South African businesses continue to face two major operational risks, including escalating electricity tariffs and recurring power interruptions. These pressures have forced many organisations to re-examine how they source and manage their energy. Solar power has become a leading alternative, not only as a hedge against grid instability, but also as a way to secure long-term cost savings.
While the benefits are clear, the path to implementation is not always straightforward. Choosing between off-grid, grid-tied, or hybrid systems requires a careful assessment of energy demand, site suitability, capital or financing options, and regulatory compliance. The right system design can reduce operating costs and improve resilience, but the wrong approach can lead to unnecessary expense or underperformance.
In this interview, Christiaan Hattingh, Managing Director for AWPower, draws on years of industry experience to outline what businesses should know before investing in solar. He explains how to evaluate energy needs, budget constraints, and future growth plans, while also addressing common misconceptions around financing and regulation. His insights provide practical guidance for businesses weighing the move to solar energy.
Key Considerations for Choosing a Solar Solution
What key factors should be taken into consideration before deciding on a best-fit solar solution to meet the energy needs of any given business, whether it’s off-grid, grid-tied, battery-tied, or otherwise?
Christiaan Hattingh: Choosing the best solar setup, be it off-grid, grid-tied, or hybrid, depends on several factors: business needs, site requirements, budget constraints, and future growth plans.
Looking at the energy demand side of a business, knowing what you use and when you use it is extremely important. This can be done by analyzing historical electrical data to determine consumption, which is your kilowatt hours or units. There’s also what we call your peak demand, which is the kilowatts of power you use at any given moment. Then we also have time-of-use tariffs. These can be analyzed in minutes, hours, or days, and also for seasonal periods. This is very important, especially for a true off-grid site, as it allows you to size the system correctly. It’s also important for other systems, but crucial for off-grid systems.
Identifying your critical and non-critical loads is another factor. Critical loads are those that need to stay on. In terms of future growth, consider if you’re going to add equipment in a factory or expand your building. Are you adopting electric vehicles in your commercial range? These considerations on the energy demand side are very important.
Regarding the site itself, consider what available roof space or ground space there is to utilize. If it’s rooftop-mounted, is it an asbestos roof, which is common in industrial areas? If so, it must be removed safely by a legitimate company. If it’s roof sheeting, it must be signed off by a structural engineer. For ground mounts, ensure compliance with local building regulations.
Consider the solar irradiance for the site and weather patterns. For example, Gauteng has consistent generation throughout the year compared to Cape Town, which has brilliant summer generation but less in winter due to rain. This affects the type and size of the system needed.
A shading analysis is also important. Are there trees or neighbouring buildings that would affect shading on your panels and ultimately your generation?
The system type and design are crucial. Off-grid means you completely sever your municipal connection and are totally self-reliant. Grid-tied systems are common in commercial instances where businesses don’t get switched off during load shedding or power outages. Hybrid systems typically have batteries and panels to store energy for nighttime use or when there’s not enough PV available.
Budget is a significant factor. Are you going to self-finance, finance through a bank, or use a PPA? PPAs are more for the larger end of the solar market. The budget will likely be the biggest influencing factor in what kind of system is considered.
Consider the rules and regulations regarding the council. In Cape Town, for example, there’s a lot of talk about getting the system registered, with penalties and fees applicable. Solar Maintenance & Support is also important. Systems require ongoing maintenance, which can be minor or major depending on the site.
Engage with reputable installers and suppliers. Warranty terms have improved, with some equipment offering up to 10 years. Support infrastructure is crucial to ensure you don’t sit without power or savings for extended periods.
Scalability and future expansion are important considerations. Once people adopt solar and see the results, they often want to add more if there’s budget and space available. Installers can help plan accordingly.
In summary, it’s a lot of information, but these are important considerations when deciding on a solar solution for your business.
“Choosing the best solar setup, be it off-grid, grid-tied, or hybrid, depends on several factors: business needs, site requirements, budget constraints, and future growth plans.”
Advantages of Adopting Solar Power in South Africa
Given the current state of power infrastructure and electricity costs in South Africa, how do businesses stand to benefit by making the leap to solar sooner rather than later?
Christiaan Hattingh: This one is a no-brainer. With Eskom’s aging coal plant and inefficiencies forcing them to increase their tariffs beyond reasonable, they are in a death spiral, making switching to solar a practical financial decision. The solar boom in 2023 made the industry more competitive, with imports of progression and technology. Manufacturers noticed the massive market in South Africa for solar, especially for energy security.
In European countries, load shedding isn’t an issue, so their systems are different. They have time-of-use tariffs where they can charge batteries at cheaper rates at night and discharge during peak periods. In South Africa, the need is for an uninterrupted power supply at a reasonable tariff to operate as a business without disruption. Manufacturers have produced equipment at a large scale to provide what we need to combat load shedding and provide savings.
