SA consumers in for 'massive energy bills' unless they embrace renewables
The cost of electricity in South Africa has jumped by nearly 900 percent since 2004, putting it in the same price bracket as London and making it increasingly unaffordable for local consumers.
That’s according to Shaun Rademeyer, CEO of MultiNET Home Loans, one of South Africa’s leading mortgage originators. Warning of impending increases of between eight and 15 percent from Eskom over the next months, Rademeyer says South Africans were “shooting themselves in the foot” by not taking advantage of even the most basic energy renewable systems in order to reduce their vulnerability to power instability and crippling price surges.
“For some reason, whether because of a lack of knowledge or complacency, our mindsets are still in the days when historically electricity was cheap. It’s not anymore. It’s getting more and more expensive and unreliable, despite the fact that the latest renewable energy technology is both efficient and relatively affordable,” he says.
At odds with countries such as the United Kingdom and Germany, South Africans live in the world’s third-sunniest land, he points out. “We have more than double the sunshine of Europe and other countries, who despite this, are harvesting solar power to the point that 1.7 million Germans have solar systems in their homes.”
Ahead of the gazetting of the government’s new Integrated Resources Plan (IRP), which focuses on renewable energy to the exclusion of nuclear development, Rademeyer says the “writing is on the wall” for citizens to change the way they consume energy.
According to James Green of Ubersolar, the draft IRP has omitted the inclusion of behind-the-meter renewables as part of South Africa’s energy mix, which, he says, would be a “significant contribution to reducing carbon emissions and providing confirmation of action towards the Paris Climate Accord”.
“In much of Europe and the USA, end user renewables in the forms of both solar water heating for replacing mains powered water heating and solar electric (photovoltaic) for at home electricity generation still receive subsidies or tax incentives for consumers to go green,” he says.
In South Africa, Green says the place for consumers to start is with solar water heating and then to move onto solar electric home generation, bearing in mind that “between 35 and 60 percent of home electricity consumption is used just for heating water”.
Investing in alternative power sources – what’s the payback time?
With the prices of both solar water heating and home electricity generation having fallen “significantly” in the last few years, he says affordability is now within the grasp of a growing number of people. “The financial payback on solar water heating can be as little as two to three years, and with a lifespan of 25 years-plus, there are few other investments that can provide consumers with these types of returns.”
“Solar electric can provide financial payback in as little as four to six years for businesses operating seven days a week, while for domestic consumers, the payback is likely to be at least nine years without battery storage, and 14 years with battery backup.”
Adds Green: “The price of electricity is only going one way and that is up. The result will be that consumers will progressively opt for renewable, both solar water heaters and then solar PV, because it will be much cheaper than buying from Eskom or electricity resellers”.
Anticipating that more than 80 percent of homes and businesses will have some form of renewables on their roof tops by 2030, Green says the benefits will include saving money and reducing carbon emissions as well feeding clean energy into the grid – “a glaring omission in the IRP” as it stands at the moment.
If Green’s forecast is correct, not only will many domestic and business consumers be significantly better off in financial terms by saving money on expensive electricity, but South Africa will not need to retain 46 percent of power generation by coal at 2030 (the same as it is today), thereby helping reduce carbon emissions and water (according to Green, Eskom emits over 1kg of carbon and uses over 1 litre of water for every kWh produced).
“Considering the facts, South Africans really need to take more control over their home functionality by introducing alternative power sources, which will also add value to their properties when it comes time to sell,” says Rademeyer.