‘Taxing sunshine’: Want solar energy? Then Eskom wants you to pay more

While President Cyril Ramaphosa is mulling subsidies for households and businesses to switch to solar, Eskom plans on penalising them.

The utility’s new proposed tariff structure will sucker-punch desperate consumers who have already – and expensively so – removed much of their dependency on the utility’s grid.

South Africans who have invested in solar power, but remain connected to the Eskom grid, may have to fork out R720 more every month in addition to the R218 they already pay for the privilege to harvest free solar energy.

Split billing

It all forms part of a new fee structure that the state-owned company plans to impose on consumers, who have no choice in the matter, should Nersa give Eskom its way.

The new system will split billing in two: one fee starting at R938 to simply be connected to Eskom and then, in addition, a charge for usage. The new tariff also encourages higher usage, with cost increments lower at the top end of consumption.

Splitting the bill may make things easier to charge consumers in future, too. It will also hit lower-income consumers, who use less electricity, and solar-powered homeowners the hardest.

‘Eskom desperate for money’

Economist Dawie Roodt said this proposal is tantamount to taxing sunshine. “Eskom is clearly desperate for money and trying to find smart means of collecting more revenue from already cash-strapped users.

“When the same users opt for a more reliable source of energy – the sun – they want to make money off that, too,” said Roodt.

Nafisa Fareed of Power4Less, a solar and alternative energy business said: “There is a level of unfairness in this charge that will be imposed on solar users, given that, firstly, they have had no other alternative but to move to an alternative power source, given the unreliability of the utility over the past 15 years and the fact that load shedding has clearly become more prevalent year after year.”

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Roodt said a pricing structure as proposed would also allow the utility to raise prices on two streams, not just consumption as it has until now, but its grid connectivity or “capital” fee, too. And Eskom plans to make both structures variable, which, in Roodt’s view, is ridiculous.

“You cannot assign a variable cost model towards capital. It should be fixed.”

He did add that Eskom’s rationale for splitting billing made sense, but it did hint at financial mismanagement if it had to resort to a billing model that accounts for input costs separately.

Roodt said it’s all too late and the likely outcome is that Eskom will simply alienate more customers and incentivise people to slip off the grid completely.

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Fareed said despite the proposed increases and Eskom’s sunshine tax, solar energy could still prove to be cheaper over time. But there the niggling reliance on Eskom remains. Solar powered homes still rely on Eskom power as a backup, should inclement weather hamper energy harvests.

Roodt said: “I would rather go and buy a generator to top up any electricity I need than pay Eskom a single cent.”

The Western Cape provincial government is already in process of implementing a buy-back programme and Fareed suggested that this may be a next step each province has to take.

Roodt added that the proposed split billing is also smart way to spin possible future price hikes. Eskom has asked Nersa for just over 32% hike in electricity prices for next year.

Eskom just continues to be mismanaged, said Roodt, and no amount of billing re-engineering or taxing sunshine will change that.

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