Solar breakthrough: power already cheaper than Joburg, CT – gap widening
In another informative interview, GoSolr co-founder and CEO Andrew Middleton explains how the company's cost per kw/h was already in line with Joburg's before City Power announced a 13% increase and is lower than Cape Town's. Middleton unpacks why this cost advantage will keep widening – and the self-confessed 'solar nerd' shares some practical tips on how those who switch to self-reliance can save even more. Click here for more information on GoSolr.
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An edited transcript of Alec Hogg's interview with GoSolr's Andrew Middleton
Alec Hogg: It's time to talk solar again with GoSolr's chief executive and co-founder, Andrew Middleton. Today, we've got some practical insights for you on how to save money with your solar installation.
Andrew, I feel like I'm a missionary for you guys. I've told quite a few of my friends to come along to GoSolr, and so far, I shouldn't say because I know there was one little hitch we had from a business community member, and congrats, you guys sorted that out quickly. But everybody who's gone your route has given it a big thumbs up. Are you seeing that the momentum for installations is growing?
Andrew Middleton: Well, thanks again for having me, Alec, and being a good GoSolr ambassador. And yeah, we always aim to please, and sometimes there are some glitches, but we're always proud of ourselves for getting it right.
When we last spoke, there was a downturn in momentum. We've seen that pick up quite nicely. So it was interesting. May and June were record months for the industry. July was quite a slow month, and August was a slow month, but September turned around quite nicely. So we're looking forward to some positive momentum into the end of the year, into summer, when solar can show many of its other benefits, not just loadshedding. When the sun is shining, it will generate lots of affordable, reliable, clean energy, so we're looking forward to the summer months.
Alec Hogg: Well, that's very much the case here in the Western Cape where I now live; we've had a horrific winter. The people who have been around much longer tell me it's the worst winter they can remember. It's been overcast a lot of the time. Does that affect the amount of solar you can draw generally as a go solar client?
Andrew Middleton: Absolutely. So it's dependent on, firstly, the season has a shorter day. So there are less daylight hours in winter all around the country. And yes, if there is the kind of rain we've seen in the Western Cape, it significantly impacts solar production. You still all get some production when there's an overcast day, but we've asked for solar data in the Western Cape for the last three or four months. We don't need to read the news around record rainfall and floods. We can see it with our customers. From a production perspective, solar in the Western Cape has been a very tough winter.
Alec Hogg: Can you share any of those numbers with us?
Andrew Middleton: I don't have the aggregated data right before me. We can certainly do that on the next episode, but it's considerably less, almost half the generation we've seen in the same months in Johannesburg and other areas up north. So, it does have a significant impact, but in the summer months, the Western Cape will do very well with the longer days they have down there. It should even stand out, but not two or three months where you'll save a lot of money from a solar perspective, but you still get the other benefits of protecting yourself from power outages.
Alec Hogg: Andrew, how does it work from a usage point of view? We're going into again what the locals tell me will be a long, hot, Cape summer. So the sun will shine a lot, and lots of solar energy will be generated. How much of that power, though, gets used? Because, once the battery's full, and once you've used whatever electricity you will during the day, presumably, you don't just keep producing solar power.
Andrew Middleton: No, you're right. So the system is very smart. So power needs to be generated and go somewhere. So first, what it'll do is it'll go into your house and make sure whatever you're using on the load there is utilised by the panels. If there's excess and capacity in the battery, it'll charge the battery. And if there's nowhere for it to go, such as you can't feed into the grid just yet, or you can, but it's complicated, then it'll effectively throttle the panels' wasted daylight hours essentially. That's why there must be a bit of load management that comes with solar. I'll explain what I mean by that. And that's effectively shifting your or finding ways to shift your energy consumption into those daytime hours. And most households wake up in the morning, that's the peak, have your coffee and shower, and there's a spark in energy demand. And then, later on in the evening, the spark happens again.
And that's why we include batteries in all of our systems so that we can store some of that energy when you're not at home, and you can use it in the non-solar hours. But there are very, there are nice products in the market, plenty that will help you optimise when you heat your water. Also, there's a behavioural aspect where you try incentivising customers to put the appliances on later in the morning and utilise your aircon in the summer. Aircons are great for solar, pool pumps are fantastic for solar, and you can run those during the day. So, we can help customers use it more efficiently in many ways, and we're working on innovative ways to do so.
