Bad news for people with solar panels who want to sell power to the grid

The National Energy Regulator of South Africa (Nersa) has approved rules to compensate solar users for power exported to the grid, but they won’t receive a cent.

Instead, the net billing rules approved by the watchdog specify that the tariff to compensate solar users for their exports to the grid will be used to offset future electricity purchases from their distributor.

Nersa approved the tariffs in mid-December 2024 and recently published the rules.

“The approved rules aim to create a balanced and sustainable framework for both prosumers and distributors,” it said.

“These rules are expected to drive the adoption of renewable energy and contribute to South Africa’s long-term energy goals.”

The move effectively shifts the approach from a net metering system in which customers would be credited one unit for every unit they sell back to the grid.

Unfortunately, many of the country’s municipal power suppliers never implemented the net metering system for fear of losing revenue.

However, the new rules effectively force providers to implement net billing.

Section seven of the rules document specifies how the billing system will work. Energy exported must:

• Be credited to the relevant monthly billing period
• Not be offset against fixed, basic or demand charges but only offset against energy exported
• Not be compensated in cash by the distributor but only offset against energy purchases
• Where export compensation exceeds the value of energy purchases in a billing period, the credit must be carried over to offset future electricity purchases from the distributor, provided such rollover doesn’t extend into the distributor’s new financial year

The latter seems to imply that the credits awarded to customers for future purchases from their distributor will expire at the end of each financial year, which would likely disincentivise these customers from selling power back to the grid.

MyBroadband asked Nersa for clarity on this but it hadn’t responded by publication.

Regarding setting net billing tariffs, the rules stipulate that providers must complete cost-of-supply studies.

“Unbundled, cost-reflective tariffs are needed to develop tariffs that reflect variable cost components, such as in relation to the procurement of energy, and fixed components,” said Nersa.

The rules also outline how distributors must set their net billing tariffs, which must be based on variable, fixed, and other charges.

Variable charges include energy and network charges to recover costs associated with supplying energy and grid usage, while fixed charges are designed to recover network capital, maintenance, returns,
fixed operating, administration, and service costs.

Nersa said “other charges” include once-off charges to the customer in the form of connection fees to recover metering and network-related costs.

They can also include charges related to contributing to subsidies and other levies.

“The billing system for net-billing shall account for both imported and exported energy from/to the grid by the Prosumer as separate transactions,” the rules add.

Nersa has also outlined the metering infrastructure that must be used for net billing purposes.

These meters must be bi-directional, capable of measuring forward and reverse energy flow in separate registers, and comply with the prescribed requirements of each distributor.

They must also comply with the relevant metering standards, measure and record peak supply, be capable of two-way communication, and provide time-of-use metering.

“The metering equipment shall be procured, installed, and maintained by the distributor or by a duly authorised third party. The distributor may levy charges on the prosumer to cover associated costs,” says Nersa.

“Spinning disc meters are not permitted to spin backwards or reverse in direction as a means of metering bi-directional power flow.”