Tag Archives: viability

Eskom / Municipality vs Solar pricing Maths.

One of the age old questions I get asked is this – Does solar make cents(sic)?
The smartass answer is of course “it depends”.

Eskom is fast turning that answer into “extremely well” though.

Looking at the math, the average household with say 1100KW usage a month or R1800 a month average bill in Cape Town pays these rates:

600KW @ 1.56 = R936
500KW @ 1.86 = R930 (over 600KW is billed at higher rates)

Monthly thats R1866. Lets round that down to R1800 for ease of use.

1100KW / month is 36KW / day.

36KW daily usage = 1.5KW/hr on average. Ouch.

That’s quite high. Lets bring that down. We did.

First steps

Install solar hot water heating for hot water (and pool heating if you have a pool).

That should bring our bill down about 40-50%, as heating water is a major consumer of electricity.
Install gas for cooking. (We didn’t as we don’t cook that often, and it didn’t make sense in our situation)
Install LED lighting instead of power sucking halogens and regular bulbs.
We should be looking at closer to 20KW day now.

You’ll probably have spent up to R30,000 on that.

Good.

Lesson #1
Its ALWAYS cheaper to first reduce costs before going solar.
Our best bang per buck is *always* to reduce our monthly usage first.

In our case, we installed 2 x 150L solar hot water heaters.
Replaced *all* the lighting with LED’s. Don’t forget the outdoor security lighting!
Our gate light was on 12hrs a day. We replaced it with 10W LED lighting.

Outdoor security lighting @ 10W /hr @ 12hrs vs Halogen @ 150W @ 12hrs= *major savings*.
eg 120W usage for 12hrs, vs 1800W!
One 10W LED run for 12Hrs a day = 120W = (monthly 30 x 12Hrs) = R5.4
One 150W Halogen run for 12Hrs a day = R2.7 a *day*, or R81 a month.

Imagine that for all the lights in the house. If you have Halogen downlights get rid of them, and get LED ones. Takes less than a month *per* bulb for payback time…

After all that, our electricity usage went down from 1100KW/ month to about 600KW month.
That’s a 3 year payback on investment if it’s similar to our R30,000 cost.

Sure, but thats got nothing to do with Solar I hear you say.
Well, yes it does. Again, *reduce your footprint* first.

Second steps

Install some PV!

180k will get the average house with 20kw daily usage offgrid including batteries in todays money.
(Say about 5kw panels on the roof, and 30kw of battery, plus a 3kw backup generator to cater for repeated winter outages past 2 days of no sun, and all inverters etc for a single phase household)

Some Math / Justification on that
20KW daily usage = 830W/hr on average.
5KW panels will generate over 15KW in winter, and well over 30KW in summer daily, so deficit is 5KW/day or zero in summer.

Assuming 5KW / day worst case scenario deficit
You need roughly 3 x (3 days of battery) x 2 (50% discharge) for usage.
– Batteries shouldn’t be drained past 50%, so halve the rated value.
– Cater for 3 days of worst case scenario of no sun.
– Add a generator for generation for worst case scenario getting worse, and batteries go below that point of discharge.

With that in mind, deficit is 5KW odd in winter, so 3 x 5 = 15KW for 3 days of discharge (say 3 days of cloudy weather) x 2 (can’t discharge lead acid/agm/crystal batteries more than 50%) = roughly 30KW required in batteries.

28.8KW of battery can be had for a little over R1/Whr eg / 20x12v@120Ah= 28800W which can be run in 24V or 48V easily (battery inverters usually run in 24v or 48v sizing)

12v@120Ah Gel Lead Acid is currently R1500 at retail, or less, which = R30,000 for 28.8KW per 5 years usage worse case.
The good news is that battery prices are headed down, not up.

5KW of panels looks like 18 panels * 300W
300W panels are in the R11/w range retail, so roughly R60,000

Panels + Batteries = R90,000

MPPT PV Inverter should be about R20,000 (or less)
Mounting + 3KW Generator say R10,000
DC -> AC Battery inverter about R20,000 (or less), oversized so that the system is scalable if necessary.

Total so far – R140,000
Add installation, say another R10,000 (1-2 days of work) and replacement batteries in 5 years, and you’re looking at closer to R180,000 for an offgrid system over a 10 year lifespan.

If you start looking at that over 10 year terms, that’s a lot more affordable, even if you cater in replacing batteries every 5 years.

Our monthly bill is only R1000 a month though at 600KW usage / month. (Usage of R936 + other costs), and R180,000 is closer to R1500 a month. There’s a big discrepancy.

R1000 a month for 600KW x 12 = R12,000
R12,000 x 10 = R 120,000.

Our costs are closer to R180,000.

Sure. It doesn’t make sense. Its 50% more expensive!
However, that’s at todays pricing.

Nersa has granted Eskom a 15%+ increase (and Eskom is asking for more now, as the situation is dire).
15% increase on Eskom pricing means that Year 2 monthly rates are now R1150 for our 20KW/day usage.
The municipality is likely going to add a few % on top of that also, as they’ve asked for 7% also (also to be confirmed).

So year one is R12,000/ R1000 monthly
Year two is R13,800 / R1150 monthly (15% increase, which is looking lower than the actual increase will be).
Year three is R15,180 (assuming a meagre 10% increase on year 2), and so on..

Guess what just happened – our costs have (not so magically) equalised with our investment, and fairly quickly at that. Without guessing whats going to happen for year four to year ten, its already looking like a smart decision to have gone solar. We also have a nice equity in a system that has increased our house value, AND we have a system thats more reliable than Eskom is.

I know we’re happy paying a premium for the first year or two just to have electricity 24/7.

Essentially, if you have a R1500 bill a month in electricity now, and you have the capital, and roof space for it, its roughly time to start looking at going completely offgrid, as it will payoff by the 10 year mark.

I’m happy paying that premium to have reliable electricity in house right now, and I’ll guarantee you that the costs will be cheaper for self generation based than you are billed for electricity within 5 years.

Footnote –
You’ll note that I haven’t looked at feeding back to the grid in the above scenario.

Why?

It doesn’t make financial sense (at least for Cape Town). I’ll leave it up to the reader to discover why, and do the math (or look at the comments on previous articles where someone did the math!).