The cost of PV Solar electricity vs. Ethekwini business & general electricity tariff

A case study of the savings produced by a grid-tied PV Solar Power system on an industrial roof space in Westmead vs the cost of Ethekwini Bussiness & General Credit Tariff.

It is in the news everywhere, PV solar systems produce electricity at a lower cost than-than that supplied from the Municipal Grid. Here in Ethekwini, it is no different when considering the “BUSINESS & GENERAL TARIFFS” but let take a deeper look at the comparison, using our latest installation of a 27.7kW Solar Edge solar system on a factory in Westmead as a case study.

Energy & Demand Charge

To understand the savings from a PV Solar Power system, you need to understand the tariff system you are being billed on and the different charges associated with the tariff system.
For our case study, of a factory in Westmead, our client was on a simple “BUSINESS & GENERAL CREDIT TARIFF”, typical to small to medium Commercial and Industrial consumers in Ethekwini. The tariff consists of:
1. Fixed Service Charge – as the name suggests the amount is fixed every month.
2. Energy Charge on the volume of energy supplied (kWh).

The chart below indicates the Energy (kWh) rate for each month throughout the year. For this tariff, the rate is fixed however on time of use tariffs the rate may vary by month and time of day.

For our case study, the Business & General Credit Tariff is R1.5728/kWh exc VAT.

There are many other tariffs some of which are complex with charges built up from:

  1. Fixed Service Charge – as the name suggests the amount is fixed every month.
  2. Demand Charge – based on Apparent Power (kVA) delivered.
  3. Energy Charge – based on the volume of energy supplied (kWh).
    1. Energy charges can be linked to a time of use rate per kWh that varies dependent on the month, day and hour of the day.
  4. Network Access Charge (NAC) – based on the highest Demand Charge over a rolling set period.

Savings against the energy charges from solar are predictable and substantial. To calculate the savings from energy supplied from a proposed solar system there are many variables, however, the two key variables we will consider for this simple example are:

  1. The installed cost of the system in Rands
  2. The designed energy output from the system over its 25-year design life (kWh)

The PV Solar Power system in our case study produces electricity at an average cost of R0.428/kWh for its 25-year design life. In comparison Ethekwini electricity “BUSINESS AND GENERAL CREDIT TARIFF” rate of R1.5728/kWh will increase annually with inflation.

The saving between the two is a substantial – R1.148/kWh or 72% based on the cost of electricity today.

Every year the savings made from the PV Solar Power system will increase as inflation pushes the cost of Ethekwini Municipal Grid electricity up.

As stated above this is a simplified demonstration of the savings that are possible when installing a PV Solar Power system. For a detailed model of the savings that you could make we would need to consider the components used, the maintenance regime planned, the constraints on and quality of the installation, as well as the consumption of the electricity produced by the PV Solar Power system

Request a copy of our white paper “Economics & Engineering of Grid Tied Solar on Commercial and Industrial premises in Ethekwini.” to understand all of the variables that determine if it is financially viable to install a PV Solar System on your roof.
Apart from the obvious savings, South African legislation has changed to allow for “accelerated depreciation” of 100% of Capex over 1 year.
In summary, a well-designed grid-tied PV Solar Power system in Ethekwini can substantially reduce your business expenditure on electricity and pay for its self in 4 to 6 years. As Eskom and Ethekwini continue to raise the cost of electricity installing a well designed PV Solar Power system allows you to manage and mitigate the effect of these increases.

When designing a PV solar system for our clients we need to understand the Economic and Engineering constraints and variables that affect its performance. Request a copy of our white paper “Economics & Engineering of Grid Tied Solar on Commercial and Industrial premises in Ethekwini”  to gain an understanding for yourself of what makes a PV Solar System a viable investment.

Out of the Box Energy Solutions specialises in commercial PV Solar Power systems and Hybrid Power Systems and Products.

Contact Rob Jardine with queries on the above:




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