Electricity prices are rising by 17% in July 2019. In about 13 months’ time you will be paying 32% more than today and probably more.
Solar will save you money. You need to understand why and how.
In this high-level overview, we will try to give you the facts as we see them.
The Absolute Basics
Do not think that you can pop along to Builders, buy a solar PV panel and power your fridge or television.
Do not think you can avoid load shedding inconvenience without spending money, and solar will not be the easy or cheap answer.
Realise that if you are going to save money you have to invest money into the solar technology in order to get the savings.
You may well think that solar technologies are expensive, but what does that really mean? Electricity prices in South Africa are still cheap compared to most of the world, but prices are going up and up, and in real terms solar technologies are getting cheaper and cheaper and provide extraordinary returns on investment compared to anything else.
Two Types Of Solar – Water Heating And Electricity Generation
Any appliance that creates heat will use a lot of electricity.
In the home, the electric geyser will consume between 35% and 60% on the monthly electricity bill. Washing machines, tumble driers, dishwashers, oil filled radiators, electric stoves, hairdryers, kettles, underfloor heating all use a lot of electricity.
Lights, TV’s, DSTV, computers, Wi-Fi, music, fridge, are all small users of electricity.
Solar water heaters can save up to 100% of the electricity used in heating water in the geyser.
Solar Photo Voltaic (PV) can generate electricity to replace the mains electricity used for other appliances.
What Do They Cost?
Solar water heaters can cost from as little as R5,000 to R45,000 for domestic systems, depending on the size.
Solar PV will cost from R80,000 for a basic day time only system to around R230,000 for a good home system for a 3 to 4 bed home. This does not mean that you can go ‘off grid’ and you will have to use mains power for some of the time.
What Do You Get For Your Money?
The size of the solar collectors will determine the amount of energy you collect and use for the replacement of mains electricity used by any of your appliances.
You can think of it similar to a car. A Hilux can have a 2 litre petrol engine, a 2,4 litre diesel engine, a 2,7 litre petrol engine, a 2,8 litre diesel engine and a 4 litre petrol engine. In simple terms the bigger the engine the more power. In the case of the Hilux range, the power output ranges from 102kW to 175kW. The more power you have the faster it will go, the more you can carry. The bigger the engine, the more it costs.
The same is true with solar, a bigger solar collector will give more power, more power means bigger savings, but more cost.
The Cost Of Electricity Used In The Home
The average price of a unit of electricity which is expressed as a kilowatt hour (kWh) being 1000 Watts at March 2018 is R2,12 including VAT in Johannesburg. It is higher in Cape Town, and there are numerous tariffs both lower and higher depending on location and type of use (business and agriculture are generally less).
The price for Eskom customers from April 2019 increases to R2,42 per kWh, and for Citypower and other municipal resellers will be R2,50 per kWh from July 2019. It may be higher depending on any additional loadings put on by municipalities.
In July 2020, the price per kWh based on the Nersa approvals already given will be R2,80 per kWh. Actually, it is likely to be higher with additional loadings coming through on areas such as the Carbon Tax in July 2019.
You probably consider this to be outrageous, but to keep it in perspective, in Germany the price per kWh is over R4,00.
Electricity Use In The Home
1 kWh used heating water in your electric geyser will give you 36 litres of hot water at washing temperature of 40C. What this means is that you can shower for 2 minutes and 15 seconds for R2,50 in electricity costs (at July 2019).
A 150l electric geyser (the most common size) will use 7,67 kWh to heat 1 tank of water costing R21 per tank in winter, slightly less in summer. Most homes of 3 to 4 people will use 1,5 to 2 tanks of 150 litres electric heated water per day.
In round figures this means a monthly spend on heating water of R600 to R900 and probably more. Heat loss, where the geyser loses heat to ambient air temperature, (exactly the same principle as a cup of coffee cooling down), will add to the electricity cost. Expect heat losses of over R50 per month during winter.
In contrast, the amount spent on lighting, TV, computers and other light loads will be less than R100-R200
Going Solar – The Realities
Solar water heaters can recover the investment cost of supply including installation in as little as 20 months, but generally will be in 2 to 2 ½ years. Considering that the life expectancy is likely to be around 25 years with very little ongoing costs, comparing this investment with any other should be an easy decision.
Calculating the return period on solar PV is harder because it very much depends on how the electricity generated is used.
