How Rising Electricity Costs Are
Sparking Renewed Interest
in Solar Energy in South Africa
You might have heard rumours circulating about a staggering 60% increase
in electricity costs next year.
We’re here to give you the facts and explain why Eskom’s plan has left many South Africans feeling like they’re being taken to the cleaners.
In this article, we’ll break down the motivations behind Eskom’s steep hikes and explore the potential impact on everyday South Africans.
Drawing from industry insights and economic expertise, we’ll also offer predictions on what’s ahead for electricity costs and discuss
why a new solar boom could be on the horizon.
Eskoms Reasons for the Proposed Electricity Hikes
What and How Exactly Will Eskom’s Tariff Increases Happen?
Eskom has proposed a series of sharp tariff hikes over the next three years. Starting in April 2024, South Africans could see their electricity costs rise by 36.1%, followed by 11.8% in 2025 and another 9.1% in 2026. Cumulatively, these increases would result in an approximate 60% (66% compounded) rise in electricity costs by 2026. Eskom argues that these hikes are necessary to cover operational expenses, address their significant debt, and fund critical infrastructure maintenance and upgrades. However, the impact on consumers will be significant, with household and business budgets likely strained by these rising costs.
The expected hikes could lead to a “bill shock” for consumers, as each year’s increases compound the financial burden. Many South Africans may find themselves in a situation where electricity bills begin to rival other major household expenses, such as rent or mortgage payments. These substantial increases come amid an already challenging economic environment, adding to financial pressures faced by consumers and businesses alike.
To give you a practical idea of what this might look like for your budget consider the formulation below where we look at what your water geyser would cost you in 2026
Projected Monthly Cost in 2026
Projected Electricity Tariff by 2026:
With the estimated 66% increase, the electricity cost per kWh would rise to:
R 3.50 × 1.66 = R 5.81 per kWh
Cost per Heating Cycle in 2026:
o 8 kWh × R 5.81 = R 46.50 per cycle
o R 46.50 x 2.5 cycles = R 116 per day
o R 116 x 30 Days per month = R 3480 per month
Summary
By 2026, operating this 3 kW, 150L geyser once daily could cost approximately
R3480 per month, assuming a 60% tariff increase.
This emphasises the potential financial impact on households relying on electric geysers as electricity prices rise.
Public Backlash and the DA Petition Against The Cost Increases
The proposed price hikes have not gone unchallenged. South Africans across the country have expressed strong opposition, with concerns over affordability and Eskom’s management. In response to the announcement, the Democratic Alliance (DA) has launched a petition to oppose Eskom’s proposed 36.1% increase for 2024. The petition has already garnered over 100,000 signatures, reflecting widespread public disapproval. The DA argues that these tariff increases are “unrealistic and unfair” given the state of the economy, Eskom’s inconsistent service, and the impact on consumers struggling to keep up with rising costs.
The DA petition calls for alternative solutions, such as improving Eskom’s operational efficiency, reducing corruption, and seeking non-tariff-based revenue sources. Public pressure could influence the National Energy Regulator of South Africa (NERSA) as it reviews Eskom’s proposal, as NERSA has the authority to approve or modify tariff increases. Historically, NERSA has granted lower increases than Eskom’s requests, though the final decision remains uncertain.
Will Eskom’s Price Hikes Trigger a New Solar Power Boom?
The Potential for Increased Solar Installation Prices
A surge in solar demand could, however, lead to temporary price hikes for installations. Supply chain constraints, installation labour shortages, and increased demand could initially drive up the costs of solar systems. Over time, competition within the solar industry may stabilise prices, creating a more affordable market. So we suggest staying ahead of the curve and getting the ball rolling as soon as possible.
As Eskom’s tariffs continue to climb, the shift towards solar energy appears not only prudent but necessary for many South Africans.
The financial and environmental benefits of solar, combined with government incentives, make it an increasingly accessible option. While demand surges may bring temporary price hikes, the long-term savings and energy independence solar offers can outweigh these initial costs.
With April 2024 poised to be a tipping point, those who start exploring solar options early may avoid future price jumps and secure a sustainable energy future. Embracing solar now could mean greater control over energy expenses and less reliance on an unpredictable grid, turning this challenging period into a powerful opportunity for change.
