Why we should invest in solar panels in South Africa

Worsening climate disasters and soaring fossil fuel prices are sharpening the need for a rapid and just transition to renewable energy. For South Africa, the added crisis of frequent blackouts makes this even more urgent. Harnessing zero-emission, low-cost energy from South Africa’s 2,500 annual hours of sunshine is the proven solution.

Solar is the country’s most abundant and reliable energy source, and panels can be installed quickly in areas that need them most. Moreover, the cost of solar photovoltaics (PV) has plummeted over the past decade. There has never been a better time or more pressing need to invest in solar panels. 

Employing solar as the solution to load shedding would not only help with the energy and climate crisis but also boost the economy. “The shortage of electricity is a huge constraint on our economic growth and job creation”, President Cyril Ramaphosa said in a July 2022 speech. “It deters investment, it reduces our economy’s competitiveness.” For real energy security, stable power prices and sustainable employment opportunities, renewables are “the only credible path”, said UN Secretary-General António Guterres in September 2022. There is “no future” without renewables, he stressed.

While replacing fossil fuels with solar energy is fundamental to environmental and economic stability, it is also a solid financial investment. “Upfront costs for solar and wind power account for 80 per cent of lifetime costs – meaning big investments today will reap even bigger rewards tomorrow”, assured Gutteres. 

Solar is booming worldwide

Solar has become one of the most cost-competitive and fastest-growing energies in the world, according to Invictus Capital. Installations in the last decade have surpassed even the most ambitious projections. Every year, the world sets new records for solar deployment. In 2021, there were 173.5 gigawatts (GW) of new solar capacity installations. Experts predict that the new capacity will reach 260 GW in 2022.

South Africa’s solar opportunity 

South Africa has one of the highest and most stable solar radiation levels globally. Investing in this power alongside other renewables and storage is the least-costly and quickest pathway to achieve energy security. “To solve load shedding as quickly as possible, and to build the foundation of an optimal, low-cost future energy mix, South Africa should significantly ramp up its investments in solar, wind, storage, and technologies that integrate renewables into the grid”, said Richard Halsey from the International Institute for Sustainable Development (IISD). 

Already, the success of South Africa’s Renewable Energy Independent Power Producers Procurement Program (REIPPPP) in embracing clean energy has led to reduced energy production costs, job creation and international investment. Furthermore, these projects are often located in rural areas, benefitting communities through employment opportunities, development and improved quality of life. 

However, despite this progress, solar accounted for just 1.5 per cent of South Africa’s energy consumption in 2021. This presents both a challenge and a huge opportunity. Unlocking investments for manufacturing, supply chain and skills is essential to usher in the future of widespread solar power. The provision of climate finance – such as South Africa’s Just Energy Transition Partnership – along with government investments and energy market liberalisation would unlock the private investment needed for South Africa’s solar industry to thrive. 

Businesses and households are embracing solar

As well as government efforts, businesses and households are directly addressing the energy crisis by investing in solar systems. Falling upfront costs, long-term savings, a lower environmental footprint and the promise of energy independence and security are making solar panels an increasingly attractive option for those with the means to invest.  

Why businesses should invest in solar panels

Solar is a solid business investment, and many are seizing the opportunity to create their own clean power. A 2020 report by GreenAgri found that solar PV can pay back within three to 12 years of installation, providing free energy for about 15 years thereafter. Solar PV also means businesses can benefit from tax allowance incentives, lower carbon tax and payments for electricity they feed back into the grid. Businesses can also acquire solar through power purchase agreements (PPAs). This is where, rather than owning the system, the customer purchases the panels’ energy output over their lifetime. This provides a 100 per cent asset-backed investment offering stable, long-term returns.

For example, Ford’s Silverton plant in Pretoria has installed one of the world’s largest solar carports via a long-term PPA with SolarAfrica. This generates 13.5 MW of emissions-free electricity to reduce the plant’s reliance on the grid, and improve efficiencies and cost competitiveness. Cape Town’s Golden Arrow bus service has also invested in solar plants to power a new fleet of electric buses, as well as feeding electricity back to power the city’s grid. The solar installations are saving 542 tonnes of carbon emissions per year and have reduced electricity costs by 95 per cent, resulting in a payback period of 5.5 years.

A ‘revolution’ in home solar uptake

Driven by blackouts and soaring energy bills, home solar systems have boomed in South Africa in 2022. In the first five months of the year alone, South Africa imported solar PV panels worth nearly R2.2 billion, a Reuters analysis of customs data found. “It’s completely unrecognised by the government as to how big an industry it’s become”, said Frank Spencer from the South African Photovoltaic Industry Association. “It’s a silent revolution.”

Home solar systems can connect to the national or municipal electricity grid, run off-grid or a combination of both. These systems can reduce household electricity costs for decades. In some provinces, households can sell surplus electricity back to the grid. However, very few home solar users do this, meaning valuable solar generation is going to waste.

In July 2022, Ramaphosa and Eskom announced upcoming nationwide reforms to address this. “To incentivise greater uptake of rooftop solar, Eskom will develop rules and a pricing structure – known as a feed-in tariff – for all commercial and residential installations on its network”, said Ramaphosa. “This means that those who can and have installed solar panels in their homes or businesses will be able to sell surplus power they don’t need to Eskom.”

Why we should invest in solar panels

From the national to the household level, solar generates long-term, stable returns on investments while offering more energy security and independence. The wonder of the humble solar panel is that it also underpins wider socio-economic and environmental development, making them a sweeping solution for many of today’s crises.  

