Cape Town residential electricity tariff; how is it impacted by the installation of a solar PV system

A question came up from a solar PV installer in a forum session that I attended the other day that demonstrated that even those in the industry don’t really understand some of the challenges facing the City of CT with regards to tariff structure.  The question was something along the lines of “Why has the City come up with an embedded generation tariff with a daily charge that can be more expensive than the residential tariff – thereby disincentivising people to install solar PV systems on their home?” I’m paraphrasing.

To start with the basics:

There are two main tariff types for Cape Town households – Domestic and Lifeline. The intention of the Lifeline tariff is to provide low income households or, as it is currently set up, ‘low consumption’ households with free basic electricity (between 25kWh and 60kWh).  Some mid- or high-income households currently qualify, because they have a low monthly average consumption, but the City is planning to address this by including a maximum cap on the value of your property that qualifies (R300,000).

Let’s assume then that if you’re thinking about installing a PV system, you’re on Domestic, and not on lifeline.  If you can afford a PV system you’re probably not the target market for the free electricity programme anyway.

The VAT inclusive domestic tariff is currently set up like this, and will be increasing as of the 1st July.

  • 0-600kWh – 153.63c/kWh
  • > 600kWh – 186.81c/kWh

This is called an inclining block tariff (IBT) and there used to be a lot more blocks to it, instead of just two.  The more you use, the more expensive each kWh of electricity becomes.

There’s a lot written about IBT’s, and they’re designed to protect low-income households from increasing electricity tariffs.  They effectively represent a cross subsidy of electricity by the middle- and high-income households.

It’s not my intention to discuss the merits and demerits of this tariff structure in this post.

In response to increasing pressure for the City to allow installations of small scale embedded generators (which for the purpose of this post we’ll assume are all solar PV installations), the City developed the Residential Small Scale Embedded Generation tariff.

This tariff, for the first time, introduces a fixed daily fee which is payable, regardless of how much electricity you consume.  It is set up like this (VAT inclusive):

  • Service charge – R13.03/day
  • Energy charge – consumption – 109.17c/kWh
  • Energy charge – generation – 56.68c/kWh

What this means is that, for a 30 day month, you’d pay R390.90 in service fees, regardless of how much electricity you consumed or generated from your system.  However, you’ll notice that your marginal consumption tariff is around 2/3 of what you’d pay if you were a normal residential customer (block 1).  They have split out the fixed costs from the variable costs.

The City also does not allow you to sell them more than you buy, so you can never be a net exporter.  This will likely change in the future, but right now it’s in response to NERSA requiring you to have a generation licence if you sell power to another person, and this is the City’s way of getting around this.

Why has the City set it up like this?

Having the grid available to export electricity into, and effectively using as a battery, costs someone money.  There are maintenance or upgrading costs that need to be accounted for. This daily service charge is the City’s attempt to recoup these costs regardless of how much electricity you use.  This helps to separate the cost of the two services the City is providing; namely the provision of an electrical network, and the delivery of electricity in kWh’s.

If there was no service charge, who would pay for the grid? Ultimately, it would be people who did not have any embedded generation.  And who would that be?  Those who couldn’t afford it.  Which would effectively be a cross subsidy in the wrong direction.

And before you say ‘but it’s green energy, so should have a premium payable,’ that argument is nice for Germany, where people can afford to choose whether they’d like to have an installation on their roof.  It doesn’t work here.  And the recent trends in PV prices mean it doesn’t need to work here for PV to take off.

Commercial tariffs already have a daily service charge, so are already set up to slip nicely into an embedded generation tariff structure.  There is talk of moving the residential tariff away from an IBT structure.  If this happens this issue will become a non-issue and this blog post will become irrelevant.

Also, for the record, 186.81c/kWh is a big tariff to be paying.  If you’re consuming over 600kWh and have moved onto this tariff, you’ll be paying big money each month for electricity.

Notes:

I’ve included the VAT amounts as this is what the average household will be paying.  If I was looking at the commercial set up, I’d probably be using VAT exclusive amounts.

You can read up the impacts that IBTs have had here: http://pdg.co.za/wp-content/uploads/2012/04/Have-inclining-block-tariffs-for-electricity-made-a-difference-published-in-Business-Day.pdf

The City’s current electricity tariffs can be found here: http://www.capetown.gov.za/en/electricity/Elec%20tariffs%20201415/Schedule%20of%20Consumptive%20Tariffs.pdf

The difference between solar thermal and solar PV

I was in a meeting this week and found myself talking to someone who confusing solar water heaters with solar photovoltaic panels.  This took me a bit by surprise as I thought people were quite familiar with the two different technologies, as they’ve been around for a while, but it seems not.

