For years, we have been hearing about ESKOM wanting its actual costs reflected in the tariffs they apply for from NERSA (National Energy Regulator of South Africa). Furthermore, each year we get to how NERSA does not grant ESKOM these tariff increases.

Eskom & 2021 Tariffs Explained

This is a yearly cat and mouse game, but as of the last couple of years has also become a legal battle, due to the R69 billion bail-out from government.  

For the layman, it appears that ESKOM inflates what it needs, and NERSA grants less.  But are these just appearances?  ESKOM is entitled to claw back any losses from a RCA (Regulatory Clearing Account), should they have losses from operations costs or shrinking revenues. 

But now, there is another issue rearing its ugly head.  All of a sudden , ESKOM is coming forward to discuss “cost reflective tariffs” in light of the revenues lost to client s shifting over to renewables.

This essentially means three things for ESKOM clients:

  1. Potentially, fixed costs for all ESKOM consumers will increase with a daily charge.
  2. Customers who supply themselves with alternative power (as in renewables), may incur addition charges for the availability of ESKOM power.
  3. Residential and some other customers that have an existing flat tariffs  (meaning, one kWh charge regardless of time of day) may start being charged under time of use (ToU) tariffs.  In short, the reason for a ToU tariff is to ensure that ESKOM receive additional income for the time that the grid comes under the most pressure. 

DEMAND TIMES FOR ESKOM:

This is typically 3 hours in the morning, and two hours in the early evening. Peak demand is largely caused by residential customers. At the time of day that renewables (as in Solar), do not provide ESKOM with the demand that it requires, and they have to rely on coal and gas.

Having been in the industry for many years, I must note the following.  ESKOM needs to think very carefully about its strategy regarding tariffs and should rather prepare themselves for reduced revenues.

Businesses and residential owners that have been waiting to transition will now start making the transition faster to renewables and specifically to off-grid as they will not want to be ransomed to a monopoly provider any longer.  Also, the rules cannot change at the whim of ESKOM every year.  They have had more than enough time to see this coming.

Essentially, I foresee an influx of residential customers wanting to go off-grid and I believe that the impact to ESKOM will be far more severe than they intended.

Hybrid systems that are made up of Solar+ Lithium Energy Storage Systems (ESS) and backup generators.  The backup genset is there only for bad weather days.

Residential hybrid solutions are already very feasible for clients and do away with power outages.

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