Assuming that all the power from solar PV is used during the day, the payback on a grid tied system may be as low as 6-8 years. When you add batteries to store the power generated during the day, or the power that is surplus to the day time use, and use that power at night, the cost of the solar PV system, inverters, controllers and batteries may increase the payback period to as much as 12-14 years.
Next Steps And Your Options
Clearly doing solar water heating in preference to solar PV has to be the first step. The financial economics to saving money are just much better.
Other areas that makes sense are installing LEDs for lighting, where the payback can be as little as 9 months, but the electricity used for lighting is a small part of the overall monthly bill.
Cooking on gas stoves in preference to electricity stoves can save up to 30% on the electricity used. However electric ovens generally remain more efficient and user friendly than gas.
Insulating hot water pipes, particularly those within 2 metres of the geyser tank also makes sense with payback on heat loss achieved in as little as 60 days.
Consider using gas for heating water rather than electricity or solar, and be aware that gas water heating is likely to be only up to to 10% cheaper than electricity. Most of the cost savings are attributable to instant heat rather than storing hot water which will suffer heat loss. In addition, the pressure of the water will be substantially reduced, and unless a large enough gas boiler is installed (16 litres or more) it is probable that the water will not get hot enough. Gas boilers also require the gas bottles to be replaced which some users find not only expensive, but an irritation.
Heat pumps are another option for heating water where theoretically up to 70% of the electricity used in an electric resistance element geyser can be saved. Many domestic users find the savings from heat pumps to be far less, find the noise irritating particularly at night, and the installation must be done correctly.
In our opinion, solar water heating wins the race every time, but that is not to say that gas boilers and heat pumps do not have a role to play. We install them both depending on the application, particularly for hotels and hospitals.
Lastly you move to solar PV for generating your own electricity. (Read our article Solar PV for the Home).
The Longer Term Outlook
The government always has ambitious targets for job creation and projected economic growth. More certain is the ever-increasing price of electricity.
The recent rounds of electricity prices only takes us out for 3 years, and it will probably be higher that what has already been agreed.
Using conservative electricity inflation of 10% (post 2021) the amount of money homes will waste on heating water by electricity rather than solar are simply terrifying. Over 10 years R170,000 to R230,000 is likely to be spent by a 3 to 4 person home. Over 20 years R600,000 to R800,000 or more.
The Power Picture
Load shedding back in 2008, then in 2014 and now again in 2019 is a warning of what is to come. We will suffer more load shedding.
The reality of Eskom’s ageing power fleet is that it is an old banger on the road and it will constantly break down and with increasing frequency. The new power stations of Medupi and Kusile are catastrophic white elephants which are not only badly designed but also badly built. The bad news is that it is much worse than either Eskom or the government will let on.
The Eskom financial crisis is also worse than is being stated. One only has to watch the way that the bad news is drip fed into the marketplace. A year ago they were talking of debt of R350 billion, it then increased to R400 billion, then to R420 billion, and the end figure is likewise increasing with figures of R600 billion now being increased to R700 billion.
These staggering figures where billions are thrown around as figures of loose change, need to be serviced. The question is how and with what. One area will be from charging the consumer more and more.
Do You Go Solar Today Or Tomorrow?
The price of solar water heating technologies has fallen in real terms, but is unlikely to reduce much further.
The same can be said of solar PV, where the dramatic falls in costs over the last 10 years have levelled off.
The time when domestic consumers really start to go renewable is still to be proved, but the history of energy, whether it is coal, oil or gas, has always shown that the cheapest energy will win in the end.
Already around the world renewables are the largest growth sector, with nuclear power falling away, coal fired power stations being replaced by wind and solar PV. The reason is that they are cheaper.
For the domestic consumer, the arguments in favour of solar water heating today are overwhelming. For business, the arguments in favour of solar PV today are conclusive. Solar PV will also become increasingly attractive for the domestic consumer as mains electricity prices escalate.
Do You Buy On Cost Or Informed Decisions?
Whatever you decide to do, always buy renewable solar technology based on educated informed decisions. Do not buy on special offers where the headline cost make look very attractive but you are buying rubbish.
Only too often consumers are suckered by unscrupulous sales people who are interested in selling, even when it is the wrong product for the end user. You need to take the time to make an educated decision, otherwise you are likely to end up disappointed.