The increase will take effect on April 1, 2023, with another 12.74% increase set to take place on April 1, 2024.

Despite the amendment, Eskom’s total revenue remains roughly the same, but they needed the increase due to factors such as depreciation, increased primary energy costs, and increased cost to procure electricity from independent power producers.

Nersa raised concerns over Eskom’s high usage of emergency generating capacity and declining energy availability factor at its coal power stations, which has a direct relation with the load shedding happening across the country. The decision was made after balancing all these factors.

This increase in electricity tariffs makes alternative forms of energy such as solar power even more attractive to consumers and businesses as a way to offset the rising costs of electricity from Eskom.

Solar power systems now have the dual benefit of reducing costs and also serving as a backup or uninterrupted power supply (UPS) during load shedding. They are normally configured to power the lights, plugs, WiFi, TV, fridge and alarm.

A 5kW solar PV system for an average sized household costs about R135 000 and has a lifespan of 20 to 30 years. See does solar save you money for more details. Financing for these systems is also becoming more readily available. One can choose to get a personal loan from a bank or have the system financed by the solar service provider directly.

The solar industry in South Africa has been growing by about 8% per annum (Rooftop Solar Market Growth Trends) and with this extra pressure on consumers it is likely that it will grow even faster in the near future. There are already an estimated 346 000 households with solar energy systems installed (1734.4 MW). However this is just 1.93% of the 17.95 million households in the country.

If the trajectory of other countries such as Australia is anything to go by, SA could be looking at a 230% increase in households with solar installed over the next 4 years. South Africa would however still be far behind Australia, which has solar on 32% of its households.

In any case, the outlook for solar in SA is very bright. The approval of an 18.65% electricity tariff increase is likely to have a significant impact on the economy and daily lives of people. With an additional 12.74% increase set to take place in the future, the cost of electricity is expected to be even more expensive for consumers and businesses.

The government, private sector and consumers should explore ways to increase the adoption of solar energy to help mitigate the impact of rising electricity prices. With a concerted effort, solar energy can play a vital role in providing a sustainable energy future for South Africa.

What you need to know about solar power in South Africa

1. Firstly, solar power systems are becoming more affordable while Eskom electricity continues to increase in price. This has a compounding effect which, in this economy, is adding extra pressure on consumers. Switching to solar offers reduced stress and some savings. The initial installation cost can be unaffordable to some but financing options for solar system are becoming more readily available.

2. Your business could qualify to be eligible for tax deductions for using solar energy. Taxpayers are allowed to deduct the cost of their solar power system from their profits as a depreciation expense. This reduction can also be carried over to the next financial year as a deferred tax asset. In effect, it is the same as getting a 28% discount on the price of your solar system!

3. The installation cost is high but can easily be recouped in a few years through your savings. After which, you can enjoy the benefits of free energy which will save you a lot more money in the long run.

4. Load-shedding is a common occurrence in South Africa and with only Eskom to rely on as an energy source, being affected by load-shedding is inevitable. With solar energy and a battery bank, you won’t be negatively affected by load-shedding and black outs, saving you money and helping you avoid low productivity. This also means longer lasting food, Wi-Fi, hot water and other benefits of continuous energy that Eskom can no longer supply us.

5. You won’t need to invest in a generator, which is expensive and noisy to run, since it would need fuel to run, which is both bad for the environment and extra pricey with the high gas prices we are currently experiencing.

6. You could also feed excess energy back into the grid, and in doing so you’ll receive credits from your municipality or directly from Eskom for selling your excess solar power. This is not available to households in all areas of the country yet though so if you are interested in doing this you need to check if it’s possible in your area.

Let’s look at an actual example

The price for a solar energy system depends on its size, for example, an 80sqm house may use 30kWh of electricity per day and would require at least a 5kW inverter. The cost of such a system would be around R130 000. A full design and quotation process is necessary for each installation to ensure the electricity requirements of the home are met correctly.

So how much will be saved? 

Eskom’s average domestic tariff has risen to just under R2.62 per kW.

On average 20kWh per day could be provided by the solar system while 10kWh per day will still be drawn from the grid. This split depends on the consumption pattern of the household, the position of the solar panels and the size of the battery bank.

Annual savings are therefore R19 126 (365 x 20kWh x R2.62).

The payback period for the solar system is therefore 6.79 years (R130 000 / R19 126).

This means that over the lifetime of the solar system, which can be longer than 20 years, the home owner would see a saving of R252 520 (20 x R19 126 – R130 000) after factoring in the cost of the original purchase price.

With all the electricity price hikes and more to come, load-shedding and the other energy issues we face today, going solar is a great alternative option. Saving you time, energy and money. Eskom was recently granted an average electricity tariff increase of around 18.65% and is expected to implement a further price increase of 12.74% in April 2024, so why not join the solar boom and avoid this by investing in solar today.