Last week, Eskom announced a milestone achievement of 100 consecutive days without loadshedding. While this is encouraging news for the nation, it has led to a significant slowdown in the solar market’s growth. This situation raises a critical question: Is there still a need for solar in South Africa, and can the industry continue to thrive?
To provide some context, Jaltech, a company specializing in long-term solar finance through power purchase agreements, issued over 400 solar proposals to businesses this year in partnership with its solar installer allies. These proposals were valued at more than R4.1 billion, averaging over R120 million per week over the past 14 weeks. According to Jonty Sacks, a partner at Jaltech, only 15% of these proposals have moved forward so far, with half expected to be finalized within the next 4 to 6 weeks. Sacks estimates that if loadshedding had persisted, the value could have doubled or even tripled.
Over the past year, Jaltech has successfully established a solar portfolio consisting of over 160 commercial and industrial assets. This indicates that more than 160 business owners have identified solar power as a more reliable and cost-effective alternative to Eskom, with financial benefits projected to grow over time. These businesses chose power purchase agreements, enabling them to avoid the initial costs of solar systems and pay only for the electricity generated.
Despite the recent reduction in loadshedding, Eskom’s electricity prices continue to rise. As of 1 July, municipal electricity costs increased by over 12.5%, and Eskom has requested an increase of over 36% for next year. Sacks points out that the year-on-year double-digit escalation has already made Eskom’s electricity too expensive in many municipalities. In contrast, the cost of solar technology has been steadily decreasing, allowing energy consumers to pay as little as 95c per kWh through a power purchase agreement, compared to Eskom’s price, which can reach up to R3.
Looking ahead, Sacks is optimistic that solar adoption will continue to grow in the South African market as more energy consumers recognize the cost benefits of solar. Additionally, solar energy producers are taking advantage of electricity arbitrage for their customers by charging batteries with solar power and then using the stored energy during peak periods when electricity prices are highest. Ultimately, loadshedding did not create the business case for solar; it simply accelerated the decision-making process for potential solar customers.
For most businesses and an increasing number of residential energy consumers, solar offers a cheaper, fixed, and predictable cost for decades, regardless of the loadshedding situation.
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