This continuous disruption to productivity is costing South African businesses, and the economy, money they can’t afford to lose – especially amid rising inflation. According to CSIR, load shedding costs South Africa a staggering R700 million in lost economic output per load shedding stage per day. And PwC estimates that it cost the nation around 3% in real GDP growth in 2021.
“When you look at those numbers it’s no surprise that so many people are talking about going off grid,” says Manie de Waal, joint-CEO of the Energy Partners Group. He adds that another contributing factor is the high cost of energy. Eskom’s continuous tariff hikes, which started with a 15% hike in 2021 followed by another hike of almost 10% this past April and another due in July, are placing severe pressure on South African companies. And we can expect 10% – 15% increases over the next three years. Surely it would be better to go off grid – or would it?
He explains that there are two energy problems facing businesses that quickly lead to the notion of “going off grid.” To be clear: “off-grid” means absolutely no connection to the electricity grid of South Africa.
The first of these challenges is the direct impact of the rising cost of electricity. “The solution to cost control is definitely not to go off-grid. Simply put, any off-grid solution will in fact increase any current cost of electricity supplied by ESKOM.”
The most effective measure (after energy efficiency measures have been exhausted) to maximise cost control is to install an embedded (i.e. on-site) photovoltaic (PV) system to generate solar power for the business. At the current cost of grid supplied electricity, a rooftop solar generation system is an excellent investment. The benefits of these systems are obtainable without any capital investment, through a Power Purchase Agreement (PPA). A PPA agreement offers solar power generated at discounts of up to 50% of the grid supply price.
The second issue, according to De Waal, is one of reliability, or security of supply [due to load shedding] and has indirect cost implications through loss of production and productivity. “Reliability issues are not addressed by a solar system on its own, when the ESKOM or municipal grid is down solar production also stops in its entirety.”
“This is one of the biggest misconceptions regarding solar systems, that they keep producing when the grid is down. For that to happen you have to integrate the solar system with alternative back-up systems like Batter Energy Storage Systems (BESS) or a generator.”
Security of supply concerns therefore must be addressed by energy back-up systems that are not intermittent and that can provide a stable reference grid – currently either BESS or generators.
For a complete off-grid solution, one would need to install a solar system (for which a considerable amount of space is required) as well as a BESS or generator. Such complete off-grid systems are prohibitively expensive to implement when compared to the current cost of ESKOM electricity. In many cases it is simply impossible, due to the space required to accommodate a large enough solar system.
He asserts that outsourcing solutions to the above challenges is quickly gaining adoption in the commercial and industrial space where solar systems, BESS and generators are combined in an optimal manner under PPA’s. This has the client not investing any capital and solving both cost issues as well as security of supply. Suppliers that offer these energy solutions are completely aligned with business needs to keep costs down, clients only get billed for energy generated. Up-time and generation guarantees are also built into contracts.
So, is South Africa ready to go off grid? No, says De Waal. “Going off grid is the biggest misconception of the South African energy industry – it simply isn’t feasible. But, becoming less dependent on the grid, getting through load shedding with fewer operational disruptions and benefitting from significant cost savings – that is possible and feasible. And it can be achieved without any capital investment.
“Companies should be exploring ways to maximise on site embedded energy generation and storage capability to work better with the grid,” concludes de Waal.
Photo by Severin Demchuk on Unsplash
Relevant pages on Agribook include “Renewable and alternative energy” and “Energy“.
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