The untapped Solar PV rooftop market holds great potential to diversify South Africa’s electricity generation base and ease pressure on the national grid.
More interestingly, a new study contends that a competent credit system for the residential rooftop market can generate financial returns comparable to the historic performance of property investments.
The claim is carried in a report put together by the Stellenbosch University’s Centre for Renewable and Sustainable Energy Studies. The centre used the Western Cape town of Riversdale as a case study for the financial viability of rooftop solar PV. The case study focuses on a situation where individual homes or larger commercial sites use privately-installed photovoltaic panels to supply electricity for the local grid.
The main proposition is Solar PV rooftop electricity generation can be a win-win for both property owners and municipalities provided the correct pricing and regulatory structures are put in place.
A press release announcing the findings of the study says the technology for rooftop solar PV is readily available but, currently, it is only widely used in South Africa to reduce on-site consumption from the grid or to provide power in areas which are not connected to the grid. The next step, says the statement, is to allow ‘net metering’ where the rooftop output is connected to the grid and the supplier receives credit for the contribution made.
The statement says South African municipalities generally have been resistant to individual solar PV power providers because they fear a loss in revenue. According to a separate ‘Solar PV Market Assessment’ by independent consultants Frost & Sullivan, local authorities derive as much as 70% of their income from electricity sales and they are concerned that solar PV installations could both reduce demand and provide cheaper output in ways which would jeopardise their finances.
Local authorities are also wary of issues around unregulated connections, says the statement.
It added that the Stellenbosch study in Riversdale shows that municipalities can protect the financial viability of their electricity supply operations by ensuring that the cost of network connectivity of each customer is recovered, even when PV zeroes the net energy consumption, and that the cost at which energy is bought from a PV exporter is no more than the equivalent cost paid by the municipality to Eskom.
Stellenbosch University researcher Karin Kritzinger says that “even without additional incentives, the modelling established that an investment in rooftop PV would provide home owners with similar financial returns to investing in a money-market account”.
Where state incentives are in place, currently for larger scale commercial projects only, Kritzinger estimates that returns would be comparable to the historic performance of property investments.
Davin Chown, the chairperson of solar PV industry body SAPVIA, said these findings confirm the solid fiscal reason for municipalities to immediately ramp up solar PV rooftop connections, alongside “the very obvious benefits in terms of climate change mitigation and establishing a greater security of supply through diversification”.
“Authorities need to move faster to set incentive schemes and guidelines for these installations if they want to have any form of control over the impact of such technology embedded into the distribution systems”, says Chown.
The statement added that the Frost & Sullivan report points to net metering regulations available from both the German and Brazilian experiences which could be applied locally and states that a sound metering framework would “unlock huge market potential for residential, commercial and industrial applications for solar PV”.
The Stellenbosch study on Riversdale concludes that technical standards for the supply and metering of solar PV power urgently should be finalised nationally and then municipalities should establish tariffs in line with Nersa guidelines and put systems in place to encourage legal uptake of the technology.
“It would also help if municipalities led by example and used their own premises to generate solar electricity,” said Kritzinger.