South Africa’s power supply has been in turmoil in recent years, with regular load shedding leading to a rise in demand for alternative power sources such as solar energy. In light of this, we have compiled a list of trends we expect to see occurring in 2023 and beyond.
- The Solar Power Gold Rush
The energy and load-shedding crisis has brought to light the lack of reliability of grid power in the country. The resulting increase in demand for solar energy and battery storage in the country has led to a proverbial ‘gold rush‘ in the renewable energy market, attracting more players, including international companies, into the sector.
However, it is a sad truth that gold rushes can attract less reputable suppliers who sense the opportunity to “make a quick buck”. With this in mind, it is crucial for people to choose a reputable partner when investing in solar technology. Issues to watch out for include:
- choice of equipment – make sure the manufacturer is reputable, that they have in-country after-sales service, and that the type of technology used is appropriate for the task at hand;
- track – record – don’t hesitate to ask for references;
- understanding of PV and batteries as a solution – make sure your supplier knows how to calculate the size of the system you need, understands how to limit the size needed through ancillary equipment, and that they also understand the limitations of battery storage systems; and
- price – cheap is not necessarily better, and often opting for the cheapest alternative will only cost more in the long term.
- Supply constraints
South Africa’s demand for solar power is still less than 2% of worldwide demand – which means that there is little chance that our domestic demand cannot be met by international manufacturers of equipment. However, there are supply constraints that apply within the local market, principally in terms of logistics and the ability to bring enough equipment into the country through our ports. In addition, with the rapid rise in demand for battery storage systems – the majority of which are assembled locally – lead times and prices are increasing rapidly. Expect this trend to continue until alternative supply channels open up.
- The Rising Cost of Electricity
Eskom estimates that it will take 3 to 5 years for load shedding to improve in South Africa. It, therefore, looks like load shedding will get worse before it gets better. Even in the best-case scenario, fixing the problem will require a massive investment that will almost certainly cause the price of electricity to increase. Furthermore, compared to most countries worldwide, the cost of electricity in South Africa is still relatively affordable, meaning that despite the severe increases in electricity prices over the last couple of years, there is room for more.
- Market Deregulation
The deregulation of the energy market in South Africa has been a topic of discussion for many years, and recently the government has taken policy steps in that direction. This will mean independent power producers would be able to generate and sell electricity to the grid, breaking the monopoly of Eskom and introducing competition to the market. This could potentially lead to greater investment in renewable energy and other alternative energy sources, resulting in a more diverse and cleaner energy mix for the country. However, this process will take time to implement, and it’s uncertain how much it will alleviate the load-shedding crisis in the short term. Nevertheless, it is an important step towards a more sustainable and reliable energy future for South Africa.
- Water Security
Water security is crucial for businesses and communities in South Africa, but unfortunately, the majority of water infrastructure in the country has not been properly maintained. Increasingly, there are reports of suburbs and municipalities experiencing water supply interruptions. In addition, water treatment infrastructure is poorly maintained, leading to water resource contamination.
These problems are compounded by load shedding, which has far-reaching effects on water treatment. Municipal pumps that run on electricity are shut off during load shedding, and wastewater treatment plants cannot operate, causing taps to run dry and harmful discharges of wastewater in some towns and cities across South Africa. In the coming year, it will become increasingly necessary for individuals and businesses to invest in water supply and treatment systems.
The solar energy market in South Africa is still in its infancy, with plenty of opportunities for investors and suppliers to meet the increasing demand for alternative power sources. However, given the constraints to meeting local demand, it is crucial to choose a reputable supplier when investing in solar technology. While the load-shedding crisis may seem daunting, it also presents an opportunity to invest in a reliable and sustainable source of energy that can mitigate the effects of the crisis in the long run.
Sources:
“South Africa’s demand is less than 2% of the worldwide demand for solar power” – International Energy Agency, Solar Photovoltaic (PV), 2021, https://www.iea.org/reports/solar-photovoltaic
“Eskom estimates it will be 3 – 5 years before load shedding improves” – Reuters, “South Africa’s Eskom sees load shedding persisting for at least five years,” July 22, 2021, https://www.reuters.com/world/africa/south-africas-eskom-sees-load-shedding-persisting-least-five-years-2021-07-22/
“Over the past few years, the average price for utilities per month went up from R7500 to R15000” – MyBroadband, “South African electricity prices have doubled in 10 years,” July 30, 2021, https://mybroadband.co.za/news/energy/406842-south-african-electricity-prices-have-doubled-in-10-years.html
“Deregulations could come into play in the future” – Engineering News, “South Africa to open electricity supply to private generators,” October 22, 2021, https://www.engineeringnews.co.za/article/south-africa-to-open-electricity-supply-to-private-generators-2021-10-22
“Water Treatments and how they will be affected by load shedding” – The South African, “Here’s how load shedding affects water supply in South Africa,” August 19, 2021, https://www.thesouthafrican.com/news/how-load-shedding-affects-water-supply-in-south-africa/
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