Technical and financial analysis of large-scale solar-PV in eThekwini Municipality: Residential, business and bulk customers

Abstract

Regulatory changes, economic challenges, environmental concerns, and changing public perception have contributed to the profound changes observed globally in the electricity industry. Since 2008, South Africa has been experiencing electric power deficits and outages. This has been due in part to generation capacity constraints, belated investment in new electricity infrastructure, deferred maintenance of existing power assets, load growth in areas which were not adequately planned for, high population and economic growth over the last two decades. This has resulted in peak electricity demand outstripping available power generation capacity, leading to electricity shortages and load shedding, which is now impeding economic growth. In South Africa, forced under frequency load shedding, rising electricity tariffs, energy efficiency, declining cost of solar PV systems, the introduction of Carbon taxes, high cost of unserved energy has led consumers to explore embedded generation options to assist with reducing their energy bills, hence investments in solar PV has become an option to municipal customers. The simple payback period of solar PV systems is an important indicator for customers to ascertain whether to invest in these systems or not. Revenue loss remains a significant concern for municipalities who have historically designed single and two-rate bundled tariffs, which rely on municipalities selling electricity to ensure its business’s sustainability. Municipalities have now proposed new tariff structures designed to minimize the adverse impact of reducing electricity sales from solar PV by creating net billing tariffs with a built in network access charge component based on the customer’s inverter size. Case studies were carried out to better understand the impact on the feasibility of solar PV systems with and without the implementation of these new tariffs and its impact on the customer’s payback periods. A calculation of the levelised cost of electricity and customers rate of return for the different customer classes were also calculated to provide a better picture on the financial feasibility of rooftop solar PV. Results obtained from these case studies indicate lucrative payback periods for customers installing solar PV systems with improved revenue recovery for the municipality.