Opportunity and Problems with Solar Installations

As homeowners get more and frustrated with loadshedding, the ‘Residential Solar Installation Industry’ specifically has recently experienced a massive influx of demand. Homeowners has been looking for ‘off the grid’ solutions since loadshedding have started, but they have always struggled to commit to install solar. Now, due to a few factors, homeowners are buying solar installations in the price range of R100k – R300k.

Here are a few reasons:

1. The intensity of the latest September / October 2022 loadshedding schedule.
2. Eskom’s recent increase in electricity prices – and they want to put through another 20.5% increase. See more about this announcement here.
3. Solar companies are starting to offer rental solutions starting at around R1200 per month.
4. The banks and private lenders are starting to handle solar as ‘asset financing’ and therefor interest rates to finance residential solar is dropping.
5. Solar technology is becoming better and cheaper.

Once Eskom does its next price increase, it will be cheaper to have a financed hybrid solar system for your home than it is to rely on Eskom only in many cases. Even if the electricity prices go up only 10%, it will be a good deal for homeowners to switch to solar.

Let’s take an example of John. His electricity bill is R2000 per month. John will need a solar system costing him R150k once-off to save him an average of 75% of his annual electricity bill. The equipment will last 15-20 years. If he buys the R150k system using his home loan account (prime rate interest over 20 years) he’ll pay back around R1500 per month on the loan. So here is the calculation:

• R 1 500 on average John saves per month on his Eskom bill.
• R 1 500 extra is paid by John on his home loan.
• R 0 payable / saved.

John spends R0 and saves R0 each year; and now he is covered against load shedding to a large extent. As Eskom’s pricing goes up, John will start saving. By year 10 John should easily save R2000+ per month if Eskom continues to do basic price increases – as his monthly loan payback will stay the same. The only risk to John is if his solar equipment breaks – which is always possible. However, if by worst case scenario everything breaks after its warrantees has expired – John will still be savings costs.

So, homeowners will be able to save money monthly by buying solar; and keep their power running during future loadshedding hours. This means the reliable Residential Solar Installation Businesses will stay busy for many years to come. Many small solar businesses with one team doing residential installations, are currently making a profit of R80k+ per month.