Absa is cognisant of how debilitating load shedding is on business and home life, which is why it promotes the addition of solar energy technologies to a residential property. Portia Letlape, Absa’s Portfolio Manager – ECM and Rewards, Home Loans, provides insight and justifies why an upfront expense will provide long-term energy savings.
“Actually, the price of photovoltaic (PV) or solar systems has declined significantly in the past decade,” says Letlape. ‘Despite this, the initial capital costs of PV/solar systems are relatively high when compared to non-renewable energy sources such as diesel generators. However, unlike non-renewables, PV has no fuel costs and low operation and maintenance costs. One has to therefore think of these systems as a long-term investment.”
Letlape provides a formula of sorts that confirms this. “The cost of energy (R/kWh) from PV systems will vary depending on the size of the system and the total outlay costs, including capital costs and O&Ms, over the system’s lifespan. Typically, larger PV systems offer lower energy costs over the PV system’s lifespan when compared to smaller systems due to the lower installation costs. The financial feasibility of PV systems, therefore, depends on the cost of energy from the PV system over its lifespan and it being lower than the energy costs that one would incur when consuming energy from Eskom or the local municipality over the same time period, while also taking into account the expected annual increases.”
For instance, if a PV/solar system installed at a shopping centre costs about R14/W, and if the system is a 500 kWp installation, the total cost of the installation is thus R14/Wp x 500 000 W = R7 000 000. In the case of a smaller PV system, for example, a 50kWp system at a filling station, at an installation cost of R16/Wp, the total cost of the installation will be R800 000. “Obviously, homes don’t require this amount of power, and because the PV systems are modular, a homeowner can even choose a single module that generates just a few watts of electricity, say 1 kW, which is capable of generating 5000 watts during the day using the sun’s power. That’s enough to provide 8-10 hours of power if the power is used selectively,” says Letlape.
Solar installers have the means to determine the size of installation required, but this requires input from the homeowners, such as their understanding of the energy use or consumption of the household. For example, what is the current monthly electricity usage, size of your home and the maximum number of appliances needed to be run at any single moment? Some of this information can be acquired from the appliances themselves as they usually indicate the watt usage of the model. Adding all those together will determine part of your energy needs.
There also may be no need, or a financial constraint, in installing a PV/solar system that will provide an uninterrupted power supply to the entire household. Some solar systems are “grid-tied”, meaning they are connected to the national grid through an inverter, which allows the meeting of power needs during the day but reverts to the national power supply during the night. They can also sometimes produce more electricity than is actually needed, which can be stored in batteries or fed back to the national grid.
“Grid-tied systems have become increasingly more popular in urban areas, and more so within the commercial and industrial sectors to offset electricity usage from the grid,” says Letlape. “Understand that municipal areas have higher electricity tariffs than Eskom, which really improves the financial feasibility of PV systems. But be aware that regulations govern the feeding of electricity from the PV modules to the local electricity network.”
Local municipalities also have their own bylaws governing the renewable energy tariffs and system configurations, which include aspects such as net metering and embedded generation. “Embedded generation refers to the connection of electricity produced into the national grid, which is the case for PV systems,” explains Letlape. “Some municipalities also do not allow for the installation of PV systems, whereas others are willing to purchase power from a resident at attractive rates. There are even national regulations that govern PV systems, such as The Electricity Regulations Act, 2016, which requires generation licences as specified.
“There is also SANS 10142, a technical standard relating to the wiring of premises and connections to a PV system.”
Most solar/PV modules come with a warranty of 25 years, meaning that power output will not get lower than 80% of the rated power during those 25 years, but this does vary depending on the manufacturer and solar panel materials. Other components may need replacing after every 10 years of service. These are all factors that must be considered beyond the initial outlay costs.
If you believe that you cannot afford a solar system, Absa asks that you consider the following when it comes to a financial solution. “Our existing home loan customers can access the equity in a number of ways,” says Letlape. ‘There is Further Advance, which allows you to tap into the increased value of your property and register a further bond. The increased value is paid out in cash, although bond registration costs are payable.
“Re Advance allows a homeowner to access what has already been paid into the home loan account, which obviously does not require a new bond registration nor the associated costs. Flexi Reserve is yet another consideration, which provides that if you have paid more than the required instalment, pre-paid funds are available and can be accessed.
“Finally, you can consider switching. If you have a home loan account with another bank, consider switching that to Absa, where you may find you can access the equity in your property. There is also the potential for a personal loan or credit card, which can be applied for online or with one of the Absa personal bankers.”
Writer : Kerry Dimmer