The Steps to Energy Efficiency in Homes and Business – Solar Thermal (Water Heating) – and Solar Electric (Photo Voltaic)

The Steps to Energy Efficiency in Homes and Business – Solar Thermal (Water Heating) – and Solar Electric (Photo Voltaic)

Solar Water Heating or Rooftop Solar Electric Generation (PV) are a real solution to South Africa’s energy, water and environmental crisis - James Green as Chairman of the Sustainable Energy Society of Southern Africa (SESSA SWHDC) and CEO of Ubersolar points out key information about solar

Eskom’s recent claims (June 2016) that they are doing such a great job keeping the lights on is good political PR rhetoric. Yes, there hasn’t been load shedding for some 9 months, but the economy has crashed over the last year (aluminum smelting, steel, and mining) and with it there have been substantial reductions in demand. Maintenance schedules may have improved and again this is easier to effect if you are not running on a knife-edge.

But there is no point in kidding ourselves. Eskom’s long-term future remains bleak with an ageing fleet of coal fired power stations, and a remarkably slow process to enact a definitive strategy to ensure energy sustainability and security in the future through power generation, whether it is gas, coal or even nuclear.

It also involves renewables as part of the equation both in generation (clean energy into the grid) and in saving energy (solar thermal or solar water heating and (rooftop) solar Photo Voltaic (PV) in homes and in businesses).

Although it is not really recognized yet, (certainly by those in government) much of South Africa’s energy security future lies in the hands of the consumer, and because the price of electricity can only go up, it will increasingly make economic sense for the end user to take charge both by saving energy and creating energy for their own use.

By 2030 I estimate that 80% of homes or businesses (excluding RDP) will have either solar water heating or solar PV or both on their roofs because it will be so much cheaper than buying power from Eskom or municipal suppliers.

Before discussing what the consumer needs to recognize and do, a high level overview of renewables and the electricity supply / demand market needs to be appreciated along with cultural differences in South Africa to other parts of the world.

Renewable Energy Generation feeds power into the grid, using a combination of utility scale technologies, Solar Photo Voltaic, Concentrated Solar Thermal or CSP, and Wind Power.

Bio offers potential, using a combination of waste materials and crop vegetation but is currently insignificant in GW contribution.

Hydro Power in South Africa is also small with limited water resource to tap into, other than imports from Mozambique from Cahora Bassa hydro. As has recently been seen in Zimbabwe and Zambia, climate change can play havoc with rainfall and both countries are suffering protracted load shedding with Lake Kariba hydro only having reserves of less than 10% before it has to be turned off completely.

South Africa’s Renewable Energy Independent Power Producer Program (REIPPP) is heralded as a great success, and deservedly so, despite having cost significantly more in Rounds 1 and 2 than the latest plans awarded at some 65%-70% less cost per kWh generated and sold to Eskom.

With around 2 000 MW currently being produced by REIPPP’s, it accounts for approximately 5% of Eskom’s power generation but in reality only when the sun is shining or the wind is blowing.

When this has increased to 6, 000 MW and probably to 12, 000MW by 2030 with more energy farms coming on line, it will still only represent the equivalent of 4 of Eskom’s power stations (they have 22) or 28% of current theoretical capacity. And that is before factoring in any growth in the economy.

The problem for South Africa is the grid. It just was never designed for renewables, where the power output from wind or solar ebbs and flows according to the weather, whether it is day or night, or when the wind blows. Balancing power demands to supply is both a sophisticated science and indeed almost certainly an art.

Unlike Europe in South Africa we have only a small amount of nuclear, Koeberg in the Cape is 21 years old and produces 1800 MW or about 6% of Eskom generation. Now one attraction of nuclear is that like gas turbines you can ‘turn up the wick’ when you need to meet demand, and that is partly how Europe has managed to combine renewables with conventional electricity generation. France’s electricity generation is 80% nuclear, and this combined with some nuclear from Germany (and others) has enabled much of Europe to embrace renewable energy generation, with power sharing agreements being able to increase supply from nuclear when needed to balance the electricity grids.

While Europe has also invested heavily in utility scale power generation with renewables, Denmark for example ran completely on wind power for 4 days continuously in May 2016, the other huge area of power generation has come from the installation of rooftop solar PV.

In Germany over the last 10 years over 45GW of PV panels have been installed in homes and businesses. This is more than Eskom’s total power output in South Africa. Homes and business have both used the solar electric generation for their own use and fed their surplus back into the grid. And because Europe is also focused on saving energy in all areas, solar water heating has been widely adopted for both washing water and central heating.

Cultural Differences

Across Europe and the USA the power market is largely deregulated, but controlled, enabling the consumer to decide from whom they will buy their power. The competition leads to more choice as well as lower prices for power.

In South Africa the electricity supply is effectively a monopoly with Eskom generating over 98%, (a few small independent power producers (IPP’s) sell back to the grid as well as providing in house supplies). REIPPP power generation is sold by independents to Eskom who then sell to the consumer.

Resellers of electricity in the form of municipalities buy from Eskom at wholesale prices and then distribute and sell electricity to homes using their own grids. One generally does not have a choice as a domestic consumer to buy from Eskom or your municipality, and the prices of electricity vary, (there are apparently over 2,400 tariffs).

