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Will Loadshedding drive the adoption of Residential, Commercial and Industrial Solar Solutions in South Africa?

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Will Loadshedding drive the adoption of Residential, Commercial and Industrial Solar Solutions in South Africa?


South Africa is no stranger to loadshedding, a deliberate and controlled power outage implemented by the country's national power supplier, Eskom, to avoid a total blackout of the electricity grid. Loadshedding has become a regular occurrence in South Africa, causing frustration and inconvenience for both residents and businesses alike. However, this problem could lead to an increase in the adoption of residential, commercial, and industrial solar energy solutions.

Loadshedding has highlighted the country's over-reliance on traditional energy sources, such as coal-fired power plants, which are struggling to keep up with the growing demand for electricity. This has resulted in a surge in demand for alternative energy sources, such as solar energy.

Since the end of the third quarter last year, increasing levels of load shedding – and now the risk of it escalating to Stages 7 and 8 – has seen a "rapid" increase in demand for domestic solar and battery storage installations, according to the South African Photovoltaic Industry Association (Sapvia).

An overview of Solar Energy in South Africa

South Africa has abundant solar energy resources, with high levels of solar radiation throughout the country. The potential for solar energy in South Africa is vast, with an estimated capacity of up to 500 GW. This makes solar energy a viable and attractive solution to the country's energy crisis.

The adoption of solar energy in South Africa has been slow, mainly due to high initial costs and a lack of awareness about the benefits of solar energy. However, loadshedding has highlighted the importance of having a reliable and consistent source of electricity, which solar energy can provide. As a result, more people are turning to solar energy as an alternative source of power.

The installation of solar panels can be done on both residential and commercial properties, providing a reliable source of electricity, even during loadshedding. In addition, solar energy systems can reduce electricity bills significantly, making them a cost-effective solution in the long run. For industrial operations, solar energy can also provide an uninterrupted power source, allowing businesses to continue operations even during power outages.

How Government Policy may drive the adoption of domestic, commercial and residential solutions

The South African government has implemented various initiatives to encourage the adoption of solar energy. The Renewable Energy Independent Power Producer Procurement (REIPPP) program, for example, has incentivized private investment in renewable energy projects, including solar power. This has resulted in significant investments in solar energy infrastructure, which has helped to drive down the cost of solar energy and increase its accessibility.

The Government has recently gone further, during his latest budget speech, finance minister Enoch Godongwana announced two new initiatives to encourage homeowners and businesses to embrace the shift toward renewable energy:

According to the finance minister, starting 1 March 2023:

  • Individuals who install solar panels on their rooftops can receive a rebate of up to 25% of the panels’ cost, with a maximum rebate of R15,000.

  • Businesses can decrease their taxable income by 125% of the investment they make in renewables.

Will supply chain issues be a challenge?

As a case study it is interesting to look at solar PV solutions provider, IBC SOLAR South Africa, the company has been experiencing an increasing number of orders over the past few months due to the risk of load shedding. The company has recently confirmed that there are longer lead times for installations and product supply, and their customers currently have a waiting period of at least four to six weeks. Another supplier VersofySolar, which offers rent-to-own solar PV solutions, has seen a quadrupling of enquiries since January 2022 alone.

Clearly there is a short term crunch for domestic, commercial and industrial solar driven by material shortages and demand, however the supply chain seems resilient in the medium to long term. Prices for solar PV equipment will increase gradually due to current stock shortages but longer term there may be a decline in costs as the volume of solar equipment from China is expected to increase over the next 18 months. Increased domestic demand may help importers negotiate better deals when purchasing equipment from overseas.

Domestically local solar panel manufacturers, ARTSolar and Ener-G-Africa, have upgraded their technologies and equipment in order to keep up with global trends, but still rely on international suppliers for their solar PV cells and solar glass.

Can Cape Town Lead the Way?

The City of Cape Town has received an exemption from the National Treasury for a competitive bidding process regarding the purchase of energy from independent power producers. The exemption will allow for residents and businesses with Small Scale Embedded Generation (SSEGs) to sell their excess power into Cape Town's grid and receive cash for it. Payments to commercial customers will be possible before June 2023, and within the year for any resident with the necessary city-approved generation capacity. The city is focused on ending load-shedding over time, and has steadily been laying the groundwork to enable payment for excess small-scale power. The city's power purchases will be fair, equitable, transparent and cost-effective in compliance with section 217 of the Constitution. Cape Town may be paving the way for other cities to reduce their reliance on Eskom.

Closing Thoughts

In conclusion, loadshedding in South Africa has highlighted the importance of having a reliable and consistent source of electricity. This has led to an increase in the adoption of residential, commercial, and industrial solar energy solutions. In this respect South Africa’s experience is very similar to the UK, in the UK the energy crisis has seen a boom in the rooftop solar industry. The data for the UK shows that more than 130,500 rooftop solar arrays were installed in the UK during 2022, more than double the amount installed during 2021. So there is a clear international trend and incentives for a grass roots adoption of domestic, commercial and industrial solar solutions. With abundant solar energy resources and government initiatives to promote renewable energy, solar energy is becoming a more attractive and accessible solution to the country's energy crisis. As the cost of solar energy continues to decline, it is likely that more South Africans will turn to solar energy as a reliable and cost-effective alternative source of power.