A powerful climate solution

Fossil fuels are the leading driver of climate change, responsible for about 75 per cent of human-produced greenhouse gas (GHG) emissions. As an alternative energy source, zero-emissions solar is one of the most powerful solutions to reduce emissions and tackle the climate crisis. Transitioning to 100 per cent renewable energy generation, such as solar, could eliminate the equivalent of more than one billion tonnes of CO2 annually by 2050 in South Africa alone, according to a 2021 study from Stanford University.

The planet-warming GHGs emitted today remain in our atmosphere for up to a thousand years. Therefore, investing now to avoid these emissions would have a monumental impact on the planet for generations to come. As a nation particularly vulnerable to climate change, South Africa cannot afford not to. Already, people are suffering the consequences of climate-induced extreme heat, droughts, floods, and diseases that impact health, livelihoods, and food security. Investing in solar directly mitigates these existential dangers. Deploying solar at a rate consistent with the goals of the Paris Agreement is one of the most critical climate actions that nations can take to create a safer future. 

Cleaner air and better health

South Africa’s polluting coal-based economy comes at a significant cost to health and wellbeing. For example, satellite images from 2018 found that Mpumalanga’s coal belt was the world’s most polluted hotspot for nitrogen dioxide and sulphur dioxide. The region’s toxic emissions also spill into neighbouring Gauteng City-Region, impacting health over a large area. Nationally, the early deaths, disease and lost working days due to fossil fuel-associated air pollution costs South Africa a staggering R550 billion a year, the IISD has calculated.

According to government analysis, South Africa requires up to R4 trillion over the next three decades to transition to a net-zero economy. This includes not just the transition from coal but also decarbonising transport, agriculture and tourism. This amounts to less than eight years of current fossil fuel-associated health costs. Progressive green policies to replace dirty coal generation with zero-emissions solar would all but eliminate these costs in the future, while also improving the quality of life and health for millions of South Africans. 

Affordable and efficient energy

While solar installation costs are falling and fossil fuel prices are rising, the economic imperative to invest in solar panels is growing even stronger. Solar PV costs can be offset by providing free electricity throughout most of their 20-year to 25-year lifespan. The result is protection from fossil fuel price shocks, and ultimately, lower bills in the long term. Moreover, solar offers more than cheaper electricity. For example, the electrification of transport, such as minibus taxis, allows for affordable and sustainable solar-powered travel.

Renewable energy is also far more efficient than fossil fuel-generated energy. By 2050, a 100 per cent solar-wind-water energy system would reduce South Africa’s end-use energy needs by 55 per cent. The associated cost savings is almost a 63 per cent reduction nationwide, equivalent to an astonishing R2.3 trillion annually. 

Improved energy security and access

Solar is a leading solution to South Africa’s energy crisis and load-shedding woes, which costs the economy R4 billion each day that the lights are off. A report by Meridian Economics found that 96.5 per cent of all of 2021’s blackouts could have been avoided had just 5 GW of additional wind and solar capacity been available. It also outlines an achievable plan for increasing renewable capacity – much of it solar – that would effectively end load shedding by 2024.

Looking long term, along with wind and storage, solar can contribute to an entirely decarbonised energy system that provides 100 per cent grid stability in South Africa. This is because wind and solar generation are complementary by nature, while storage solutions, such as batteries, offer peaking and backup power as required. Solar energy is also redistributive and democratic. For rural areas, solar energy generates power without expensive connections to the electricity grid, meaning it is the best solution for the 15 per cent of the population still living without access to energy. 

Sustainable jobs and inclusive economic growth

The solar industry promotes job creation through a variety of new employment opportunities. There are also opportunities for solar to enhance existing incomes, such as farmers installing solar on agricultural land. The widespread use of solar power systems also stimulates sustainable, local economic growth, promoting job creation even further. For example, the 100 MW KaXu solar project generated about 1,700 temporary and 80 permanent jobs in the Northern Cape, a province with one of the highest youth unemployment rates in the world. It is part-owned by the local community and supports long-term education and economic development initiatives in the area, helping to build a local green economy.

However, South Africa’s renewable industry is still fledgling and suffers from skills shortages, highlights renewable energy group Enel. “The renewable energy industry needs electrical engineers, operations and maintenance managers, and mechanical technicians. Skills in manufacturing, assembly, and installation are also needed”, the group said. This is in addition to business management, marketing, sales and finance roles. However, reskilling and training programmes are helping to address this. “With financial aid, educational support, and skills development programmes constantly being instituted, it is hopeful that the skills gap will continue to shrink and that new job opportunities will become available to the many unemployed in the country”, Enel added.

South Africa’s path to solar power

Solar is a powerful and proven solution to many of South Africa’s critical socio-economic challenges. Rapidly scaling up solar in South Africa’s energy mix would result in massive annual savings in energy and health costs that would effectively pay for the transition in a matter of years. The challenge is mobilising the financial flows and market conditions to allow the industry to flourish and unlock long-term benefits.

Ramaphosa’s 10-point emergency energy plan, announced in July 2022, includes some measures to accelerate solar deployment in South Africa. However, there is more that the government could do to advance a rapid transition. Redirecting government spending away from new gas developments would be a crucial start. Such investments in gas projects could be an “expensive mistake“, warned the IISD. Therefore, the government turning its back on gas would also send a clear message that South Africa is dedicated to responsible green growth. This would lay the groundwork to attract the billions of dollars of investment needed to help South Africa’s green economy boom.