The need for a restructured, collaborative approach among government and the private sector to address rising energy costs is a key topic in GoSolr’s second quarterly “Light Paper”, released this week.
It comes as time when the country moves from being focused on the impact of loadshedding to a concern about the ever-escalating cost of power – driven by a number of regulatory announcements in the last quarter including, but not limited to, potential tariff increases from Eskom, the introduction of import duties on solar panels ,and new fixed fees for pre-paid electricity meters in Johannesburg.
“South African are feeling the pinch of rising electricity prices. While the growth of adoption of renewable energy was initially driven by loadshedding, we are seeing now that the focus is shifting towards cost savings as a driver, as solar and other renewable energy options become cheaper” says GoSolr co-founder and CEO, Andrew Middleton.
Private renewable energy generation is helping to reduce the demand for power. In South Africa, the demand for electricity production, transmission, and distribution – otherwise referred to as Eskom’s unbundling – is giving other electricity producers the leeway they need to enter the market. By the second quarter of this year, the country’s electricity availability factor stood at 66%, 15% higher than at the beginning of 2024, largely due to contributions from alternative energy providers.
However, this doesn’t mean that heftier electricity price tags will be kept at bay – decreasing consumption, coupled with increasing costs, and debt keep pushing Eskom to advocate for higher tariffs, with a potential spike of up to 44% in 2025.
As a result consumers are increasingly looking for alternative energy supply, rather than relying on the grid.
“While the initial growth of solar in South Africa was largely motivated by our energy deficit (load shedding), now that some of that pressure has been removed, new drivers are emerging. We’ve now moved into phase two of the clean energy boom, which is underpinned by cost considerations. We believe the third phase will be where consumers insist on the power that causes the least damage to our planet,” explains Middleton.
“While we work through this second phase, it’s imperative that reliable and clean energy becomes more accessible to all consumers, including lower-incomes ones who have previously been unable to make these choices. With the cost of solar installations coming down, this is starting to become achievable, and our figures show that our customers are seeing significant costs savings compared to when they were 100% on the grid,” he says.
“So in a time where we are seeing dramatic increases in the cost of living, for many South Africans, the next step is to secure reliable and cost-effective power. While discussions about unbundling electricity tariffs, heavier infrastructure costs and import duties continue and regulations remain in constant limbo, the cost of moving to renewable energy seems lucrative. Yet, regulatory setbacks continue to curb progress,” says Middleton.
Making the shift doesn’t come without its challenges. GoSolr argues against Eskom’s proposed 70/30 split, where 70% of the revenues are linked to fixed charges and 30% to energy charges, as this does not align with international standards. They suggest instead that the fixed versus energy charge ratio should not exceed 40/60 – as is international best practice – and also recognises the need for government to incentivise solar users.
“Effective market signals include scrapping the 10% import tax on solar panels and implementing incentives that encourage households to discharge batteries during peak hours and at critical times of the year when the system needs them most,” continues Middleton.
“When we talk about democratising access to energy, we mean that it should be affordable for everyone. It’s not beneficial if electricity prices rise so high that people must choose between food and keeping the lights on – which, unfortunately, is happening in South Africa today. As solar costs decrease, accessibility for all income levels improves.
“However, sensible tariff reform is crucial. Government and the private sector must work together to enhance affordability. Ultimately, adopting international best practices and incentivising solar use will make clean energy more affordable and widespread.”