City of Cape Town Draft Electricity Tariffs relating to Net Metering - 2012-04-06

The City are doing what the government did in 2009. In 2009, the Government introduced Feed In Tariffs, but made them impossible to get. Now the City will following in the Government's footsteps and introduce Net Metering, but make it impossible to get!

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The question was "a friend said you have to buy the system, deliver the energy for free to the city and pay on top more than you would pay without the PV system?!"

David Lipschitz's answer:

The City would pay for the electricity that you sell to it and you would buy it back at the same price.

I'm going to use prices including VAT for this explanation as homeowners typically can't claim VAT, ie R1.034 is R1.18 inc VAT and R19.16 per day is R664 per month inc VAT. I'm also rounding the numbers a bit for the purposes of explanation.

ok so we have R1.18 per kWh as the Net Metering Tariff and R664 per month as the Net Metering Service Fee.

(Note that the normal rate (without using Net Metering, ie using the "Domestic Tariff") for a 1200 kWh house would be R1.46 per kwh.

ie 600 kWh * R1.1808 * 1.14 (14% VAT) + 600 kWh * R1.3798 * 1.14 = R1751.15 per month Divided By 1200 kWh = R1.46 per kwh incl VAT. Note the top rate is R1.57 per kWh including VAT so people using 3000 kwh per month will be paying R1.53 per kWh.

ok, so let's go back to this statement: We have R1.18 per kWh as the Net Metering Tariff and R664 per month as the Net Metering Service Fee.)

So with an 8 KW system, one would produce 40 kWh on an average day in Cape Town. Let's suppose you used 10 kWh during the daylight hours, then at the end of the daylight hours you would have "banked" 30 kWh at R1.18 and the City would owe you R35.40. Then that night you would use the 30 kWh and by the next morning when you start producing electricity again, you would be at "Net Zero."

But you would have an 8 KW system on your roof and that would be costing you about R1750 per month which the same as you would have paid the City for the electricity in the first place.

BUT: In order to use Net Metering you have to pay the R664 per month Service Fee. So you need to add the R664 to the R1750 and you get R2414 so indeed your PV system is costing you more than if you didn't have it!!!

In fact R2.01 per kWh instead of R1.46 per kWh!!

When do we break even? Can we break even?

If we installed 16 KW on our roof instead of 8 KW, we would have a R1434 credit (the credit should be higher, but the Net Metering Tariff is R1.18 per kWh and should be R1.46 per kWh, in fact it should be R1.63 per kWh to get wealthier people involved) with the City each month and subtracting the R664 fee, we would have a R770 credit. But our 16 KW system would have cost us R364,800 (minimum, with contract) and would be costing us R3648 per month. Subtracting the credit and we would be at R2878 which is still more than R1752!!

Note that all this assumes we have a big enough roof. My estimate is that a house with 1200 kWh per month consumption has enough roof space for a 5 KW system, but I need to do more calculations to be sure.

Hence the City are doing what the government did in 2009. In 2009, the Government introduced Feed In Tariffs, but made them impossible to get. Now the City will following in the Government's footsteps and introduce Net Metering, but make it impossible to get!