Solar Thermal

Solar water heaters or solar geysers use the heat from the sun to warm up water, most often in flat panels on the roof, or water contained in tubes surrounded by a vacuum within another tube.  The warmed water is stored in a geyser, which often has back up heater like a normal geyser, to ensure there is hot water even on overcast days.  Flat panels are often used in temperate climates, where there is a lot of direct sunlight and where it is not typical to have overnight sudden frost.  Evacuated tubes are good for colder climates, or where there is sudden frost overnight, as sudden freezing of water causes it to expand and can crack flat plates, whereas the vacuum around the inner tube provides a measure of insulation from frost.

Solar water heaters help to reduce the electricity consumed for heating water, and can be an excellent investment for households, where a large chunk of electricity is used on heating water.

Solar photovoltaic (PV)

Solar PV systems are able to convert sunlight to electricity.  They are typically made up of individual silicon based cells that are connected together in a module or panel.  They can be connected to a building’s distribution boards to supplement the electricity supplied by the grid, or the electricity can be exported directly from the system to the grid.  They are able to convert direct sunlight, or, depending on the type of module used, they can generate electricity even on a muggy day.  Unlike solar geysers, they perform better when the module temperature is kept fairly low, and the light energy that is most important; not the thermal energy.

Both systems can be installed together, as they serve very different purposes.  It doesn’t make sense to install a PV system on its own if your biggest electrical load is from your geyser, and if you don’t have any hot water needs, it clearly doesn’t make sense to install a solar water heater.

Other solar thermal applications

Solar thermal installations can also be used to generate electricity, but this makes use of the thermal energy to heat water to turn a turbine, to generate electricity.  Thermal -> mechanical -> electrical energy.  These are often large scale installations, called Concentrated Solar Power (CSP) but there are some small scale systems that have been installed.

Lastly, solar thermal can also be used to run a building’s cooling system, as strange as that sounds.  The water is heated up, the steam is used to power the chilling machinery, which runs the airconditioning system.  Thermal -> mechanical -> cooling.

Generally though, most solar thermal installations are your run of the mill solar water heaters.  How to tell which you have:

  • do they have a series of glass tubes? – solar water heater
  • if it’s a glass plate, do they have lots of individual squares that are distinguishable? – solar PV
  • if it’s a glass plate, which looks like a solid black panel and/or there’s a tank installed above it? – solar water heater

EDIT: I have been reminded that I forgot to write about absorption chillers.  Read up on them here: http://www.gasairconditioning.org/absorption_how_it_works.htm

What’s going on in renewable energy around the world – my quest for the next year

In between my doing paid work to ensure that I stay fed for the next year, I will also be embarking on a personal voyage of discovery, to understand how energy is managed, who the key role-players are, what chance renewables have, and what the outlook is in the cities that we visit around the world.

I will be meeting with government officials, project developers, designers, installers, operators, lenders, NGO’s, industry associations, academia etc wherever I can, and I’ll be writing all of this up as I go.  

My idea is to use this wonderful opportunity that I have to get to grips with what works, what challenges the industry faces, how much it costs, who makes the wheels turn, what the public perception of renewables is and what the potential for the market looks like from their perspective.

The summary of my findings will be going on this blog, but I’ll be writing more detailed assessments in document format.  See how interesting you find this blog, and if you’d like to know more about what I’ve found, drop me an email at vivi@energyramblings.com and I’ll make sure you’re included on my mailer for the full account.

Also, I’ll be putting out feelers before I head off to a new city.  If you know anyone there that you think would be interesting for me to talk to, please also drop me a note.  I really want to have broad and varied input.  

I’m going to be starting in Brisbane, Sydney, Canberra and Melbourne.  If you are involved in the energy industry, and you know people there, please let me know.  I’ll be there in June/July.

I’m off for a year of work and travel – the travel part is easy, now to find the work…

Blatant self-promotion
about to take place.  Prepare yourself.

My husband and I have decided to take a leap of, well I would
say faith, but it feels more like a leap of courage.  We are leaving the
safe harbour of Cape Town, to go see the world, and work while we do.  

We will start by going to Australia (to the hubster’s home
country) for a month and a half.  There we will go to Sydney, Melbourne
and Brisbane.  A  bit of family focus, but we’ll be dusting off the
ol’ grindstone as we go, and the graft will be real.  From there, on to Asia, then to the States
and probably Canada.  Over the pond to Europe and then who knows?

