The impact of residential rooftop solar PV on municipal finances: An analysis of Stellenbosch

Authors

  • N. Korsten School of Public Leadership, and the Centre for Renewable and Sustainable Energy Studies, Stellenbosch University.
  • A.C. Brent Department of Industrial Engineering, and the Centre for Renewable and Sustainable Energy Studies, Stellenbosch University, South Africa; Sustainable Energy Systems, School of Engineering and Computer Science, Victoria University of Wellington, New Zealand. http://orcid.org/0000-0003-3769-4512
  • B. Sebitosi Department of Mechanical and Mechatronic Engineering, and the Centre for Renewable and Sustainable Energy Studies, Stellenbosch University.
  • K. Kritzinger Centre for Renewable and Sustainable Energy Studies, Stellenbosch University.

DOI:

https://doi.org/10.17159/2413-3051/2017/v28i2a1740

Keywords:

Renewable Energy, Electricity Utility Revenue, embedded energy, distributed generation, photovoltaic

Abstract

Electricity utilities throughout the world are responding to the increased uptake of rooftop solar photovoltaic (PV) in the household sector. Although the increase of decentralised solar PV is seen as progressive for sustainable development, it is not without financial implications for electricity utilities. There is a concern in South Africa that allowing rooftop solar PV connection to the grid will reduce electricity sales for local governments and thus their revenue streams from electricity. An investigation was carried out to examine the financial impact that increasing installations of grid-connected rooftop PV at a household level might have on local governments in South Africa. Stellenbosch Municipality was used as a case study, and two different approaches were used. The first considered the maximum grid capacity for distributed generation, as determined by the South African grid standards. The second was based on individual households that would gain the most financial benefit from investing in rooftop PV. The outcome indicated a financial reduction in total electricity revenue of 0.6–2.4% depending on the approach followed. A fixed monthly charge of about R363 would counter these potential financial loses, but entail a disincentive for households to invest in solar PV installations.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

Author Biographies

N. Korsten, School of Public Leadership, and the Centre for Renewable and Sustainable Energy Studies, Stellenbosch University.

Independent sustainable and renewable energy consultant, Utrecht, Netherlands, and masters student of sustainable development in the School of Public Leadership, Stellenbosch University, South Africa.

A.C. Brent, Department of Industrial Engineering, and the Centre for Renewable and Sustainable Energy Studies, Stellenbosch University, South Africa; Sustainable Energy Systems, School of Engineering and Computer Science, Victoria University of Wellington, New Zealand.

Professor of Engineering Management and Sustainable Systems in the Department of Industrial Engineering, and Associate Director of the Centre for Renewable and Sustainable Energy Studies, at Stellenbosch University, South Africa; and Professor of Sustainable Energy Systems in the School of Engineering and Computer Science, Victoria University of Wellington, New Zealand.

B. Sebitosi, Department of Mechanical and Mechatronic Engineering, and the Centre for Renewable and Sustainable Energy Studies, Stellenbosch University.

Retired professor of renewable energy, associated with the Department of Mechanical and Mechatronic Engineering and the Centre for Renewable and Sustainable Energy Studies, at Stellenbosch University.

K. Kritzinger, Centre for Renewable and Sustainable Energy Studies, Stellenbosch University.

Senior researcher in the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University.

References

Association of African Planning Schools (AAPS). 2010. Case research toolkit: Guidelines for case study research and teaching. Available online at: http://www.africanplanningschools.org.za/images/stories/aaps/aaps_cr_toolkit.pdf (accessed 8 August 2014).

Ahlfeldt, C. 2013. The localisation potential of photovoltaics ( PV ) and a strategy to support large scale roll-out in South Africa. Integrated report for SAPVIA, WWF and the DTI, available online at: http://www.sapvia.co.za/wp-content/uploads/2013/ 04/PV-Localisation_Draft-Final-Report-v1.2.pdf (accessed 7 February 2017).

Burger, C. and Weinmann, J. 2014. Germany’s decentralised energy revolution. In: F.P. Sioshansi (ed). Distributed generation and its implications for the utility industry. Elsevier, Amsterdam: 49–73.

