New electricity tariff increases reinforce the case for home solar
South Africans are embracing the long-term cost savings and convenience of home solar systems, and the recent municipal electricity tariff increases approved by NERSA remind them why this is the best choice.
NERSA recently concluded its approval of electricity tariff hikes across multiple municipalities, with the increases for 66 of these entities going into effect on 1 July 2024.
Disappointingly, they are all significantly above the inflation rate – increasing the heavy financial burden that South Africans already carry.
Shattered hope
While large electricity tariff hikes are nothing new in South Africa, many had hoped NERSA’s new approach to granting increases would be an inflection point for the country.
NERSA was forced into a new approach after the Pretoria High Court determined in October 2022 that the previous approach of using price bands and guidelines was illegal.
Municipalities are now required to submit comprehensive cost-of-supply studies to NERSA that outline their projected costs over the next year. These must then be used to justify their requested tariff increases.
Notably, the Gauteng High Court on Friday, 28 June 2024 interdicted all but 66 municipalities from rolling out approved electricity tariff increases due to their failure to submit compliant Cost of Supply studies.
These municipalities have been given 60 days to submit the relevant information to NERSA in order to get tariffs approved for the 2024/25 financial year. Failure to do so will mean these entities will have to continue supplying electricity to customers at their 2023/24 rates.
Many hoped this would lead to municipalities finding out they had been overcharging their customers for electricity – leading to lower electricity tariff increases in the years to come.
However, the latest municipal tariff hikes – backed by each municipality’s cost-of-supply study – show that this was not the case.
The confirmed electricity hikes for the top metros in South Africa are below.
| Metropolitan municipality | Cost of supply indicated increase | NERSA approved average increase for 2024/25 |
|---|---|---|
| Buffalo City | 16.9% | 11% |
| City of Cape Town | 11.78% | 11.78%* |
| City of Ekurhuleni | 12.72% | 11.2% |
| City Power (Johannesburg) | 21% | 12.72% |
| City of Tshwane | 12.7% | 12% |
| eThekwini | 18.7% | 12.72% |
| Nelson Mandela Bay | 13.04% | 13.04% |
No silver lining
The result of municipal cost-of-supply studies prove that above-inflation electricity tariff hikes are here to stay.
Additionally, more customers will switch to home solar in the future – leaving municipalities with fewer on-grid electricity users and a lower revenue base.
The combination of lower revenue and increasing costs is a poisonous recipe for the future, and one that South Africans must avoid by embracing home solar solutions.
Full home solar systems
A full home solar system remains the best long-term investment you can make to beat electricity tariff increases.
These systems are becoming increasingly affordable, with component prices falling by approximately 30% over the past financial year.
This reduces how long it will take to break even on your initial investment in a solar system – with your break-even time also continually shrinking as tariff increases continue in the future.
Full solar systems are also significantly more accessible to South Africans thanks to LookSee’s popular Solar Loan product.
LookSee’s Solar Loans offer a low interest rate, starting at prime plus 1% and capped at prime plus 2.5%.
This is an incredibly affordable rate, allowing you to invest in a home solar system without having to pay the full cost up front.
Solar geyser conversions
If you want an even more accessible solution to combat rising electricity tariffs, you can convert your electric geyser to use solar power.
You can take a Solar Loan out for this, too, with the amount of money you save on your electricity bill typically higher than the repayment cost – ensuring you make money from day one.
Here’s how converting your electric geyser to solar works:
- Normal solar panels are installed on your roof.
- The panels are connected to a controller.
- The controller converts solar energy to power your existing geyser’s element and thermostat.
This conversion is also superior to a dedicated solar geyser for several reasons.
The most significant reason is that your installation cost will be much lower, as your existing electric geyser stays in place and no additional plumbing work is required.
Other benefits include improved heat retention (as a solar geyser sits on your roof exposed to the elements), reduced maintenance and support requirements, the ability to stay connected to the grid for backup purposes, and not having an eye-sore solar geyser on your roof.
Click here to learn more about converting your electric geyser to solar.
Loading ...
