Several factors have led to a decline in South Africans buying solar panels – primarily the lack of loadshedding during the past few months. What other trends are impacting solar power supply and demand?
According to Clive Hogarth, Head of Retail Pricing at Old Mutual Insure, electricity tariff hikes could see consumers investigating solar power solutions again, emphasising the need to ensure buildings and contents are adequately insured. However, he does note that adding the “service and capacity” fees for prepaid customers means that some of the avenues for savings on consumers’ electricity bills have been reduced.
“The demand for residential and commercial solar has historically been driven by loadshedding. With the recent improvement in Eskom's performance, demand has dropped. However, there are still many corporates who are installing solar – driven by their corporate social responsibility and cost-saving initiatives,” says Hogarth.
According to the National Energy Regulator of South Africa (Nersa)’s statistics, there is still an appetite for solar for commercial customers.
“With the lower demand, the focus for many solar installers has now shifted to maintenance and addressing issues with existing systems, many of which were installed with varying degrees of quality,” explains Hogarth. “But the industry is facing challenges with some suppliers entering business rescue.”
He notes that several trends are impacting the solar and insurance market.
The Department of Trade, Industry, and Competition recently introduced a 10% tariff on imported panels in a bid to support the South African industry. In addition, the tax credit for installing solar panels producing more than 275 W of energy fell away at the end of February.
“However, we anticipate a range of factors that could lead to additional investments,” Hogarth adds.
Legislative changes have generated more interest in wheeling electricity, which could increase corporate demand. However, there is still a lot of uncertainty, particularly with the objections Eskom has raised with Nersa. The regulation is currently open for commentary.
“Solar (and battery) backup systems do increase the risk of a policyholder to a degree. Despite the obvious theft risk, the high-voltage cabling and batteries do pose a fire risk. Modern batteries use lithium-ion compounds, which are very safe – if installed correctly. Unfortunately, this is not always the case and there have been instances in which Old Mutual Insure has dealt with claims caused by fires because of poorly installed solar (and battery backup) systems.”
Consumers and business owners must ensure they are adequately insured, especially when investing in new forms of power.
“There is always a risk that someone will install solar, or a backup power system without having their buildings (or contents) revalued, which could leave them underinsured should they have a loss,” says Hogarth.
It’s essential to check with insurers to ensure that all the requisite safety requirements are met, typically including an updated certificate of compliance.
