SA’s largest residential subscription solar power provider, GoSolr, expects the demand for rooftop solar solutions to continue growing despite Eskom starting to show progress in resolving load-shedding.
The company, backed by billionaire Patrice Motsepe, hopes to raise about R10bn in funding as it aims to install up to 500MW of solar generation capacity over the next three to four years.
According to CEO Andrew Middleton, demand is being driven by the promise of future cost savings, which should start to materialise as solar installation costs fall and Eskom’s electricity prices continue to increase.
Broader implementation of feed-in tariffs at municipalities countrywide will help speed up the delivery of cost savings for households who want to generate their own power.
The increase in load-shedding in the second half of 2022 and record levels of power cuts last year caused SA’s market for solar power to grow significantly, with installed solar capacity doubling in 2023. How did your company benefit from the boom?
The business was founded in 2021 and we have seen exponential growth over the past two-and-a-half years. This was driven by several factors, but mostly the increase in load-shedding in 2022 and 2023. We have about 75MW installed and two-thirds of this was done last year.
Solar capacity in SA as a whole doubled last year, but the residential market increased by three to four times.
Eskom has not had to implement load-shedding for almost two months, and based on its outlook for winter SA will have much less load-shedding this year compared with the past two years. How has this change affected demand for residential solar?
It has certainly had a short-term effect on new sign-ups, but we don’t see load-shedding ending as a threat to our business because we never intended to be just a load-shedding backup solution. It was probably the primary reason for customers to sign up with us over the past year or two, but the cost-saving benefits that we believe we can offer them in the future will be the primary driver for people to continue using solar at home.
We are very pleased that load-shedding has abated and part of what we do, by installing more solar capacity, is to help alleviate the pressure on the grid.
You mention cost savings, but generally, it is still more expensive for households to install solar power than it is to buy electricity from their municipality. Is this changing?
We think this will change rapidly as the cost of solar comes down and the price of electricity supplied by Eskom continues to increase faster than inflation. Already, the cost of solar, whether you buy your own system or use a subscription service, has been coming down substantially. This has meant that if the product works as expected, the cost of generating your own electricity is now coming very close to the cost of buying it from the municipality. In some municipalities generating your own electricity can be cheaper. In Cape Town, for example, where feed-in tariffs already apply, on a 12-month basis the cost of own generation with a subscription solution can already be cheaper than buying all your electricity from the municipality.
What role will wider implementation of feed-in tariffs play in making it more attractive for individuals and businesses to invest in solar energy systems?
Right now, if a household cannot sell or otherwise use the excess generated by their rooftop solar system that power is essentially lost.
Generally, we see that, for some period during the day, households have more solar available than they can use. If there is a feed-in tariff, they can always maximise what can be generated by the sun. Some of that power generated will go to power your home, some to charge your battery system and the rest is sold to the local municipality which means you get some money back.
That means that the extra costs households are incurring to get energy security by being connected to the municipal grid will drop.
It is also an important opportunity for municipalities because they can set the feed-in tariff at a lower rate compared with the tariff they pay Eskom, which gives them access to cheaper power that they can then on-sell, at a higher margin, to other customers in their network.
What is the status of implementing feed-in tariffs in SA?
Cape Town is the furthest advanced and households here are already benefiting from a feed-in tariff. Other municipalities such as the City of Tshwane are close to implementing. While Johannesburg has a feed-in tariff and all the bylaws in place to implement it, they have not finalised how it is all going to work. But we expect that to be in place before the end of this year. In fact, we expect most municipalities will make progress this year.
What are some of the difficulties municipalities face in implementing feed-in tariffs?
Many municipalities still have regulations saying that a household can never be a net seller of electricity to the municipality, which puts a cap on how much electricity a household can feed into the grid.
However, the biggest inhibitor for households and indirectly for municipalities is the cost of the meter that a household needs to install to feed power into the grid. Most meters in households are old technology and only allow the buying of electricity, not the selling. New meters that do allow this are prohibitively expensive, costing R10,000-R12,000, and municipalities have been unable to bring those costs down.
But that has now started to change. The City of Cape Town recently announced that they have halved the cost of those meters, which is a huge step forward.
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