The cost of solar is now cheaper than buying from the grid, with payback periods between three and six years, depending on the system size and configuration. Rising annual electricity costs are a factor, as is grid reliability. Eskom is under financial pressure, which will certainly affect reliability.
Technology has advanced significantly, especially with batteries and inverters. Panel efficiency has increased, providing more wattage from the same panel size. This makes the leap to solar sooner rather than later a wise decision. Solar is cheaper than ever, electricity costs are high, and it’s just a matter of time before the grid collapses again, putting businesses in jeopardy. You can’t quantify lost business as easily as savings, so we urge people to act now.
“The cost of solar is now cheaper than buying from the grid, with payback periods between three and six years, depending on the system size and configuration.”
Solar Investment: Costs and Future ROI
In terms of solar setup costs and return on investment (ROI), how have you seen investment in solar energy become more lucrative or affordable over the past 5 years, and what kinds of predictions can you make for the future in this regard?
Christiaan Hattingh: Ten years ago, the solar industry was a niche market for those who believed in sustainability and had the finances to afford these systems. They were very expensive back then but still paid off quickly. In the past five years, prices have dropped by around 50%, making a massive difference.
We’ve seen advancements in technology, particularly in panel efficiency. Every quarter, new panels come out that are larger but still manageable in size. Battery pricing is expected to come down over time, although panel pricing may have reached its bottom, China’s rebate cuts may push PV module prices up by 20% by year-end.
Batteries are the most expensive component but play a crucial role in storing energy for use when there’s not enough solar. The use of AI in these systems is emerging, helping to shift loads, optimize systems, and predict maintenance needs.
“In the past five years, prices have dropped by around 50%, making a massive difference.”
Solar Financing’s Impact on Energy Strategy in Emerging Markets
How is solar financing reshaping the way businesses approach their energy strategy in emerging markets like South Africa? Are we seeing a mindset shift from energy as a cost to energy as an asset?
Christiaan Hattingh: Solar financing has become more available, accelerating the adoption of solar. The solar boom and load shedding pressures created urgency for financing institutions to offer solar financing. It’s not as straightforward as financing a car, but there are now more options available.
In South Africa, where the economy isn’t in great shape, people are cautious with their cash. They don’t want to spend on solar unless necessary. Financing plays a massive role, especially in the residential market. If financing is accessible and affordable, it opens up a big untapped market.
There’s a lot of effort from businesses and financial institutions to market solar financing. The paperwork and admin involved can be a hurdle, but streamlining the process can increase adoption. Rising tariffs and load shedding play a role, and the availability of financing has sparked growth, although we’re not there yet in terms of volumes.
It’s important to communicate that savings can pay for monthly installments if packaged correctly. This information helps people see solar as an asset rather than a cost.
“It’s important to communicate that savings can pay for monthly installments if packaged correctly. This information helps people see solar as an asset rather than a cost.”
Overcoming Barriers to Solar Adoption in South Africa
With load shedding and rising grid tariffs, there is clearly value in solar, but what still holds some South African businesses back from adopting financed solar solutions? What are some common misconceptions about solar financing models like PPAs, leases, or green loans?
Christiaan Hattingh: People are worried about extra hidden fees. When committing to financing, whether for five, ten, or even twenty years with PPAs, they wonder if there will be extra fees beyond the monthly installments. Service fees, for example, are something solar can’t address.
Complicated contracts, like PPAs and leases, can be confusing with lots of fine print. Concerns about maintenance also arise. Without a maintenance agreement, unexpected failures can lead to additional costs.
Regulatory issues are another concern. Clients must ensure systems are registered, which can involve fines if not done. Credit and collateral problems also exist, as not everyone is in a financial position to get a loan.
To overcome these issues, businesses should understand all costs, talk to financing experts, and work closely with local authorities. South Africans generally don’t like long-term contracts, so while PPAs can be advantageous, many prefer not to be tied to a contract for twenty years due to instability.
“People are worried about extra hidden fees. When committing to financing, whether for five, ten, or even twenty years with PPAs, they wonder if there will be extra fees beyond the monthly installments.”
The Impact of Government Policy on Solar Adoption
What role does government policy like tax incentives or regulatory frameworks play in accelerating the adoption of financed solar solutions, and what policies would you like to see introduced or improved in the next few years?
Christiaan Hattingh: There was a massive uptake in the residential market with Section 12B, which gave rebates on solar panels. This indirectly sparked interest in solar for businesses as well. Business owners with residential properties that installed solar began adopting it for their businesses.
When there’s government backing, people are more inclined to invest in solar. However, for residential users, the incentives were only applicable to solar panels, not inverters or batteries, which are more expensive components. However, the Section 12B advantage is still available for businesses, where they can write off the full cost of solar in year one and slash their tax bill.
“The Section 12B Tax advantage is still available for businesses, where they can write off the full cost of solar in year one and slash their tax bill”