Electricity tariffs have recently been increased by around 14%, and the National Energy Regulator of South Africa (Nersa) has approved further above inflation hikes for the next three financial years. This means that operating costs for all businesses are expected to skyrocket, while load shedding also remains an ongoing risk.
This is according to Charl du Plessis, Head of Sales at Energy Partners Solar – a division of Energy Partners and part of the PSG group of companies – who says that the security of electrical supply will increasingly place pressure on businesses across South Africa’s market sectors.
“First and foremost, we would strongly recommend installing a grid-tied solar photovoltaic (PV) system to mitigate the impact of the massive tariff increases over the coming years. The payback period for a PV system (which can be installed within three to six months) could be as short as three years, including the utilisation of the Section 12B accelerated tax write off of renewable energy assets. There are also service providers that can offer renewable energy on the basis of a Power Purchase Agreement (PPA), at up to 50% discount to grid rates,” he advises.
He adds that a PV system on its own is not suited as an alternative power supply during load shedding. “A PV system still requires a stable power grid to feed into, so for intermittent power cuts, one needs a generator that can provide the essential load.”
The best solution, according to Du Plessis, is a hybridised system that utilises both the PV system as well as a diesel generator. “For this step, it is crucial to engage with an expert service provider to combine the PV system with a generator in an energy centre that automatically regulates the power supply to the business. That is the only way to guarantee that the system is safely installed and able to perform at maximum efficiency.
“In an energy centre configuration, the PV system is able to supply the bulk of the power required by the business during load shedding in peak daylight hours, while the generator either idles on standby or runs at reduced capacity to provide additional power. At times when the PV system is unable to operate, such as on cloudy days, the generator takes over bulk power supply. This method can significantly reduce fuel consumption, and typically saves around 70% of the cost of diesel generation.”
Du Plessis notes that there is one other option available. “A battery storage system in conjunction with a PV system. While the capital outlay for this is substantially more than a diesel generator, with the approximate cost for a battery system that provides around 100kW of power during load shedding currently being around R1.5 million. However, it does offer a few interesting advantages.
“A battery system can also be used to reduce power costs when the grid is on. Alternatively, you can set the battery system to feed power into the company’s smart grid during operating hours (a method known as peak-shaving), or charge the battery during off-peak hours when energy tariffs are lowest and discharging system during peak hours (known as Time-of Use arbitrage).
“Over the next ten years the cost of batteries will reduce substantially, which will make this option much more viable in the near future,” he adds.
While an awareness of the importance of security of supply is growing among businesses in South Africa, Du Plessis believes that more still needs to be done. “It is crucial for every company to start looking for capable service providers to ensure they have affordable, uninterrupted power in the coming years,” he concludes.