Two years ago, there was not much interest in solar technology in South Africa. Today, businesses and government increasingly regard it as a cost-effective alternative energy generator with huge potential to help deliver lower-cost energy, encourage job creation and stimulate local economies.
This awareness of solar's potential will likely increase amid the rolling blackouts, threats of load shedding, rising electricity prices and unstable supply experienced in the country. By 2030, installed solar energy capacity is expected to reach over 8400 MW, while the government has signed power purchase agreements (PPAs) for over 1450 MW from solar photovoltaic (PV) projects.
South Africa's climate is ideal for solar. Most areas in the country average more than 2500 hours of sunshine per year, among the highest in the world, thanks to its Equatorial position. The more light the panels receive, the more electricity they generate and they work on cloudy days too.
As electricity costs keep rising, solar is becoming an even more viable and cost-effective option for businesses in South Africa. While there is an initial outlay cost, it can be recouped after five to eight years on average. That's an attractive internal rate of return (IRR) especially considering solar electricity is then free after the initial payback period. So solar PV actually offers businesses an attractive savings model.
South Africa currently benefits from clean electricity produced by several renewable energy technologies, including solar, wind and hydro. Each has their advantages and can be implemented depending on local conditions. For example, coastal areas are particularly windy so are well suited to wind energy. However, wind farms sometimes face local opposition because the turbines are rather noisy, so in urban areas, solar may be a better option. Solar farms have no moving parts, with panels sitting quietly in fixed positions and solar farms do not require as much space as wind farms.
All forms of renewable energy are favourable in comparison with burning coal for energy. Fossil fuels emit climate-changing carbon emissions and are not a sustainable energy source. They're also getting more expensive whereas renewable technologies such as solar are cheaper over the long term because the sun's energy is unlimited and free. And that surely appeals to every profit-making business, especially as electricity costs in South Africa continue to rise.
Solar is a relatively new technology in South Africa and although interest in this clean, free source of energy is steadily growing, there is still much work that needs to be done in educating people about its benefits. A mindset change is needed but this will take time since South Africa has for many years enjoyed cheap and readily available coal power. Further guidance is needed on the initial outlay required in purchasing a solar system. Without crystal clear figures, businesses will struggle to understand how solar makes financial sense.
Solar's increasing importance is demonstrated by the South African government's support for solar. For example, the government recognises the value of public-private partnerships in the development of solar projects. The RustMo1 Solar Farm is one example of this and it is already connected to the national grid and generating 7 MW for Eskom.
Contracts for 47 renewable energy projects were concluded in total in 2012 and 2013, which will add 2460 MW of power capacity. A further R45-billion will be invested in solar in 2014.
The South African government is expected to sign PPAs with renewable energy producers in July, when the proposed feed-in tariffs will come into effect. The tariffs will allow residential and commercial sectors to generate their own solar electricity and feed any excess back into the national grid, providing a valuable source of income.
Solar also offers businesses a way to cut their carbon emissions and do their bit for the environment. Further, decoupling themselves from relying on the grid by using solar electricity to meet their energy needs means that businesses will be less impacted by the continuous electricity price rises or the impending carbon tax.
According to National Treasury law director Lena Mangondo, the solar PV industry, under the IPP programme, has created more than 20 000 jobs in the construction and operations sectors. There is also great opportunity for solar to create more jobs, and this in turn would help stimulate economic growth.
Amid concerns of cash-strapped economies, climate change, resource depletion and increasing demand on South Africa's already overloaded national grid, there's great opportunity for solar to solve many of the country's energy concerns. Besides the clear opportunity to choose a sustainable energy source which can help preserve delicate ecosystems, more and more people will turn to solar when they consider its economic benefit.