I’ve handed in my notice at
Arup.  I am going to keep helping out on some projects, but really I’ll be
looking to pick up work as I go. 

I’ve been working on utility and small scale solar pv projects.
 Feasibility studies/tender preparation/contract reviews/due diligence assessments/construction
monitoring support etc. etc.

I’ve also been involved in energy efficiency projects, city
resilience work, have experience on governmental policies/strategies from when
I worked at the City of Cape Town and I write a lot.  A LOT.  I’m a
prolific report writer.  I can churn them out.

I’m a mechanical engineer, a certified energy manager, a part
qualified accountant (CIMA), and PMP certified.  And those are just my
qualifications.  

So I’ll be looking for work.  I’ll be working remotely and
a-synchronously, but I can deliver. Ask anyone who’s worked with me.  Do
your due diligence on me, and I’ll do the due diligence on your project.

Sustainability vs energy security

South Africa is an interesting place.  We seem to end up aiming for the same end results as first world countries, but with third world motivators.  Heaven forbid someone mentions technology helping us to ‘leapfrog’ developmental issues or another reference to the cell-phone uptake in Africa.  I will mention neither of those things in this post (again).

What I do find interesting is the driving force behind the uptake of small scale renewable energy and energy efficiency interventions.  

When I worked at the City of Cape Town the message that we kept pushing was that the efficient use of energy wasn’t something that was going to be a ‘nice-to-have’ feature.  It wasn’t going to be driven by carbon emission reduction targets, by corporate KPI’s or consultants pushing the green agenda.  It would largely be driven by the cost of energy.

That’s what we’re seeing.  Eskom’s recent tariff increases have led to increased interest in possible energy efficiency interventions and the competitive nature of the national renewable energy bidding programme has led to major decreases in the price of solar PV technologies.  

Of more interest to me though is what the recent loadshedding means.

I was in a meeting recently where there was talk about PV on a new development.  One of the guys said (well I’m paraphrasing, so don’t quote me quoting him) - I don’t care about how much you’ll save me on carbon, or if the payback is five years or ten.  I need to know that if the utility goes down my business can keep running.  If this installation means that we don’t have to shut down for two hour intervals on and off, it’ll pay for itself in no time.

Energy efficiency can help with your company’s P&L, but there won’t even be any Profit at all unless you have energy in the first place.  It’s a game changer when energy security concerns meet rising electricity tariffs.  Where we’re sitting today is very different from 2008; when we hadn’t experienced a whole whack of NERSA approved tariff increases.

The face of energy security itself is changing.   I know that in 2008 there was a massive rush at the local diesel genset store.  I also remember every restaurant on the Camps Bay strip having some form of generator in 2006 when someone thought a bolt in the Koeberg reactor would make for a fun story.  While solar technology is intermittent in nature, it has a role to play.  I’ve posted on here before about the continued work going into energy storage. A viable storage solution for renewable energy, resulting in independence or at least protection from an unstable grid is inching its way towards us.  

What makes a city resilient?

The list of the 50 most violent cities in the world has been making the rounds recently, with a lot of people being surprised that Cape Town has come in near the top of the list.

In 2012, as part of the Rockefeller foundation’s study into cities’ resilience and the indicators that can be used, the company I work for carried out a series of workshops, focus group sessions and interviews with various city stakeholders. From government officials, to NGO representatives.

The findings were fascinating and unsurprising. Cape Town suffers from chronic stress issues. Violence, hopelessness, hunger. Stemming from a legacy of inequality that is systemic in all things we do.

The City Resilience Framework was issued in April 2014 and you can find it here. http://arup.com/cri

This framework incorporates findings from a desktop study and from the field based research and is a very interesting read. What I wanted to share were 8 qualities or functions of a resilient city. Read through them and think about your city. If you’re in Cape Town, maybe think about this with the problem of violence in the back of your mind. Where do you come across these functions failing? Does your daily life impact on these areas of life for either you or someone else? Can understanding these help you to have more empathy for other people and the things they struggle with? What role does our municipality have to play in addressing these? What responsibility do we have? Where should we be applying more pressure?

