Solar Power – Should you invest in your future? The answer is YES…South Africa is a sun-rich environment and as a result, solar power generation is not only viable but is available and becoming increasingly more affordable to households and businesses alike.
Taking all influential aspects of your electricity costs and supply into consideration, i.e.
Exorbitant annual tariff increases, price adjustments with even more expensive winter rates, areas not contributing with massive arrears… not to mention the financial, economic and physical implications of load shedding, planned outages, unplanned outages, incorrect billing or metering, cable theft as well as the imminent future of more expensive nuclear plants looming, it is time to secure your own future with power.
The fact is that the electricity prices in SA have doubled over the past 5 or 6 years, in contrast, solar power has decreased by more than 50% which makes solar electricity a really attractive solution, now and definitely for the long term.
The chart shows the cost of solar power per kWh in cents (red) based on installing a system today and using it for the next 10 years, compared with the cost per kWh in cents from Eskom (blue), calculated with the annual 8% increase. Solar figures from Enerlogy.
Will solar prices come down even further in the next couple of years? – Yes, but utility prices will definitely increase so the right time to install solar will always be now, who is going to pay Eskom’s infrastructure and running costs as more and more people move towards renewable energy, grid electricity prices will never come down, it is like death and taxes, we will always be compensating Eskom’s shortfalls with tariff adjustments, increases and “outages”.
The benefits of installing solar power are measurable – it is much like the analogy of whether to buy or rent a home, you are currently paying for and affording it on a never ending contract to the utility company, all you need to do is to get it financed and installed on your roof to make it your asset and reap the returns, this gets added straight onto you bottom line…for example, how much product do you have to turn-over to realise an extra 5% net profit on your business?
Investing in and installing solar power:
- Increases property value and will rise relative to property valuations with long term returns.
- Saves on monthly utility electricity costs with its own ROI in addition to the increase in property value.
- Can be implemented in stages as budget allows.
- Systems can be extended as and when required.
- With battery backup, can be used to offset peak tariff periods and/or supply emergency/convenience power during power outages at night.
- Helps to save the planet
Why is a Grid Tie solar power system on my 08h00 to 17h00 business a good investment?
Grid Tie Solar Power = Daylight solar energy electricity production without costly battery backup
South Africans are caught in a perceived Catch-22; on the one hand energy costs are increasing at exorbitant rates, with those increases seemingly driven by factors not related to generally accepted economic variables, while on the other hand, we are forced to pay faithfully each month to keep the lights on and “stay in business”. The consumer generally feels powerless because this does not seem to be a viable alternative to the established power supply infrastructure.
This is no longer the case, a major cost driver with solar power is energy storage, in the form of batteries. The grid tie solar power system harnesses daytime energy production while bypassing the necessity for expensive energy storage facilities. The system provides solar-sourced energy during daylight hours when your business is operating, and automatically reverts to utility supply at night, during your non-operational hours, this is the best of both worlds – generating your own power during your peak consumption and high tariff periods and using the utility supply for the low tariff night time consumption.
Clearly, this requires a capital outlay. That capital expenditure is recovered, through diminished costs of consumption, usually within 5 to 8 years of implementation, depending on your individual circumstances. If a cash option is not possible a financing option on a PV system can be tailored to fit into your monthly utility budget. This will essentially redirect your monthly operating expense into financing capital expenditure and expansion of your asset base. Although this will increase the initial outlay of the system and will extend the payback period you can have an almost static (nonescalating) instalment for the period of financing. Your escalation of cost for energy will be a function of the financing cost of your asset, and not driven by the National Energy Regulator or State Owned Enterprise. Not only does this make a whole lot more business sense, but you could be cashpositive, almost from the outset.
You are already affording and paying for the PV system, but rather than financing your own asset you are maintaining an increasing operating expense. This monthly payment could be better utilised to finance your own PV power source, while you have the business management advantage of fixed instalments for a fixed contract period.
With the three year tax depreciation of the system value, the return on investment of a solar power system has never been better. Without having to supply storage in the form of batteries the GTS is producing payback on the investment for alternative energy within 5-8 years. With our financial analysis tools, we can determine the estimated payback period of a Grid Tie solar power system for a business, allowing our clients to make better informed and calculated decisions.
