While South Africans are being forced to endure yet another cycle of skyrocketing electricity tariffs and other bureaucratic hurdles, news broke that Australians in some parts of the country will be getting free electricity from next month. And those that aren’t getting the free power yet will join in later phases.
Australia is not South Africa. Perhaps the only similarity relevant to this conversation is its abundance of sunlight and wind. It has a far smaller population than South Africa and does not battle the same institutional and infrastructural inequality. It also didn’t have a decade of state capture.
However, the country’s ability to hand out free electricity for three hours a day could be replicated in this country, and it is something that the backup battery industry has been shouting from the rooftops about but has been largely ignored. Instead of punishing consumers by trying to find new tariffs to extract more money from them, those in power would do well to look at Australia – if only to see what is possible with a genuine commitment to renewable energy.
What’s happening in Australia?
From next month, residents in Queensland, New South Wales and South Australia will pay exactly zero cents for electricity between 11am and 2pm. This isn’t a gimmick. It’s not a political stunt. It is the natural, economic consequence of a massive, decentralised solar and BESS boom in the country.
Roughly one in every 25 homes in Australia has a back-up battery system. That’s more than 415,000 residential batteries. The result? Australia has flattened its demand curve, displaced expensive, and carbon-heavy power plants to meet peak demand, and driven wholesale electricity prices down – to the point of surplus. It’s not just the houses with solar or batteries that benefit – everyone benefits.
What’s happening in South Africa?
Let’s cast our eyes at recent energy headlines in South Africa. The National Energy Regulator of South Africa recently approved a Negotiated Pricing Agreement granting two of Eskom’s largest industrial customers, Glencore Merafe and Samancor Chrome, an astonishing 83% discount on electricity. These heavy industrial users will pay just 62 cents per kilowatt-hour (kWh).
It is important to put 62 cents into context. It is less than a fifth of what regular, hard-pressed and perpetually squeezed households have to pay. Energy expert Chris Yelland has pointed out that it is less than half of the 147 cents it costs Eskom to produce the electricity.
Of course we need the smelters to survive. The economic and social consequences of their collapse would be devastating. However, if the power is being sold at such a huge loss then the shortfall will inevitably be clawed back from ordinary citizens. Has anyone else noticed regular news about tariff increases and proposed new charges recently?
However, the more pressing question is: How did Eskom suddenly find the excess capacity to offer these huge discounts? There’s little point in being cynical, so let’s look at the data. Eskom hasn’t miraculously replaced its aging coal fleet. Residual energy demand on the national grid is down roughly 10%. The 10% breathing room was created by South African households and businesses spending billions of rands, out of their own pockets, on rooftop solar and battery storage.
They didn’t do it with incentives. They did it out of desperation to keep the lights on during the dark years of load shedding. The result? According to the National Transmission Company of South Africa, behind-the-meter rooftop solar at households and businesses reached 8294 MW in May of this year. That’s a 30.6% jump from the same time last year. This is more than the combined capacity of Eskom’s Independent Power Producers.
Unlike Australia, where the solar and battery boom results in free electricity, South Africans are not being rewarded. Instead of facilitating this green momentum and using it as an impetus for something even more significant, politicians are instead seeking to punish private citizens for daring to be progressive and investing in renewable energy.
We have all seen proposals for punitive fixed charges on solar users, changes in feed-in tariffs, and hefty import duties on clean energy hardware. Rather than seeing the decentralised energy boom as a golden opportunity to modernise the grid, it would appear that South African politicians instead see it as a threat to their money tree. It is a profound failure of vision.
The power of batteries
What’s happening in Australia proves that a battery storage boom can bring immense benefits to the entire population at virtually zero cost to the state utility. Yes, we have and we will continue to call for more investment in utility-scale BESS, but the truth is that the Australian model proves that multi-billion rand storage facilities are not the only solution.
The industry has proven over the past few years that private residences and businesses are willing to fund, invest and maintain residential and commercial BESS infrastructure themselves. All the government needs to do is facilitate, not frustrate.
Our leaders can make a massive impact on the environment, energy security and cost of living crisis by eliminating regulatory red tape and a tariffs-first mindset, and by dropping import duties on batteries and solar components. This would create an incentive for household energy storage.
In Australia, batteries are actively pushing expensive gas-peaking plants out of the market. In South Africa, widespread battery adoption could make a dent in, and potentially permanently relegate diesel-guzzling Open Cycle Gas Turbines to the history books, saving Eskom billions in diesel costs. If we democratise storage, we will flatten the grid’s peaks and fill its troughs. This creates a more stable, lower-cost network for everyone, including the smelters we are currently subsidizing at a loss.
- Lance Dickerson, MD at REVOV
