Trends impacting solar power supply and demand

Johannesburg - Several factors have led to a decline in South Africans buying solar panels, mainly because there hasn't been any loadshedding for several months.

Clive Hogarth, Head of Retail Pricing at Old Mutual Insure, says that 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 the addition of the "service and capacity" fees for prepaid customers means that some of the avenues for savings on consumers' electricity bills have reduced.

"The demand for residential and commercial solar has historically been driven by load shedding. 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 Clive.

According to Nersa's statistics, there is still 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," says Hogarth. "But the industry is facing challenges with some suppliers entering business rescue."

He notes that there are several trends 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 the installation of solar panels producing more than 275W of energy fell away at the end of February.

"However, we anticipate a range of factors that could lead to additional investments," Hogarth adds.

He notes that 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. 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."

He urges consumers and business owners alike to 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.

He further adds that consumers should check with their insurer to ensure that all the requisite safety requirements are met – which would typically include an updated certificate of compliance.