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May 13, 2021 | Eskom

The Effect Eskom’s Proposed Tariff Restructure Will Have an Those Using Renewable Energy

Written by Xoliswa Zwane

Earlier this year Eskom presented a new tariff structure for the year 2021/2022 to the National Energy Regulator of South Africa (Nersa) for approval. The proposed changes include, but are not limited to:

  • A move away from incline block tariffs – meaning lower-consumption customers will pay slightly more and higher-consumption customers, less.
  • Changes to time-of-use tariffs – where evening peak hours will be increased and morning peak hours decreased.
  • Introduction of a capacity charge for the use of the grid – involving the split of costs into network (a fixed daily charge) and energy (volumetric c/kWh).

What does this mean for those making use of renewable energy?

Eskom proposes that peak hours should be adjusted so that there are two hours in the morning and three hours in the evening. During peak hours the consumer pays more for electricity. For those that have a grid-tied system, this means that they will pay more for electricity pulled from the grid in the evenings – the time that it is most needed and used.

But besides this factor, there is another point of concern that will affect the pockets of those making use of renewable energy and using the grid to supplement their power needs in the evenings or during bad weather, as is the case with grid-tied systems. If NERSA approves this proposal, the consumer will have to pay for being attached to the grid. These would be fixed daily network charges for the use of the grid and the upkeep thereof. These extra costs will lead to a longer period before you will get a return on investment, moving the current 6-year average up to 10 years.

These costs are currently combined in the usage rates payable. According to Eskom, splitting these two costs would better reflect the true cost of their supplied energy and make them(Eskom) more attractive compared to current alternative energy sources. They continue by stating that consumers who are making use of only the grid for their energy needs, are in effect subsidizing those homes that have grid-tied systems for use of the grid. Eskom claims that their current tariff structure created “a falsely attractive business case for own generation” and that consumers making use of a grid-tied system have to pay a “fair, unsubsidised contribution for using the grid”.

Eskom also says that the extra energy generated by those that make use of renewable energy and fed into the grid does not adequately compensate for the cost of the network used. Those that make use of the grid for backup, pay for the electricity they used if not compensated by their surplus. Thus they pay for the use of the grid as and when they use it. Eskom says that the real problem lies with prepaid systems as the fixed network charge was not included.

Consumers that have a grid-tied system are in upheaval about this proposal and are threatening to bite the bullet and go completely off-grid. Paul Vermeulen, the chief engineer of renewable energy at City Power, said that if consumers decide to go off-grid it would be to the detriment of poorer households that relied on subsidies from wealthier households. It will also not be optimal to the grid and extra energy fed into the grid helps in the reduction of loadshedding and increase stability.

Eskom assured the regulators at NERSA that they were not anti-solar, that they just want adjusted fixed rates that accurately represent the cost of connections to the grid. They are not out to hamper those making use of alternative energy sources.

Thank you for reading this article. If you feel we have left out any important information or would like to contribute to this site and content, please get in touch with us by leaving a comment or emailing us.

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