South Africa’s solar boom against load shedding

Issue 6 2023 Security Services & Risk Management

Dominic Goncalves.

South Africa has installed more rooftop and on-site solar contracted to private consumers in the last year and a half than under government programmes in the last ten years. For industry experts, this is a staggering figure. What took almost ten years under public programmes, took little over a year once regulations were lifted and load shedding incentivised the private residential, commercial, industrial and agricultural sectors to build their resilience and get off the grid.

In 2010, South Africa set up the Renewable Energy Independent Power Producer Procurement Programme (REIPPP), which at the time was one of the most highly regarded ‘best practice’ ways of implementing renewable energy globally. I was involved in three of these projects at the beginning of the programme, Khi, Kaxu and Xina Solar One, which produce about 250 MW of solar power into the grid in the Northern Cape. Ninety-two of these projects were installed during 2011-2016, some 6300 MW of solar and wind – before they came to a grinding halt as Eskom and government forces put a stop to the programme, arguably to force through a nuclear deal with Russia instead.

After a three year hiatus, this programme was continued again, and the current installed base is 3442.6 MW of wind and 2287.1 MW of solar as of late August 2023, but the load-shedding deterioration that occurred from mid-2022 onward has caused nearly every progressive-thinking South African to explore ways to get off Eskom’s grid and have their electricity supply as much ‘in their own hands’ as possible. Diesel generators are expensive – more than Eskom’s power – but solar power has become cheaper than Eskom in almost every application. Although it only works roughly 30% of the year (when the sun is shining), during this 30%, you can have your own power at a cheaper rate than what you would pay for Eskom when there is no load-shedding and in off-peak hours.

The solar boom

In the space of little over a year, the installed solar base not contracted to Eskom or government programmes has leapt from 981 MW in March 2022 to 4740 MW by August 2023. What took ten years to achieve in these highly applauded government programmes took less than one year once regulations were opened to allow residents and businesses to do the same.

Three main factors contributed to the explosion in domestic and commercial solar installations:

1. The price of solar decreased more than 90% from 2008 - 2023. Solar is cheaper than Eskom power, meaning one can achieve savings on installing a system vs. not. There is an increasingly lower payback period, and the business case makes sense

2. Regulations prevented private consumers from installing projects above 1 MW until 2021. Once permitted, a flurry of demand from mines, smelters, industrial facilities, data centres, hospitals, shopping malls and other larger loads all began developing solar projects – ideally on their roofs and onsite if enough space – otherwise, ‘wheeled’ from different parts of the country, using Eskom’s grid to transport this power.

3. Increased load shedding. Diesel is approx. 8 - 10 times the cost of solar power. Diesel works all the time; solar works 30% of the time. The best way to get your diesel cost down is to install solar to offset your diesel when the solar is operating.

Factors contributing to reduced national demand

In May 2023, Eskom published its winter outlook. It looked bleak. Power plants continued to break down, and those under maintenance were delayed from returning online. Eskom assumed that demand on the grid would be similar to last year – around 34 GW. To some fortunate surprise, demand this winter was only 31 GW – which is 3000 MW less than expected and roughly the same amount as the new solar energy installed that is not connected to Eskom’s grid.

Still, to unpack and examine this in detail, one must attribute this to something other than solar power taking consumers off the grid as the sole cause of this reduction in national demand. But it is one of the main ones. Here are some of the factors that caused this drop in national demand:

1. Increased wind generation in the first weeks of winter.

2. Increased commercial, industrial and agricultural usage of onsite Solar PV and BESS systems, the rapid adoption of which is driven by resilience to the high levels of current and future forecasted load shedding.

3. High winter prices for Eskom Megaflex tariff starting 1 June 2023 for industrial, mining and energy-intensive industries, on top of the high Eskom average electricity price increase on 1 April 2023. This ‘double tariff increase’ caused some smelters and heavy operations to reduce their loads.

4. Weak economy and low business confidence.

5. Energy switching to gas for domestic heating and cooking.

In late August 2023, the national demand figures were revised further downward: it seems that, moving into the summer months, demand has further decreased, from 34 GW to 31 GW to 28.5 GW. Some 328 MW of solar was reported installed between June and August 2023.

Challenges and benefits of solar power

Eskom considers solar a double-edged sword. As do most utilities globally and any operation that requires 24/7 power. Solar is variable: it is great when it is producing, but even with batteries, it cannot store energy for long periods. This means that during winter, when there are extended periods of no sun, all the fleet of gigawatts of solar power – for a week at a time, for example – can be of no use. It is during these times when the power is often needed the most. Still, this can be factored in. It is well known prior to installation that it will only work 30% of the time, during daylight hours and with high seasonality – more in summer, less in winter. This can be planned and worked around.

What solar does is free up strain on the grid for Eskom to conduct much needed maintenance. It relieves the consumer of needing to burn diesel generators, which are much more expensive. It enables consumers – whether residential, commercial, or industrial – to retain some autonomy of their electricity supply in their homes and their businesses in a country where public service delivery, especially electricity, has a very poor track record with little expectation of improvement in the short to medium term.

Globally and in South Africa, solar is booming. It is good for the climate and the environment, and there are few drawbacks to installing it to become more in control of your own electricity supply and, therefore, your own home and business. It will be interesting to see how much more solar is installed in five years – how much load that takes off Eskom’s grid – and how much load shedding it will avoid. It may not be the silver bullet against load shedding, but it is undoubtedly one of the main ones.

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