Did 100 days without load shedding kill SA’s solar industry?

Did 100 days without load shedding kill South Africa’s solar industry is the question on some people’s lips as they start switching off their inverters and putting them in storage with their generators. Some wonder if they should have taken out that loan to pay for solar. Was it all for nothing?

As positive as this news is for the country without load shedding, the solar market 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, let us look at Jaltech, which provides long-term solar finance through power purchase agreements. It has issued more than 400 solar proposals to businesses along with its solar installer partners in the past year. These proposals were valued at over R4.1 billion, averaging more than R120 million per week over the past 14 weeks.

 Jonty Sacks, partner at Jaltech, says over the past twelve 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.

“Of the R4.1 billion issued, only 15% have progressed to date, half of which we expect will be finalised within the next 4 to 6 weeks. If load shedding was still around, we estimate the amount would be double or triple,” says Sacks.

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.

ALSO READ: Load shedding’s on pause but solar’s still worth it

Less load shedding, but higher prices from Eskom

However, Sacks points out that despite the recent reduction in load shedding, Eskom’s price for electricity continues to climb. As of 1 July, the cost of municipal electricity increased 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,” Sacks says.

“In contrast, the cost of solar technology has been decreasing steadily 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.”

Is there still a future in solar? Sacks is adamant that there is. “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 using stored energy during peak periods when electricity prices are highest. Ultimately, load shedding 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 load shedding.

Jaltech was founded in 2010 and is a boutique alternative investment fund manager, managing over R2 billion of retail investors’ capital. Jaltech’s objective is to create a transparent, accessible and regulated investment environment for alternative investments, thereby making alternative investments available to the wider investor market in an investment environment where compliance, regulations and investment management are at the core of the business.