How to gain energy independence amid Eskom price hikes?

Zawya

02-07-2025

Eskom's 2025/26 tariff increases are set to have a huge impact on operational expenses, forcing businesses to re-evaluate their energy strategies.
The National Energy Regulator of South Africa (Nersa) recently approved average tariff increases of 12.74% for Eskom direct customers (effective April 1, 2025) and 11.32% for municipalities (effective July 1, 2025).
"The current energy climate in South Africa presents both challenges and opportunities for businesses," says Matthew Cruise, business development executive at Impower Solar & Storage.
The reality of persistent tariff increases and the ongoing need for energy security means that relying solely on Eskom is no longer a viable long-term strategy for many industrial and commercial operations.
Businesses are also facing a threat of tariffs being added to goods they export to the EU and US, should those goods be produced through 'dirty' energy sources, such as Eskom's coal station dominated generation portfolio.
Clean energy
The Carbon Border Adjustment Mechanism (CBAM) tariff will increasingly drive businesses to switch to clean, renewable energy in their production process.
'Internal competition between the manufacturers of solar panels in China is good news for local businesses, as this keeps driving down the cost of the panels.
'It makes going solar an entirely affordable option, but we recommend making this move only after careful consideration and planning,' says Cruise.
Energy independence
Cruise says the decision to move off-grid through solar PV is a strategic one, driven by several key factors:
- Cost certainty and savings: While the initial investment in a solar PV system is a significant consideration, it offers long-term cost predictability and substantial savings. Unlike volatile Eskom tariffs, solar energy provides a hedge against future price hikes. The upfront costs are increasingly offset by rapidly decreasing solar panel prices and various financing options, including power purchase agreements, green energy loans, and attractive tax incentives. Going the financing route enables businesses to receive immediate net-monthly savings with solar and lock in stable electricity price increases, without spending any money.
- Energy security and resilience: A well-designed solar PV system, particularly a hybrid or off-grid solution with battery storage, provides a reliable and continuous power supply, mitigating the impact of outages, 'load reduction' and ensuring business continuity.
- Environmental responsibility and brand reputation: Adopting solar demonstrates a commitment to sustainability and reduces a company's carbon footprint. This not only aligns with global environmental goals but also enhances brand reputation.
- Increased property value and tax benefits: Investing in solar energy systems can significantly increase property value. The South African Revenue Service (Sars) offers the 12B Solar Tax incentive for businesses investing in renewable energy, which enables a 27% rebate from Sars of the total cost of their solar system. Large carbon dioxide emitters also benefit by reducing their carbon tax, which will become increasingly more expensive from 2026 onwards, as phase two of the Carbon Tax Act comes into effect.
What to consider
Cruise advises businesses considering the transition to solar to assess the following:
- Energy consumption profile: A detailed analysis of current electricity usage patterns is crucial to determine the optimal size and type of solar PV system.
- System type:
- Financial investment and ROI: Businesses must evaluate the initial capital outlay against the projected energy savings and potential return on investment (ROI), which can be recovered over a relatively short period given the long lifespan of solar panels.
- Tax incentives: Sars offered several incentives to encourage solar installation, but the structure has changed, and there is a real chance that they will fall away from 1 April 2026. This puts a time pressure on installations to happen this year, still, before incentives fall away potentially.
- Financing options: Explore various financing models, including outright purchase, power purchase agreements for zero upfront cost, lease-to-own options, and green energy loans from financial institutions.
- Professional assessment and installation: Engaging reputable solar providers ensures accurate system design, high-quality equipment, and professional installation, maximising efficiency and longevity.
- Grid-tied systems: Connected to the Eskom grid, these systems reduce reliance on Eskom and can feed excess power back into the grid, potentially earning credits. They are generally the most cost-effective entry point.
- Hybrid systems: Combining solar panels with battery storage, these offer greater energy independence and backup during outages while still leveraging grid connection.
- Off-grid systems: These systems provide complete energy independence, eliminating reliance on Eskom. They typically involve solar panels, significant battery storage, and often a generator as a backup.
"The conversations around Eskom tariffs are louder than ever, and businesses are actively seeking solutions that offer stability and long-term economic sense," adds Cruise.
"The next nine months will be a very interesting period for solar installations in South Africa, as companies move to make use of available tax incentives before they potentially fall away.'