Teresa Kok, Marketing Director of the One Energy Group, provides some solid, practical advice for anyone considering installation of a solar PV system.
For many households and businesses, investing in a solar photovoltaic (PV) system has been essential in order to survive the effects of loadshedding.
Having no power can have a huge negative impact on the productivity of a small business or on a self-employed person’s ability to generate an income.
Households also need to consider the impact of loadshedding on their home’s security infrastructure, as well as ways to mitigate the rocketing costs of electricity ‒ which will only get worse as more properties defect from the grid.
With the price of electricity now sitting at over R3.50/kWh and increasing exponentially every year, getting the best return and payback on your solar investment should be a key motivator and objective.
It all starts by getting a thorough electricity usage and needs analysis done to determine the best system design to ensure that not only do you have enough backup when you need it for power outages, but that your system can also generate and supply enough power to reduce your grid electricity usage and cost as much as possible.
Match demand with supply
Proper monitoring and analysis of your electricity usage will reveal when your peak electricity demand happens and how much you use, on various circuits. From here, you can design a system that generates as much as possible of what you would normally use from the grid.
Monitoring shows you which appliances or devices are pulling the biggest loads, allowing you to reconsider not only their time and duration of usage, but whether there are more energy efficient options to consider.
For example, schedule energy-hungry appliances like pool pumps and geysers to only run when your solar generation is at its peak – typically between 10am and 4pm. Consider putting timers on your geysers to manage the time slots of when it will draw power for water heating – or better still, convert to a solar geyser.
Add solar panels for electricity generation
Installing an inverter and battery system to provide only backup power during outages, without solar generation capacity (panels), means that you will need to use the grid to recharge your batteries when the power comes back on.
So, although your system will keep you powered up during loadshedding, you will not be saving anything on your electricity bill.
By adding solar panels for self-generation, every kW that you generate from your panels is one less that you will need to draw (and pay for) from the grid. For businesses whose main electricity consumption happens during daylight hours ‒ which is also when the sun is supplying the bulk of your electricity needs ‒ this is an absolute win.
When selecting panels, invest in the highest-grade monocrystalline panels you canafford. Premium efficiency translates directly into better energy output and savings over time.
If your PV solar array produces more energy than you need, certain municipalities now allow feeding back into the grid, and the utility pays you for this excess power generated by your solar panels, essentially offsetting what you use from the grid, against what you feed back in.
However, many feed-in tariffs are not yet high enough to make it worth spending money on a larger PV system, and feeding back into the grid often requires a costly upgrade to your electricity meter.
For now, the best savings will come from storing your excess generation in a bigger battery bank, and then using your own energy when you need it. You should aim to get as much of your electricity usage coming from self-generation.
Add battery storage
There’s every reason to bulk up on battery storage, not only for when the grid goes down, but to reduce your usage from the grid as far as possible, to maximise savings as grid electricity costs soar.
Essentially, your intelligent hybrid inverter will ensure that all the energy generated by your solar panels will first go towards powering your property and all the circuits that are connected to it, and then diverting any surplus or extra to charge your batteries up again so they are ready to carry you through the grid outages and when the sun is no longer shining.
If you have enough battery capacity and your system is programmed correctly, when your property starts to draw from the grid when the sun goes down, the battery will step in and supply the energy saved in your batteries from earlier, instead of you drawing from the grid.
Understand the lifetime cost per kW of your Li-ion phosphate batteries
There is a perception that lithium-ion phosphate batteries installed as a key component of a hybrid PV system are expensive. This is simply not true if one calculates the average cost per kW over the life of the battery.
It is clear that the battery energy cost is significantly lower than what Eskom or your local council is charging per kW, and massively lower than the cost of a diesel genset kW.
Consider the following calculation based on a 5kW battery costing R30 000:
- Based on a depth of discharge (DOD) of 80% (ie 80% of usable capacity, which is a protective mechanism to extend the lifespan of your lithium-ion battery), you have 4 kWh usable power per cycle.
- Battery lifespan = 6000 cycles
- Total power over life of battery = 6000 cycles x 4 kWh per cycle = 24000 kWh
- Average cost per kWh = R30000 / 24000 kWh = R1.25 per KWh
Now compare this to the current Eskom residential cost of R3.51 (Ekurhuleni tariff B). Generator sets run at an insanely high average cost of between R6 – R8 per kWh, and need regular maintenance which adds to costs. Your strategy should be to cycle the lithium batteries and increase the battery capacity to maximise the installed inverter and panel array capacity as close to daily electricity consumption as possible.
Every kWh of solar electricity generated is another knocked off your electricity bill. With today’s high energy prices and the rapidly reducing costs of quality battery storage, more homes and businesses are better off looking at greater battery storage capacity.
Your solar PV system needs a quality hybrid inverter
The inverter you choose is an important factor when trying to realise the best return on your solar investment. Opt for a reliable hybrid inverter with a 10-year warranty.
