Microgrid boom in South Africa

Smaller privately run electricity networks are seeing a surge in demand across South Africa’s most popular provinces due to severe levels of load-shedding, Sunday newspaper Rapport reports.

A microgrid is a concentrated network consisting of power distribution infrastructure with a specific area that can feature its own generation — typically solar or wind — and often with a connection to the national grid.

In these scenarios, microgrid companies take over the role of the power distributor — like a municipality.

Rapport said that one electricity metering company — WeBill — no longer needs to do business with the government because of the rising demand for its products among private players building microgrids for residential areas.

WeBill founder and managing director Ayal Rosenberg told Rapport that doing business with municipalities often proved to be a struggle.

In addition to issues of corruption and procurement rules adding to the cost of goods, local authorities often struggled to keep up with technological advancements.

While these small networks initially started in industrial parks and commercial properties, they are extending into the residential sector at an astounding pace, particularly in Gauteng and the Western Cape.

Foreign investors interested in long-term stable income act as the primary source of funding.

The debt accrued to install the microgrids is typically paid back in eight or ten years, after which an investor starts making a profit.

Rosenberg said he was aware of at least ten microgrid projects in Gauteng alone.

However, the model only works in areas where households spend between R3,000 and R4,000 on electricity monthly.

One prime example of such an area is the sought-after Midstream Estate, located between Centurion and Midrand in Gauteng.

Aerial view of Midstream Estate in Gauteng.

The nearly two-decade-old estate has its power services managed by Midstream Electrical Supplies (MES), which buys electricity directly from Eskom.

The 6,500 homes that receive electricity via MES have smart meters and are all connected to the utility’s network via fibre optic cables.

Midstream developer Bondev is currently rolling out an 8MVA battery bank that will be charged using a combination of a large solar farm, residential rooftop solar, Eskom’s grid, and fuel-based generators to provide electricity during load-shedding.

The capacity will be sufficient to ensure Midstream’s households still have power at up to stage 4 national load-shedding.

The only price that residents will pay for the installation is their consumption during load-shedding, charged at an extra R1.20 per kWh added to the regular R2.50 they typically pay for a unit of electricity.

Bondev initially said the system could be ready by August 2023 but has since told Rapport it will be up and running within the next two to three months.

Orania aiming to go completely off-grid

While Midstream still relies on Eskom for most of its power, Northern Cape Afrikaans-only town Orania aims to take its micro network completely off-grid.

Following the first phase of its power privatisation project, micro utility Orasol estimates that 33% of the town’s electricity is provided by its own solar farm and residential rooftop solar.

After the second and third phases of the project, all of Orania’s electricity consumption between 06:00 and 22:00 in the day will be privately provided.

Orasol has also been granted permission by the National Energy Regulator of South Africa (Nersa) to sell electricity back to Eskom’s grid during peak solar output periods — when supply outstrips demand.

Both Midstream and Orania are paying residents back for the electricity they provide to their microgrids.

Midstream has proposed a feed-in tariff of 80c/kWh, based on an expected cost of 60–77c/kWh for producing power from its large solar farm.

Orania pays residents R1.51 per kWh.

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Microgrid boom in South Africa