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The impact of residential photovoltaic power on electricity sales revenues in Cape Town, South Africa

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  • Mayr, Dieter
  • Schmid, Erwin
  • Trollip, Hilton
  • Zeyringer, Marianne
  • Schmidt, Johannes

Abstract

In South Africa, electricity is provided as a public service by municipalities. The combination of (a) rising electricity rates, (b) decreasing photovoltaic technology costs, and (c) a progressive tariff system (under which wealthier households support low tariff rates for indigent residents) leads to incentives for high-income households to cover part of their electricity demand by self-produced photovoltaic (solar) electricity. This development is simulated with hourly load profiles and radiation data, and an optimization model for a case study in Cape Town through the year 2030. Results indicate that the majority of higher-income residents are incentivized to invest in photovoltaic power production by 2020 and additionally use home battery systems by 2028. This leads to a steadily increasing gap between revenues and expenditure needs in the budget of the municipality. The budget gap can be reduced by replacing the energy-based tariff with a revenue-neutral fixed network-connection fee implementation of which is particularly effective in reducing incentives to invest in storage.

Suggested Citation

  • Mayr, Dieter & Schmid, Erwin & Trollip, Hilton & Zeyringer, Marianne & Schmidt, Johannes, 2015. "The impact of residential photovoltaic power on electricity sales revenues in Cape Town, South Africa," Utilities Policy, Elsevier, vol. 36(C), pages 10-23.
  • Handle: RePEc:eee:juipol:v:36:y:2015:i:c:p:10-23
    DOI: 10.1016/j.jup.2015.08.001
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    5. Rutovitz, Jay & Oliva H., Sebastian & McIntosh, Lawrence & Langham, Ed & Teske, Sven & Atherton, Alison & Kelly, Scott, 2018. "Local network credits and local electricity trading: Results of virtual trials and the policy implications," Energy Policy, Elsevier, vol. 120(C), pages 324-334.
    6. Lee, Minhyun & Hong, Taehoon & Koo, Choongwan, 2016. "An economic impact analysis of state solar incentives for improving financial performance of residential solar photovoltaic systems in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 590-607.
    7. Milstein, Irena & Tishler, Asher & Woo, Chi-Keung, 2022. "Wholesale electricity market economics of solar generation in Israel," Utilities Policy, Elsevier, vol. 79(C).
    8. Best, Rohan & Chareunsy, Andrea & Li, Han, 2021. "Equity and effectiveness of Australian small-scale solar schemes," Ecological Economics, Elsevier, vol. 180(C).
    9. Lucy Baker & Jon Phillips, 2019. "Tensions in the transition: The politics of electricity distribution in South Africa," Environment and Planning C, , vol. 37(1), pages 177-196, February.

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