South Africans Embrace Home Energy Generation

South Africa’s energy regulator is developing regulation for small-scale renewables.
Published: Wed 25 Feb 2015

Despite being excluded from the government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), the past year has seen a great increase in the number of private rooftop PV systems installed on residential and commercial/industrial premises at the cost of the owners, according to the National Energy Regulator of South Africa (NERSA) in a new discussion document.

Under the REIPPP, provision was made only for large and small scale solar PV greater than 5MW and 1MW respectively, effectively excluding most rooftop systems. However, with falling costs for PV systems and the abundance of solar irradiation, the levelized costs of energy (LCOE) for PV is very close to the average system price of electricity. [Engerati-CSIR’s Report Points to Financial Benefits of Renewables in South Africa]

Further growth can also be expected. The Integrated Resource Plan 2010–2030 calls for 9,770MW of solar PV capacity to be installed in South Africa by 2030, but estimates are that residential and commercial PV could reach as high as 22.5GW by that date. Further, under the IRP 2010, the overall contribution of new renewable energy generation should increase to 17,800MW by 2030 (42% of all new-build generation).

Given this growth, NERSA has initiated a consultation to formulate a position on qualifying principles and the technical and economic conditions for the installation of small-scale renewables in the country’s electricity supply industry.

Qualifying technologies

While the primary technology that will qualify is rooftop solar PV, other technologies could include wind, biomass, landfill gas, biogas and small-hydro.

Under the Renewable Energy Grid Code, the rated power must be less than 1MW and less than the installed capacity (rating) of the customer. The generator also must be connected to the distribution network of the utility or municipality for net metering.

The aim is that the amount of electricity produced by the system primarily offsets part of the host customer’s demand. NERSA proposes that systems designed to completely offset the energy demand of the customer shall not be allowed, and the customer must still remain a net importer over a 12-month billing period (although may be a net exporter in any month).

Impacts of small-scale renewables

NERSA identifies various impacts of small-scale renewables.

• On the system, the impacts would be an absence of contribution (without storage) to peak demand reduction, and a steeper early evening load pick-up (when consumers arrive home from work). This means that at higher penetration of the PV installations, it is likely that investment would be required into a ‘dispatchable’ flexible mid-merit or peaking generation with relatively faster ramp rate that can perform in a way that allows them to handle this rapid pickup, i.e. pumped storage and gas.

• On financials, the impact would be a loss of revenue to municipalities as the suppliers, estimated at between 3% and 15%, depending on the uptake. Possible measures that could be taken to mitigate this impact include a decoupling of the tariff, with an energy charge to cover Eskom charges and the use of a fixed charge to cover distribution costs. NERSA reviews tariff options including feed-in tariff and net metering, and asks distributors to propose which one is the best to choose and easy to implement.

• On customers, the impact is likely to be steadily increasing electricity prices. Users with this type of installation should be put on a time-of-use tariff to deter them shifting their load at specific times to export maximum power. There also should be limited energy as well as export tariffs for export to the grid. Indeed NERSA goes as far as to suggest there should almost be a disincentive tariff that would encourage users to include storage in their installations rather than to export back onto the grid. With storage, peak demand would go down, so that the users are almost going off grid and are therefore not incurring extra costs on behalf of other users.

NERSA is currently collecting comments on its discussion document and expects to conduct public hearings during April. Approval of the regulatory framework is expected in May.