WHAT YOU NEED TO KNOW
- Frequent load shedding focusses the mind as to whether one should generate one’s own electricity using solar photovoltaic power generation.
- As the prices of electricity go up and up, more and more people are asking the question as to whether they should go ‘off grid’.
- Good questions but not so easy answers, particularly when people learn how expensive home electricity generation is.
- In this high-level overview, we will try to give the facts as we see them.
Load Shedding – Power at Home
- Need power at home when the lights go off, the easiest and cheapest solution is to buy a generator. (See our article on Load Shedding). The next stage up is a generator with a changeover switch. Then you can go to an automated generator and automated changeover switch.
- The other alternative is to go for an uninterrupted power supply (UPS) which is basically a battery pack. Basic costs from as little as R9,000 to R25,000. None of these options will save you money, they are all options to overcome the inconvenience of no mains power.
Home Generation of Electricity
- If you are looking to save money on electricity, solar PV is not the place to start.
- Installing a solar water heater has to be a much higher priority, as the electric geyser will typically account for 35% to 60% of home consumption.
- From an investment perspective, solar water heaters are much cheaper with paybacks on investment as little as two years, while solar PV is likely to be 3 to 6 times longer (depending on the system).
- Moving onto solar electric generation the cheapest option is a grid tied system. Basically, the solar PV panels and inverter will work in conjunction with mains electricity displacing part or all of the electricity being used during daylight hours. If Eskom power goes down, (through load shedding), so will the solar electric PV system.
- Next is the introduction of batteries into the solar PV system.
- Batteries are expensive and there are two main types, deep cycle lead acid and gel, and Lithium Ion (see below for details).
- Excess power from the solar PV panels during the daylight hours are fed into the batteries, being stored for later use.
- At the end of the day there is option of using the batteries for providing power to the home, or if mains power is available, continuing to use the mains power until the mains power goes off or a combination of the above.
- There is also sometimes the option of feeding excess power generated from the PV panels during the day back into the grid and receiving a credit from Eskom or the mains supplier for the kWh’s put back into the grid. Unfortunately, in South Africa unlike in Europe the feed in tariffs for power supplied by home generation are frankly inadequate, and generally this option does not make much commercial sense.
High Level Costings
- A small grid tied home system may be purchased for as little as R60,000 to R80,000. Remember this will only replace part or all the electricity used in the home during daylight hours, not provide any power during the evening or night.
- Introducing the batteries will add the ability to have power after the solar PV panels have stopped working. The size of the battery power pack will not only determine the cost but the amount of time that power will be supplied. In turn, the output of the battery pack in Amps and in kWh output will in conjunction with the lights and appliances used determine how long the battery power will last.
- As a simple example, a 10 kWh battery will in theory give you 5 hours use at 2kWh per hour, or at 3kWh use just over 3 hours.
- If one was to heat an electric geyser with the batteries, a 200 litre geyser would use 100% of all the power in the batteries to heat just less than one tank of water. Clearly the batteries would be better used for areas such as lighting, TV, DSTV, computers, Wi-Fi, fridges and other light loads and any heavy drawing loads such as kettles, electric ovens, electric heaters, hairdryers, dishwashers, washing machines, tumble dryers are all best avoided.
- A 10-kWh deep cycle lead acid battery is likely to cost in the region of R50,000, lithium ion rather more.
- How much a home system is going to cost depends on a whole number of factors but it is essentially down to scale, and the type of batteries chosen.
- Deep cycle lead acid or gel batteries take up more space than lithium, should not be run down to more than 50% of their output and will last around 2,000 to 3,000 cycles. This will typically provide between 3 and 10 years of use, but if they are run to less than 50%, their life expectancy is likely to be significantly reduced. Already people that have installed home solar PV systems with lead acid batteries are having to replace them after only 2 -4 years.
- Lithium Ion batteries are considerably more expensive, take up much less space, and will provide between 7,000 and 10,000 cycles depending on brand. This should provide between 15 – 25 years of battery use. They can also be recharged in around 25% of the time for lead acid batteries. Importantly they can be discharged 100% with no adverse impact on future performance.
- Although more expensive, the arguments in favour of lithium are (in our opinion) the way to go, if one is going to invest in a long term solar PV quality installation.
Return on Investment – Solar PV for the Home
- The financial argument as to whether one should install solar PV in a home is subjective and depends on individual circumstances.
