What Eskom’s 18.65% electricity price increase means for solar energy
The National Energy Regulator of South Africa (Nersa) has approved an 18.65% electricity tariff increase, following an application by Eskom.
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.