Alec Hogg: Boreholes as well come to mind. For anything that's energy-hungry, try and run it during the solar hours. And then the other thing is how far can you safely drop the batteries to it at night? Because I'm scheming here. I'm saying, well, if I can get the batteries to 100% during the daylight hours, then at night, as long as we don't go overboard, if I use 50% of the battery, would that mean that I wouldn't have to go to Eskom for any power?
Andrew Middleton: Yeah, so the manufacturers recommend it. Usually, you don't want to discharge them below 20 to 30%, to protect the battery, not damage it. But there's still quite a lot from going, the 70, 80% you utilise. There's still plenty of battery there, and you can always add more. So there is a possibility battery settings are very important, Alec. So we offer certain battery settings on our app where you can set your battery up to discharge to the recommended minimum. Then you'll get the maximum savings because you'll always have battery capacity to take the excess solar in during the day.
You can also set it to keep your battery full. And we call that the protection mode. And that's when you've got stage six load shedding and poor weather. And there, the household is generally less worried about saving and more worried about keeping the lights up. And then, we've got two modes in the middle: our balance mode, which effectively balances the savings component with the load shedding component. Then we have our newest version, called solar managed, which is effective; we will change the settings at different levels of loadshedding, which is hot off the press. So battery settings are very important because if you keep your battery too full and you're too conservative, you won't generate as much solar, and you won't save as much money, but if it's too low, you might lose your power.
Alec Hogg: But that's a wonderful offering you're talking about now because I think about myself. If I apply my mind, I'll be able to achieve the savings. But often, you get distracted, you forget, and then there's some loadshedding, and you'll be left without power, defeating the whole object. So is it easy to get hold of your guys and say, please manage this for me?
Andrew Middleton: Yeah, you can get hold of us, or we can set you up on our app. A lot of our customers need to learn about our app. We're trying to get it out there more and more. It's a web app, and we will convert it into a mobile app that'll be easier to download and use. But you can also set it yourself to avoid calling or emailing us. And we're trying to encourage customers to go that route so that it's easier and instantaneous. It's a few clicks on your phone, and there you go.
Alec Hogg: It's amazing how we've become so conscious of electricity in South Africa. I remember my father because he came from the north of England. He always switched off lights when he left a room. And he forced me to do the same thing, but many of my contemporaries never really had those disciplines because it was so cheap.
Andrew Middleton: I grew up in one of those households where I got into trouble if I didn't turn off the light so I can relate. But yeah, investing in South Africa was one of the key selling points. Post-democracy, we had a well-run utility with excess and very cheap power. You could bring in aluminium smelters, big mines, all these good things, and motor manufacturing. So we need to get that back. And I think it's…The generation capacity is coming in from solar, wind, and all sorts of fantastic new technologies, and we need to regain our electrical power base. We can't grow this economy without power and households; we focus on the household side; it's challenging to live without power, it's impossible to live without power, so you have to make a plan, but on the broader economic side, we need more electricity.
Alec Hogg: We are certainly learning more and more. Let's get into the costs. And we've got a couple of tables and graphs that you guys have very kindly put together. Let's just talk about it and the cost comparison. Average cost per kilowatt hour in rands. When we look at this, solar is slightly more expensive than Cape Town or Johannesburg but a lot cheaper than a generator. Just take us through this.
Andrew Middleton: Sure. So what we've tried to do here we've labelled it solar. We're effectively talking about a subscription solar solution, such as what we offer. If you did buy your solar, you could also attribute your calculation to your effective cost. And we've got a range there. So you can see there's a range. The reason why there's that range is because of the first part of the conversation. If you use your solar well, it's down to, you know, I'm as low as R3 per kilowatt I've done a post on LinkedIn about this to show my own house, I'm down to R3 per kilowatt, so if you look at that range, it means the city of Johannesburg if you use your solar effectively we're essentially at parity with the city of Joburg so right now if you use your solar well the incremental cost of a solar subscription doesn't cost you anything. You get it for free. And that's quite exciting. That's huge news for Johannesburg. I'll talk about Cape Town now, which is even better news, but that's exciting news for Johannesburg because that means solar is free. You get the benefits of loadshedding going green, and you've got the hedge of the future prices. But you must use it correctly; otherwise, it has already announced 13% increases. So that will push Johannesburg right past the parity mark. So solar, used correctly, will be cheaper.
