South Africa Considers Rooftop Solar Electricity Credits

South Africa’s energy regulator is looking at a framework that would enable homes and businesses to receive credits for feeding surplus power they generate from rooftop solar panels back into the constrained electricity grid.

“There is growing interest from South African electricity customers to install rooftop photovoltaic systems in order to reduce their electricity bill and supplement their consumption,” the Pretoria-based National Energy Regulator of South Africa said in a draft discussion paper to formulate its position on principles, licensing and conditions for installation of small-scale renewable embedded generators. The document was published on its website and dated Dec. 10.

The introduction of such a plan means South Africa, whose sole power utility is struggling to meet demand in the continent’s second-biggest economy, would be emulating countries such as Germany, Spain and the U.S., which have had small-scale renewable generation that included feed-in tariffs or credit programs through banks.

“Their governments also securitized the tariff by government guarantees, which is something that the South African government cannot engage in at this stage with so many programs where guarantees are currently offered,” the paper said.

South Africa has so far procured about 3,900 megawatts of capacity through three competitive rounds of bids by independent producers of renewable energy, with about $10 billion invested. That already exceeds the 3,725 megawatts initially sought from five bid windows. An additional 3,600 megawatts will be sought, the Department of Energy said on Dec. 12.

Generation Forecast

The country’s integrated resources plan for 2010-30 estimates both residential and commercial photovoltaic embedded generation could reach as many as 22.5 gigawatts by 2030, the regulator said in its discussion document.

In 2011, Nersa approved conditions where generators of as many as 100 kilowatts are registered and allowed to sell electricity to municipalities. It proposes that this be raised to 500 kilowatts.

Tariff options proposed by the regulator included enabling customers to reduce bills by feeding excess usage to the grid at a retail price, with a feed-in tariff paying a different rate for selling energy to that for consuming it.

A net-metering option would see customers billed on consumption minus the amount generated.

Billing Considerations

Net-energy metering, measured in kilowatt-hours, will be used instead of rand, the regulator said. Each month, the electricity that small-scale generators produce in excess of their own consumption will be sent back to the grid and credited to their accounts for up to one yearly billing cycle, after which any remaining credit is forfeited to the distributor, it said. “This reduces any incentive for the customer to oversize generation with respect to load.”

South Africa’s electricity rates will rise an average 13 percent from April, more than the 8 percent planned, to help the state-owned utility Eskom Holdings SOC Ltd. recover 7.8 billion rand ($665 million) of unbudgeted costs incurred in the three years through March 2013, Nersa said in October.

The government will raise 20 billion rand by selling shares in listed companies, stakes in state-owned entities and real estate to help the company finance a 225 billion-rand cashflow shortfall for the five years through March 2018.

Copyright 2014 Bloomberg

Lead image: Cape Town via Shutterstock

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