The process causes a conflict in that resale of electricity by municipalities, cross subsidizes other areas of service delivery, and electricity sales are a huge part of their revenues. When Eskom put their prices up, so do the municipalities (and frequently by more) resulting in more profit for the municipality for the same work.

So the reality is that end user renewables both solar water heaters and solar PV are in conflict with the business models of both Eskom and municipalities, because either the consumer is saving energy by solar thermal, (less electricity is sold) and solar PV, where electricity is used for own use, lighting and appliances.

Selling back to the grid by end users (embedded generation) faces major hurdles, where the rules have been in discussion within the Department of Energy, for approval by Nersa for years.

The Opportunity for Consumer Renewables – Solar Water Heaters and Solar PV

While South Africa enjoys typically about double the solar radiation to most of Europe, the current prices of electricity despite rising by over 400% since 2004 remain low. 1 kWh in South Africa is still about 50% of the cost one would pay in Germany.

What this effectively means is that the opportunity for end user renewables from a risk reward perspective or return on investment, is actually very similar in Germany as it is in South Africa. Double the radiation to save ½ the cost, is effectively the same as ½ the solar savings at double the cost of electricity.

But in South Africa the price of electricity is inevitably going to continue to increase at a significant rate, (Eskom need to build more power stations and maintain most of the which are reaching the end of their designed lifespan) and the price of solar technologies are continuing to fall.

The critical cross over point has already arrived where it is cheaper to heat water by solar thermal for the domestic consumer rather than by electricity, and solar electricity generation is already viable and indeed cheaper than Eskom on large-scale PV projects. For the consumer the cross over point for home PV is still a few years away, where the price per kWh is less than the cost charged by Eskom or the municipality.

Solar Water Heaters are the First Step

Approximately 40%-60% of a homes electricity bill will be attributable to hot water heating. Electric geysers using electrical resistance elements are power hungry, and 1 kWh will heat about 36 litres of hot water at 40°C, the temperature one washes at.

A full bath will use about 162 litres or use 4,5kWh, and a high pressure shower will use about 16-18 litres of hot water at 40°C per minute. A 10 minute shower will therefore use about the same amount of electricity as a bath and cost the same in electricity.

Solar Water Heating however faces a number of problems, which are attributable to a lack of understanding, education and awareness, and to an industry that has failed to be transparent in what it is offering.

Unless one knows or at least have a good idea of the amount of electricity being used for heating water, how can one choose a solar water heater that is intended to replace that electricity? Unless one knows what the solar water heater will save (or in other words the performance output in kWh savings) how can one realistically choose any solar water heater?

Having a good idea of both the electricity consumption used in heating water, the power output of the solar water heater, and the cost of the solar water heater enables one to make an informed decision. The payback on investment in time, the return on investment can all be calculated easily.

If this process is not followed the consumer will end up disappointed, and likewise professionals that are specifying energy saving for homes and businesses will be guessing in the dark.

The reality however is that there is solar thermal technology that can provide a payback within 2 to 3 years on electricity savings, save up to 100% of the electricity that would be used, and will provide an expected life of service of over 25 years.

Solar PV (Electricity Generation) for Homes and Business

Unlike solar thermal or solar water heating, solar PV faces one major disadvantage and that is the ability to store electricity easily and cheaply. Batteries are required for electricity storage, while with solar thermal this is overcome through an insulated storage tank or geyser.

Producing electricity through solar PV panels with direct current electricity is converted into alternating current using an inverter and either used immediately or stored in batteries. Where permitted it may also be fed back into the grid.

Solar PV is not really suitable in the home for appliances with large loads such as electric geysers, washing machines, electric ovens, microwaves, and hairdryers unless a quite large system of over 5 kW peak is put in. More suitable usage is for light loads such as lights, (particularly LED’s), computers and TV’s. This in turn almost implies that battery storage will be required as most of the use will be after dark.

Solar PV in the home therefore has limitations in that the light loads such as lighting will only represent 7%-12% of monthly consumption, and areas such as TV’s and computers probably only 5%-8% of monthly consumption.

This therefore represents between 12%-20% of the total monthly bill, while water heater is at least double or even 3 times this amount.

When comparing the cost of solar thermal against solar PV it is much cheaper in capital cost. The typical payback on capital for solar water heaters is 4-6 years, (we are much less), while solar PV for a similar sized saving in kWh will be 7-9 years. Likewise when battery storage is put in, the figure increases dramatically to 13-16 years, against again 4-6 years for solar thermal or 2-3 years for Ubersolar.

The mathematic formulas begin to change for solar PV dependent on the type of use and the size of the system. For example an office that is using the electricity during a 5 day working week, for lights, computers, printers and other light loads will require far less battery storage. If an office is working a 7-day week the payback formula improves further.

When PV systems without storage grow to 100kW peak and above and an office or light industrial are using PV to supplement and replace mains power, the payback can fall again to as little as 6 years. When financed at competitive interest rates (prime +/- 1%) it is possible to be net cash positive from month 1, and every month thereafter until the system is paid off in 6 -8 years.

