Has 100 Days Without Loadshedding Killed SA’s Solar Industry?

Last week power utility Eskom announced that it had achieved 100 consecutive days without loadshedding. As positive as this news is for the country without loadshedding, the solar market has experienced a significant decline in growth. Is there still a case for solar in South Africa and will the industry survive?

To put things into perspective, this year, Jaltech, which provides long-term solar finance through power purchase agreements, issued more than 400 solar proposals to businesses along with its solar installer partners. These proposals were valued at over R4.1 billion, averaging more than R120 million per week over the past 14 weeks.

“Of the R4.1 billion, only 15% have progressed to date, half of which we expect will be finalised within the next 4 to 6 weeks,” explains Jonty Sacks, partner at Jaltech. “Had loadshedding still been around, we estimate the amount would be double or triple.”

Sacks says that over the past 12 months, Jaltech successfully built a solar portfolio comprising over 160 commercial and industrial assets. This indicates that more than 160 business owners recognised solar power as a more reliable and cost-effective alternative to Eskom, with the financial benefits expected to increase over time.

These businesses opted for power purchase agreements, enabling them to bypass the initial costs of the solar system and pay only for the electricity generated.

Cost of electricity  

Despite the recent reduction in loadshedding, Eskom’s price for electricity continues to climb. As of 1 July, the cost of municipal electricity went up by over 12.5%, and Eskom has now requested an increase of over 36% for next year. “The year-on-year double-digit escalation has already priced Eskom out of the market in many municipalities,” says Sacks.

In contrast, the cost of solar technology has been steadily decreasing to such an extent that through a power purchase agreement, energy consumers can already pay as little as 95c per kWh, compared to Eskom’s price which can be as high as R3.

Future of solar

Sacks is adamant, “The adoption of solar will continue to grow in the South African market, as energy consumers continue to realise the cost benefit of solar.  Additionally, solar energy producers are capitalising on electricity arbitrage for their customers. This involves charging batteries using solar power and then utilising the stored energy during peak periods when electricity prices are highest. Ultimately, loadshedding did not create the business case for solar, it simply reduced the decision-making time for solar customers.”

For most businesses and increasingly for residential energy consumers, solar offers a cheaper, fixed, and predictable cost for decades with or without loadshedding.