Korsten, and three co-authors, reported in 2017 that electricity utilities throughout the world are responding to the increased uptake of rooftop solar photovoltaic (PV) in the household sector. Although the increase of decentralized solar PV is seen as progressive for sustainable development, it is not without financial implications for electricity utilities. There was a concern in South Africa that allowing rooftop solar PV connection to the grid will reduce electricity sales for local governments and thus their revenue streams from electricity. An investigation was carried out to examine the financial impact that increasing installations of grid-connected rooftop PV at a household level might have on local governments in South Africa. Stellenbosch Municipality was used as a case study, and two different approaches were used. The first considered the maximum grid capacity for distributed generation, as determined by the South African grid standards. The second was based on individual households that would gain the most financial benefit from investing in rooftop PV.
The authors concluded that a financial reduction in total electricity revenue of 0.6–2.4% could occur depending on the approach followed. A fixed monthly charge of about R363 would counter these potential financial loses, but entail a disincentive for households to invest in solar PV installations. year. If the municipality would consider a charge for distributed generation owners to cover the net loss of R9 836 373, the fixed monthly charge for the 2 255 households would be R363.50 per month. An approximate similar amount is calculated to cover a net loss of R2 352 587, namely a R362.40 monthly charge for the 541 households. However, fixed charges can be very counter-productive and represent a real disincentive for households to invest in solar PV installations.
It is encouraging that in 2016 Stellenbosch Municipality released a new policy for embedded generation, with a tariff structure that indicates a fixed monthly charge of R140.00, and a buy-back option of 10% below the Eskom rate. The fixed monthly charge for embedded generation users is on top of the regular fixed monthly charge of R142.09 for pre-paid meter consumers, and R255.18 for credit meter consumers, when using more than 500 kWh electricity per month. The potential influence of such a policy on household behavior is the subject of further research. However, a better approach for the Municipality would be to allow for a small increase in rates and taxes in higher income areas to absorb the potential losses, which would incentive a sustainable energy transition. This is also the basis for further research.
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