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In the heart of South Africa, the Tingala Lodge battles persistent energy cuts that disrupt daily life. As the country grapples with escalating power outages, major banks like FirstRand, Standard Bank, Absa, and Nedbank are offering financial support for a solar revolution. Individuals, like 80-year-old lodge owner Tom Joubert, and businesses are turning to renewable energy. With solar orders skyrocketing, the International Monetary Fund anticipates a 1.9% growth in South Africa’s economy by 2024. Despite challenges, the shift to solar is seen as a beacon of hope, offering economic relief and a sustainable energy future.
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South Africans Are Going Green to Escape Incessant Power Cuts
By Adelaide Changole and Antony Sguazzin
The Tingala lodge is about a six-hour drive northeast of Johannesburg, where the savanna is dotted with dense clusters of trees and shrubs. Located in a nature conservancy, the lodge is popular with visitors looking to tour nearby Kruger National Park. But unrelenting energy cuts have made running the business a continual challenge. “When the power goes off, the toilets don’t work, the showers don’t work and that is a major interruption,” said 80-year-old owner Tom Joubert.
South Africa has experienced intermittent power cuts, known locally as load shedding, since 2008, but outages this year have escalated to the point where they stall factory operations, disrupt life and snarl traffic for extended periods on almost a daily basis.
Imposed by state-owned power utility Eskom Holdings SOC Ltd. in an attempt to protect the grid from collapse, these blackouts occur in two-to-four-hour blocks, sometimes multiple times a day. The number of outages reached record levels this year, and as of August, the utility’s energy availability factor — a measure of how much energy the grid can handle — was at 60%, meaning more than a third of power supply was inaccessible to customers.
While power cuts have eased for now, Eskom has continued to hike energy prices to cover its own rising costs.
With no immediate fix on the horizon, South Africans are increasingly turning to renewable energy, and the country’s biggest banks are stepping in to help. Since the beginning of the year, FirstRand Ltd, Standard Bank Group Ltd, Absa Group Ltd and Nedbank Group Ltd have rolled out financing options to assist individuals and businesses transition to solar. These efforts, combined with government clean-energy incentives, are expected to have a wider impact: Thanks in part to private power generation, the International Monetary Fund predicts that South Africa’s national economy will grow by 1.9% in 2024 — up from an anticipated 0.9% this year.
Orders are already surging. In a post on X, economist Gaylor Montmasson-Clair observed that South Africa imported $2.5 billion (47 billion rand) worth of solar panels, lithium-ion batteries and inverters in the first six months of 2023, compared to $1.7 billion total in 2022. For homeowners, solar installations don’t have a set price tag; municipal energy bills suggest how many panels and batteries might be needed. But a system with 8 to 12 panels, an inverter and battery storage — roughly what’s needed to power a single house — run about $13,250, with smaller installations costing about $9,800.
In Joubert’s case, setting up the 16-panel solar installation that will liberate Tingala from Eskom will set him back around $18,380. He thinks it’s worth it. “We want to go off-grid so that we can control the power supply,” he said, estimating he’d save about $750 a month in energy bills.
To individuals and small business owners like Joubert, Absa has given out $69 million in loans for renewable energy options, including solar products, while Standard Bank loaned $32 million in the first eight months of this year through its “solar-for-home” program, enabling around 450 homes to set up installations.
Companies are making a similar calculus. In May 2022, fed up with the Eskom-imposed electricity rationing that forced the company to curtail its power use by as much as 20%, gold mining company Pan African Resources Plc decided to transition to solar.
Pan African hired solar installer and renewables developer JUWI South Africa to build a 10-megawatt, $8.13 million solar farm to power its Elikhulu treatment plant east of Johannesburg. The plant, which extracts traces of gold from old mine waste, now relies on solar to meet a third of its power needs.
So far, FirstRand’s Rand Merchant Bank has financed $106 million worth of utility-scale private power projects, and Absa has invested $1.2 billion in renewable efforts. Of the $4.4 billion rand that Standard Bank has loaned through its sustainable finance initiatives, $58 million have gone to business installations and solar providers. Sustainable finance is “the fastest growing part of our business,” said Standard Chief Executive Officer Sim Tshabalala.
Already, the Elikhulu project saved Pan African an estimated $217,600 in July and is expected to save the company up to $1.9 million annually. It’s also reduced the gold producer’s carbon footprint by 6%. Pan-African is planning to expand its solar operation, and is developing a separate renewable-run facility to power another mine several hours away.
“Our ambition is to be 30% renewable energy mix by 2027 and we have set an ambitious goal to get to 50% by 2030,” said Barry Naicker, Group ESG Manager at Pan African Resources.
The work of actually installing these systems falls on specialists like Richard Douglas, who founded Greenway Solar in Randburg seven years ago. In his first year, he handled six installations in total. He’s on track to hit 180 this year, including larger-scale projects. Douglas recently installed a 200-kilowatt solar plant at a horse farm in northern Johannesburg, which can fully power the farm’s operations — including an air conditioning unit for the owner’s four pet hens — without any backup for up to two days in summer and one in winter.
As demand grows and technology costs fall, Douglas is considering opening a second office. “The uptake is huge and it is being driven by the need for backup power,” he remarked.
But in a country that the Thomas Piketty-backed World Inequality Lab has named the world’s most unequal, not all South Africans are able to simply drop Eskom. Solar affordability can determine, quite literally, who has access to power — and without panels, a generation of South Africans stands to be left behind.
Earlier this year, opposition parties and the National Union of Metalworkers of South Africa sued the government on the grounds that the power cuts were denying people their basic rights to education and health. During outages, chidren can’t attend school or access wifi. Hospitals have had to delay critical operations and expensive medical equipment has been damaged by constant blackouts and electricity surges. The case, which was eventually dropped, was one of at least four filed against the government over Eskom’s practice of loadshedding.
For some South Africans, solar can present other challenges. 60-year-old Thembi Elizabeth Mathebula, who runs the popular Joe’s Butchery in Johannesburg’s Alexandra Township, bought her first solar panel four years ago only to see it vanish within a few months. “It cost 16,000 rand,” she told Bloomberg at her establishment. “Once it was stolen, I said, ‘I don’t have money, let me put a smaller one,’ which was about 6,000 rand. But when we got loadshedding, thieves jumped my fence and took it.”
Mathebula now cools her meat display with a battery-operated chiller, and uses kerosene and liquefied petroleum gas to cook. She also has a generator so she can stay open during blackouts. But this isn’t a long-term solution – diesel for the generator can costs up to $32 a day, and that adds up fast.
Even with the risk of theft, Mathebula is considering giving renewable energy another try. “I was thinking that I must go to the bank to ask if they can lend me money.”
- Investors reassured but medium term risks loom for SA economy – Thea Fourie, S&P Global Market Intelligence
- SA economy falls short of Government forecasts – Dawie Roodt
- Solar energy firm Voltalia partners with Richards Bay Minerals
© 2023 Bloomberg L.P.
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