Where to from here for Solar PV in South Africa

The solar PV industry in 2016 is sitting in a semi state of limbo. At the utility scale end, the financial party enjoyed in the early days of Round 1 & 2 is over.

The ‘rooftop’ solar PV market is saturated with suppliers outstripping demand, all chasing business, with emerging ‘bakkie’ suppliers and installers cutting corners (frequently not really knowing what they are doing), and the large scale players turning their focus to this market sector as the opportunities in large scale PV supply and installation reduce. Simultaneously the public, both business and domestic, remain entranced by solar PV, but become quickly jaded due to the lack of certainty regarding embedded generation (feeding back into the grid), which was a great impetus for installing PV in Europe, particularly when combined with tax incentives.

Cash rich companies install larger scale PV systems, and profess and advertise their moves towards ‘going green’ and it is laudable. However for the majority who are intrigued or excited by the concept of going ‘off grid’ it is only those with the spare cash that can afford to do so. Even then the municipalities are reluctant to grant the necessary planning permissions to do so, as in reality they are endorsing reducing their electricity sales that cross subsidizes other service delivery. When one adds in the lack of regulations and standards for PV supply and installation, (unlike solar thermal which is heavily regulated), it provides a recipe for the early adopters to be abused, ripped off, and left with systems that may have been illegally connected, or not performing as originally promised. Eskom managing to keep the lights on with no load shedding has also curtailed enthusiasm and urgency.

However solar PV will have a great future in South Africa. It really is a question of when.

The main factors that will influence this timing is the cost of electricity provided by Eskom and municipalities, the continuing fall in the price of solar PV panels and inverters (these may have bottomed already), cheaper battery storage costs (including longevity and cycle capability), the rules and ability to feed back into the grid and the remuneration paid for solar PV kWh, and other factors such as the introduction and implementation of carbon taxes (promised for early 2017).

It is certain that the prices of mains supplied electricity will continue to rise. Eskom despite recent announcements, is one of the most inefficient power generators per capita employed, and has a fleet of power stations well past their sell by date. Like an old car they cost more to keep on the road, breakdown more often, and their replacement models like Medupi and Kusile not only cost far more (always) than their originally projected cost, they arrive years late.

Throw in contentious future power generation options such as nuclear, which almost certainly South Africa cannot afford and which will take many years to approve let alone implement and the cost of electricity through the grid can only go up rapidly. Add in Carbon and Environmental taxes and even greater upward pressure is applied.

By the early 2020’s the cross over point where in home and in business solar PV generation is cheaper than buying from Eskom and municipalities will almost certainly have arrived. The more people that go ‘off grid’ or reduce their own consumption but still use Eskom for heavy loads, puts even more upward pressure on electricity prices.

It is probable that the financial sector will also respond. Easier financing at lower costs, will facilitate end consumers to embrace solar PV. A secondary market is likely to merge, where much in the same way as financing cars or photocopiers, pre owned solar technology will enable finance houses to look at the renewable asset as security, rather than the balance sheet of companies or the home as security.

A.B.C. Going Forward

For the architect, quantity surveyor, engineer or developer it is clear, based on the financial equation that solar thermal or solar water heaters are effectively a ‘no brainer’ as long as the basic rules are followed of knowing what is being used in electricity in heating water and replacing it with a solar thermal system that generates the solar kWh savings. Ubersolar offers the best ROI’s in the business for every size of solar thermal system.

The other ‘low hanging fruits’ of energy efficient lighting and the latest heating and cooling technologies can pay for themselves in as little as 12 months to a few years.

Solar PV is still a major luxury, much in the same way as specifying marble over a cheap ceramic tile. For those with the available (spare) budget, solar PV will prove over the longer term to be a great investment. Choose with care getting several quotes and recommendations of service and delivery.

For the rest of us solar PV can remain a ‘like to have’ until the financial equation provides a payback on investment that makes sense. It will come as the price of electricity escalates, and technology costs fall. Fortunately retrofitting is as easy as specifying solar PV from the outset.

Eskom whether they like it or not, are destined to a greater or lesser extent to become a dinosaur, unless they change their business model. They will progressively sell less electricity to the domestic and business sectors. Imagine however, if they adopted the stance that everyone in the country should go with solar PV, they would use the grid for reticulation, buying every surplus kWh from every home and business, distributing it to those that need electricity, and charge a wheeling charge for doing so. With battery storage (large scale) they could supply power after dark to everyone in conjunction with their own coal fired generation and utility scale renewables.

Of course the end consumer will ultimately determine their future, as when the price of end user renewables is irresistible, and people can go off grid completely, they will be left with fewer people to sell to, and the monopoly control they currently enjoy will disappear.

Finally the benefits of solar thermal and solar PV being taken up by the consumer will have significant contribution towards climate change mitigation, and that has to be in the interests of everyone in confronting the largest challenge that the world has ever faced.

Contact for SWH systems and pricing or Brett +27 (0)74 160 6093
James Green
James Green
CEO of Ubersolar and Chairman of the Sustainable Energy Society of Southern Africa (SESSA SWHDC)