Green Economy Journal Issue 58

ENERGY
ENERGY
Boosting the growth of the South African
PPA market could alleviate pressure on
Eskom to supply demand.
• Reactive energy charges (c/kVArh) supplied more than 30% (0.96
power factor or less) of the kWh recorded during peak and standard
periods. The excess reactive energy is determined per 30-minute
integrating period and is accumulated for the month applicable
during the high-demand season.
COMMERCIAL
AND INDUSTRIAL
Small-Scale Embedded Generation
To achieve reliable and cost-efficient energy supply, commercial and industrial consumers are
looking for alternative sources of energy for their operations. However, careful consideration of
all the tariff components is necessary to determine the economic business case of small-scale
embedded generation.
Eskom
Eskom C&I customers with a notified maximum demand (NMD)
greater than 1MVA are typically on a time-of-use (TOU) tariff structure,
namely the Megaflex tariff, while municipal licensees apply their own
tariffs. All other customer segments who install small-scale embedded
generation (SSEG) are required to move to a TOU structure.
C&I customers who have installed grid-tied generation are moved
to the Megaflex-Gen tariff (>22 kVA connections). On the Megaflex-
Gen tariff, any excess energy fed into the grid that is not wheeled to
another Eskom customer is credited at the Gen-offset tariff. If energy
is wheeled to another Eskom customer (the off-taker), then the offtaker
is credited at the Gen-wheeling tariff. The Megaflex tariff varies
according to transmission zone, network connection size, maximum
instantaneous demand and time of use (hour and season).
Megaflex tariff components
• Fixed charges (R/month) to recover overhead costs and prices
that vary with customer-base size. These charges are based on
the sum of the monthly utilised capacity at each point of delivery
(POD) and administration charges.
• Transmission, network and distribution demand charges
(R/kW/month) to recover long-run marginal investments required
to meet peak demand. These charges are based on the supply
voltage, transmission zone and annual utilised capacity measured
at the POD at all time periods. Excess network capacity charges
are payable.
• Energy charges (R/kWh) recover variable costs to meet the
customer load. These are TOU differentiated active energy charges
including losses based on supply voltage and the transmission
zone of the customer. There are three TOU periods namely peak,
standard and off-peak.
• Ancillary service charges (c/kWh) based on the voltage of the
supply applicable during all time periods.
WEEKDAY TARIFF STRUCTURE
Eskom and CSIR
The Megaflex tariff incorporates three transparent cross-subsidies:
i. The affordability subsidy funded by Eskom’s direct industrial and
business customers and is calculated using the end-user’s total
active energy demand.
ii. The electrification and rural subsidy funded by Eskom’s direct
industrial and business customers as well as municipalities and is
calculated using the end-user’s total active energy demand.
iii. The urban low voltage subsidy funded by all Eskom’s customers
on urban tariffs that take supply at 66kV or higher. This cost is based
on the voltage of the supply and charged on the annual utilised
capacity measured at the POD applicable during all time periods.
The actual revenue split between variable and fixed costs was
determined in a cost-of-supply study (see figure 3) and demonstrates
Eskom’s financial risk to declining energy volume sales. The average
Figure 3. Eskom cost of supply and revenue share.
ENERGY CHARGE (R/kWh)
REPORT BY CSIR AND RES4AFRICA*
The commercial and industrial (C&I) market provides a double
opportunity for organisations by delivering them with costs
savings, long-term price stability and security of energy
supply, and allows for decarbonisation of their operations. The
electricity consumption from the C&I market segment however
has not grown at the same levels as other global markets due to
unreliable supply, in fact it has slightly decreased since 2010.
Official numbers of C&I installations and the equivalent capacity
is not available, however estimates have been pulled together from
different sources – placing the market size at over 1.15GW as of 2020.
Outside of developed countries, South Africa has the largest share of
companies actively sourcing renewable energy.
SA TARIFF STRUCTURES
Energy consumers either purchase electricity from Eskom or their
municipality. Municipalities buy electricity directly from Eskom and
redistribute it to end-users, adding their own distribution network
and retail costs as well as an allowable profit margin. There are
currently 266 local municipalities in South Africa, but not all have
distribution licenses.
Figure 1: Eskom total annual electricity sales volumes in GWh from 2010 to 2020.
Eskom
Figure 2. The Megaflex tariff. Notes: Megaflex Non-Local Authority tariff; transmission zone 66kV and 132kV. High season = Jun-Aug; low season =
Sep-May. Notes: Megaflex Non-Local Authority tariff; transmission zone 66kV and 132kV. High season = Jun-Aug; low season = Sep-May.
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