You have the important and additional benefit of demonstrating your commitment to environmental conservation. There is no better way to show your customers that your business cares about the planet than by installing a grid-tie solar system. Marketing your reduced dependence on energy infrastructure demonstrates how your business is minimizing its carbon footprint, potentially, to the point that your own solar power generation offsets 100% of your business’ carbon footprint.
Time for new carports?
There are numerous additional, incidental, benefits to own power generation. For example, is your roof too small or unsuitable for a PV Array and taking our harsh climate and elements into consideration, could you also do with more covered parking for your staff or customers? New purpose-designed carports could not only optimally position your PV array, but also provide additional customer and staff benefit in the form of covered parking. A PV array on your roof could help reduce inward heat radiation, reducing your premise cooling costs. Our audit of your particular operation would illuminate these and other incidental benefits of the system.
Should I buy a Grid-Tie, Off Grid (Stand-alone) or Hybrid PV system?
Advantages of Grid-Tied Systems
A Grid-Tied PV System is a lot more affordable as it lowers equipment and installation costs, compared to other systems described below.
A Grid-Tied solar system is one which uses solar power to satisfy your energy needs by providing electricity during the day (your peak operation and consumption period), but then relies on usual grid supply at night, when your demand is very low (typically only night lighting and continuous power supply for usually electronic equipment like computer server). Grid-Tied solar systems are cheaper and simpler to install as the system does not entail installing or using batteries for power storage. This can save 30%+ of the system and maintenance cost. Different types of batteries have different lifespans and can last between 5 to 12 years, after which they will need to be replaced. Clearly, this is a big capital outlay that can be negated by installing a Grid-Tied solar system.
Your Grid-Tie solar system can be expanded to generate excess electricity, which you would be able (once the grid infrastructure allows it) to feed back into the grid, allowing you to produce excess power in the day to offset nite time consumption and get you as close to being a net-zero energy home or business as possible.
However, Grid-tied systems do not provide protection from power outages because the inverter needs current to operate, when the electrical grid fails, grid-tied systems will not continue to operate, so if back-up is needed during outages then a Grid-Tie with Generator or emergency battery back-up (Hybrid PV System) is necessary.
Off-Grid Solar Systems
Off Grid Systems require battery banks to store solar electricity for use during night time or cloudy weather, a backup source of energy (like a generator) is also recommended and can be added to the system. An off-grid solar system must have sufficient capacity to produce in excess of 100% of the energy needs of the building (in itself an exercise in order to optimise efficiency of the system). In all off-grid scenarios, therefore, electrical usage must be monitored and kept below the maximum output of the panels and batteries as there is no grid-source to supply excess power.
An off-grid solar system (stand-alone) is the obvious alternative to one that is grid-tied. However, for buildings that have access to the grid, most often we find people lean towards Grid-Tie as it is more cost effective and has a quicker payback on investment. To ensure access to electricity at all times, off-grid solar systems require battery storage and a backup generator (recommended if you live offthe-grid). In addition, a battery bank typically needs to be replaced after every 8 to 12 years.
Batteries are complicated, expensive and decrease overall system efficiency. This obviously requires expensive initial capital outlay, with the storage systems (possibly one of the most expensive components of the entire layout) having a limited lifespan. Few, if any, consumers will undertake the significant initial capital expenditure unless budgetary provision has been made for that comment. Usually over some years.
Hybrid Solar Systems
Hybrid solar systems combine the best from grid-tied and off-grid solar systems. These systems can either be described as off-grid solar with utility backup power, or grid-tied solar with extra battery storage.
The advantage of a Hybrid system is that it is less expensive than an off-grid solar system and you may not really need a backup generator, the capacity of your battery bank can also be downsized to run just an emergency load during outages.
A Hybrid system therefore offers a system with less initial outlay than an off the grid system, but higher outlay than a Grid tied system.
It is not necessary to be held hostage to escalations in energy cost that are not reasonable or market related. There are alternative systems that will increase your independence, decrease your reliance on grid-provided electricity and will build your asset base.
Call Ulilog for a personalised assessment as to the feasibility of a PV Solar system for your business, taking your operations and capacity into account, we will give advice, design and ultimately implement your optimal alternative energy supply