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Invest in Solar Power to Counteract Eskom's Future Increases.

Thursday, December 9, 2021 4:03:20 PM Africa/Johannesburg

Invest in Solar Power to Counteract Eskom's Future Increases.

Invest in Solar Power to Counteract Eskom's Future Increases. 

“Eskom chief financial officer Calib Cassim has confirmed that the state-owned power utility has applied for an electricity price increase of 20.5% for its 2023 financial year, set to take effect from 1 April 2022.

Earlier today, Nersa issued a statement revealing that Eskom’s revenue application amounts to R279 billion for 2022/23, R335 billion for 2023/24, and R365 billion for the 2024/25 financial year.”

Eskom Tarif increase

Looking at the graph, the following can be noted:

In the period from 1988 to 2008, electricity prices consistently increased. Tariff increases did not keep up with inflation and this was partly due to government policy to keep electricity prices as low as possible for poor communities but also because Eskom had an oversupply of electricity in the 90’s and even though they were aware of what their actions would do to future consumers, they didn't invest in new capacity going into the 2000s.

Between 1988 and 2007, electricity tariffs increased by 223%, whilst inflation over this period was 335%.

From the 2008 electricity crisis onwards, there is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2021, electricity tariffs increased by 753%, whilst inflation over this period was 134%. Thus, electricity tariffs increased more than five-fold in real money terms in 14 years.

Considering the current state of Eskom’s current debt and that South Africa probably cannot afford for Eskom to fail, consumers can likely expect a continuance of much higher than inflation electricity price increases over the coming several years. Not only is Eskom in serious need of restructuring but as announced by the government in August 2021 as one part of their economic stimulus package aimed at assisting its citizen's recovery from the slow down experienced around that time, this restructuring has not been implemented nor completed although it was supposed to be completed over the next 18 months since its announcement by the government.

Long have we already noticed that we can’t rely on Eskom. Not just considering the increases, but the incompetency in supplying us with electricity, implementing the extremely famous method called Loadshedding. We need to pay more, basically for nothing. It’s like paying for a whole bread and only getting the crumbs. When will it end?

I don’t think our future relationship with Eskom will last long, it will only get worse. I think we’re over the stage of trying to make things work and hoping for the best.

It’s time to look for alternatives. Many South Africans have already started with Solar energy and there are a lot of benefits that go with it, including saving you money.

The good news

The price of a solar system has decreased exponentially, especially for a normal home user. It has gotten to a point where a small home can have a pretty good solar system where they can be off-grid during the day while the sun is shining and have a battery backup to power them through the night and top up the batteries using solar during the day (daytime solution). Therefore, maximizing their savings.

Let’s work things out so we can get a clear understanding of the amount of power and money one can save with a small solar system consisting of:

6 x 455W Panels

1 x 5kW Inverter

1 x 5kW Battery

And assuming your electricity bill is R2000 per month at an electricity rate of R2.08 per kWh. With a 20% yearly increase in the price of electricity

What we can deduct from this is that your monthly electricity usage is 961kWh.

Your solar panels will produce an average of 300kWh of power per month (This will increase in summer and decrease in winter)

From the table below, the long-term investment is worth it. Especially since your solar panels have a 10-year warranty and a 25-year performance warranty behind them.

 

Year

Price per kWh

Percentage Increase

Electricity Bill Per Year Without Solar Panels

Electricity Bill Per Year With Solar Panels

2021

2.08

20.00%

R23 986.56

R16 486.08

2022

2.50

20.00%

R28 783.87

R19 783.30

2023

3.00

20.00%

R34 540.65

R23 739.96

2024

3.59

20.00%

R41 448.78

R28 487.95

2025

4.31

20.00%

R49 738.53

R34 185.54

2026

5.18

20.00%

R59 686.24

R41 022.64

2027

6.21

20.00%

R71 623.48

R49 227.17

2028

7.45

20.00%

R85 948.18

R59 072.61

2029

8.94

20.00%

R103 137.82

R70 887.13

2030

10.73

20.00%

R123 765.38

R85 064.55

2031

12.88

20.00%

R148 518.46

R102 077.46

 

Total paid to Eskom

R771 177.94

R530 034.37

Total Savings in 10 years

R241 143.57

 

 

In the table above, we can see that by 2025, we will be paying more than double for electricity than what we pay now. This is quite shocking, especially when you look at 2029, which is when it doubles again, so in a space of 8 years, our electricity prices have more than quadrupled.

A penny for your thoughts while we reach the end of this blog. In a span of 10 years a small household, would have paid nearly R1 million for electricity. 

 

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