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Wednesday, March 11, 2015

Change your thinking: Does Solar Electric Renewable Energy really cost more?

People complain about the high cost of Renewable Energy. Here is my answer to two of them.

Hi Willem and Mike. You both need to think about it a different way:

  1. What will your cash flow be with a solar system? If you are paying R2,000 per month now, and you can install a system, without batteries, and it costs you R1,800 per month, then even though this represents R180,000 of capital, you should do it. A grid tie system without batteries can be paid over 20 years at 10% interest rates.
  2. Lots of people, especially those who work from home, or SMME's, and even the big boys, are installing backup systems, which don't supply their entire needs, but which for about R100,000, give them security of supply during Load Shedding and BTW, also reduce their normal electricity cost.
  3. In 2008, I decided to spend R200,000 on a backup system for my house instead of buying a new Renault Clio. I therefore initially spent R5,000 per month instead of R600 per month. Over 5 years this R600 would have become R1,800 with increases. Eventually my "car" was paid off (in five years), in December 2013, and in January 2014, my electricity bill dropped to R400 per month, instead of R1,800 per month that it would have been now.
  4. If the government allowed "rich" people (by rich people I mean taxpayers) to install their own systems before Tax and before VAT, just like IPP's can, then these peoples's battery based systems would already save them money.
  5. If the government had spent the R300 billion it has spent on Medupi and Kusile, so far, on poor peoples' houses, then it could have made 6 million of these houses into power stations already.

So it's just a matter of changing our thinking. And that is the problem.

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