RADHIKA MIA: Solar industry basks in glow from rage against load-shedding

In the face of SA’s enduring energy challenges, a silver lining is emerging: a booming solar industry. The country’s recurrent and protracted load-shedding, coupled with Eskom’s faltering reliability, has spurred a seismic shift towards renewable energy solutions. 

Load-shedding has propelled SA into a multibillion-rand solar revolution, providing not only relief from power woes but also economic and environmental opportunities. It has inflicted significant damage to SA’s economy, leading to a weakening of the rand and exacerbating inflation.

In 2023, about 80% of public healthcare facilities reported being affected by power cuts.

The SA Reserve Bank’s latest estimate is that load-shedding reduced economic growth in 2023 by 1.8 percentage points, while a PwC study (2023) estimated a growth rate reduction of 5%. Load-shedding cost the SA economy nearly R45bn.

The imposition of load-shedding has ignited a surge in rooftop solar installations across the country. SA energy expert Anton Eberhard analysed data released by Eskom and discovered a significant surge in the country’s installed rooftop solar PV capacity.

From March 2022 to June 2023, capacity soared from 983MW to 4,412MW, marking an astounding 349% increase in just over a year. This exponential growth underscores the escalating demand for alternative energy sources amid utility deficiencies.

Eskom is accountable for the distribution of 40% of SA’s electricity, but now municipalities find themselves at the centre of a swiftly evolving electricity landscape. Traditionally, this entailed a linear system: municipalities procured electricity from Eskom and subsequently supplied it to their customers.

The good news is that this system has since evolved to encompass small-scale embedded generators, primarily represented by rooftop solar photovoltaics (PV).

Recognising the urgency of the situation, the government introduced lucrative incentives last year to drive solar adoption. Godongwana’s 2023 budget speech unveiled two key initiatives: a rebate scheme for individuals installing rooftop solar panels and an incentive enabling businesses to recoup up to 125% of their renewable energy investments.

These measures not only alleviate financial barriers but also signal a strategic commitment to sustainable energy transition. While solar users aspire for grid independence during daylight hours, maintaining grid connectivity remains essential for uninterrupted power supply.

The Treasury’s rationale behind incentivising specific components of solar installations underscores the delicate balance between self-sufficiency and grid reliance. The pending establishment of feed-in tariffs promises further clarity and coherence in navigating this intricate landscape.

The feed-in tariff will be a crucial incentive for SA, as it will foster a market for private generation. Essentially, feed-in tariffs enable private generators to channel surplus solar-generated power back into the grid in exchange for compensation, whether monetary or credit-based. While major municipalities are already implementing these frameworks for households, a national system is still in development.

Financing

Facilitating access to solar financing is pivotal in democratising renewable energy adoption. Companies such as Hohm Energy are pioneering innovative financing models, catalysing solar uptake among less affluent demographics in SA. Hohm Energy raised $8m in its seed-funding round.

Drawing inspiration from Germany’s successful feed-in tariff framework, SA is poised to replicate transformative financial mechanisms that drive widespread solar adoption.

In January SA’s solar aspirations received a significant boost through strategic international partnerships. The EU’s €280m investment initiative underscores global recognition of SA’s potential as a solar powerhouse.

Through the Just & Green Recovery partnership, SA is primed to leverage European expertise and funding to accelerate its transition towards a sustainable, inclusive economy.

Private investors, recognising the lucrative prospects within SA’s solar landscape, are injecting substantial capital into the sector. Start-ups such as Hohm Energy, backed by multimillion-rand funding rounds, exemplify the confidence and enthusiasm driving private sector participation. This influx of investment bodes well for innovation, scalability and market competitiveness.

The solar boom in SA heralds a transformative era characterised by resilience, policy innovation and opportunity. As the nation navigates the complexities of energy transition, solar power emerges as a beacon of hope, offering not just power but also economic growth and recovery and environmental stewardship.

By harnessing this momentum, SA can steer towards a future defined by sustainable prosperity and energy sovereignty.

• Mia is research fellow at the department of industrial design at the University of Johannesburg.