South Africa making big solar mistake

Most South African municipalities are missing out on the untapped potential of excess rooftop solar capacity, which is right on their doorstep.

Without a major intervention or mindset change, municipal electricity sales are likely to continue to decline, putting their main income stream under severe pressure and causing many more municipalities to fail.

These are the views of Techsolutions CEO Eon de Koker, who is a qualified electric and electronic engineer, with a master’s degree in the latter.

De Koker believes that photovoltaic (PC) rooftop solar should be the preferred form of electricity generation until South Africa gets sufficient transmission network capacity to support the expansion of utility-scale generation.

He pointed out that South Africa is among the top two countries on the planet in terms of its suitability for solar energy generation.

“Solar suitability is determined by three factors: the total sun irradiation throughout the year, the variation in solar irradiation during the year, and the average temperature,” he explained.

“Only Egypt is more suitable than South Africa — by a small margin.”

De Koker argued that expanding rooftop PV solar was also much faster than other generating technologies, including ground-based utility-scale solar farms.

Eskom estimated there was roughly 6,000MW of rooftop solar PV installed in South Africa by the end of July 2024, an increase of about 3,700MW in two years.

The capacity added during that time is over 1,000MW more than the total capacity of utility-scale solar plants built in South Africa in the past decade.

The rush for backup power amid severe load-shedding has thus put South Africa in a unique position.

Well over 73% of the country’s solar is installed on rooftops, whereas the global average of rooftop solar’s contribution to total solar capacity stood at 10%.

The table below compares the key performance and cost differences between large solar farms and rooftop solar installations, as detailed by De Koker.

Performance or cost element	Utility-scale solar farms	Rooftop solar
Output	Higher due to optimal location	Marginally lower: About 1-2% less
Land use	Significant and requires time and money	No extra land required
Environmental impact studies	Required, taking up additional time and money	None
Structure costs	Cost of structures to retain solar panels	Uses existing roof structures
Transport costs	High transport cost for taking equipment to remote sites	Lower transport costs for equipment as sites are located in cities
Transmission network requirements	Cost and time to install transmission network	No additional network capacity required
Energy losses	Substantial energy losses due to transmitting power over long distances	Much lower energy losses
Energy storage	Ability to store energy in thermal batteries (only concentrated solar plants)	Most often paired with batteries that can help shave peak demand

Municipalities standing in their own way

Despite the enormous potential, there has been a lack of progress by municipalities in finalising small-scale embedded generation (SSEG) policies.

The SSEG policies and their resulting bylaws stipulate the formal procedures for ensuring grid-tied solar installations are safe to feed electricity to the grid and provide for feed-in tariffs.

The South African Local Government Association (SALGA) has done significant work to assist municipalities in developing policy frameworks, financial models, and other guidelines for SSEG adoption.

“This excess energy represents an important opportunity to bring additional energy onto South Africa’s constrained electricity grid,” SALGA’s report on the state of SSEG in 2023 said.

The report showed that 71 of South Africa’s 165 municipal electricity distributors had developed an SSEG application process, but only 43 — or about a quarter — had published feed-in tariffs.

In addition, the published tariffs varied between R0.32 and R1.30 per kWh of excess energy, significantly lower than the roughly R2.40 municipalities pay for electricity from Eskom.

De Koker warned that many municipal customers who had already installed solar and backup capacity might cut themselves off from the grid completely without the incentive to sell back their power.

“If the municipalities do not make it attractive for them to sell back their excess energy or add high fixed costs, these residents will simply request that their existing meters be removed, and then the municipalities would have permanently lost the opportunity to buy from them,” he said.

De Koker said municipalities should increase their feed-in tariffs to rates more comparable to Eskom’s charges.

This would encourage households to spend money on the hybrid inverters and bidirectional meters they need to install to offer up their excess capacity.

To ensure that the municipalities’ balance sheets and grid stability don’t suffer, they could adopt dynamic time-of-use (ToU) pricing that reward energy generation and penalises consumption during peak demand hours.

ToU tariffs also make it cheaper to buy electricity in off-peak hours, incentivising continued grid use for battery recharging.

De Koker said countries that have adopted ToU for SSEGs include Australia, the United States, Germany, Spain, UK, Italy, Japan, and the Netherlands.

“The implications are that the electricity meters to be installed should be capable of handling dynamic pricing and the billing systems should be capable of handling that.”