South Africa produces 80% of its electricity using abundant locally mined coal and is one of the fifteenth largest emitters of CO2 worldwide.

Marking a potential shift in energy policy, South Africa’s Integrated Resources Plan (2019) envisages a significant share of future electricity generating capacity coming from renewable energy sources.

However increasing deployment of Small-Scale Embedded Generation (SSEG), particularly rooftop solar PV, among commercial and wealthier residential electricity users is raising technical and financial challenges for local distribution networks and municipalities, who distribute electricity to a large share of the population.

Energy Systems Catapult supported the South African Energy System Modelling project to assess the potential impact of increasing rooftop solar PV on local distribution networks with analysis of potential revenue, cost and consumer bill impacts through different electricity tariff structures.

The project is funded by the Newton Fund in partnership between Energy Systems Catapult, the CSIR Energy Centre, South Africa’s largest energy utility – Eskom, and Sustainable Energy Africa (SEA).

The Challenge

Energy is one of the key sectors underpinning South Africa’s long-term vision for social and economic development as embedded in the country’s National Development Plan (2030). The vision for the sector is to promote growth through infrastructure investment, to support social equity through expanded access to affordable energy, and to support environmental sustainability.

A large-scale national electrification programme combined with the provision of free basic electricity services has led to significant improvements to grid and off-grid electricity access, which reaches 85% of the population. The sector is currently facing a challenge of finding a path of long-term financial and operational sustainability.

Load-shedding, increasing electricity prices, and falling cost of renewable generation are creating an environment in which small-scale embedded generation (predominantly solar PV) are increasingly considered for deployment, especially amongst commercial and higher consumption residential users. This  trend can have significant impacts, including potential network constraint issues and reducing municipal revenue, which in turn may limit their ability to support lower income and consumption users.

At the same time, it presents an opportunity for municipal distributors to diversify their electricity supply and design rooftop PV strategies that enable deployment in a manner that supports the provision of safe and reliable electricity services, while considering the need for cross subsidies in the electricity system and balancing the interest of users deploying SSEGs.

CSIR is a member of the Research Council in South Africa tasked with developing practical and commercially viable innovations which address energy industry challenges. Sustainable Energy Africa is a pan-African NGO which promotes equitable, low carbon, clean energy development in urban South Africa and Africa, through research, capacity building, policy engagement and information dissemination.

The Solution

Energy Systems Catapult utilised capabilities in Markets, Policy & Regulation, Systems Engineering and Modelling, to develop tools and methods to support municipalities and electricity distributors in South Africa in assessing the potential impact of rooftop PV installations.

Working alongside Sustainable Energy Africa, the Catapult teams reviewed current policy and regulatory framework and tariff arrangements, and their impact on SSEG and electricity use. This led to the development of a tariff design tool to help energy distributors assess the impact of different tariff designs on municipalities’ ability to recover costs and their impact on bills for different consumer groups, with and without Solar-PV, The tool was demonstrated and tested with municipalities and Eskom representatives and would be further trialled as part of wider project dissemination.

The Local Energy Systems Modelling team developed a methodology that can be used to assess network impacts under different scenarios for dispersed and clustered PV uptake. The approach was tested in several areas in Cape Town utilising network data provided by Eskom and City of Cape Town to produce a case study evaluating potential grid reinforcement requirements.

Industry engagement was planned as part of the project to support UK SMEs interested in collaborative opportunities in South Africa. Set to be delivered through an open call to select UK SMEs as part of a mission to South Africa to include attendance at the Solar Africa Show in Johannesburg and meetings with South African SMEs to discuss future opportunities. This part of the project was cancelled due to the COVID-19 impact; however the Catapult will continue to engage with UK SMEs interested in South Africa through other channels.

The Outcomes

The aim of the South African Energy System Modelling project was to support the design of rooftop solar PV strategies and tariff design, in order to improve cost recovery and a planned increase in Small Scale Embedded Generation (SSEG) in South Africa. The key outcomes were:

• A detailed report on the Catapult’s modelling approach and outputs in assessing the impact of rooftop solar PV to the grid.
• An overview report on the policy and regulatory environment and industry structure, key challenges and developments and retail tariff design in South Africa.
• A Tariff Design Tool to assist South African Municipalities, in the light of significant uptake of SSEG in setting electricity tariffs and analysing the effects of tariff changes on their customers and on the municipality.

The Impact

• Local municipalities and Eskom* will have additional tools to support their assessment of new tariffs to avoid an increase of energy poverty due to the take up of renewable energies, and to ensure electricity sales revenue protection.
• The distribution grid impact methodology will provide local municipalities and Eskom with information required to proactively address distribution grid vulnerabilities that are associated with high solar PV uptake.
• Knowledge transfer from the Catapult and local partners, on energy planning, data gathering and usage of modelling tools for Local Energy System Modelling.
• Generate opportunities and highlight areas for further collaboration activities for South African and UK innovators in the energy sector.

*Eskom is South Africa’s primary energy generator and is also responsible for national energy transmission and grid system operation.