GoSolr’s second quarterly “Light Paper,” released this week, underscores the urgent need for a revamped, cooperative approach between government and the private sector to tackle the escalating energy costs.
As South Africa transitions from grappling with the impacts of loadshedding to confronting the rising cost of power—exacerbated by recent regulatory changes including potential Eskom tariff increases, import duties on solar panels, and new fixed fees for pre-paid electricity meters in Johannesburg—the issue of energy affordability has become increasingly pressing.
Andrew Middleton, Co-Founder and CEO of GoSolr, comments, “South Africans are feeling the strain of increasing electricity prices. While the adoption of renewable energy was initially spurred by loadshedding, the current focus is shifting towards cost savings as solar and other renewable energy options become more affordable.”
The rise in private renewable energy generation is easing the demand on traditional power sources. With Eskom’s unbundling creating room for new electricity providers, the country’s electricity availability factor reached 66% by the second quarter of this year, marking a 15% improvement since the beginning of 2024, thanks largely to contributions from alternative energy sources.
Despite these improvements, higher electricity costs remain a concern. Eskom’s financial difficulties, coupled with rising costs and debt, are driving the utility to push for higher tariffs, potentially increasing by up to 44% in 2025.
“While the initial surge in solar adoption in South Africa was driven by our energy crisis, we are now entering the second phase of the clean energy movement, which is primarily motivated by cost considerations,” explains Middleton. “In the future, the focus will shift to ensuring that the power we use has the least environmental impact.”
He adds, “As we navigate this second phase, it is crucial that reliable and clean energy becomes more accessible to all consumers, including those with lower incomes who have previously been excluded. With decreasing costs for solar installations, this goal is becoming increasingly feasible. Our data shows that customers are experiencing significant cost savings compared to relying solely on the grid.”
Middleton emphasizes the growing need for reliable and affordable energy amidst rising living costs. He notes, “As discussions continue around electricity tariffs, infrastructure costs, and import duties, transitioning to renewable energy appears increasingly attractive. However, regulatory hurdles still pose challenges to progress.”
GoSolr advocates for a more balanced approach to energy pricing, opposing Eskom’s proposed 70/30 revenue split—which allocates 70% to fixed charges and 30% to energy charges—as it diverges from international standards. Instead, they recommend a fixed versus energy charge ratio of no more than 40/60, aligning with global best practices, and urge the government to provide incentives for solar energy users.
“Effective market signals should include eliminating the 10% import tax on solar panels and introducing incentives that encourage households to use batteries during peak hours and critical periods,” Middleton suggests.
He concludes, “Democratizing access to energy means making it affordable for everyone. It’s unacceptable if rising electricity prices force people to choose between essentials like food and electricity. As solar costs decrease, accessibility improves, but sensible tariff reform is essential. Collaboration between government and the private sector is key to making clean energy more affordable and widespread by adopting international best practices and incentivizing solar usage.”