New fees and tariffs for 2022 have been published, and it seems that Cape Town has finally realised that Solar is not the enemy, and is in fact a good thing. Residential solar falls under what the council calls Small Scale Energy Generation or SSEG.
The new tariffs have removed the onerous daily SSEG fees, and now seem to actually make a mild amount of sense to feed back to the grid. I suspect that they are keen to have people feed back now. City of Cape Town (CoCT) can make a profit on reselling cheaper power, and it will help to reduce load-shedding. Oh, and it will also reduce pollution. Win-win!
The tariff tables are available to read here – https://resource.capetown.gov.za/documentcentre/Documents/Financial%20documents/Electricity%20Consumptive%20Tariffs.pdf
Lets take an excerpt from the table and look at the residential solar fees
You’ll note that SSEG fees have been completely deleted (removed), and SSEG has now been rolled into the Home User Tariffs. It’s not completely transparent though, as they have added a new AMI meter reading fee.
Why yes, that is a fee to read a completely remotely readable meter, because being able to read a meter remotely “costs more”. As opposed to all those manual meters they need to send people out to read. Hmmm, two steps forward, one step back CoCT, sigh.
The Meter reading fee is currently approximately R90+vat as of writing.
An AMI meter is around R10,000+vat or so.
So…, is this new pricing structure a good thing?
Well.., what the City has done now is remove the loophole where you could install a tiny system in order to get better electricity pricing per kWh. While that was a bit questionable at best cost-wise given the daily fees, I’m sure some worked out their usage to fit the math.
Now thats gone. Vamoosed. Vanished. I honestly doubt many used that loophole though, as loadshedding made that sort of thing iffy, even if the math worked out in your favour.
The ‘new’ math makes a bit more sense (cents?) now if you want to use the grid as a battery – i.e. feed excess to the grid, get credited, then use those credits back in evening or winter.
Ironically, this is exactly what Eskom doesn’t want people doing. Eskom regularly complain about the evil solar users abusing the grid to do exactly this.
Let’s go through some caveats, and I’ll give you my thoughts on the new pricing structures.
- You can’t make money selling solar to CoCT. Credits apply only to what you have used.
Any excess generated won’t be credited. The best you can do is break even (and that doesn’t count in the costs that you incur in order to be able to sell them cheap electricity for them to profit off).
- You also have to comply with CoCT maximum system size feedback limits if you feed back.
The limits are quite small in certain instances (dependent on your current incoming line size)
Details here (page 35) –
Ok, caveats done. Remember them, especially the first one, as the first thing anyone asks me is – can’t I make a profit selling my solar back to the grid? No, no you can’t in Cape Town.
thoughts for the day options. These options will obviously depend on what sort of system you have. I have noted where it may make sense for each choice.
Option 1 – It’s a trap
Don’t jump in on signing up as SSEG!
They’ve got you now, and knowing CoCT it will be impossible to change back to standard prepaid without a ton of hoops. They’ll also slowly bring the pricing back up to add more fees over the next few years. If you already have a grid connected system with a decent sized battery, this is probably where my line of thinking will be.
Personally, I’d wait and see.
CoCT are (in)famous for adding more and more fees onto things later.
“Temporary fees” that then never disappear (see water for a good example).
In this scenario – as a worst case you buy units as needed from the grid at normal rates, and don’t need to pay them extra to (not) feedback any excess.
If you have a decent sized system with battery, and only need grid for 5% of the time, this is your best bet currently.
Option 2 – It’s not a completely terrible deal (in some cases/scenario’s)
sucker valued CoCT user; so you want to feedback.
You need to pay
Darth Vader and the Emperor CoCT an extra 10k+ for an AMI meter. Ka-ching!
You also need to pay an extra meter reading fee (for a fully remote readable meter – WTF!).
Yup, more fees – we’re CoCT, we love extra fees!
Once you’ve paid CoCT for the privilege of allowing you to sell them cheap electricity for them to resell at higher rates, you can now use them as a grid sized battery and make some credits in the process.
Credits! Say whaaaat, I can make credits? Oooh I can hear you say.
I’d like to redirect to you caveat #1 above as a reminder though.
No, don’t ask me again about it. No, no buts. No loopholes. No – but…, can I.
No. Just no.
