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How electricity generation has changed over the past 10 years – and what it bodes for our future

Alongside the global pandemic, electricity has been on many South African’s minds this year. And rightly so: South Africans can expect a 15% increase in their electricity costs from mid-2021, based on a recent court ruling which grants Eskom the right to recover operating costs through additional tariff escalations. This will mark more than a decade of average annual increases of 14%, relative to average inflation of just under 6%.

These escalations have fundamentally changed South Africa’s economy: the manufacturing and mining sectors have been particularly affected by the rising tariffs, and are doubly affected by the inconsistent supply caused by load shedding. South Africa’s electricity supply from the grid is subject to decreasing reliability, with 2020 already shaping up to be the worst on record for load shedding.

What South Africa is experiencing is not unique, but exposes the global trends that expose the high costs of maintaining an aging and centralised coal fleet. A decade ago, average Eskom tariffs were two times lower than they are today, and the costs of installing solar PV were two to three times higher. That situation is very different today: Eskom and municipal electricity tariffs are now substantially more expensive than solar PV installations on an average, lifetime cost basis. This is driving strong uptake of own-use solar generators, despite persistent policy and regulatory barriers.

This is because the electricity market has fundamentally changed over the last 10 years. The growing cost gap between the grid and solar PV means that the benefits of solar are more economically viable, even if the PV plants generate more power than required (for example on weekends, when a factory does not operate). 

For private electricity consumers, solar electricity is typically used to offset daytime electricity consumption through ‘own-use’ or ‘embedded’ generators that service the electricity needs of the facility on-site. The uptake of embedded solar generation has exploded in South Africa, particularly amongst the retail and manufacturing sectors, because of the cost savings generated by the plants. Despite this, embedded generators are largely restricted from selling power into the grid, although it is looking hopeful that this might change

The fact that solar PV is so much more affordable than Eskom’s grid is also changing the way in which solar PV is consumed by large commercial and industrial facilities. For example, some facilities choose to oversize their solar PV system relative to on-site electricity demand in order to increase morning and afternoon solar electricity production, generate more power in winter, save more diesel during load shedding, reduce peak grid demand charges, and achieve higher overall reductions in grid electricity consumption. 


Other commercial and industrial facilities are opting to oversize their solar PV systems and store the excess affordable power in battery banks – something that, 10 years ago, would have been ludicrously expensive. However, with Eskom’s tariffs increasing the way they are, and with the reduction in the costs of energy storage components, the business case is starting to emerge. The advancement in electricity generation technology gives businesses more flexibility and options when it comes to their energy choices. Own-use solar – whether on or off grid – is an affordable and, by now, well-used option.

Load Shedding Solutions for Your Business

Load Shedding, unfortunately, has become a norm in South Africa. Even though load shedding takes place to stop the entire country from experiencing a permanent blackout (by the collapsing of the whole electricity supply grid), load shedding still has major negative effects on the economy in South Africa. 

Several reports now estimate that South Africa will experience severe load shedding for at least two more years. The frequency of load shedding, even during COVID 19’s economic standstill, indicates just how fragile Eskom’s fleet has become, and businesses have to find a solution to remain operational. The positive news is that a plethora of technology now exists which can help your business to find a solution to ending the nightmare of operational disturbances.

The causes of load shedding 

Load shedding happens when there is not enough electricity available to meet the demand of all customers. In order to maintain grid stability, the electricity utility supplier will interrupt the energy supply to certain areas on a rotational basis.  The winter-months are prone to load shedding, as it can be  caused by the higher demand for electricity during cold weather, which causes the power station stations to be overloaded and  struggle to  keep up with generating the needed electricity capacity.

According to Eskom and government officials, the solution is a capacity problem, requiring the construction of additional power stations and generators. However, the procurement of additional national capacity could be a lengthy process. In the meantime, there are alternative electricity solutions to help businesses during load shedding.

Various methods can be used to minimise the impact of load shedding, and below we suggest a few solutions businesses can use to see their operational disturbances be minimised. 