Remember that your solar panels have long life spans of up to 25-30 years and require little service and maintenance, while lithium batteries offer lifespans of anything from 6000-8000 cycles (16-22 years at 1 cycle per day), so choose a good-quality inverter that will perform as dependably, for as long.
One of the key issues with cheaper “off-grid” inverters is that they are unidirectional, so the solar power can only address the essential-services circuits, and savings cannot be made on the higher-load items that are not on the backup side of the distribution board (DB).
More sophisticated hybrid inverters are bidirectional, so they allow savings both upstream and downstream of the inverter, drawing power from both the grid and battery storage in a coordinated exercise to maximise the power you use from self-generation, and only drawing from the grid when it’s absolutely necessary.
Cheaper off-grid inverters will also switch completely to grid power if the load exceeds the solar supply, and cannot only pull the portion of excess demand from the grid, while using your solar power first. This can dramatically reduce the savings from your solar installation.
Convert your electric geyser to a solar geyser
An electric geyser typically accounts for 30-40% of your monthly electricity cost, so this is the most crucial starting point when looking to reduce your daily electricity load. Installing a solar geyser means you can buy a smaller and more affordable PV solution.
On a R3000 electricity bill, you’ll save around R880 per month, amortising your outlay in just over two years ‒ that’s without even taking annual electricity cost increases into account.
Calculating the solar payback period
The “solar payback period” is the time it takes to recoup your initial investment in a solar power system. Most residential renewable energy systems end up performing as a solid investment, in which you yield a return.
The payback period length can vary due to differences in peak sunlight, solar array size, and other factors. Many homeowners report breaking even on their investment within five to seven years, but with the skyrocketing cost of electricity, this payback period is coming down all the time.
You can calculate the solar payback period by taking the initial system cost and dividing it by your annual electricity savings.
Calculating ROI for your solar PV system
Return on investment (ROI) is related to the solar payback period, but instead of calculating the time it takes to break even, ROI calculates the total amount of money and savings that a PV array will provide over its lifetime and the expected utility costs for the same period.
Consider the following example: On an electricity bill of R2450 per month (which is around 700kWh usage per month (23kWh/day) at a tariff of R3.50 per kWh), the system spec and cost looks like this:
Solar PV system spec:
- 5kW Inverter
- 10kWh Li-ion batteries (upscale your batteries for reasons explained earlier – its cheaper per kWh than Eskom/council)
- 3kW solar panel array
- Price, fully installed with all materials and COC: R148 000
This system will generate between 20-22kWh per day, which is approximately 90%+ of your daily electricity needs.
On an upfront purchase:
Based on an 18,65% electricity tariff increase this year and 12,74% for the next year and then a very conservative 5%pa thereafter, your breakeven point is just over 5.5 years based on electricity savings.
Your ROI is based on a very conservative escalation of 5% in electricity tariffs from year 3. Your cumulative savings on electricity costs will be R350 000 after 10 years and R940 000 after 20 years – this is a savings multiple of 6.3 on your original investment of R148 000.
On a finance option:
Based on prime interest rate, with a finance term of 60 months with no annual escalation, your monthly repayment cost is going to be around R3580 pm (figures may vary based on your credit rating and rates applied).
The savings on your monthly electricity bill will be around R2200 per month in year 1, which then escalates as does the cost per kWh of grid electricity – this saving will offset a significant portion of the monthly loan repayment.
Your system will be fully paid off in five years (60 months) and you will own it, and for the rest of the 15-20+ years of your system’s lifespan, you will be generating your electricity for free, with less than a 10% reliance on grid electricity.
Choose your solar energy partner carefully
Getting the best return on investment in renewable power, whether for your home or your business, will be based on the initial cost to install your system, the amount of energy it will produce and store, and what this will mean in terms of electricity bill savings, as well as the quality and performance of the equipment, installation and ongoing management of your system.
Enlist the help of a renewable energy installer that can fully explain your options for you and show you the calculations. And remember, with the right set-up from the start, you can expand your system capacity as your budget allows and your needs change.
Work with a credible, qualified and accredited renewable energy partner that will provide support and ongoing consultation over the lifespan of your system – that’s a good 20-25 years. Far too many consumers are finding out that the result of going with cheap systems and questionable installers is poor system performance, outright failures of battery systems, and a vicious cycle of constant ‘callbacks’ and maintenance requirements – until the original installer simply does not come back to fix their shoddy work or goes belly-up, leaving you holding the can.
In some of the worst cases, these fly-by-nights have disappeared with deposits, and the installations are an immediate fire and electrical risk to lives and properties.
The proper installation and management of a solar PV system is a complex undertaking that requires a deep understanding and experience of the various technologies on the market, that are suited to the specific circumstances of every client and site.
Visit the One Energy website to download a comprehensive checklist of all the considerations you should be looking at and the important questions to ask of any prospective solar installer.
This post was based on a press rlease issued on behalf of One Energy, an award-winning solar energy installer franchise with a national footprint of franchises and almost 14,000 perfect installations completed to date.