Eskom’s latest round of load shedding has again put the focus on solutions that help families and businesses be less reliant on the grid.  Increasingly, solar energy storage systems are becoming the standard and supplanting traditional solutions like fuel-powered generators.

Over the past year or so, along with the stories of double-digit annual price increases from Eskom, there have been stories about Eskom wanting to ‘fine’ solar users by charging them ‘extra’ to use the grid.

The message has been a convenient one for those writing headlines and has helped to generate further anger directed at Eskom.  However, the headlines are misleading at best.

The current model of billing used by Eskom and municipalities for ‘smaller’ users is to bill based on usage (kWh or ‘units’) only.  In this model, if you use no energy from the grid, you don’t get billed anything.  Let’s call this ‘Pay As You Go’.

Other users like larger commercial, industrial and agricultural users often have different models applied that have a fixed ‘access’ or ‘line’ charge applied among other potential charges and a much lower per kWh unit charge.  Let’s call these ‘Contract Customers’.

When solar installers propose solutions for ‘Pay As You Go’ customers, our goal is to try optimise the system to buy as little energy from the grid as possible, but still be connected to the grid in case you need it.  Thus, after installing a solar system, Eskom or the Municipality immediately loses out on selling electricity to you.  In some cases, we’re able to cut bills by 80%.  This represents a significant revenue loss to Eskom and municipalities who still have to carry the burden of maintaining the network to provide those customers with their access to the grid.

Solar solutions for larger ‘Contract Customers’ can often appear to be a less viable investment proposition because the client still has to face the fixed charges for the privilege of access to the grid and the reduced energy purchases thus result in a lower overall % saving on the bill.  But Eskom or the municipality are still being paid sufficiently for maintaining the client’s access to the grid.

What Eskom is thus proposing is a change in billing that helps to ensure that smaller users are also paying for their access to the grid despite the potential scenario where they are not using the grid at all but keeping it as a backup to their solar system.  This approach is extremely common in the international context as it is considered a fair compromise between end user and utility.

In the South African context, consideration must also be given to the fact that Eskom is being split into 3 companies: Generation, Transmission and Distribution.  The Generation business is the one we all know about with all the problems keeping power stations running.  The Transmission business is least known as it transmits that generated power throughout the country to their Distribution business who supply some clients directly (eg. farmers) or to Municipalities who mark it up and sell it onward to homes and businesses using municipal owned and managed grids.

While the vast majority of electricity generated in South Africa comes from Eskom (current estimates are around 80%), most end users are actually supplied by municipalities who buy that power from Eskom.  Each municipality will have to develop their own regulations around the question of ‘Pay As You Go’ vs ‘Contract’ and how best to balance access to the grid with the cost of using the grid.

The fact that solar users have been able to reduce their energy bill in the meantime and face the potential of an increased bill when this change is implemented cannot reasonably be considered to be a ‘fine’ on solar users.  A single person living in an energy efficient studio apartment with no solar but extremely low energy usage would face the same increase in billing.

The bottom line is that these measures are not targeted at solar users but will apply to all users of the grid equally.  Regardless of this potential change, an investment in solar will generate a saving in the long run and bring comfort, convenience and productivity continuity to homes and businesses around the country.