Are solar panels worth it?

A few years ago, we thought that not having electricity in our homes for some parts of the day would become a regular occurrence as then Eskom CEO Tshediso Matona said load shedding was “here to stay”.

Fast-forward to this year when we may not be suffering from load shedding at the moment, but the increase in electricity tariffs threaten many households that are already stretched by the increase in VAT, the sugar tax and petrol price hikes.

Load shedding is a possibility still, but what’s more likely is a tariff increase in our electricity bill this year and for many more years to come. It’s certainly not sustainable and this is why there’s an increasing need for consumers to consider other options, such as having solar panels installed.

“For me, the issues around water and electricity are both crucial factors for consumers to consider. If anything, from One Energy’s perspective, we have seen a massive upswing in the demand for [photovoltaic] systems for residential and commercial electricity generation. Consumers are increasingly wanting to become self-sufficient and the imminent cost increases coming from Eskom are a key driver,” says Teresa Kok, director of the One Energy Group.

Is solar power a good idea?

When it comes to resources, we lack water and, if problems at Eskom worsen again, perhaps electricity. But one thing we’re not short of is sunshine, which is why solar energy is such a sustainable alternative to what Eskom provides.

“Electricity is more expensive, but the reality is we need to be working far better with all resources.

“It makes absolutely no financial sense to keep paying for a resource like electricity that you can in fact generate for yourself with an asset that adds tremendous value to your property, hedges your costs for the next 20 to 25 years and will save you a massive amount of money over the cumulative lifespan of your solar investment”, says Kok.

But what about the cost?

There’s no doubt that it can be very expensive to install, but the good news is that the cost of solar power has come done dramatically.

According to Soventix, which specialises in building and operating solar farms in sub-Saharan Africa, the cost of energy from a photovoltaic system was R5 per kWh compared with Eskom’s R0.50 a kWh a couple of years ago.

“Solar power has now plummeted to below R1 per kWh (around 0.70/0.80 cents) while Eskom’s average domestic tariff has risen to R1.92 per kWh,” says JP De Villiers, managing director of Soventix.

“Solar power has now plummeted to below R1 per kWh, while Eskom’s price has risen to R1.92 per kWh,” says JP de Villiers, managing director of Soventix.

Still, the cost of the installation of a solar panel system is out of reach for most South Africans. Soventix shows a typical cost breakdown of installing a 5kW solar power system with a battery backup.

De Villiers says the cost can be reduced by opting not to have the battery bank installed, but this is still an advisable addition considering the fact that our power delivery is unreliable and that we do commonly suffer from power cuts.

Kok agrees that the grid tie system – with no battery backup – used to supplement electricity during the daytime hours will amortise its costs in around three years.

With this type of system, one would use the grid at night, but this still works out cheaper than relying on the grid fully.

If you have a bi-directional meter, typically installed by municipalities and charged to households, instead of a battery pack you would be able to feed the grid as well as draw power from it if needed.

However, De Villiers cautions that not every municipality charges you the same for withdrawing the electricity you’ve fed to the grid.

“You are now using the grid as storage and feeding the grid in exchange for credit. Drakenstein Municipality is more attractive as you pull power for R1 and send it back for R1.

“Meanwhile, the City of Cape Town would charge you R13 per day and then a fee on a sliding scale of about R1.92 for your power withdrawals and 70c for power that you feed the grid.”

Financing your installation

With such high costs of installation, the only viable option for most households would be to borrow money.

“With solar photovoltaic installations, customers are more likely to utilise their home loans – if they are ABSA customers – to match the longer lifespan and payback period of the asset,” says Justin Schmidt, ABSA head of renewable energy Africa, retail and business banking.

Discounts are also available to consumers if they make use of accredited companies.

“As an ABSA customer, you receive a 10% discount on energy products purchased from Eco Navitas and a 5% discount on all water storage and harvesting solutions.

“There are also various funding options available. You can use funds from your ABSA home loan by applying for a further advance or re-advance or Flexi Reserve; or apply for a personal loan from ABSA funding solutions,” adds Schmidt.

While getting into debt for such an installation may make you hesitate, it can be seen as an asset instead of a liability, particularly if you’re currently living in your “forever home”.

“The bottom line is that grid electricity is fast becoming unaffordable and people are realising that it is a matter of survival now to embrace renewable solutions.

“People are looking for control over their costs and what they spend on electricity, and renewables are answering that need,” adds Kok.

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