Bad news for solar power users in South Africa

South African residents with rooftop solar systems who live in areas that receive municipal-supplied electricity could soon have to pay a surcharge on their systems to help improve municipal revenue generation.

Minister of Cooperative Governance and Traditional Affairs Velenkosini Hlabisa revealed this in response to parliamentary questions from ANC MP Nombiselo Sompa-Masiu.

Sompa-Masiu’s question was about how the Department of Cooperative Governance and Traditional Affairs (CoGTA) intends to mitigate municipal revenue loss due to some households generating their own electricity.

“The Department of Cooperative Governance and Traditional Affairs (CoGTA) acknowledges the impact of off-grid generation on municipal revenue,” said Minister Hlabisa.

“To address this, we’re developing strategies to diversify and enhance municipal revenue streams.”

Interventions in the short term include exploring alternative revenue streams and reviewing tariffs to ensure they remain competitive, improve revenue collection, and reduce debt.

However, Hlabisa also said municipalities will, through National Energy Regulator of South Africa (Nersa) regulations, impose a surcharge on all scaled-embedded electricity systems to improve revenue generation.

“The department, through the office of the Results Management Office (RMO), also supports municipalities in developing their Small-Scale Embedded Generation (SSEG) policies and guidelines,” he added.

“In this regard, we will work with Sustainable Energy Africa to design suitable tariffs for all SSEGs and those IPPs seeking to wheel power through the municipal network. This will go a long way to improving municipal revenues.”

MyBroadband asked Nersa for comment but it didn’t immediately provide feedback.

Customers with SSEG installations typically require little or no electricity from municipal providers. However, many systems remain tied to the grid so that homes have power when solar generation is underperforming.

Eskom has taken issue with this, describing this as small-scale solar users relying on the “Eskom Battery”.

It recently proposed structural changes to its retail tariffs through which it intends to charge solar users in South Africa to remain connected to the national power grid.

“Customers with solar rooftop solar PV connected to the grid who use Eskom-supplied energy as a backup, known as the ‘Eskom Battery’, on cloudy days, at night, and during the morning and evening peaks will still be required to pay for using the Eskom network,” Eskom said.

“The application does not include customers who have completely disconnected from Eskom’s grid and have no Eskom connection or meter.”

According to Nersa’s consultation document for Eskom’s proposed changes, the utility wants to implement a single energy charge, an ancillary network charge, a network demand charge, and a service and administration charge.

“This is a proposed change from the current tariff, where a combined service and an administration charge is reintroduced,” said Eskom.

These fees will be charged regardless of usage.

If approved, this would mean that households with grid-tied rooftop solar installations and low-consumption residents would pay substantially more than they currently do for electricity.

The power utility has a tariff comparison tool that customers can use to see how their monthly electricity bill changes and how the fixed charges change based on monthly energy usage.

For example, customers currently pay R196 in fixed fees even if they consume no electricity provided by Eskom. With Eskom’s latest proposal, this would increase by 183% to R554.

Households that consume around 400kWh pay approximately R1,178 per month. With the proposed changes, this would increase by 25% to R1,476.

The changes will benefit heavy power users. Households that use 900kWh per month currently pay R2,853, but this would drop by around 8% to R2,629.

Other proposed changes include removing the inclining block tariff, which Eskom says will make electricity more affordable and expand access to electricity services.

The state-owned power utility also wants to let customers with solar systems sell electricity back to the grid to offset their monthly bills.

However, the current structure of these arrangements makes it challenging for feed-in customers to break even on the monthly transmission network charge they must pay based on their inverter’s capacity.