/ 4 July 2022

‘Incredible growth’ in rooftop solar in South Africa

Solar Everything Will Power Your Life

As he drives around neighbourhoods, Maloba Tshehla always finds himself looking on people’s rooftops – for solar photovoltaic (PV) panels.

“It’s a visual experience of seeing solar panels, you know, in weird places sometimes … but I see it everywhere,” said Tshehla, the spokesperson for the South African Photovoltaic Industry Association. “We know the numbers are there, there’s incredible growth and that’s not just in the visual evidence of it.”

Municipalities have come on board and are now starting to put in place the requisite policies to enable people to connect their systems, where previously it was a grey area and some people were saying it was outright illegal.

“Now, they’re saying ‘Okay, well you can connect under these conditions’, and some are even saying you can actually feed back and we’ll give you some kind of a rebate,” Tshehla said. 

“Over the past 10 years, there’s been a significant growth in the policy environment, which has been in fact, led by an increase in people actually installing systems and saying ‘You know what, my municipality will catch up’.”

There’s been record growth in rooftop solar installations in the commercial and industrial sector, too. 

“Go to your local Makro, the rooftop is solar. Look at your Netcare, the rooftop is solar … You’ll see that a lot of shopping malls, big industrial buildings have these installations on, so the growth is absolutely amazing,” Tshehla said.

Rising electricity prices, blackouts

In 2021, the commercial and industrial sector accounted for more than half of the overall rooftop solar installations in South Africa, according to a recent report by industry analyst Mordor Intelligence. 

Rising electricity prices, power outages, increasing awareness of the need to reduce greenhouse gas emissions and decreasing solar technology costs are driving the rooftop solar market in South Africa, it said.

However, the high cost of solar rooftop systems and the associated need for batteries for electricity storage are likely to restrain the market growth, the report added.

For the forecast period 2022 to 2027, the commercial and industrial segment is expected to dominate the local rooftop solar market.

“Owing to the increasing blackouts in the country, leading to the electricity crisis and increasing demand for continuous power, several opportunities are expected to be presented for the market players in South Africa to bridge the supply and demand gap,” the report says.

By last year, solar and storage were cheaper than grid supply for most commercial and industrial customers across South Africa.

Financing solar installations

According to Tshehla, financial institutions have developed a suite of products over the past decade to finance solar energy. 

“There are financial institutions that will bank the installer, for example, so an installer can come in and say ‘Look, we can get into a lease agreement of sorts,’ so you don’t have to put up any money as a homeowner, so you basically lease your system to the installer and the net outcome is that your electricity bill will have effectively decreased,” he said.

Another is financing solar energy solutions through home loans, for example. 

“With banks, with their home loan division, there are some that now will include, similar with your solar water heater, they can include your solar PV system as part of your home loan so you can add it to that, either as you buy the home or retrospectively. You can say, ‘Look I’ve got a quotation’,” Tshehla said. 

“They might have approved or preferred suppliers that you need to get a quotation from and then based on that they might add it to your home loan, which makes it easier to pay off that system. Then, of course, you then realise those immediate electricity savings. Others can have direct products where they say, ‘We will fund you, this piece of infrastructure on your home’,” Tshehla said.

Rent-to-own models, Tshehla explained, work like car repayments: “Let’s say you’re renting to own, funded by the bank. Whatever that fixed amount you’re repaying the loan on your system is, you’ll pay it off like your car.”

“So, it might be a loan for a three-year period or a five-year period, depending on the sum and size of the installation that you’re paying on. Once you’ve paid it off, then that system is yours, you don’t have a debt to the bank anymore but of course, the system keeps producing electricity … these things can go for about 20 years or so.”

These products should typically be structured to ensure electricity savings for households. “If you were paying let’s say, R1000 for electricity a month, when you install your solar PV system and you pay off the debt to the bank or your funder, you should realise a saving still. Otherwise it doesn’t make sense.” 

“Let’s say you’re now paying R800 in total, including your debt repayments, when that debt repayment is done and you remove that debt amount, now your electricity bill is down to R600 a month. You’re now realising an even greater saving,” he said.