Drought, state capture, land reform, Eskom – these were the most topical conversations of 2018. A good friend once said: “If you worry about things you cannot change, you’ll grow old before you’re due.” The rhetoric almost sounds like a lesser known Don Williams song.
As for the first three there is very little that we as individuals can do. However, when it comes to supplying electricity, there might be some solutions.
Here are a few aspects to consider: Our ancestors farmed much smaller tracts of land than what we regard today as commercial units, and yet they still made a good living. Where has the commercial wisdom of the previous generations gone?
Perhaps we have all been subjects of the ‘frog in the boiling pot’ effect. We have become accustomed to genetically modified (GM) seed, effective implements, powerful bakkies, private schooling and electricity at the flick of a switch. And when we experience load shedding, we use four and five letter words to express our frustration.
Eskom as a supplier
In most of the vast areas where seed is grown, Eskom supplies electricity by means of overhead lines – also referred to as the grid. These lines are usually part of their distribution network that supply 11kV or 22kV – also termed MV (medium voltage) lines.
Eskom installs a transformer close to the points where end-users utilise the electricity. The transformer reduces the voltage of the line from MV to LV (low voltage), which is then supplied and metered by Eskom to us at 400V.
Eskom charges end-users for each point of supply through an account that contains various service fees, network charges, supply charges and redundancy charges (to name but a few). These are all fixed charges, which means they are charged to our account whether we use electricity or not. These charges often range between R1 925 and R4 670 per point of supply.
Only once we have paid these charges, we are able to start using electricity – for which we are again charged through our consumption measured in kWh (charges will depend on the tariff we are on). A fixed tariff applies throughout the time of day – these are termed land rate, home power, etc.
A time of use (TOU) tariff is one that fluctuates throughout the day, according to the average demand of the network. It is divided into peak, standard and off-peak times with peak being the most expensive and off-peak the cheapest.
The principle applicable when purchasing electricity from the grid, is that as long as you pay, you will receive supply, a scenario that was at the order of the day before load shedding became an ongoing reality in 2008. Since then, we have grown accustomed to paying a monthly amount as part of our operational expenses (OPEX) for the electricity supplied to our properties, also termed pay-as-you-go or as you use the resource.
This is very similar to the way contract harvesters are paid (pay-as-you-go) to harvest our fields, due to the cost of ownership of the equipment, which can cost several millions.
While it may make financial sense to use contract harvesters for a seasonal asset, it need not be the case for your electricity supply.
When the supply of electricity from an off-grid Solar PV system, which would set you back R450 000 for a 15-year supply (and yes, that’s how long the lithium ion batteries are designed to last), you’d think again about the money you pay in the form of ‘fixed charges’ to Eskom.
But can it really be done? The answer is yes, but only if you work with a reputable solar PV provider. The correct supplier will provide you with a properly engineered solution specifically designed to meet your requirements. You may initially pay more for the professional solution, but you can rest assured that your expected benefits will be guaranteed. This is often not the case with so-called DIY suppliers.
Off-grid – Heidelberg (GP): In Heidelberg (Gauteng), Mr Van Driel found the quote from Eskom to supply his farmstead via a new distribution line excessive. Instead he opted to install a 9,75kWp solar PV system, coupled to a 10kVA inverter and a 15,36kWh battery. He also installed a 13kVA diesel generator to supply charge to the batteries during adverse weather. By investing in this solution Mr Van Driel enjoys an uninterrupted power supply, although he has never had any grid supply to his farmstead.
Grid-integrated – Mossel Bay: Mr Botha from Mossel Bay had an existing grid supply to his house from the local municipality, but felt the consumption cost of R1,82 per kWh was excessive. He installed a system similar to Mr Van Driel, but with supply from the grid to maintain his home on rainy days (instead of the generator used in case one).
Look at the generation profiles for October 2018 (Figure 1). The red sections on the bar graph indicate the consumption from the grid, the blue from the battery and the yellow from the Solar PV. The days with a larger red section were cloudy days.
Figure 1: Generation profiles for October 2018.
Grid-integrated – Robertson: Graham Beck Wines opted for a grid-tied solution for their winery, which was installed during the latter half of 2016. Apart from the financial saving of using less power from the Langeberg municipality, this solar solution has established their brand as a green producer of MCC for their local and international markets.
All three the scenarios are termed small-scale embedded generation or SSEG.
Since late 2017 there has been several changes to the regulatory environment for legally installing or connecting alternative energy generation facilities. The most pertinent reference documents are Schedule II to the Electricity Regulation Act, 2006 (Act 4 of 2006, i.e. ERA), the Integrated Resource Plan (IRP) and Nersa rules.
The aspect of licencing changed to the effect that any generation facility in excess of 1MW requires a licence. Given the traditional dryland farming operation of the oilseed industry and the scale on which extraction and pressing is done, this burden would not easily befall the industry (given traditional oilseed farming electricity requirements). However, it is something to keep in mind should you consider expanding to that scale.
In accordance with the ERA Act, all generation facilities must be registered with Nersa. Nersa is still in the process of developing these rules for registration, and at the time of writing we are still awaiting the imminent release of the updated IRP, which would direct government’s plans for the future generation of electricity.
Earlier this year, some public benefit organisations (PBOs) flooded social media with the comment: “Nersa will tax your solar panel”. With respect, these PBOs used an incorrect interpretation of the ERA Act, whereby Nersa is funded from licenced generation facilities, to create public mayhem. There is no need to worry about your SSEG system being arbitrarily taxed – as long as you have complied with regulation and registration from the start.
In addition, you will need to apply to and obtain consent (for the types of systems in scenarios one and two) from your electricity supply utility, either Eskom or the municipality. Most utilities have processes and policies in place for this. Once you have successfully navigated these hurdles, you will have years and years of independent and cost-effective electricity supply.
Although we like to criticise Eskom, we should recognise and respect the fact that they have kept the lights on in South Africa for many years. The increased costs of operation and the rise of cheaper, efficient alternatives have driven them to rethink their business of generating from coal resources, but it is difficult to turn such a large ship!
Solar PV has become a viable alternative for farmers due to ever increasing utility tariffs and the reduction in costs of alternative energy technology.
The question is simply this: Does it make financial sense for your farming operation? If not, wait until the utility tariff increases further and once it does, it ultimately becomes a no-brainer. Add a financing solution to the offering (supported by most leading financial institutions) and can you simply divert your former Eskom expense to the repayment of the loan for a financially viable solution.
But most importantly, find a reputable supplier of these products and services with a proven track record. – DeVilliers Botha, COO, Solareff
For more information, phone DeVilliers on 082 924 7342.