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Navigating SA's energy crisis: Solar panels vs generators vs grid dependency

File picture: Pexels

File picture: Pexels

Published Sep 19, 2023


In the face of the nation’s load shedding crisis as well as increases in electricity prices, South African homeowners and businesses are grappling with a critical decision – should they transition to solar panel systems, invest in generators or stick to grid dependency?

To shed light on this matter, leading solar energy provider Alumo Energy has conducted an insightful case study.

The study focuses on a small business (we will call the business something random like GHI Repair Shop for the sake of the scenarios) with a monthly electricity bill ranging from R15,000 to R20,000 and evaluates four scenarios.

These scenarios are as follows: maintaining grid-dependence, purchasing a generator, battery and inverter back-up system, or embracing a hybrid solar solution.

Scenario 1: Grid Dependence

While GHI Repair Shop might be tempted to sticking to the current grid that has been failing us for years because no upfront investment costs will be made, this could result in more costs in the long run.

If there is an annual electricity price increase of 15%, GHI Repair Shop would end up spending over R1 million annually on electricity by the 15th year.

In addition to that, considering an inflation-driven loss of R50 in profit for each kilowatt-hour lost during power outages, the cumulative income loss due to load shedding would reach a staggering R21.6 million.

Scenario 2: The Generator Solution

Like some households and a number of businesses, GHI Repair Shop may choose to invest in a generator.

To sustain their business and mitigate income loss during power outages, this 60kVA generator would be worth approximately R300,000.

However, it’s important to note GHI Repair Shop’s expenses don't end there.

Using the above electricity bills increase at 15% annual rate, the business would spend nearly R1.69 million annually on diesel by year 15. This is also assuming a diesel inflation rate of 12%.

There is also maintenance costs to look out for that would escalate with inflation.

Scenario 3: Battery and Inverter Back-Up

What if GHI Repair Shop opts for a battery back-up system? If the business invests in a 75kWh battery and a 50kW inverter for an upfront cost of R676,950, this will provide much needed relief during load shedding.

Electricity bills will remain high due to recharging the battery, but is more cost-effective than the previous options in the long run.

While GHI Repair Shop might be digging deeper in their pocket for the initial investment, the business would spend a total of over R10.9 million on electricity and the battery system over 15 years, saving nearly R6 million.

Scenario 4: The Hybrid Solar Solution

Solar is becoming a popular option for households and businesses alike. Going (mostly) off-grid with a hybrid solar solution featuring a 32kWp solar system, a 50kW inverter, and an 80kWh battery would require an initial investment of approximately R1.18 million.

This has the biggest initial cost and monthly electricity bills and maintenance costs will be high, but GHI Repair Shop can capitalise on Section 12B tax incentives, tax rebates, and even solar power self-consumption savings.

This approach breaks even in terms of the initial investment after eight years and generates a substantial profit of over R1.9 million by the fifteenth year.

So which is best?

The decision between these different solutions ultimately depend on what is best for you financially. Can you afford to spend on hefty initial investments or would you rather depend on the grid and pay as you go along?