Certain customers, who are now finding that self-generation offers superior long-term financial predictability
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A structural shift is underway in the South African residential estate model that has relied on a centralised utility for power.
Rising electricity costs, evolving tariff structures and a sustained decline in the cost of solar modules and lithium-ion batteries are rapidly changing the economics of energy supply, eroding the case for remaining grid-dependent, says Francois Van Themaat, the co-founder and MD at Sustainable Power Solutions (SPS).
He says that for property developers and Homeowners’ Associations (HOAs), the conversation has moved from temporary backup power to full energy independence.
“At its core, this shift is about cost savings and security of supply. While security was the primary driver during peak load shedding, the relative stabilisation of the energy situation has shifted the focus more firmly to the bottom line.”
Raising fixed connection & service charges even when variable energy usage drops
The solar energy company says the financial motivation to defect from the grid is driven by two diverging curves. It says on one side, the utility is increasingly restructuring tariffs to protect revenue, often by raising fixed connection and service charges even when variable energy usage drops.
The company says this trend is aimed at protecting its revenue base, making daytime-only solar solutions appear less attractive on a standard bill. On the other hand, the cost of renewable components, specifically batteries, continues to follow the downward price path previously seen with solar modules, it adds.
“Taken together, these two trends make it clear that a point exists where generating one's own energy is more cost-effective than maintaining a grid connection. That point has already been reached by certain customers, who are now finding that self-generation offers superior long-term financial predictability,” says Van Themaat.
The "Municipal collapse” - now hitting three of South Africa's eight metros, including Johannesburg, Mangaung and Nelson Mandela Bay - directly reflects a failure of leadership and accountability, Business Leadership South Africa(BLSA) CEO Busisiwe Mavuso said in her weekly newsletter.
She says local government politicians, unfortunately, have largely proven themselves to be a serious part of the problem rather than making any sort of progress in finding solutions.
“At the time of the 2021 municipal elections, I wrote that municipalities needed the right people in place, warning that the core problem was fundamentally a human resource one and that local government "has not always had the right hands at the till".
'Unfortunately, politicians continued to focus on factional battles, power grabs and vested interests. Service delivery is the casualty, and that always hits underdeveloped areas the hardest," Mavuso writes.
While lenders remain willing to finance qualified buyers, with many still offering 100% home loans to applicants with strong credit profiles, affordability today is about much more than simply qualifying for a bond, says MyProperty.
Municipal rates, levies, insurance, utilities and everyday living costs have all increased in recent years.
The portal says municipal rates, levies, insurance, utilities and everyday living costs have all increased in recent years, making it more important than ever to buy within your means.
Most financial experts recommend keeping your monthly home loan repayment to around 30% to 35% of your net monthly income, it says.
The company says using the current average take-home salary of around R21,200, this would translate to a monthly bond repayment budget of approximately:
•30%: R6,360 per month
•35%: R7,420 per month
This leaves enough room in a worker's monthly budget for essential living expenses, savings and unexpected costs.
Remember, owning a home involves much more than just repaying the bond, MyProperty says.
One also needs to budget for:
•Municipal rates and taxes
•Electricity and water
•Levies (if purchasing in a sectional title scheme or estate)
•Homeowners' insurance
•Household contents insurance
•Maintenance and repairs
•Fibre, security and other monthly services
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