President Cyril Ramaphosa’s announcement that a feed-in tariff is to be created to incentivise businesses and households to invest in rooftop solar is likely to further stimulate the so-called ‘silent revolution’ that is already under way as South Africans seek to navigate their way through an intensifying load-shedding crisis.

The President confirmed that the feed-in tariff would incentivise homes and businesses to sell surplus power to Eskom.

This represents a material shift in position given that the State-owned utility has hitherto not allowed for residential solar, resulting in more than 27 000 unregistered solar installations across its distribution network alone.

The handful of municipalities that do currently allow such micro installations to feed electricity into their grids have done so only when households and businesses remain “net consumers”, which means they are selling less than they buy.

That said, on the very day of Ramaphosa’s announcement, the City of Cape Town confirmed that it would, in future, permit commercial and industrial small-scale embedded generators (SSEGs) to sell more electricity to the city than they use.

Mayor Geordin Hill-Lewis also announced that the city would pay cash for such electricity, rather than merely extending municipal-bill credits and also unveiled a registration process for those commercial and industrial SSEGs keen to take up the offer.

TARIFF STRUCTURE IN FOCUS

As the legal space for small-scale distributed generators opens, however, the tariff and the tariff structure are poised to become increasingly important.

There is particular concern that poor consumers should not be burdened, and that Eskom and the municipalities are able to extricate themselves from their utility death spirals through a migration to a cost-reflective tariff that fully reflects and recovers the cost of the grid and ancillary services.

In preparation for the prospect of having an ever-increasing number of prosumers on its network, Eskom has approached the National Energy Regulator of South Africa (Nersa) with a tariff restructuring proposition that seeks to separate fixed and variable costs.

The utility’s proposal to implement a fixed monthly charge of more than R900 for grid access, whether or not a household has a solar system, has sparked particular debate and concern, even ahead of any approval by the regulator.

Solar Photovoltaic Industry Association board member Frank Spencer, also of Bushveld Energy, says the move to a more cost-reflective tariff that distinguishes between fixed and energy charges is appropriate, particularly given the prospect of a possible feed-in tariff.

However, he argues that Nersa should still ensure that these are indeed cost-reflective and fair across the board.

“At the moment, there are huge discrepancies between various municipal tariffs, and Nersa should do more to bring these tariffs into being more fairly aligned with each other while also allowing for fair access to the grid for SSEGs,” Spencer tells Engineering News.

Centre for Renewable and Sustainable Energy Studies director at Stellenbosch University Professor Sampson Mamphweli believes the regulator should consider developing a methodology and process similar to the one used to determine Eskom’s wholesale tariffs so that retail tariffs can be standardised.

He is more cautious, though, about whether SSEGs should be allowed to immediately sell more electricity into the grid than they buy, given the importance of such revenue to both Eskom and most municipalities.

Nevertheless, Mamphweli is also strongly in favour of splitting the energy and fixed charges so that consumers without solar do not subsidise those with such systems and Eskom’s network costs are fairly recovered.

Mamphweli and Spencer both support Eskom’s proposal for a time-of-use structure, explaining that it will ensure that energy is priced according to what it actually costs to produce at different hours of the day.

“By having the right tariffs,...