Cape Town offers businesses, residents cash for power but experts say scheme 'is too costly'

Panel owners of solar power will be among those who will be able to sell their excess power back to the City’s electricity grid from June. Picture: Henk Kruger/African News Agency (ANA)

Panel owners of solar power will be among those who will be able to sell their excess power back to the City’s electricity grid from June. Picture: Henk Kruger/African News Agency (ANA)

Published Jan 25, 2023

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Cape Town - From June this year, Capetonians will be able to earn money from the sale of power fed into the local electricity grid.

The National Treasury gave the City an exemption to pay businesses and residents directly for selling their excess power back to the City.

In a groundbreaking announcement, mayor Geordin Hill-Lewis said the City can now pay cash for power to businesses, and in time residents, who sell excess electricity back to Cape Town’s grid.

The National Energy Regulator of South Africa (Nersa) has approved a rate of 79c per kilowatt-hour (c/kWh) for this financial year for the City to pay power sellers. The City also adds a 25c/kWh incentive tariff on top of this.

Hill-Lewis said: “Under this plan, the City will also pay these customers an incentive over and above the Nersa-approved tariff in a bid to turn the corner on load shedding. The sale of excess power by homes and businesses with small scale embedded generation (SSEGs), among other generation solutions, will contribute to Cape Town’s goal of four stages load-shedding protection within three years.”

He said the City aimed to immediately start paying cash for power. It aims to buy electricity from as many City-supplied customers as are willing to sell to it.

Hill-Lewis said as their network of home power producers grew, so would the City’s energy security.

He said the cash-for-power plan has the potential to be a powerful force to end load shedding over time when taken with the City’s Independent Power Procurement programme, and Power Heroes incentives for voluntary energy savings.

“Payments to commercial customers will be possible before June, and within the year for any Capetonian with the necessary City-approved generation capacity. If you’re thinking of investing in a solar system, it just got more attractive,” Hill-Lewis said.

However, energy experts have said converting to solar or going off grid is not going to be cheap in the short term for most ordinary residents.

Hohm Energy Business Intelligence head Matthew Cruise said providing power back into the grid at a fee mitigates the capital outlay of a solar and battery investment and that this should reduce the return on investment period from about five years to four years.

Cruise recommended a 5kWh system for a typical three or four-bedroom household and a current energy cost of around R2500 per month.

“This system would cost between R140000 and R150000 and the energy saving per month would be approximately R2 000. With the escalating price of electricity over the next five years, that system would pay for itself within four to five years.”

For those thinking of going completely off the grid, energy solutions provider, AWPower MD Christiaan Hattingh said “kicking Eskom” is no simple or cheap endeavour.

“The reality is that going totally off-grid is simply out of reach for most households. In our experience, specifying solar panels, generators, and battery storage that provide complete grid independence is too expensive to be practical for most small businesses or homes. Whatever you think you need, you need more than double and even quadruple that. It is certainly a massive lifestyle decision.”

He said people who were convinced that off-grid was the way to go, could expect to spend about R500000 plus to power a home with around 1 200kWh of monthly usage with full self-generation.

“But if you are willing to get only 5-10% of your power from Eskom, that cost decreases dramatically.”

Some of the measures that the City has been taking to enable payment for excess small-scale power include dropping a policy requirement for power sellers to be “net consumers” of energy.

This requirement previously only allowed for municipal bills to be credited for excess power, instead of actual cash payments

They also began a wheeling trial for commercial and industrial users which they say is helping to iron out technical and billing issues ahead of a mass-scale roll-out

The City has also allocated R15 million budget to pay for energy generated by small-scale embedded generators for the remainder of this financial year until June.

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Cape Argus

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