A resilient city:
1. Delivers basic needs. Can people get access to food, water, energy?
2. Safeguards human life. Can a city respond to shocks and stresses to protect its inhabitants?
3. Protects, maintains and enhances assets. Are man made and natural assets treated and maintained properly, and are they utilized efficiently and equitably?
4. Facilitates human relationships and identity. Are cultures, heritage, language, religion and genders celebrated and empowered? Is diversity encouraged?
5. Promotes knowledge, education and innovation. Is the empowerment of our civil society promoted? Is education a priority? Is it easy to access, of good quality and available to all?
6. Defends the rule of law, justice and equality. Is the response to a violation of the law fair, reasonable and consistently applied? Are laws, policies and regulations fair, and are they implemented appropriately? Is there recourse for victims?
7. Supports livelihoods. Do people have hope that they will be able to provide for themselves and their community? Are there opportunities? Can they get to those opportunities?
8. Stimulates economic prosperity. Is trade supported?

What I feel could also be included under 8 is does it stimulate social prosperity? Are people happy.

After reading the above with my Cape Town hat on, I find it very easy to believe we are so high on that list. In a place where people have had their sense of identity eroded for decades, where the education system has been first unfair and then incompetent, where the rule of law is ineffective, where economic opportunities are thin on the ground, and people have to travel ridiculous distances to get there, and where basic needs are sporadically available. How then in the face of this can a city respond to continuous stresses; increasing drug use, the legacy of inequitable urban planning and segregation, continued immigration, global economic events… Without bending, cracking and breaking in parts.

But if we know where those pressure points are. If we are aware of what leads to a strong, flexible and resilient society are we not able to take action, collectively, to help pull us out of this list if shame. Let us be shamed to be ranking so high. Let us use that shame to get us to act.

What makes a city resilient?

Cangro – an upside down way to look at growing veggies

Hooray! It’s unashamed cronyism time! My friends Jody & Di have started a fantastic initiative – Cangro, where they are using upside plants to educate the young and old on how easy it is to grow fruit & veg under your own steam.  They sell an urban farming kit which can then be hung with a plant facing downwards.  It’s great for plants like tomatoes or beans, where the fruit/veg doesn’t normally do well when planted straight in the soil, because they tend to get nibbled by critters on the ground. 

They’ve also run a bunch of competitions where kids see who can grow the biggest and/or most impressive tomato plants, and they’ve seen these kids get SO excited at how wonderfully rewarding the experience can be (as well as how wonderful it is to win a bicycle…)

Contact details here for more info:

083 403 3394 & info@cangro.co.za

 Bit of history from their website:

Cangro was founded by siblings, Jody and Diane Kramer. With a little bit of environmental and sustainable knowledge and some forward thinking, they discovered the “magic” of the upside down can.

It all started with a tomato growing in the back garden and a thought…

“How can we grow tomatoes in a fun and practical way?”

… A few days later, Diane and Jody came across 30 000 redundant paint cans earmarked for the dump and so their journey began.

From their very humble beginnings at the Irene farmers market, in which they sold out before they could unpack the trailer, Jody and Diane knew they were onto something special… It was soon realized, from the children’s and teacher’s enthusiasm that this could become a wonderful teaching aid, something that could replace the “old bean and cotton wool”.

With Diane’s exuberant personality and Jody’s practicality, they have formed a very compatible and effective team.

“Everybody has been so enthusiastic and helpful towards the project, we often find we have no control over where this can is taking us. It has been an incredibly rewarding experience!” Jody Kramer

Energy storage really the talk of the RE town at the moment

Following on from my post on electricity storage from yesterday, the Renewable Energy World site included three articles on storage in their mailer this morning.

Sitting at the Tip of the Iceberg: The Huge Potential of Energy Storage (found here), where they estimate that “the U.S. energy storage market will grow to 1.7 gigawatts in 2017 and should hit 2.5 GW by 2020.”  This is largely driven by targets set in California where it has been mandated that “the state’s utilities procure 1.325 GW of storage by 2020.”

In Hawaii’s Solar Conundrum: Can Energy Storage Save the Day? they describe how Hawaii is alsolooking into storage quite actively (article found here), where they have “opened bidding for one of the largest energy storage projects in the country: a 60- to 200-megawatt storage project to help manage solar power within the Oahu island grid by 2017.”

And finally, Energy Storage: A Different View from Germany (found here) talks on how Germany is looking into “three main categories: power to heat, power to gas (specifically hydrogen) and power to power, which can utilize a range of storage technologies, including electrochemical (batteries), mechanical or thermal.”

It’s no surprise that all three of these articles focus on areas where there is a high penetration of solar technologies, and there is likely to be even more interest in solar going forward.  
It’s good news for South Africa that R&D in the States and in Germany is a priority at the moment.  Innovations and breakthroughs in this field can have massive implications for a country with solar irradiance like ours, where baseload is considered to be so important.