Owing to the power crunch and rising power costs in South Africa, there is significant interest from commercial and light industrial users to offset their energy consumption using alternative energy systems.

A key requirement to bolster commercial and residential alternative- and renewable-energy deployments is a feed-in tariff, which will enable the assets to be amortised more rapidly while not removing revenue from municipalities, says Solarcentury Africa MD Gareth Warner.

Some municipalities are also actively investigating the possible benefits of allowing alternative energy generation in their districts to boost energy supply for industrial and commercial use.

“The cost savings of alternative-energy deployments are based on the massive increases in electricity costs (currently increasing at rates more than three times those of annual inflation), compared with the known costs of operating alternative energy systems.

“Even without a feed-in tariff, alternative energy systems are viable and typically provide a return on investment within five to seven years of deployment, ” he explains.

A feed-in tariff would boost the alternative-energy industry, which would reduce power drawn from the grid, as users reduce their consumption through such installations. This means more energy from the grid is available for other users, expanding the pool of paying customers and energy available in South Africa, explains Warner.

Solarcentury has been approached by municipalities that are assessing the deployment of alternative energy systems, mainly solar photovoltaic (PV) systems, in their districts to reduce not only the negative impact of rotational power cuts on businesses and people, but also their own power costs over time, he adds.

Feed-in tariff policy guidelines will also bolster investment in energy generation across South Africa, as some regions are difficult to connect to the national grid. South Africa, in line with the rest of the world, stands to benefit from distributed generation and consumption of electricity, he says.

“Municipalities are realising that they can boost economic activity by boosting energy availability. This should be acknowledged and supported by the national government, [for example] through feed-in tariff policy guidelines.”

Solar PV energy generation is well suited to offsetting light industrial and commercial power use, as it provides power during daylight hours when people are in the office, factories or shops. The baseload energy that is saved can then be used to provide stable power for more sensitive areas of the economy, such as heavy industry and mining, which require constant power.

“A feed-in tariff would be a win-win for the country, as more areas and homes can be electrified and pressure is taken off baseload sources, such as coal-fired power generation, while incentivising private, distributed generation investments.

“The incentive will not impact significantly on the revenue earned by municipalities, while the impact on Eskom will also be limited, owing to the utility’s not being able to supply sufficient electricity to meet demand, meaning that any power Eskom does not sell to municipalities can be sold to industrial users.”

Warner also foresees a significant alternative-energy services industry arising from a feed-in tariff, though he warns that the local manufacturing of alternative energy systems might not be competitive, compared with the scales of efficiency in other parts of the world.

“South Africa should open up the energy generation space to bolster its economy, which would also help secure more energy to meet current and future demand,” he concludes.