Eskom making solar power users pay for its problems By Hanno Labuschagne

[Nat Quinn]

A reputable energy expert and two solar power installers have cried foul over Eskom charging people higher fixed tariffs for having grid-tied systems while also making it expensive and laborious for them to make them comply with its standards.

The National Energy Regulator of South Africa (Nersa) recently approved Eskom’s retail tariff plan, which will increase the proportion of fixed charges that contribute to the power utility’s revenues.

The change comes as Eskom has experienced declining revenues from electricity sales due to its inability to provide a reliable power supply, forcing households and businesses to invest in self-generation and backup.

In a recent interview with Carte Blanche, Organisation Undoing Tax Abuse’s energy expert Chris Yelland pointed out that the big problem for solar power users was that they were being forced to adopt the mandatory Homeflex time-of-use (ToU) tariff.

The ToU tariff is designed to encourage people to use less electricity from the grid during peak periods by charging expensive energy fees during those periods, while also offering discounted tariffs during off-peak times.

In the case of grid-tied users, it will discourage charging batteries during periods when Eskom’s grid is constrained.

While many could effectively bypass paying the higher charges by relying on their batteries during peak periods, Homeflex comes with an avoidable fixed tariff higher than plans with flat tariffs.

On Homeflex 4, which will apply to all single-phase connections, Eskom is charging R2.09 per day for a generation capacity charge, in addition to the other fixed charges that people without embedded generation will pay.

Over a 30-day period, that charge works out to R72.11, when including VAT.

Yelland argues that Eskom is deliberately targeting solar power users after the precarious electricity environment it created persuaded them to reduce their reliance on the grid.

“They have been encouraged to install these systems, they have even been incentivised through government tax incentives to install them and now suddenly, the rules of the game are being changed,” Yelland said.

The table below compares the fixed charges that Homepower 4 users without grid-tied generation will pay under Eskom’s proposed RTP compared to those with registered grid-tied systems.

	Homepower 4	Homeflex 4
Generation capacity charge per day	—	R2.09
Network demand charge per month	R0.23	R0.23
Network capacity charge per day	R7.41	R7.41
Service and admin charge	R8.72	R8.72
Total fixed cost per day excluding VAT	R16.36	R18.45
Total fixed cost per day including VAT	R18.81	R21.22
Total fixed cost per month	R564.42	R636.53

Alumo Energy owner Rein Snoeck Henkemans also told Carte Blanche that surging electricity prices was another major factor in some households’ decision to supplement their needs with self-generation.

“If you consumed 800kWh in 2014/2015, you would have spent around just over R1,000. If you used exactly the same today, your electricity bill has tripled,” he said.

While Nersa has repeatedly stopped Eskom from implementing extreme price hikes, it has nonetheless approved above-inflation hikes.

Henkemans said the upcoming increase of 12.74% from April 2024 for direct customers is the fourth-largest in the last decade.

“We are all relieved, but it is still astronomically high.”

He also said that forcing grid-tied users to pay up to R11 per kWh on the ToU tariff during the winter peak period was not fair.

Eskom’s argument that it must adjust prices above inflation to be cost-reflective is nonsensical, considering the sources of its cost increases: corruption, inefficient operations and revenue collections, delayed maintenance, rising debt, and a bloated workforce.

The power utility is effectively shifting the burden of these issues to the consumer. What’s worse is that these users have helped reduce load-shedding.

Additional registration hassle and costs

Grid-tied solar users will not only be punished for consuming less from Eskom’s grid through higher fixed fees but are also facing steep charges to get their systems “compliant” with the grid code.

Eskom started ramping up its efforts to get customers to register their systems in late 2024, long after many people had already installed their solar and backup power.

Among its requirements is that the systems be signed off by a professional engineer, which costs tens of thousands of rand.

While Eskom has maintained it had the small scale embedded generation (SSEG) requirements in place for many years, solar power installers have disputed this.

Cape Town-based installer AWPower recently told MyBroadband that Eskom had previously not bothered to register people with small systems suitable for home use.

It alleged the power utility quietly inserted a checkbox in its application forms that made it necessary for smaller systems to also be registered.

Greenway Solar director Richard Douglas told Carte Blanche the requirements were onerous.

“It does feel like we’re using a sledgehammer to crack a hazelnut,” he said. “You need a professional engineer’s sign-off on a small installation, you need engineering drawings.”

“We need to prepare single-line diagrams, some people would require a new certificate of compliance.”

Carte Blanche provided an example of a R23,405 quote to be compliant in the City of Tshwane.

The Electrical Contractors Association of South Africa previously also told MyBroadband the cost could be around R20,000 to R30,000, depending on various factors like how far the engineer would need to travel.

Douglas warned that if utilities made it difficult and expensive to be compliant, solar users may become more attracted to expanding their panels and batteries and, if needed, adding a fuel-powered generator to go completely off-grid.

Without a grid connection, they would no longer be legally acquired to register their systems, although a utility official would need to inspect the installation to ensure the customer is off-grid.

Complicating the registration processes even more is that many municipalities have only recently adopted SSEG policies and are taking months or even years to process applications.

Douglas argued there should be a threshold under which sign-off by an electrical engineer is not necessary.

“There are solar systems that are smaller than a swimming pool heat pump, which don’t need a site visit,” Douglas said.

 

SOURCE:Eskom making solar power users pay for its problems – MyBroadband

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