Major price warning for solar users in South Africa

Eskom is proposing radical electricity pricing changes to significantly increase the monthly bill for South African households with solar power.

The proposal would increase the fixed capacity charges, disproportionally affecting people using less electricity.

The changes included introducing an ancillary service and network demand charge in the variable energy charges.

Eskom first presented this plan to the National Energy Regulator of South Africa (Nersa) in January 2021.

Simply put, Eskom wants to significantly increase network costs, which include transmission, distribution, and transformer costs.

These network costs are recovered through variable (c/kWh) and fixed (R/kVA and R/Customer) charges.

Eskom said it wanted to move to a tariff structure with significant fixed daily network charges independent of usage.

This means that South African households and businesses would have to pay a much higher fixed charge, regardless of whether they use electricity.

This would lead to those with solar panels paying far more than before, as they would need to pay daily fixed costs to Eskom to be connected to the grid.

At the time, Eskom said it was needed to prevent the loss of revenue from South Africans using solar panels to generate their own electricity.

Eskom said South Africans who use solar power systems generate most of their electricity during the day.

The power utility explained that this forces it to ramp up faster to meet evening demand, which affects the power system and incurs additional costs.

The new electricity tariff plan also aimed to make Eskom’s electricity more attractive than households and businesses generating their own power.

Eskom’s plan remains in place

Eskom’s plan to increase its fixed charges, which will adversely affect solar users and other households with low consumption, remains in place.

However, in its most recent published revision, the power utility acknowledged that it would increase low-consumption users’ bills.

Eskom’s previous analysis of its proposed tariff changes showed that many households using less than 900kWh per month would pay more.

“If the network costs were used as is, this would have resulted in significant increases to low consumption users, so some scaling was done to limit this impact,” Eskom explained.

To reduce the impact, Eskom said the generation capacity charge would initially be at a 50/50 fixed-to-variable split in a phased approach.

The power utility will gradually adjust this until it collects 100% of the generation capacity charge through fixed fees instead of variable costs.

Although this proposal would initially cushion the price increase to low-consumption households, it will still increase their bills.

Eskom did not publish its revised version for 2024/25. However, the power utility did not show any inclination to change its stance on fixed and variable costs.

An analysis by MyBroadband showed that Eskom customers who consume no electricity can expect to pay 321% more than they currently do.

Those who use 100 kWh for a month can expect their electricity bill to increase by approximately 130% per month.

It should be noted that Eskom’s proposed changes to the electricity tariff structure have not been approved.

The table below provides an overview of the proposed price change for the most common Eskom Direct user.

This article was first published by Daily Investor. Read the original here.

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