Massive unspoken problem with going off-grid

With Eskom reportedly planning to apply for another massive electricity price hike and its proposals that households pay higher fixed rates for access to the grid, many people might be contemplating completely severing their grid connection.

However, doing so could have severe unintended consequences for service delivery, which is already in crisis in many towns and cities.

Most South African households with backup power use grid-tied systems. These allow them to generate their own energy and use Eskom electricity when necessary.

A very rare few have the ability or financial means to go completely off-grid.

Several reputed solar power installation companies have told MyBroadband that giving Eskom the boot requires oversizing a system with two or three times the number of solar panels and batteries a household would typically need to cover over 90% of their electricity demand.

To achieve 100% off-grid coverage, a system must compensate for prolonged periods without sunshine.

However, Eskom’s proposals to introduce significantly higher grid connection fees or capacity charges could start tipping the scales in favour of going off-grid to remaining grid-tied.

A previous Eskom analysis calculating how its proposal would influence electricity prices showed that households using less than 600kWh could see their bills climbing by R466 to R2,564 per month.

Users who stick with its Homepower 1 tariff would see their fixed charge increase from R218 to R938 per month.

Even those who opted to switch to Eskom’s time-of-use tariff, which the company has punted as the ideal option for solar users, would pay R720 more per month if they used 0kWh, R551 more for 400kWh, and R466 more for 600kWh.

These calculations don’t factor in Eskom’s latest application to the National Energy Regulator of South Africa to increase electricity tariffs to its direct customers by 36.15% and tariffs levied against municipalities by as much as 43.55%.

How Eskom’s proposed tariffs with higher fixed charges compare with older tariffs, if a household with solar switches to the more affordable time-of-use tariff

Nersa’s own proposed electricity tariff changes could also see grid-tied solar power users charged substantially more in energy charges, similar to what heavy-demand users like mines and smelters pay.

If either Nersa or Eskom’s proposals were adopted, demand for grid cutoffs could surge.

However, research by North-West Univesity associate professor of law Germarié Viljoen and University of Pretoria public law senior lecturer Felix Dube recently highlighted some major issues with South African households going off-grid.

The first big problem is that there is no specific national legislation prescribing the process for delinking from the national grid.

It is only in local ordinances and zoning regulations that severing grid connections are accommodated and facilitated.

Unless you are an Eskom Direct customer, legally disconnecting your household requires a request and reaction by your municipality.

The inherent problem is that electricity service fees and sales are among municipalities’ biggest sources of revenue.

They employ this revenue to fund other services and departments and to cross-subsidise electricity provision costs to poorer households, which are provided with free basic electricity.

Without proper regulations and processes and a loss in revenue from customers wanting to go off-grid, municipalities would have no incentive to abide by customers’ cutoff requests.

New by-laws needed

In addition, Viljoen and Dube found there was uncertainty from households around the legal and financial implications of going off-grid, including obligations to pay municipalities for services that a house might no longer use.

The legal experts recommended that municipalities revamp their by-laws to create regulatory mechanisms for managing off-grid migrations.

Although some municipalities have introduced progressive legislation for off-grid and grid-tied systems — like the City of Cape Town — Viljoen and Dube said that there was great inconsistency between different municipalities’ approaches to small-scale embedded generation.

Only a handful have introduced feed-in bill credits, and only Cape Town supports cash payouts if the value of feed-in exceeds the consumption amount.

By not offering attractive feed-in electricity tariffs, municipalities could arguably be incentivising cutoffs.

If they allowed feed-in at fair tariffs, municipalities could get electricity at a fraction of the cost of what Eskom charges while also ensuring customers remain connected and use the little bit of electricity they need on overcast or high-demand days.

In that way, despite the fact that many solar users might cost the municipality more than they consume in credits or cash payouts, the cheap extra electricity from households could slash the municipality’s Eskom bill.