April 2025: The Next Solar Power Boom?

Clerissa Holm • November 20, 2024

 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

Eskom

1. Financial Sustainability


Eskom cites financial sustainability as a major driver behind the tariff increases. The utility aims to achieve cost-reflective tariffs—rates that accurately represent the real expenses involved in generating and distributing electricity. Faced with a debt burden of around R400 billion and considerable municipal arrears, Eskom needs increased revenue to stabilise its finances and ensure the reliability of South Africa’s power supply.


2. Operational Costs


Eskom is also grappling with rising operational costs, essential maintenance, and further infrastructure investment requirements. The utility’s infrastructure is aging, and ongoing maintenance is critical to prevent more frequent power outages and to ensure dependable service. Eskom argues that previous tariff increases have been inadequate to cover these growing costs, making the proposed hikes a necessary step for securing funds to maintain and upgrade the grid.


With these increases on the horizon, the future cost of relying on Eskom’s electricity is daunting for many. Consequently, many South Africans are exploring alternatives like solar power as both a financial and sustainable option.

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


Current Geyser Cost Breakdown


Power Consumption: 

A 3kW, 150L geyser takes approximately 2 hours and 40 minutes (2.67 hours) to heat water from 20 ºC to 65 ºC.


Energy Used per Heating Cycle: 

8 kWh


Current Cost per Cycle: 

At today’s rate of R3.50 per kWh, the cost per heating cycle is: 


○ 8Wh x R3.5 = R 28 per cycle 

○ R 28 x 2.5 cycles = R 70 per day (average geyser cycles per day = 2.5)

○ R 70 x 30 Days per month = R 2100 per month


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 financial appeal of transitioning to solar energy in South Africa is intensifying due to escalating electricity tariffs. Eskom's proposed 36.1% tariff increase for April 2025 has prompted consumers to explore alternative energy solutions. Reuters


To support this shift, the South African government has introduced incentives to make solar power more accessible. The Energy Bounce-Back Loan Guarantee Scheme, launched in August 2023, aims to facilitate investments in rooftop photovoltaic solar systems for small businesses and households, targeting an additional 1,000 MW of generation capacity. News24


Industry experts anticipate a significant increase in demand for solar installations as consumers seek to mitigate rising energy costs. The combination of higher electricity prices and supportive government measures is expected to drive a new solar boom across the country. Business Live

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.


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