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An investigation into the financial impact of residential Rooftop PV on Stellenbosch Municipality

Korsten, Nikkie (2016-03)

Thesis (MPhil)--Stellenbosch University, 2016.

Thesis

ENGLISH SUMMARY : Worldwide, electricity utilities are recognising and responding to the threat that a large uptake of rooftop photovoltaic (PV) solar installations might have on their traditional business model, based on volumetric sales. Likewise, in South Africa there is a concern that the trend of households investing in rooftop PV might have significant impact on the business model of electricity delivery services by Eskom and local governments. Since South African municipalities are responsible for managing electricity distribution, they face similar challenges to traditional energy utilities across the world. Historically, South African municipalities served as local distributors of electricity and many municipalities relied on the revenue generated from electricity sales to cross-subsidise other services that were underfunded. If the number of rooftop PV installations continues to rise in South Africa, this might have a negative impact on the financial balance of South African municipalities. This research investigates the financial impact that increasing installations of gridconnected rooftop PV at a household level might have on local governments, using Stellenbosch Municipality as a case study. An extreme-case scenario approach is used to measure the financial impact. Assumed in this scenario is that the absolute maximum of installed embedded generated electricity, as set by NRS standard, will be channeled back to the grid by households. The NRS standard provides a guide as to how much maximum installed embedded generated electricity can be fed to the grid before an in-depth grid study needs to be conducted. The research looks specifically at the residential areas in Stellenbosch with high electricity use, determined by an examination of the electricity use in the different suburbs. Moreover, criteria are set to determine which households from these high electricity use suburbs may be regarded as potential investors in solar rooftop PV. If these criteria are applied, it means 541 households could (each) potentially connect a 3 kWp rooftop PV system. This leads to an annual reduction of approximately ZAR 1.3 million in the municipality’s expenditure for the electricity supply from Eskom. It also leads to a loss in income of ZAR 3.7 million by the municipality as a result of electricity sales reduction, resulting in a net loss of ZAR 2.4 million. The net loss would be equivalent to a 0.6% financial reduction on the total electricity revenue of ZAR 413.7 million for the municipal financial year 2013/2014. If the maximum grid capacity approach were practised, this would mean 2 255 households would be able to connect a 3 kWp solar system to the grid. This would result in a loss in income of ZAR 15.3 million and a saving of ZAR 5.5 million. The net loss would be ZAR 9.8 million, which would be equivalent to a 2.4% reduction on the total electricity revenue of ZAR 413.7 million for the municipal financial year 2013/2014.

AFRIKAANSE OPSOMMING : Elektrisiteitsverskaffers oor die wêreld heen gee erkenning aan en reageer op die moontlike bedreiging wat grootskaalse gebruik van dak-fotovoltaïese (FV) soninstallasies vir hul tradisionele sakemodelle op volumetriese skaal kan inhou. In Suid-Afrika is daar ook kommer dat die neiging van huishoudings om dak-FV stelsels te installeer aanmerklike gevolge vir die sakemodelle van elektrisiteitsdiensverskaffers soos Eskom en plaaslike regerings kan hê. Aangesien Suid-Afrikaanse munisipaliteite verantwoordelik is vir die bestuur van elektrisiteitsverspreiding, kom hulle voor soortgelyke uitdagings as tradisionele energieverskaffers oor die wêreld heen te staan. Suid-Afrikaanse munisipaliteite dien vir geruime tyd reeds as plaaslike verspreiders van elektrisiteit en talle munisipaliteite is afhanklik van die inkomste wat uit elektrisiteitsverkope gegenereer word om ander dienste wat onderbefonds is, te kruissubsidieer. Indien dak-FV installasies voortgaan om in Suid-Afrika toe te neem, kan dit ʼn negatiewe impak op die finansiële balans van Suid-Afrikaanse munisipaliteite hê. In hierdie studie is ondersoek ingestel na die finansiële impak wat toenemende installasies van netwerkgekoppelde dak-FV installasies op huishoudelike vlak op plaaslike regerings kan hê, met Stellenbosch Munisipaliteit as gevallestudie. ʼn Uiterstegeval-scenario-benadering is gebruik om die finansiële impak te bereken. In hierdie scenario is aanvaar dat die absolute maksimum geïnstalleerde ingebedde gegenereerde elektrisiteit, soos volgens NRS-standaard bepaal, deur huishoudings terug na die netwerk gelei sal word. Die NRS-standaard verskaf ʼn gids rakende die hoeveelheid maksimum geïnstalleerde ingebedde gegenereerde elektrisiteit wat in die netwerk gevoer kan word voordat ʼn diepte-netwerkstudie uitgevoer moet word. Daar is spesifiek gekyk na woongebiede in Stellenbosch met hoë elektrisiteitsverbruik, wat bepaal is deur ʼn ondersoek na die elektrisiteitsverbruik in die onderskeie voorstede. Kriteria is gestel om te bepaal watter huishoudings in hierdie voorstede met hoë elektrisiteitsverbruik as potensiële beleggers in dak-FV stelsels beskou kan word. Indien hierdie kriteria toegepas word, beteken dit dat 541 huishoudings (elk) moontlik ʼn 3 kWp-dak-FV stelsel kan koppel. Dit sal lei tot ʼn jaarlikse verlaging van ongeveer ZAR1.3 miljoen in die Munisipaliteit se uitgawes vir elektrisiteitsverskaffing deur Eskom. Dit lei ook tot ʼn verlore inkomste van ZAR3.7 miljoen deur die Munisipaliteit as gevolg van verlaging van lektrisiteitsverkope, wat tot ʼn netto verlies van ZAR2.4 miljoen sal lei. Die netto verlies sal gelykstaande wees aan ʼn 0.6%- finansiële verlaging van die totale elektrisiteitsinkomste van ZAR413.7 miljoen vir die munisipale finansiële jaar 2013/2014. As die ksimumnetwerkkapasiteitsbenadering toegepas sou word, sal dit beteken dat 2 255 huishoudings ʼn 3 kWp-sonstelsel aan die netwerk sal kan koppel. Dit sal lei tot ʼn verlore inkomste van ZAR15.3 miljoen en ʼn besparing van ZAR5.5 miljoen. Die netto verlies sal ZAR9.8 miljoen wees, wat gelykstaande is aan ʼn 2.4%-verlaging van die totale elektrisiteitsinkomste van ZAR413.7 miljoen vir die munisipale finansiële jaar 2013/2014.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/98351
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