David Lipschitz on Net Metering 2012-02-22

Attention Messrs Achim Steiner, Adnan Amin and Kandeh Yumkella

Your article in the Business Day is incredibly timeous as this past week I have reinvigorated my campaign regarding Net Metering.

South Africa is in a recession largely because of lack of electricity supply. This can easily and cost effectively be resolved by allowing Net Metering. By July this year, private citizens in Cape Town will be able to make their own electricity cheaper than we can buy it. And I have financial numbers which show that larger companies can already make their own electricity cheaper than they can buy it.

With Net Metering, users of electricity can buy and sell electricity at the same price. For example, if I produce 1 KW and need 2 KW, then I buy 1 KW from the Grid. Effectively, my meter is going slower than normal. And if I produce 2 KW and need 1 KW then I export electricity to the grid and my meter goes backwards at the same speed it goes forwards. This only happens with people who pay for their electricity in arrears and who have the old fashioned disk meters which look like small metal CDs. Prepaid meters either stop working, stop turning, or go forwards when one is exporting to the grid!

The South African Bureau of Standards created a document called NRS 097-2-1:2010 which was adopted by NERSA, the National Energy Regulator of South Africa, in 2011. The technical term for this Grid Integration, Reverse Feed and Net Metering is "Grid Interconnection of Embedded Generation."

It allows for Grid Tie systems up to 100 KW, an artificial limit. I have two clients who are considering buying large roof top net metering systems: one at 700 KW and one at 500 KW. I also have numerous smaller potential clients who want to use Net Metering and know of a number of people who are already reverse feeding the grid. The grid doesn't see them and they are having very little effect. Their excess electricity is simply used by the neighbour.

Eskom and The Cities, including the so called advanced city of Cape Town and the Western Cape's Provincial Administration (PAWC), have not adopted the "Embedded Generation" policies. The three main reasons given are:

1. The Grid Tie inverter might reverse feed the grid when the grid is switched off, eg for maintenance, and an electrician working on the line might get electrocuted;
2. Eskom and the Cities will lose revenue;
3. The grid might become destabilised.

1 was resolved in 1999 with the American UL 1741 standard which was harmonized with IEEE 1547. Any inverter which is listed to the UL 1741 standard may be connected to a utility grid without the need for additional anti-islanding equipment, anywhere in the United States or other countries where UL standards are accepted. A similar acceptance of the IEEE 1547 is happening in Europe. An island is a grid which can run internally, for example inside a building, without exporting electricity to the main grid. Many companies in South Africa already have Generators and when there is Load Shedding, ie enforced power failures because the demand is either too high or the supply too low, these systems "Island" the Generator and its "clients" until the Grid is restored and then there is a process of disconnecting the Island and reconnecting the Grid. These processes happen seamlessly and are installed by Electrical Engineers.

2 would be solved if government would see out of their silos. The opportunities are great if Citizens of the City of Cape Town and other cities could get the government, which owns Eskom, and the Cities to see out of their silos. I believe that the City of Cape Town gets 60% of its Revenue from Electricity Sales and the 150% increase in electricity over the past 5 years has increased this percentage from 40%. The fastest way to get renewable energy adopted is to allow private people and business owners with the required roof space to cover their roofs in Photovoltaic Systems. This will create jobs, reduce unemployment, reduce crime, increase lighting and electricity in Africa, give security of supply, fewer power failures, less chance of load shedding, and help move us away from polluting power stations. In places like Germany, California and China, the more renewable energy that is installed, the faster the economy grows. This is because the bigger base load power would then be available for the organisations needing the bigger loads, for example shopping centres, new housing developments, miners, smelters and other large users of electricity. And more importantly businesses know their electricity price for decades and can plan accordingly; and businesses get security of supply and fewer disruptions caused by electrical systems failure.

3 is a red herring. I understand that Turkey has found that wind farms up to 500 KW actually stabilise the grid. And in South Africa the two new 4.8 GW power stations will massively destabilise the grid when they are switched on and switched off. Switching on or off 1 KW or 500 KW is tiny compared with 4.8 GW, ie 4,800,000 KW. And if South Africa loses the main power lines from Mpumalanga to the Cape, for example in a storm or terrorist activity, then Cape Town could quickly be without 60% of its electricity supply as only 40% of Cape Town's electricity supply comes from our local Koeberg Nuclear Power Station.

I should say that large users of Renewable Energy such as Germany and Belgium notice problems on their grids when the Renewable Energy component reaches 20% of electricity supply, but it has taken these countries 20 years to get to this point, and with Feed In Tariffs. I think South Africa can do it in 10 years, and by then Germany and Belgium will have solved their problems and South Africa will be able to follow their lead. Breaking news: Germany is solving this grid destabilisation problem!!

I would very much like to help you in any way I can. In November 2008, the South African government announced that Feed In Tariffs (FITs) would be in place by March 2009. My company and hundreds of others decided to get ready for this momentous day. Unfortunately this didn't happen. There were FITs but no Power Purchase Agreement. Since approximately 2009, there has been a 2 cent levy (see what it was meant to be for!) on all electricity sold in place to pay for the FITs and my understanding is that there is R15 billion in this fund already. Be that as it may, we don't need FITs in South Africa anymore. We just need the implementation of Net Metering. Interestingly the Standard allows for Time Of Use Tariffs which would incentivise people to install battery systems to supply electricity at peak time whilst producing or buying electricity at off peak time.

And the R15 billion could be used on a first come first served basis to allow private people to install renewable energy systems before VAT and before tax. Businesses can already do this. See http://mypowerstation.co.za/2011/11/26/my-power-station-press-release-26th-november-2011-david-lipschitzs-renewable-energy-jobs-plan/  for more ideas along this theme.

Hence there would be zero drain on the fiscus and massive job and GDP creation on a Continent that will have the biggest consumer base in the world in the next 20 years. We can either supply our own needs or export our electricity requirements to China and the other Asian Tigers who are massively ramping up electricity production and who will end up making everything we need, but who will then end up owning Africa, as large creditors usually end up owning their customers when the customer cannot pay the bill.

The positive possibilities of Net Metering in Africa's biggest economy and in the rest of Africa are mind blowing. Let's work together to make a difference.

I look forward to your reply and to helping make Renewable Energy a reality in South Africa and on the African Continent.