SA’s solar surge is deepening the economic divide, worsening inequality: Lara Williams

In the face of relentless power crises and soaring electricity costs, South Africans are taking matters into their own hands. From households to corporations, the push towards alternative energy sources like solar panels and batteries is gaining momentum. While this move promises economic relief and greater power independence, it also deepens existing inequalities. As affluent segments embrace sustainable solutions, marginalised communities are left in the dark, underscoring systemic failures in governance and investment..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Lara Williams.If you want something done, sometimes you just have to do it yourself. That's the attitude taken by many South African households and companies as they invest in alternative-energy sources to avoid blackouts and soaring electricity tariffs. This movement has clear winners and losers. .___STEADY_PAYWALL___.Fed up with weathering the worst power crisis on record as state-owned utility Eskom struggles with debts and aging coal-fired power plants, businesses are finding ways to generate their own electricity. Most recently, Africa's biggest mobile phone group, MTN, announced that it'll spend 1.9 billion rand ($101 million) by the middle of the year on generators, batteries and renewable energy..Solar panels and home batteries are spreading like wildfire among South Africa's middle classes. Eskom estimates that there's now close to 5.5 gigawatts of rooftop solar installed by households, up from 2.3GW in July 2022 and close to Eskom's own renewable capacity. Meanwhile, the value of battery imports more than doubled in 2023 compared with the previous year..Being free of the creaky grid, which shuts down periodically in what's known locally as load shedding, could help South Africa's economy get back on track after being derailed by rolling blackouts. Consumers are saving money on their steeply rising energy bills and regaining a sense of control over their power access. It's also reduced the severity and frequency of load shedding, as demand for Eskom-generated power drops..But the full picture is more complicated..Read more: Cape Town cracks down on faulty solar installations: Off-grid inverters banned in bid to boost safety.South Africa is already the most unequal country in the world, according to the World Inequality Database, with the top 10% earning 67% of the total national income while the poorest 50% earns just 5.3%. There's been little policy support to make clean energy sources more affordable — a year-long tax break for rooftop solar panels came to an end in February. The result is that only those with enough capital have been able to escape blackouts. Poorer households and smaller businesses continue to be left in the dark or reliant on polluting diesel generators, which are cheaper upfront but much more costly over time..The problem is compounded by issues with the Free Basic Electricity policy – where poor households are meant to receive 50 kWh of free electricity every month – because it hasn't been implemented properly. Research from the Public Affairs Research Institute suggests that 5.4 million poor households should have been getting free power in 2019, but didn't..As tariffs soar erratically — increasing threefold over the past decade — people are increasingly unable to pay for their power, let alone fund their own sources, while government money intended to help isn't reaching them..Eskom isn't winning either. As more people reduce what they're drawing from the grid, the revenue of municipalities and Eskom will decline. Electricity minister Kgosientsho Ramokgopa warned that the trend would be compounded as those who go off-grid by investing in rooftop solar are likely to be "good payers," leaving the utility relying on less affluent customers. That'll further impact Eskom's ability to resolve its issues and provide services equitably to all South Africans. .Read more: South Africa's wind power surge: 34 wind farms generate over 3,400MW (with more on the horizon!).Some hope that broad implementation of feed-in tariffs, whereby households are paid to supply excess electricity to the grid, may help cushion the blow. Municipalities can buy solar-generated power from households, and then sell it to other consumers at a profit. It's proved effective at stimulating investment in clean energy in Vietnam, for example..We'll see the same pattern play out in South Africa's next crisis: water. Poor public policy, defective infrastructure and mismanagement are all contributing to problems with supplies, ranging from dangerously dirty H2O to taps running dry. Wealthy folks are once again able to afford their own solutions, installing systems to collect rainwater or even drilling boreholes on their land. The divide between the haves and have-nots will widen on another axis..It's important to remember that wealthier South African households aren't responsible for creating the energy crisis, but a lack of strong governance; had the right investments been made at the right time, consumers wouldn't need to become self sufficient. Weak utilities and underinvestment entrench inequality and will hamper the energy transition. So while the solar boom is to be welcomed, it risks widening divisions in an already fractured nation..Read also:.Solar panel theft soars in South Africa: Residents urged to safeguard and insure solar power systemsWhat a free electricity market could look like in SA: Andrew KennyWietze Post – Electricity supply: Wishful thinking and economic reality (Part 1).© 2024 Bloomberg L.P.

SA’s solar surge is deepening the economic divide, worsening inequality: Lara Williams

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