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South Africa is not exactly at the forefront of the EV-revolution that according to international news is about to sweep the globe.

So what is it about EV’s that has enabled Elon Musk and Tesla to surpass BMW and Ford Motor Company in market value?

Solanergy decided the best way to find out would be to get an EV for ourselves – so we bought a Nisaan Leaf about a year ago – and it’s been a revelation.

ICE (internal combustion engine) cars are the main contributor to Carbon emissions and climate change and with an EV you have none of that – provided you charge it from a renewable source such as wind or PV, that is. If you charge it with Eskom electricity then you will merely be moving the pollution from where you are driving it to the powerplant producing the electricity – almost – an EV is still cleaner but not by a huge margin. To get the full benefit, and really make a difference, you should charge it from Solar PV or wind-power.

In our case we run it exclusively off our solar panels which means its 100% clean and the running costs are reduced to changing wipers and tires. No more servicing and no more stops at the fuel-pump. Compared to our previous cars we are saving about R35,000 a year…..if we were filling it with Eskom power the saving would be R31,000 – so still amazing savings.

Charging at home is super easy – plug it in when you park it and unplug it when you go for a drive – that’s it.

Driving an EV is, as I said, a revelation – it’s super quiet, as in no sound whatsoever from the engine compartment, acceleration is amazing and there are no vibrations or any types of smells – it’s amazingly calming and it feels like you are floating on a cloud. Knowing that your drive just cost you virtually nothing just accentuates the feeling.

So why isn’t everyone driving an EV? Main reason is the upfront purchase price – an EV is still more expensive although the TCO (total cost of ownership) which includes servicing and fueling, is almost at parity already. Secondly, EV’s need charging-infrastructure before it will work – here the manufacturers and government have not been particularly proactive in South Africa – ie. Nissan have the sum total of zero charging stations available in the Western Cape – so you are on your own. Range on the early available models is also not amazing (120-150km’s) and that means they are currently only useful for people who have short commutes. Lastly, there is a lack of knowledge about EV’s and there is a lack of models – there are currently only two full EV’s available in South Africa (The BMW I3 and the Nissan Leaf).

But if you have driven or owned one you will be convinced that once battery pricing allows the manufacturers to add more battery power and still be competitive on pricing with an ICE car – then there is no turning back – you’d never want to drive an ICE car again…….and by all indications this tipping point could be with us within the next 3-5 years.

When you are planning your next PV installation or garage build – don’t forget to include an EV plug, or just use the wall-plug like we do – it’s a revelation.

There is an old saying that goes: “Nothing is so bad that it isn’t good for something”. This could very well be applied to fossil fuels – we know it’s bad, polluting, climate changing, war-causing and all-round bad boy.

But, without it, we wouldn’t be were we are today, with thriving economies, modernization, massive manufacturing, transportation and the list goes on and on. But we are also knee-deep in potentially devastating climate change and pollution affecting everyone on planet earth.

So why is solar good for business? Firstly it solves the same problem that fossil fuel does in that it can power virtually anything we need without the nasty side-effects. This is good for business because all business leave an energy foot-print and the smaller the foot-print the better the good-will earned.

Secondly, people reward good-will with increased brand-loyalty meaning your company’s products will be considered over others.

Increasing the value of your brand does wonders for your bottom line as people will pay your price and not wait for the discounted price.

So now you’ve increased your brand value and profitability with one simple decision involving putting solar photo voltaic (PV) panels on your roof.

At what cost though?

The sun doesn’t shine all the time but most business operate during day-light hours and future battery storage price-reductions will allow you to enjoy the benefits through the night as well. It’s not a matter of if, but when.

In the meantime we help you solve your business day-time power needs.

And this is where solar gets even better for your business – today you can invest in making your own energy at a fraction of the cost of what is offered from your utility whilst reducing your reliance on your government and utility’s ability to deliver the power you need.

We can install commercial solar PV at a cost per kWh of R0.20-R0.30/kWh compared to Eskom’s rate of R1.30/kWh.

Furthermore, this cost is locked in for 25 years – for the next 25 years your business is unaffected by increases in utility electricity costs, this helps budgeting, enhances cost-reductions and gives you an competitive advantage over your competitors who aren’t reading this.

Adding solar PV to your business premises improves the property yield, it attracts tenants and it’s going to pay it self back in 3-4 years.

It’s even worthwhile financing it – then you can use the funds to increase marketing, improve R&D or buy more machinery whilst still getting all of the benefits above.

Tax depreciation of 100% of Solar PV investment in year 1 is virtually equivalent of a 1/3 discount reducing payback even further.

It’s simply become a no-brainer.

Or to put it conversely to above: “It’s so good that it just isn’t bad at anything”……

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.

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.

 

Welcome to Solanergy. This is our first post and we’d like to introduce ourselves by reminding you that Solar PV is now cheaper than Eskom tariffs no matter the size of your household or business.

We will be updating you with industry tid-bits and news relating to getting you cheaper electricity on an on-going basis.

Please contact us for assessment and quotation for your business or home.

Best regards

Peter Petersen

Solanergy MD