WHY YOU SHOULD CONSIDER INVESTING IN ROOFTOP SOLAR FOR YOUR HOUSE OR BUSINESS

Rooftop solar (Solar PV panels and Solar Thermal collectors installed on the roofs of residential and commercial buildings) has proven in many countries to make a significant contribution to the total electricity supply network. For instance, in Australia (where rooftop solar is still in a growing phase, more than 20% of the energy demand is supplied from rooftop solar. Between 15% and 35% of residential roofs in Australia already have rooftop solar installed. The graph below shows % rooftop solar in the different Australian states.

In comparison, Cape Town has less than 5% of rooftop solar installed. It is estimated that, if 30% of residential dwellings in the City of Cape Town install rooftop solar, it can contribute as much as 600 MW (15%-20% of the estimated ESKOM supply shortfall) to reduce the shortfall of the national electricity grid. The benefit of rooftop solar is that it requires no infrastructure investment to connect to the electricity grid and that capacity is accumulated through thousands of small, affordable investments.

1. Cape Town gets lots of sunshine

When you own a solar system in Cape Town, more sunshine means more savings, so it’s useful to know what to expect. According to the South African Weather Bureaux, Cape Town receives an annual average of 8.5 hours sunshine per day – making it one of South Africa’s top solar cities. This sunshine is the ‘fuel’ for a solar system. The larger the system, the more of this fuel can be captured and turned into usable energy. The table below shows typical energy outputs for solar PV systems of various sizes in Cape Town. Energy outputs may vary, depending on orientation and elevation of the solar PV panels.

2. Solar PV panels save money on electricity bills

There are three ways that solar power can help households to save energy on their electricity bills:

  • Reduce energy requirements by installing a solar water heater.
  • Solar self-consumption: Using the solar energy directly, as it is generated, to reduce the amount of energy you purchase from the grid. This is the main way in which solar power can save you money.
  • Solar feed-in tariffs: The rate that you are paid for any ‘excess’ solar energy that you send into the grid. The going rate in Cape Town is 68 c/kWh, so you’ll see a 68c credit on your bill for each unit that you ‘export’.

There is a big difference between the feed-in rate (68 c/kWh) and the price you pay for electricity from the grid (average 210 c/kWh), which means that your solar energy is worth much more to you if you use it yourself than if you sell it back to the grid. This differential means that it becomes a financially viable option to install battery storage to utilise solar energy even outside sunshine hours.

In a nutshell: Having a solar system on your roof is basically like owning your own power station: The energy from the solar panels can be used to run the appliances in your home, thereby allowing you to bypass your electricity retailer for a portion of your electricity needs. Of course, you don’t use all of your electricity during daylight hours (when your panels produce power), so you’ll still have to ‘import’ energy from the grid after the sun’s gone down or when you’re using more energy than your solar panels produce.

How much energy does my home use?

Household demand varies by the size of family, what appliances are used and how frequently, but as a ‘base case’, the average 3-person home uses about 20-25kWh of energy per day, averaged over the course of a year. The amount of solar energy that you ‘self-consume’ will depend on your home’s electricity consumption pattern; we recommend that you endeavour to use at least 70% of the solar energy that is produced.

The infogram below gives a guideline to what appliances can be powered by different size solar PV systems.

3. ESKOM continuously fails to meet electricity demand and electricity tariffs are expected to increase sharply

Over 2019 as a whole, Eskom’s energy availability factor was 67%, compared with 72% over 2018 and 79% over 2017. The last two weeks of December 2019 saw the energy availability factor hit 59.7% and 58% respectively. This shows a deterioration in ESKOM’s ability to meet the electricity demand and regular load-shedding seems inevitable. Experts estimate that any sustainable plan to turn this around, will take at least 5 years.

ESKOM’s financial situation is also not sustainable and it is reliant on Government bail-outs to meet its financial obligations. ESKOM has now resorted to legal action to obtain approval for substantial tariff increases.

4. Rooftop solar offers excellent returns (and short payback periods) for homes & businesses

Rooftop solar has become a no-brainer for homes and businesses across South Africa – but according to our analysis, Cape Town is clearly one of the best cities for going solar. This is due to the combination of high grid electricity prices, low solar system prices and ample sunshine.

As discussed above, the key to saving money with solar is ‘self-consumption‘– using the solar energy directly within your home/business. By self-consuming the solar energy, you avoid having to pay exorbitant grid electricity prices. The more of the solar energy you can use yourself, the lower your energy bill will be. This might be easy to achieve if you’re home during the daylight hours, but it might also make sense to invest in a home energy management system to automate the process for you.

The table below shows payback periods and investment returns for 3kW, 5kW, 10kW and 15kW solar systems at average Cape Town prices at different self-consumption levels (respectively 75% and 100%). As you can see, it’s realistic to achieve a payback period under 5 years – and a solar system will continue to operate for over 25 years.

5. Battery storage becomes compelling to protect against load-shedding and to increase self-consumption

Battery storage is a hot topic as it provides the opportunity to increase self-consumption in order to increase the financial returns on your PV investment.

Battery technology has now improved to a where a good-quality Lithium-Iron Phosphate (LiFeP04) battery offers a life cycle warranty of 10 000 cycles or 10 year period.

A return of 20% per year on a grid-tie solar PV system can easily pay off the LiFeP04 battery within 2 years – or as a whole, a PV system with battery backup will have a pay-back period of approximately 7 years.

This will have the added benefit of not having to endure the inconvenience of financial losses caused by ESKOM’s load-shedding.

MrSola is always ready to provide a free consultation to assist you in making the right decision regarding Solar Energy.