Solar PV as “Base-Cost” industry driver

Solar PV systems for local business with an LCOE (Levelised Cost of Electricity) of R0.20 – R0.35/kWh is the new reality in South Africa.

Comparing this with the standard Eskom Small Power User tariff of R1.3006 (increasing annually) for business in eg. Cape Town it is clear that Solar PV is the way to go.

Reducing input costs is crucial for South African business to remain competitive.

With the future of wind and solar already bettering any other form of electricity generation on cost we will have a whole new set of economics and opportunities for countries like South Africa.

In the past we had Base-load power in the form of mainly coal and nuclear, supported by gas and hydro for peaking demand. In the future the low cost of solar and wind (lower than traditional base-load power from coal and nuclear) will create a base-cost system where the electricity generation will be based on wind and solar because it will be the cheapest. It will be supported by gas and hydro in the short-term, but with the inclement drops in battery storage costs, even gas will eventually be phased out.

This creates a whole new opportunity for the new energy rich countries of the world – the countries who have abundant sun and wind – countries like South Africa.

According to the South African Department of Energy, the whole of Africa has sunshine all year round. “The annual 24-hour global solar radiation average is about 220 W/m² for South Africa, compared with about 175 W/m2 for China, 150 W/m² for parts of the USA, and about 100 W/m² for Europe and the United Kingdom. This makes South Africa’s local resource one of the highest in the world,” says Phelan.

This gives South Africa a distinct advantage particularly in energy intensive industries such as manufacturing – solar energy costs could be 20% more available/cheaper than China and more than half as cheap as Europe.

However, this advantage will only manifest itself if South Africa actively embraces the transition to wind and solar by converting base-load energy to base-cost energy via IPP programmes linked to state owned infrastructure and transmission systems. Allowing Eskom to hang onto the aging businessmodel of base-load energy in a vertical supply chain will not create the foundation for this transition to succeed.

But, as a business owner you can already take advantage of this shift today – we can install Solar PV systems with an LCOE (Levelised Cost of Electricity) of R0.20 – R0.35/kWh and we can in most instances do 100% finance as well provided system is more than 30kWp.

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