Private solar explosion putting Eskom to shame

Private solar installations in South Africa can generate nearly double the amount of solar power provided by plants connected to Eskom’s grid.

The power utility’s latest renewable statistics shows it has roughly 2,787MW of installed solar capacity, all of which is provided by independent power producers (IPPs).

PV solar plants account for about 2,200MW of the capacity, while concentrated solar plants (CSPs) contribute up to 500MW.

According to a senior economist at Trade & Industrial Policy Strategies, Gaylor Montmasson-Clair, South Africa had around 5,200MW (5.2GW) of private solar capacity by the end of 2023.

That is double the private solar capacity compared to a year earlier.

Private individuals and businesses installed more PV solar generation than Eskom has connected to its grid through IPPs in about a decade.

The utility has been unable to add further generation in the three Cape provinces that are ideally suited for renewable generation due to its transmission capacity being full.

Montmasson-Clair also provided a graph to illustrate how the relationship between utility-scale solar and wind power used by Eskom and private solar power changed between July 2022 and December 2023.

This showed that the renewable generation used by Eskom stagnated at 6,200MW (GW) over the last year and a half, while private solar PV capacity surged.

Amid record levels of load-shedding, South African households and businesses have taken matters into their own hands and splurged on solar panels, inverters, and batteries.

Clear evidence of this uptake is the number of solar panels imported into the country surging during 2023.

MyBroadband spoke to LookSee executive head officer Marc du Plessis, who provided detailed data on the value of solar panels declared to South African Revenue Service (Sars) customs officials over the past three years.

Du Plessis described 2023 as a “tumultuous” year for South Africa’s solar panel imports.

“The introduction of stage 6 load-shedding led to record-breaking demand for solar systems with insufficient stock in the country,” he explained. “This resulted in high levels of solar panel imports.”

“As stages of load-shedding eased, however, so too did the demand for solar systems, leaving importers and installers with an oversupply of panels.”

“By the end of the year, solar panel imports had dropped to 2021 levels.”

Despite the decline in imports, the value of the solar panels imported between January and November 2023 exceeded R17 billion.

That was over triple the R5.6 billion in the value of solar panels imported during the entire 2022 and nearly five times the R3.5 billion of solar panels imported in 2021.

The chart below shows the value of solar panels declared to customs in each month of 2021, 2022, and 2023.

Sars is yet to share the customs values for December 2023. Click to enlarge.

Consumer solar pricing also see-sawed during the year, Du Plessis said.

“High demand and low stock availability in the beginning of 2023 saw a marked increase in the pricing of solar installations and reports of some customers paying high premiums to have their installations prioritised,” he said.

“Towards the second half of the year, however, prices began to stabilise as load-shedding levels evened out, and by the end of 2023 prices had dropped by up to 30%.”

“These lower prices were greatly assisted by the large amounts of solar panel stock available in the local market and a willingness by wholesalers and installers to bring down prices in order to reduce storage costs.”

Solar prices very low — for now

Du Plessis said LookSee believed that solar systems were currently priced at the low end of the market value due to the availability of stock in the country.

However, he cautioned that this could easily change.

“Increased levels of load-shedding, as an example, will drive up local demand, which could once again result in a shortage of available components,” he said.

“Once we run out of local supply of solar components, we’ll also have to deal with the impact of fluctuating exchange rates, availability of supply from manufacturers and any price increases that may have been introduced.”

Du Plessis also pointed out that there were two short-term financial incentives that households should consider in deciding whether now is the right time to get a solar system.

Firstly, the home solar tax incentive that provides a 25% rebate on the cost of new and unused solar panels up to a maximum of R15,000 is set to expire on 29 February 2024.

“Time is running out on this, but we believe motivated households can still make the deadline to qualify,” Du Plessis said.

Secondly, the Energy Bounce Back Loan Guarantee Scheme enabled banks to offer preferential lending to households for solar installations.

Standard Bank, for example, can offer loans between R3,000 and R300,000 at personalised interest rates from Prime+1% to a maximum of Prime+2.5%.

This scheme will come to an end on 30 August 2024.