In this opinion piece, South African Photovoltaic Industry Association (SAPVIA) COO Niveshen Govender points out that proposed changes to the electricity tariffs charged by Eskom  shows that the utility is moving to a more proactive position that responds to the needs of consumers but also ensures increased uptake of alternative energy connections in a responsible way.

Over the years, criticising Eskom has become quite the pastime for many South African commentators. While the State-owned utility is not immune from criticism, this time, Eskom is taking necessary, proactive, and productive steps to respond to the country’s changing energy environment.

At the start of this year, Eskom presented proposed changes to its tariff structure, including a new Homeflex tariff to enable residential solar PV and battery systems. The outcry from some commentators was that this was Eskom trying to squeeze consumers and put unnecessary barriers in the way of renewable energy.

Unfortunately, the commentary around the announcements has served to muddy the water rather than focus on the positive and proactive steps that Eskom are taking to respond to the changing needs of their customer base. The commentary has also served to confuse rather than clarify how Eskom is responding to the increasing use of renewable energy sources both for residential and commercial customers.

The first proposed changes to tariffs will have a direct impact on the everyday consumer. And when you look closely at the details of the proposals, it is clear that the changes are designed with the consumer in mind.

Moving away from the unpopular Incline Block Tariffs is to be welcomed. This will enable residential customers to better budget for their utility costs.  Lower-consumption consumers will pay slightly more and higher-consumption customers less. The change will benefit poorer areas where multiple homes are potentially using a single electricity point, which means that they are having to pay higher tariffs because the group uses more together.

There have been many questions also around the proposed shift towards “Cost Reflective Tariffs” for electricity. To be clear, we cannot have a functioning electricity system without Eskom maintaining the grid and providing the connections to both business and residential customers. Those fixed costs must be covered regardless of whether your electricity is supplied by solar, wind, biogas or coal.

Splitting out the fixed and variable costs would mean that the cost for providing and maintaining the wires to your house or business would be independent from the cost of the energy produced and provided over the wires.

Ideally, the variable cost would be charged at different rates during the day associated with the actual cost of the generation during those hours. This has already been done to some extent for most customers, either through Time-of-use tariffs, or peak demand tariffs, or more simply a fixed monthly charge + an energy charge (eg Cape Town Residential).

The issue with only having energy-based tariffs is that the cost per kWh is then very high, which means if you put in your own generation, you would then avoid that high energy cost, which actually includes the cost for providing and maintaining the wires, which simply isn’t fair to the electricity provider either.

Eskom’s new proposed Homeflex tariff will allow Eskom residential customers to legally connect to the grid at a fair cost in terms of fixed and variable charges, with the possibility to sell back to Eskom at very good evening peak prices, and fair daytime prices. Speaking with my solar hat on, the most exciting aspect of this is the peak rate that will hopefully see the increased adoption of batteries and thus help with the peak demand problems South Africa has.

What is also clear, and may not have come through from the commentary, is that Eskom’s proposals are not anti-renewables. They are seeking to redress some of the inadequacies in the tariff structure which have resulted in misunderstanding about the true cost of renewables and also allowed some abuse of the system due to the poor design of Eskom’s historical tariffs.

SAPVIA has been a strong advocate of allowing both municipalities and residential consumers to harness the power of renewables, and solar PV specifically, through Small Scale Embedded Generation (SSEG) connections to the grid.

Uptake on this has been difficult to quantify due to the lack of formalised process and the introduction of the SSEG regulations will allow Eskom to ensure that the quality of the power that is fed back into the grid is fit for purpose.

The changes are not just about implementing red tape just for the sake of additional bureaucracy. Eskom as a state-owned enterprise is required to deliver accurate energy planning to ensure they do not overspend on generation capacity. These proposed changes will allow for that.  In addition, it will also result in enhanced safety protocols ensuring that the grid connections are up to code and supply the best quality power to the grid.

From a solar PV perspective, these changes will enable us as an industry to really get behind the roll out of SSEG across the country. It will result in an enhanced supply of alternative power that releases the pressure on Eskom and should help to minimise the need for ongoing load-shedding.

Eskom has often been criticised for not modernising and moving with the times. The changes proposed show clearly that the utility is moving to a more proactive position, one that responds to the needs of consumers and also ensures that they adapt to the increasing uptake of alternative energy connections in a responsible way.