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