Energy7.10.2024

Solar power price warning for South Africa

South African households and small businesses looking to buy solar and backup power products at the lowest possible prices might want to make their purchases within the next few months.

According to feedback from a major energy distributor, the large volumes of panels, inverters, and batteries that flooded the country are slowly trickling off supplier shelves.

They expect that some of the stock will be replaced with new and more expensive products in early 2025.

In addition, smaller companies that added solar installation services to their offerings due to the boom in demand in 2022 and 2023 are starting to return to their main businesses.

That shift will decrease competition and allow more established installers to normalise their profit margins after they previously had to make deep cuts to survive against an onslaught of short-lived disruptors.

The value and volume of solar power product imports to South Africa hit record levels in 2023, buoyed by the worst load-shedding yet and tax incentives.

With most of the addressable market having bought their solar power products towards the end of last year and load-shedding being kept at bay for over half a year since early 2024, demand has plunged.

Suppliers and installers have been slashing solar power product prices substantially to try and revive sales among new buyers and potential upgraders.

Major energy product distributor Rubicon, best known as the official supplier of Tesla energy products in South Africa, has told MyBroadband that the buying environment was perfect for the time being.

“The big anomaly at the moment is that there is still a lot of residential stock in the market with all of the suppliers,” said Rubicon Energy managing director Greg Blandford.

“If we can send a message to the public: This is a prime opportunity to buy because it’s probably the lowest price point you’ll ever see.”

Blandford said that current demand appears to be in line with growth in the years before the extraordinary boom in solar in 2022 and 2023.

“If you take out those two years and draw a straight line based on product demand year-on-year, you are probably sitting at the same growth curve as in previous years,” Blandford said.

He explained that this showed a type of market reset was in process, which could see a return to more price stability.

In light of this, Blandford believes that solar power product prices should start ticking upward again by the middle of 2025.

In addition to a more normal stream of imports, Blandford explained that several new and more advanced products would be launching in the new year, which could come with bigger price tags.

“Because the current price points are low, it just makes sense to buy now. By investing in solar, you are securing a long-term cost savings for your home,” Blandford said.

Cape Town-based solar power installer AWPower agreed with Rubicon’s market assessment.

“Once it normalises and you start seeing new technology coming in, we’ll see a steady price increase again,” said AWPower managing director Christiaan Hattingh.

The need to install solar power to protect against load-shedding might no longer be a factor, but there are two other important reasons self-generation will remain a benefit for households and businesses.

Firstly, energy and electricity minister Kgosientsho Ramokgopa has warned that the next crisis for the power industry will be in local network distribution.

Ramokgopa highlighted that underinvestment in municipal infrastructure is causing increased localised outages.

Two metros encountering significant problems in maintaining their networks are the cities of Joburg and Tshwane.

Both have started implementing substantial amounts of localised load reduction in areas with high numbers of illegal connections.

In the process, many households that pay for electricity have their power cut off during peak demand periods due to the illegal activities of their neighbours or nearby informal settlements.

Joburg has also started implementing load limiting in areas that are not prone to illegal connections but have not had their infrastructure adequately upgraded to keep up with property developments.

Secondly, Eskom has asked for substantial electricity tariff hikes over the next three years, starting with a 36.15% hike in 2025.

Ramokgopa said that the government would be opposed to any increase above 20%.

Even if the National Energy Regulator of South Africa would only approve an increase of that kind, it would be over four times the inflation rate.

The monthly bill of a solar system that can supply over 90% of a household’s demand, combined with the cost of grid electricity for the remaining demand, is already cheaper for many than having grid-only supply.

With the upcoming price hikes, even households with lower consumption could immediately see savings on their electricity bills while also being protected against outages.

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