- In businesses, the arguments as to whether solar electric generation make financial sense are rather easier to evaluate on the basis that VAT is recoverable, a Section 12 B depreciation is available and most banks will lend money on competitive terms. With the price of electricity increasing solar PV for many businesses should be a financial no brainer (See our notes on solar electric generation for businesses).
- Back to the home, it is a question of whether you want to progressively move ‘off grid’, and to become increasingly less reliant on fossil fuel power.
- The first step from both an energy saving perspective or replacing mains energy in the home has to be to go solar for water heating. From a financial perspective, the investment returns are dramatically better than solar PV, with payback periods (the time it takes to recover the investment from electrical savings), as little as 18 months to 3 years depending on the system.
- A grid tied solar PV system (without batteries) where you use all the electricity you generate during the day, the payback periods are progressively coming down, as the price of solar panels and inverters and controllers continue to fall. A couple of years back the payback period was around 9 years, but today as the price of electricity goes up, that figure might be as low as 6 years.
- Introducing batteries increase the cost of home solar electric systems significantly. While lead acid or gel deep cycle batteries will be cheaper upfront, they may prove to be a false economy, as they will need to be replaced within 10 years.
- The payback on investment will therefore depend not only the choice of batteries but also how the electricity from solar PV is used, how much is stored in batteries how much is drawn from the mains and when. If the system is financed on debt the payback will be even longer. To give an accurate figure of payback is difficult unless an analysis is done, but it may range from 8 years to as high as 19 years.
How You Use Electricity – Time of Use
- How and when electricity is used at home is a major factor in determining payback and return on investment.
- There is increasing evidence that when homeowners put in more solar panels than might be expected on the basis that you can get to 100% of what might be derived during midday, but get that power at say 08,00, then during the 6-7 hour day you use that electricity for all the appliances such as washing machines, tumble driers, dishwashers, as well of course lights, it will enable a much smaller battery pack to be used to cater for the very light loads of lights, television, DSTV later in the day.
- This then determines at what time you use the batteries and when you use the mains. Unfortunately to make it more complicated, it will also depend on the tariffs that your electricity supplier charges you. For example, if you run on batteries during the evening peak period, 17,00 to 20,00 and potentially through to 23,00 and then move back to the mains until the morning peak, and use batteries from 05,00 until 08,00, they can be significant reductions in the price of electricity paid for from the mains.
- The analysis of some systems we monitor, where close attention is being paid to time of use, and what loads are drawn during day and evening periods, suggest that even with lithium batteries, they are see potentially payback on investment of 6-7 years, on systems around R230,000 installed.
- At home solar electric generation will become increasingly widespread, as the price of electricity increases.
- Unfortunately, it does require a substantial investment, and it will remain beyond the pocket of most homes. For those that have the spare available cash to invest or decide to invest their pension into solar it should provide a good investment, depending on the amount of time the home is lived in by the owner after the initial investment. Whether solar PV actually increases the value of a home is debatable.
- While saving mains electricity through at home generation is beneficial for reducing carbon emissions, it is unfortunate that Eskom is reluctant to look at the general public helping them address the power crisis by feeding excess power generated at home back into the grid. Likewise, Eskom’s accountability and responsibility towards reducing carbon emissions appears to be almost non-existent. Again, at home and business roof top solar PV would reduce Eskom’s carbon emissions.
- Just imagine if South Africa used the private sector for power generation during the day from at home and business rooftop solar PV, in much the same way as in Germany and Netherlands, over a relatively short period, much of the power crisis could be resolved. The unions wouldn’t like it, but many jobs would be created in installing solar PV systems and South Africa would rapidly start meeting its climate change obligations.
- Sadly, this logical approach to use South Africa’s abundant sunshine is unlikely to materialise, the government will give relatively little assistance (if any and none at present) to the at home consumer through tax rebates or subsidies, and the consumer will be fighting Eskom rather than working with it.
- Eskom is in a utility death spiral, trying to sell more expensive electricity, but failing to sell enough volume. As consumers save power through solar water heaters, and use their own electricity from solar PV, Eskom’s financial problems will get progressively worse.
- Solar PV will become increasingly viable for many homes, as electricity prices go up, and the price of technology falls. History has shown repeatedly that the lowest price fuels always win in the end. Renewables will get cheaper and fossil fuels (electricity) more expensive. It is just a question of time.
- As a final word, for those consumers looking at solar electric home generation opportunities, do thorough research, get more than one quotation, understand the time of use of electricity, and only make informed decisions and go with reputable suppliers and installers.