The recent announcement by the President to lift the limit on the self-generation of power from 1 MW to 100 MW, is a gamechanger for industries such as mining, farming, retail, healthcare and manufacturing.

Off the back of this announcement, some companies such as private hospital groups have already secured deals to install solar photovoltaic (PV) generating systems to save costs and relieve pressure on the national grid.

However, insurance company Old Mutual Insure says, while it is likely that more companies may follow suit in the coming months, businesses must be careful to not cut corners both in terms of quality and installation procedures of alternative power supplies, failing which there may be regrettable consequences.

“We welcome the revised regulations, which will greatly reduce companies’ reliance on State-owned utility Eskom. However, it does bring significant risk to businesses who wish to generate their own power,” explains Old Mutual Insure spokesperson Christelle Colman.

She says businesses now need to take responsibility for, and ownership of, the product, installation and supply of power.

The ongoing interruptions to the national power supply have in many instances caused financial losses to companies such as manufacturing downtime, a decrease in production capability as well as equipment failures.

“In a hurry to benefit from the new regulation and to make up for experiencing such losses, many companies may be looking for the quickest and cheapest alternative power supplies, which can be costly in the long run,” says Colman.

She adds that the most popular alternative energy source is solar power, and that Old Mutual Insure has not experienced an increase in wind powered energy generation.

“We have recently seen an increase in small scale solar projects where building owners and shopping centres started installing solar PV panels on top of buildings, in parking areas and so on. “But in some instances, both the quality of the installations as well as the products are questionable,” says Colman.

She explains that there are no proper guidelines that solar panel installers need to comply with and secondly, tying it to the grid requires an electrical Certificate of Compliance (COC).

“However, we are generally concerned regarding COC’s as this is basically like marking your own homework: The electrician conducting the work issues his/her own COC.”

Another problem is that most electricians are not experts in lightning protection.

“Many areas in South Africa are exposed to a high flash density (lightning strikes per square kilometre) andit is imperative that panels, especially those installed on top of roofs, are properly protected.”

She says while facilities generating up to 100 MW of power will not have to apply for a license from the National Energy Regulator of South Africa, they will still have to abide by the regulations set out by the regulator.

Colman adds that the quality of the panels is in many instances, dubious.

“A number of the products are imported from companies that do not always manufacture the items to a recognised standard. Most of the panels are manufactured to withstand hail stones between 15 mm and 25 mm in size. But in many parts of South Africa, such as the Highveld, hailstorms produce stones much larger than this, so it is easy for the panels to get damaged.”

She says to store energy overnight, significant battery banks need to be installed.

“It poses a significant risk if inferior batteries are used or if it is not properly installed. “It concentrates the fire load and potential fire hazard in a small area. It is usually difficult for fire fighters to access these areas to fight the fire, which can cause significant more damage than anticipated.”

She adds that one of the biggest challenges with solar PV power is that it cannot be “switched off” during the day.

“If a fire should occur during daytime, the panels keep producing power throughout the sunshine. This makes it near impossible for fire fighters to fight the fire. This is because you cannot use water to distinguish a fire on a live electrical network.”

Andlastly, the installations are often exposed to theft. Old Mutual Insure has experienced a number of instances where the batteries have been stolenandthe installations vandalised.

She says businesses must be aware of these risks and take note of the insurance implications of not complying to proper installation guidelines, as well as using inferior quality products.

“The sustainable future of alternative energy will be dependent on the quality control of products, as well as strict guidelines that are put in place andmonitored to ensure installations comply with a minimum safety standard,” concludes Colman.