Cai, D.W.H., Adlakha, S., Low, S.H., De Martini, P. and Mani Chandy, K. 2013. Impact of residential PV adoption on retail electricity rates. Energy Policy 62: 830–843.

Carter, S. 2001. Breaking the consumption habit. The Electricity Journal 14(10): 66–74.

Costello, K.W. and Hemphill, R.C. 2014. Electric utilities’ ‘death spiral’: Hyperbole or reality? The Electricity Journal 27(10): 7–26.

Duthu, R.C. and Bradley, T.H. 2015. An evaluation of customer-optimized distributed generation in New England utility and real-time markets. The Electricity Journal 28(3): 70–85.

Eid, C., Guillén, J. R., Marín, P. F. and Hakvoort, R. 2014. The economic effect of electricity net-metering with solar PV: Consequences for network cost recovery, cross subsidies and policy objectives. Energy Policy 75: 244–254.

Felder, F.A. and Athawale, R. 2014. The life and death of the utility death spiral. The Electricity Journal 27(6): 9–16.

Hedman, B. 2014. Death spirals and other things that go bump in the night. Available online at: http://www.cadmusgroup.com/articles/2014-year-review-death-spirals-things-go-bump-night/ (accessed 26 September 2015).

Kirsch, L.D. and Morey, M.J. 2015. Pricing retail electricity in a distributed energy resources world. The Electricity Journal 28(3): 112–121.

Mountain, B. and Szuster, P. 2014. Australia’s million solar roofs: Disruption on the fringes or the beginning of a new order? In: F.P. Sioshansi (ed). Distributed generation and its implications for the utility industry. Elsevier, Amsterdam: 75–96.

Nillesen, P., Pollitt, M. and Witteler, E. 2014. New utility business model: A global view. In: F.P. Sioshansi (ed). Distributed generation and its implications for the utility industry. Elsevier, Amsterdam: 33-47.

National Renewable Energy Laboratory (NREL). 2009. Decoupling policies: Options to encourage energy efficiency policies for utilities. Available online at: https://energy.gov/eere/downloads/decoupling-policies-options-encourage-energy-efficiency-policies-utilities-clean (accessed 7 February 2017).

Parkinson, G. 2014. Utilities move to kick rooftop solar off the grid : Renew economy. Available online at: http://reneweconomy.com.au/2014/utilities-move-to-kick-rooftop-solar-off-the-grid-15250 (accessed 26 September 2015).

REN21. 2015. Renewables 2015 global status report. Available online at: http://www.ren21.net/status-of-renewables/global-status-report/ (accessed 7 February 2017).

Richter, M. 2012. Utilities’ business models for renewable energy: A review. Renewable and Sustainable Energy Reviews 16(5): 2483–2493.

Sebitosi, A.B. 2010. Is the South African electricity tariff model conducive to an energy efficient economy? Energy for Sustainable Development, 14(4): 315–319.

Sioshansi, F. 2014. The rise of decentralised energy. In: F.P. Sioshansi (ed). Distributed generation and its implications for the utility industry. Elsevier, Amsterdam: 3–32.

Stellenbosch Municipality. 2013. Tariff policy 2013/2014. Stellenbosch, South Africa.

Swilling, M. and de Wit, M. 2010. Municipal finance, service delivery and prospects for sustainable resource use in Cape Town. In: M. Swilling (ed). Sustaining Cape Town: Imagining a livable city. Sun Press, Stellenbosch: 23–40.

Walwyn, D.R. and Brent, A.C. 2015. Renewable energy gathers steam in South Africa. Renewable and Sustainable Energy Reviews 41: 390–401.

Downloads

Published

2017-06-23

How to Cite

Korsten, N., Brent, A., Sebitosi, B., & Kritzinger, K. (2017). The impact of residential rooftop solar PV on municipal finances: An analysis of Stellenbosch. Journal of Energy in Southern Africa, 28(2), 29–39. https://doi.org/10.17159/2413-3051/2017/v28i2a1740