Cape Town is already through that parity mark. So you should be saving money in the city of Cape Town with your solar. Again, companies need to help consumers use it properly, ensure it's well set up, and ensure it's clean. We'll talk about some of those tips at the end. But it's very important that it's used correctly and it's installed correctly, and we monitor it for you. If you do that, then you should be saving money. So, we're at an exciting juncture for solar energy. There's been massive adoption based on backup, and we're now going to start seeing consumers shift towards it more as a cheaper, reliable energy source, not just a low-chilling backup. So it's an exhilarating time. On the right, there's the diesel-effective one, which is quite frightening.
Many people still have their diesel generators, and they say to us all the time, I've spent this money on this diesel generator; I'm going to use it; it's capital I've used. What they don't appreciate is its sunk capital. So you've spent it, you can't recoup it. And the marginal cost of electricity is R9-10 per kilowatt hour.
That excludes maintenance and all the other intangible things like noise and keeping diesel and that inconvenience and hassle. So it's twice as expensive as using grid power and almost three times as expensive as solar.
From a marginal cost perspective. So, even with some capital, you should refrain from generating power that way. It's just far too expensive. And diesel prices, as we know, unfortunately, are going up and up.
Alec Hogg: And your neighbours will be delighted if you get rid of your generator because that is the one thing you can't cut out, the aggravation factor of the noisy guy next door. Then long-term, and there's another lovely graph your guys have put together for us. And you'd look here; your graph talks about over 20 years. How quickly, though, does a GoSolr subscription? Remember, for those who have yet to follow the story that you install it, you guys pay for it. We rented from you, and if you ever want to stop renting, we give it back to you; you have a de-installation cost. How much is that, by the way? What would it typically cost if I found a better alternative than GoSolr?
Andrew Middleton: It depends on the product, but it typically is between R17,000 and up to R25,000-R30,000. So many people look at that and say that's quite a large number. And it is a large number of households. We do appreciate that. And we'll look at ways to try and reduce those fees as and when we can. There's a de-installation fee because we offer the flexibility of month-to-month cancellation. So you can cancel. We can bring in a team on-site for a day to install it.
You can reinstall a month, two months, or a year later. So we don't charge for that team to come in initially, the team to come in, and the components that get put on around the server we use. So a lot of the wires, a lot of the consumables can't be reused. And then a team is coming to take it down, and we don't make any money from the installation fee. That's just there so we can recoup costs, take the asset, and do something else.
Alec Hogg: Yeah, fair enough. OK, so let's have a look at that image. When does it start becoming a really good proposition?
Andrew Middleton: Well, the first page hopefully shows that it's an excellent proposition because we are very much at the parity point for Cape Town. And for those using the solar efficiency in Joburg, we're at parity point, and we can do this analysis for many other cities, and we're very close to parity. So, right now, it's a no-brainer. You're not paying more for your effective kilowatt of electricity, and you get all the other benefits. And as time goes on, and this is just an illustration, we've used some assumptions behind this. However, as this goes on, we've assumed that a solar subscription like GoSolr should be between 60 and 75 percent of your energy bill going forward. So we've used 65 percent, and that 65 percent escalates at a low rate, CPI linked, whereas what we've seen with Eskom over the last ten years is that it's gone up double digits, sometimes three times that of inflation. So effectively, there's a hedge. Not only are you getting clean power and relief from load shedding, but your electricity bill with solar going forward over 10 to 20 years will compound. It looks perfect at the end, but it makes sense right now.
Alec Hogg: Does it, or have you seen any benefit on the value of the properties where GoSolr has been installed?
