Unpacking the costs and benefits of various power options to alleviate the effects of loadshedding

After losing five hours a day of productive time during loadshedding, I thought it was time to find a solution for my home office. This led to a wider investigation into power options in general.

The simple, fast solution: around R10 000

The easiest solution is to purchase a “plug and play” inverter or UPS (uninterrupted power supply). For between R8 000 and R10 000 you can buy a 2.4 kVA unit that includes two batteries and an inverter that converts your DC battery power into AC power. That would produce 1.2 kWh of power and is sufficient to run a few lights, your computer and wi-fi. You connect it into a plug point to charge and when the power is down you can plug your appliances into to unit.

Just make sure you are buying a decent brand rather than a cheap knock-off. It is worth spending a bit more for reliability.

The inverter household solution: R30 000 to R50 000

If you’re looking at power options for more than just keeping your computer going, or like me, you have two offices at home, you may want to consider upgrading to an inverter system that feeds into your DC board. You would need an electrician to install it and you must get approval from the municipality. This is really a bigger version of the plug and play system, and the more batteries you buy the more you can power. According to the Western Cape’s switchandsave.co.za website, a system producing 2.4 kWh of energy would power 10 to 15 LED lights, a TV, fridge and laptop.

A system that produces 4.8 kWh of power is enough for an energy-efficient three-bedroom home. Basically, you could run your whole house except for heating appliances like your geyser, oven, microwave and electric hob.

The cost is determined by the number and type of batteries. For example, we were quoted around R35 000 for a 5kWh system with lead acid batteries and R55 000 if we opted for lithium batteries. Lithium batteries have double the lifespan so represent a longer-term saving.

Creating your own electricity: anywhere from R60 000 to R200 000

The above power options use Eskom to power up the batteries and do not save you any money. They would also not be sufficient for extended loadshedding.

One option is to purchase a generator and connect that into your grid. The upfront cost is not that high, we had a quote for R20 000, but the on-going costs are expensive. It consumes diesel at a rate of 2 litres per hour. If you have loadshedding for five hours that will cost you R160. The other problem is that you are only allowed to store 20 litres of diesel on your property so you will be going down to the petrol station fairly frequently. It will also be a challenge if we have diesel shortages.

The other option is to go solar. According to Jack Radmore of GreenCape, the average size for a household is 4 to 7 kilowattpeak (kWp). This would have a capital cost of between R60 000 and R105 000 fully installed. This translates into an electricity cost (per unit or kWh) of R1.30 for at least the next 15 years. However, this figure does not include batteries. It is the batteries that are the real expense. If you are going solar you need to use the more expensive lithium batteries which will cost an additional R30 000 to R50 000.

Radmore does not recommend going off the grid completely. “Not only is this not the best-case scenario for South Africa as a whole, it is also very expensive. Battery costs are not yet at a point where it is financially feasible to go off grid.”

Deciding between various power options

Mark Willoughby, Managing Director of One Energy, says that when you’re evaluating the various power options, you need to start by deciding what your goal is. In the short term it may be about keeping the lights on during loadshedding but in the medium term it may be about reducing your electricity costs. Based on current electricity price increases we will be paying around R3 per kWh within a few years. At that price, solar with batteries starts to make a lot of sense.

Willoughby says if you are looking at cutting electricity costs then the starting point is moving to a solar geyser. At around R24 000 it is the cheapest way to reduce your Eskom bill. Willoughby says you would cut around R600 to R800 off a monthly electricity bill of R2 000 to R2 500. If you consider that a R24 000 investment would effectively give you a saving of R7 200 to R9 600 a year, that is a 30% to 40% return on investment, tax-free.

The next step is to get your whole house energy efficient by using LED lights, a gas hob and upgrading to new, energy-efficient appliances.

When it comes to generating your own power, if you are on a budget you could start off with a “grid-tied” system with solar panels and no battery. This will provide power during the day and you could change your usage to make sure your washing machine, dishwasher, pool pump and other appliances run during the middle of the day when the sun is generating the maximum power. By using solar during the day, you could possibly also drop into the lower-tier rate for electricity tariffs.

While this will save you money, the downside is that you only have power during the day while the grid is running and you would not be protected from loadshedding as the system is not permitted to run when the grid is down. Willoughby says this is not always clearly explained to the customer. “As soon as the grid goes down for any reason (loadshedding, cable theft, etc) the reference signal disappears and the grid-tied system automatically shuts down – as required by law. You can imagine how angry a consumer becomes the first time this happens with loadshedding during the day and they expect that the system will continue delivering power, but instead it shuts down.”

This is why a hybrid system, although more expensive, is a better option. This can be achieved through either batteries or a generator. You could install a generator for periods of loadshedding and despite the high cost of diesel, as long as we don’t enter periods of prolonged outages, it could work well as a supplement to daytime solar power. A generator would be cheaper than batteries as an upfront cost but has ongoing costs, is noisy and a pollutant.

The “clean” solution is to purchase lithium batteries, which are more expensive than a generator, but which are charged ‘for free’ by your solar panels during the day. Again, you can opt for how much battery backup you require.  You could create a less expensive solar system that had just enough power to keep a portion of your circuit running, like the lights and TV for example, and spend around R60 000. If you wanted to power your whole home, apart from your oven, you could spend anywhere from R100 000 to R200 000, depending on the energy efficiency of your home.

Willoughby says for the full solar battery system to be cheaper than using Eskom, the price of electricity would need to reach R3.50 per kWh – which will probably be the case in about five years’ time. So, you could invest now for the convenience, and then really benefit financially as electricity prices rise.

You can also follow a scalable option where you start with a few panels and build up or add batteries later. The key is to make sure you start with the correct inverter that can convert solar and battery power into your household grid. You just need to make sure you get good advice upfront.

“We often see a gap between expectations and reality which then comes as a big shock because the consumer thought they were buying a system to run the whole house when in fact all they get is a small system to run a few lights for a couple of hours! This does enormous reputational damage to this industry,” says Willoughby.

The key when weighing up the various power options is to find out how much power you really need and by how much you can reduce your consumption through a few changes. Before you spend tens of thousands of rands on a solar system get your electricity usage monitored for a week so that you can get advice on what system would work best for you. Most quality suppliers will provide this as part of the service or deduct any fee off the cost of installation.

Make sure you get good advice and beware of fly by nights that will try take advantage of the current demand. Work only with reputable providers and rather pay more than try do this on the cheap – this is a big investment.

Selling into the grid

For certain municipalities, especially in the Western Cape, there is the option to feed back into the grid which the municipality uses to offset your electricity bill. Each municipality has its own rates – some higher than others. For example, the City of Cape Town charges a daily fixed fee of R12.36 to feed into the grid and pays you 70c per kWh. Given the fixed daily fee you would need a really big installation to make any money out of selling to the municipality, so don’t count on this to pay back your solar installation.

Energy per panel

Most panels produce 330W per hour. In South Africa you multiply that by five peak sun hours. It’s Interesting to note that in Germany the average peak sun hours hour is 2.5 hours, so despite the fact that they generate half the amount of power, solar is far more prevalent in Europe.

How to fund your solar panels

If you need financing the best option is to use your home loan. According to Stanley Mabulu, Channel Management Head at FNB Private Bank Lending, the bank will still follow the National Credit Act and apply affordability rules. They will also consider if there is equity in the property to allow for a re-advance or further loan to finance the solar panel system. The savings emanating from the installation are not normally considered as part of affordability, but you can use those savings to increase your home loan repayments to pay off your solar costs over a shorter period of time.

This article first appeared in City Press.