmarketing.co.za

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