Andrew Middleton: There's value. It's quite an intangible value. Some studies have shown that there's some value attributable to it. It's pretty tricky for someone who's purchased the solar to recoup that investment. If someone wants to buy your house, they pick up the number. You cannot negotiate a monetary premium, but it makes your house more sellable and attractive. And if you want to rent your house out to tenants, it's almost a must now that you've got some alternative energy source. So that, again, is a positive from a subscription model. If you are considering renting your house out or selling it in a year or two and moving somewhere else and want to avoid investing in selling, you won't get that payback, so go with this solution. It gives you that flexibility. We get a lot of home transfer requests, and the majority of those customers who buy homes from our existing customers or people who buy homes from our existing customers take on the GoSolr contract because it's just one of those bills that you take on board with your fibre and your city municipal rates.
Alec Hogg: Let's look at some practical solutions. We've already spoken about switching off the lights as kids when we entered rooms. Is it still such a big deal now with LEDs? I remember we paid a lot of money to get all the lights changed from as they were in the past into LEDs, and it was explained to me that they draw one-tenth of the electricity that the old-fashioned lights drew.
Andrew Middleton: Yeah. Solar is one part of having an efficient home. It's a good part, but households must consider things like LED lights. Absolutely. As you say, 10% of the energy use lasts longer. It makes a lot of sense. You shouldn't just leave lights on for no reason, but LED lights are friendlier in consumption. There are other useful tips. When the installation is done, it's important that the positioning of the solar panels is in the right place. That's paramount. You want to make sure that you get the maximum solar exposure. It's sometimes north-facing. A lot of our customers tell us it has to be north-facing. Sometimes, in coastal areas, an east-west orientation makes sense. It all depends on where you are and your garden; we'll work that out. We've discussed the time you use energy, so try shifting your consumption habits.
Appliances are another big thing. With LED lights, when you look at the newest fridges and microwaves, they've got energy ratings on them. They must show those energy ratings and go for a high energy-star rating. That's going to help with overall power-saving needs.
Alec Hogg: But like aeroplanes, we remember that the airlines all try to upgrade to more modern aeroplanes because they use less fuel. Presumably, it's the same thing with appliances. But should you be switching off appliances when they're not in use?
Andrew Middleton: You should switch off certain things because some do draw some power, and things like unplugging your cell phone charger continue to pull power. They're not material draws, but if you want to save every last kilowatt, you can do those types of things. Using high-energy star-rated appliances also means we can put more on your solar system. So that's always the debate around non-essentials, essentials. What can I put on the solar because you're always limited by the inverter capacity? Now, if you have microwaves that pull less wattage or kettles that pull less wattage, then we can put those on, and there'll be no concern about tripping.
Another essential piece is monitoring when you consume power and when are your big power consumption events and trying to see if there are any things you can improve. Most of the time, before customers get their solar, they're completely in the dark when it comes to when they use power. They get their bill every month, and they pay it. And we all know there are issues with that, too, with billing accuracy.
The beauty of solar is it always comes with a monitoring app. You can see when you're consuming, what were the good days, the bad days, when were the times where you could maybe consider shifting power, you can see you were generating power, and you didn't have solar, so now you're using lots of grid and you're pulling lots of battery. So that kind of information makes the household more informed. Some households don't want to look at that and wanna get on with life with solar, but we've got many customers who spend a lot of time looking at the app, and we like that because we're solar nerds at GoSolr. We love looking at the data.
Alec Hogg: There's lots of money involved. So if cash is involved, I'm sure that is enough incentive for most human beings. Maintenance. Should I get up on the roof and ensure the panels are clean or wash them down now and then?
Andrew Middleton: Absolutely. So we offer cleaning as part of our solution once a year. There's room for more cleaning up in the Highveld in winter. The difference I noticed after cleaning the next day was about a 20% improvement. And that's because of the dust-up in the Highveld. Coastal areas are getting, often, rain more throughout the year. So, that does benefit coastal areas. But if you're close enough to the water, you also might get some salt residue and sand. So it depends on where you are. I suggest cleaning more often if you're right on the beach. But if there's regular rain, it should take care of it for you. It's just important that people clean during the right time of the day. You don't want to clean the panels when they are very hot, and putting cold liquid on them when they're very hot can damage them. So it is always best to clean in the mornings or late evenings.
Alec Hogg: We've learned a lot today. Hopefully, it saved a lot of money. Andrew Middleton is the co-founder and the chief executive of GoSolr.
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