If you have a grid tied system with a small battery, or no battery, this may make sense.
If you have a system with no battery or small battery though – you’re at high risk of load shedding during load shedding. More than likely, you’ll feed back excess, then not be able to use it as the system is down for uh, load shedding. I’d rather suggest buy more battery when you can. 5-10kW of battery should be enough, depending on your needs.
In this scenario – Any daytime excess generation goes into the grid, and per kWh fed in that gives you one third of a unit credit (+-R1 per kWh you feedback).
Night time (or whenever you need to use the grid) you get charged the R3 per kWh fee. Effectively its a 3:1 ratio. For every 3KW you feed in, you can use 1KW back for “free”*. You also have to hope that the grid is actually available when you need it.
Honestly, its still not terrible compared to the previous rates, but it still doesn’t really change the fact that they’re charging you money in order for them to make profit off of your setup. The setup that you paid money for, and CoCT charged you extra to connect to their systems. The system where you paid all the Capex..
Well, you get my point.
At this point in time, CoCT should really be going – hey, you paid for your own system, we’d like some of that juicy excess electricity you’re making; how about we give you a meter so you can feedback. Let’s sweeten that deal. We’ll supply the meter, you supply the electricity. How about that?
Now that would be a better deal.
*As this is all shiny and new (it comes into play in June 2022), the finer details aren’t quite ready.
I’ll see if I can find out more details about the new feed-in process – i.e. will any credits from generated electricity cover “fixed” charges, or do those only cover units used.
Previous documentation was that you could only get credited up to what you used.
If that is still the case, then this is a worse deal than it appears
i.e. you sell >3:1 units, but only get credited 1:1 units – effectively that. means you pay R2/kWh for any units used, and your excess over and above your usage gets taken for free and resold by CoCT (plus you need to pay for a new meter, and add another monthly meter reading fee.)
I need to confirm that though.
Would I sign up?
Personally no, although not for the reasons you think.
Would I recommend others to signup?
Possibly, but I would lean towards wait a year and see what CoCT do in terms of fees next year.
As it stands, it is a marked change from where the city saw residential solar users 2-3 years back.
The previous attitude has been – you’re the enemy! residential solar is bad!.
Now it’s more of a begrudging well, I suppose we can profit off you.
It’s a change. Change is good. I’m not sure Eskom will be happy though.
I did get some feedback from an unnamed muni employee who had a few comments on the above.
There was mentioned that I don’t talk about challenges faced by Muni’s; fair point, but out of scope for this article, which is aimed at the consumer side. If there is sufficient interest I may write something for the other point of view.
They also mentioned time of use tariff’s (ToU) as a solution, which I completely agree with. It’s something I mention on the original thread where I posted the bits that became this article. I have also talked about it in the past in other articles. No argument there! Ultimately NERSA, Eskom and Municipalities need to stop dragging their feet, and move to Time of Use billing.
Another point was that I should distinguish between SSEG and SSEG with battery.
My view on that is that I don’t believe in a South African context that there is going to be a difference. In a South African context, it’s almost a certainty that any residential solar user will also have batteries. Load Shedding has unfortunately made it a fact of life. In fact I’d even go as far to say that there are probably more battery installations than solar installations in South Africa.
Stealing from a comment I wrote previously, as I hate to rehash things again and again, and again, and again… deep in the comment thread here –
In other countries solar is typically the first thing installed. Here due to load shedding, the installations are usually the other way around. Batteries installed first to avoid load shedding, then a few months later, heck, install solar as its an easy bolt on, and you won’t need to use Eskom/Muni power.
Normally this would be good. Less power used, less costs for the producers.
The issue is that we have (some) paying customers, and (mostly) non-paying customers.
Our paying customers are paying far more than they really should be paying, in order to subsidise the non-paying ones.
Once the paying customers start dropping off the grid, that means less income.
Eskom and muni’s are fighting this by adding more fixed fee’s and other mechanisms to postpone the inevitable, but its fairly clear that those that can will secede from the grid, and the cash cow won’t be giving milk anymore.
This is going to lead to further decline, as muni’s in particular have been sucking on the teat of electricity sales income for decades.
This addendum is of course based from a residential perspective; Commercial and Industrial users have vastly different requirements to home users, and my answers and point of view will change accordingly.