Solutions to load shedding

1. Uninterruptible power supply systems (UPS systems) 

A UPS is an electrical apparatus that provides emergency power to a load when the main power supply or utility power fails.

A UPS is the bare minimum when it comes to business operational management, as it allows for the safe, orderly shutdown of computers and connected equipment. The size and design of a UPS will determine how long it will supply power.

A UPS will only work if power banks are fully charged and on standby when needed. Unfortunately these are short term solutions, due to the fact that the power banks may run out of power before the electricity comes back on. This means that, once the UPS’s reserve has been depleted, there is no alternative supply of power, which might negatively impact productivity and affect day to day operating of the business.

2. Backup generator  

Many businesses have turned to backup generators to ensure the continuous supply of power. Generators typically use diesel or gas, and convert mechanical energy into electrical energy as the output. 

Gas generators can be used for residential emergency power supply and can last about 2 to 3 hours,  which may not be ideal for a business function. Diesel generators, on the other hand, can run for 20 – 30 hours, depending on their capacity.

However, with the ever increasing price of fuel, running a generator can become prohibitively expensive. The lifespan of a generator depends on its run hours – a generator that is used infrequently could last around 20 years. In a scenario of increased and consistent load shedding, generators may need to be replaced more frequently. 

In addition, it is important to consider the noise and fumes that a generator might emit, which can be an additional frustration to an already stressful working environment. 

Diesel generators on Robben Island

3. Grid-tied PV Solar system 

A solar PV system is composed of solar modules combined with an inverter and other electrical and mechanical hardware that use energy from the sun to generate electricity. PV systems can vary greatly in size, from small rooftop or portable systems to massive utility-scale generation plants. In South Africa, which has fantastic irradiation, solar PV tends to be the most affordable kind of power to generate.

However, typical solar PV systems are grid-tied, meaning that they would go down during load shedding. This is because, although the sun may continue to shine during a power outage, the inverters will automatically switch off in the event of a grid outage. An inverter is required for solar PV systems in South Africa, to convert the DC power generated by the modules to AC power, which is used in buildings and commercial operations. Inverters are designed to switch off in the event of a power outage, to ensure the safety of personnel that could be working on the grid during an outage.

Luckily, a simple “workaround” can ensure that during the day, a solar PV system can still remain operational during a power outage. As we explained in our previous post about load shedding, installing hardware and a simple generator/UPS system can ensure that inverters remain on during outages, and the solar PV system can continue to generate low-cost power during this time. Several SOLA customers have used this technology, such as Old Mutual Park. 

Old Mutual Solar Carport

Installing a solar PV system is a great cost effective way to get your business not having to deal with the crisis of load shedding in South Africa.

4. Off-grid solar PV system

An off-grid solar PV and battery system, also known as a stand-alone power system (SAPS), or solar PV microgrid, works by balancing several electricity sources, such as solar PV and batteries. Solar PV microgrids work by generating electricity from solar modules and using them to charge a battery via a charger controller.

An off-grid system works independently of a utility grid , which makes it an independent power generation source, ideal for remote or rural areas, such as the microgrid in Clanwilliam’s Cedar mill Mall.  However, with increased load shedding, this form of electricity generation is starting to make financial sense in urban areas too.

Although many companies may be reluctant to move off-grid,  solar PV microgrids are becoming the most long-term and cost effective solution for permanent power supply in South Africa. 

Cedar Mill Mall Solar PV Microgrid

Conclusion

With the prospect of load shedding being around for at least another three years, considering viable alternative sources of power is important for business. With the rising tariffs and other issues at Eskom, companies need to seek out the best alternative power generation options for their businesses. 

Now that we are ready to “reopen” our economy after the COVID 19 lockdown, load shedding will be a reality for many businesses. The good news is that there are lots of options for business owners to ensure continuous power – whether through a  UPS system, backup generators or solar PV systems. The options are there to help ease your mind with the effect that load shedding has caused to businesses.