There is method to the power utility’s madness, with tariffs restructured in the name of fairness and efficiency. Experts are, however, questioning if the price they named is the right one.
Last week, the National Energy Regulator of South Africa (Nersa) conceded that Eskom be allowed to recoup an additional R6.04 billion from customers through tariffs during the 2021-2022 financial year.
This has translated into an estimated 10.95% tariff hike.
But Eskom’s precarious business operations, necessitating government bailouts in 2019-2020 and 2020-2021, and continued bouts of load shedding, have raised alarm bells from experts and consumers alike.
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Many consumers have since migrated to a semi-off-the-grid approach to their electricity consumption, relying on solar power for the majority of their uses.
However, these customers, most of which come from affluent residential areas, are not exempt from paying more to the power utility.
This could mean delays in the country’s move towards a more renewable, sustainable energy model, but Eskom finds itself in a situation where additional tariffs for all consumers, no matter how reliant on the grid they area, is integral to keeping the lights on – at least, sometimes.
Installing photovoltaic panels in one’s home does not necessarily mean going completely off the grid.
Friedrich-Ebert-Stiftung South Africa (FES) climate and energy project manager, Richard Worthington, explained that consumers who were completely off the grid and required no Eskom connection were not eligible to pay Eskom’s increased tariffs.
For these customers, usually in remote areas, they use diesel generators or other forms of generating power to back up their solar powered energy.
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However, most people have a grid connection but also want to use solar PV generation. These consumers keep their Eskom connection and want a two-way metering arrangement, where they sell electricity from their PV system when they are not using it due to battery storage, and only switch to Eskom when there are days of no sunshine.
These customers are zero- or low-net consumers, and are essentially causing Eskom to lose money that is not recouped.
Eskom also said these consumers were subsidised by customers without PV, which “adds to the potential of a utility death spiral if there is not a fair recovery of the grid costs through variable means”.
Customers who dabbled in both PV and Eskom also complicated “economic signals” when switching between energy sources. Eskom explained this left them with a lack of time-of-use (TOU) signals to indicate how much energy was being consumed and exported.
These consumers, Eskom said, used PV systems during the day, which resulted in a “duck curve” of reduced consumption. This, they said, affected the power system negatively, “as it means that the generators have to ramp up at an even faster rate than before to meet the evening peak demand”.
Eskom’s system operator overview and requirements to optimally manage the power system. Picture: Eskom Retail Tariff Plan 2020-2021
Eskom affirmed its belief that the proposed tariff changes would not “hamper the uptake of small-scale embedded generation [SSEG]”. Rather, they said, the tariffs would correct economic signals, and ensure that customers were not subsidising PV users.
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However, taken into context with the country’s state of electricity generation, the issues laid out by Eskom regarding PV users would not serve the SSEG community well.
“The deplorable state of our electricity supply industry is not good for any SSEG development at the moment, and Eskom’s disincentive to PV for SSEG is more symptomatic than causal,” Worthington explained.
However, he is not convinced that Eskom is “the bad guy right now”, saying that they have at least “put something forward in context of no meaningful or methodical energy planning, and a weak regulator”.
Eskom said that customers would not all be offered the same tariffs, and that it was simply “ensuring that the tariffs accurately reflect energy, network and retail costs correctly”.
“If this is not done, this means that customers that have PV installed will become subsidised by those that don’t have PV. This is meant to ensure that apples are compared with apples, i.e energy charges reflecting energy costs and that all customers are treated equitably and fairly.”
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But the sentiment remains that South Africans, who are footing bills for producing, transmitting and distributing electricity amid mounting corruption and mismanagement claims. They are growing increasingly resentful as the electricity situation continues to deteriorate throughout the country.
“The question arises, when does the utility take responsibility, when does the regulator take responsibility for putting South Africa in this situation, and when is it time for South Africa to be honest and say that one of these institutions no longer fulfils its role,” said Greenpeace senior political advisor Happy Khambule.
Khambule said that if tariff changes had occurred in isolation to the country’s current energy concerns, it would have been a deterrent for consumers wanting to make the gradual switch to solar power.
“However, because we also have to contend with load shedding. There is an added aspect that people need to take into account when they decide to invest in PV systems.
“The price really reduces the positives of the switch to PV, in particular the pay-back of the investment,” Khambule explained.
And as much as paying to unburden the grid was not ideal, Khambule said it did create a pricing regime that “is more reflective of the current conditions and realities”.
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However, the next set of SSEG adopters may be affected.
Khambule said the main question was not if the price was justified, but if it was correct.
“Eskom needs to prove that the price is the right one and not a prohibitive measure.”
Despite this, small-scale energy generation was still an attractive option, and should not deter investment adversely, Khambule added.
He said the potential was great and if recognised, it not only addressed the country’s energy needs, but also those of climate change mitigation and job creation.
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