Embedded Generation Workshop SALGA Head Office 18 April 2013

Embedded Generation Workshop

SALGA Head Office

18 April 2013

THE POTENTIAL IMPACT OF EFFICIENCY MEASURES AND

DISTRIBUTED GENERATION ON

MUNICIPAL ELECTRICITY REVENUE

Issue overview

Steep electricity price increases are making technologies like rooftop photo voltaics and solar water heaters financially attractive to high end users

Cross subsidising low income electrification

• Mounting pressure to electrify informal settlements

Low income electrified

Med income (elec)

Hi income (elec)

Household growth projectionsShowing the potential growth in the

informal sector if current trends continue

Low income unelectrified(informal)

-

1,000

2,000

3,000

4,000

5,000

6,000

Revenue Cost Revenue Cost Revenue Cost

Low income High income Non-residential

Rm

illio

n

Crosssubsidisation (Source: PDG)

Surplus

Deficit

Equitable share

User charges

Cost

Cross subsidising low income electrification

Issue overview

Municipalities depend on high end users for additional income. What will the impact of them becoming more efficient and installing pv be on local government in the next 10 years?

-1,000

-800

-600

-400

-200

-

200

400

600

800

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

R m

illio

ns

Annual financial surplus/shortfall per service

Water

Electricity

What happens when electricity revenue drops such that city

books can’t balance?

REEEP Project Objectives

• Support 4 Metros – eThekwini, Ekurhuleni, Cape Town and Joburg for next 10 months

• Develop accurate financial and energy models from which City business strategies can be designed to address revenue and service delivery threats

• Feed info into IRP process

REEEP Project Objectives

In detail look at impact of:

• Informal settlement growth and electrification needs

• commercial and residential pv + efficiency interventions

• different tariff options

and develop a strategy to address these factors effectively

Work done to date

• Developed version 1 of a tool to accurately calculate potential revenue loss from RE and EE implementation by municipal electricity end users

Tool designNecessary to include

• varying time of day, weekday/weekend and seasonal bulk purchase tariffs in calculations

• realistic data for PV and SWH impact over 24 hr period and over summer and winter

• realistic technology uptake data

0

20

40

60

80

100

120

140

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MW (summer)*

MW (winter)*

PV output (MW)

Preliminary Outputs: Cape Town

Preliminary Outputs: Cape Town

Preliminary Outputs: eThekwini

Preliminary Outputs: eThekwini

Preliminary Outputs: Ekurhuleni

Preliminary Outputs: Ekurhuleni

Preliminary Outputs: Joburg

Preliminary Outputs: Joburg

Load profile modelling results

Intervention impact• SWH and PV largest impact• Adopted by high end users most affected by

price increases• Extra revenue loss impact as a result of

users being on inclining block tariff• Revenue losses from this market are

potentially serious• Commercial uptake of PV not modelled, but

also expected to be significant

Findings

• Alternative tariff management approaches can address the problem– Fixed charge for net metering – though may

not avoid installation for ‘own use’– Decoupling energy and operational charges.

Reintroduce a network service charge– Time of Use tariffs

Impact of FBE (CCT)• SWH and PV use could move a large

portion of the middle income residential market into FBE bracket (below 450kWh/month).

• In today’s electricity rates, a user currently just below 600 kWh/month will move into FBE just from installing a SWH.

Impact of FBE

• Impact without FBE – 34% drop in income to City per customer

• Impact with FBE – 61% drop in income to City per customer

Next Steps• Include more detail around current tariffs• Determine impacts of

• moving away from large differential inclining block tariff

• net metering tariffs for PV

• decoupling City revenue from electricity sales ie service charge for City costs and energy charge for Eskom repayment

• time of Use tariff

• FBE adjustment

• low income electrification

Thank You

Andrew [email protected]