Feed-in or Self-consumption with Battery?

This is one of the most frequent questions we encounter when asked about Solar PV installations in South Africa.

The City of Cape Town and numerous other municipalities now offer Feed-in Tariffs (FIT) which allows residential and commercial Solar PV system owners to sell back any excess electricity produced. Notably customers of Eskom do not have FIT and we don’t know when they may introduce it.

If you do not have FIT in your municipality or you are an Eskom customer then your only other option is to store the electricity in batteries for later use – or to lose it.

Which is then better?

The real answer is: It depends…..

Before we answer the question I’d like to quantify better: Better in this case means most economical.

Self-consumption with storage in batteries is more economical in some instances but when the batteries are full and the panels have no load then the electricity goes to waste – it sounds absurd that this could be more economical – but it can. Some will find that sending unused electricity back to the utility is better than letting it go to waste – even if it may turn out to be un-economical.

The FIT’s vary from municipality to municipality and we’ve based our conclusions on the 2017/18 CoCT Electricity Tariffs.

So better, as in economical, depends primarily on your usage profile, ie. How much of the Solar PV generated electricity can you use yourself? As a rule of thumb then FIT makes sense if your self-consumption is below 75%. If you can use or store more than 75% of the power generated yourself then self-consumption generate equivalent or greater savings.

The other main determinant is the monthly electricity usage. Currently higher monthly consumption favours FIT whilst lower month consumption favours storing excess in batteries. The reason for this is that CoCT FIT includes a daily Service Charge which adds up to R390pm before you have consumed any electricity – this makes consumption under R3000pm less attractive on FIT.

If your current electricity bill is more than R3000+ per month then it favours FIT whilst a spend below R3000 per month favours battery storage.

Another determinant is the price of batteries.

As battery prices decrease over time with the increased proliferation of EV’s etc we can expect prices eventually to drop to a point where FIT is just not better anymore, no matter the size of the account. We expect this to happen in the next 3-5years unless the Municipalities improve their FIT offer substantially.

Currently the extra cost of FIT is: R8500 for an AMI bi-directional meter + R15,000+ more for a grid-tie inverter (vs the off-grid inverter required for self-consumption with batteries) +R5-15,000 for the Application process. That alone can buy you 3-4kWh of Lithium Ion batteries which is sufficient for smaller 1.5-3kWp installations.

There are couple of other points to consider as well.

Self-consumption with batteries will work as a UPS in the case of load-shedding/power-failure – most FIT systems will not (because that would require Hybrid inverters which are more costly and therefore most often not used).

FIT Tariffs are only set for one year – after one year they could become better or worse, this uncertainty is not great when you are planning payback and returns on a system with a lifespan of min. 25 years.

So all in all the answer is not clear-cut and depends on your circumstances but we hope that the above will have given you some pointers.

As it stands FIT is generally more favourable with higher electricity usage but uncertainty over future FIT Tariffs and the drop in battery pricing will ultimately lead to self-consumption systems with battery being the most attractive. This is important to bear in mind as swopping from one system to the other at a later stage comes at considerable cost.

Please feel free to contact us and we will help you determine (FREE OF CHARGE) if FIT or Self-consumption with Battery storage is the best option for you or your business.

 

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