As of 1 April 2021, the National Energy Regulator of South Africa (NERSA) has approved an average increase of 15.06% for Eskom’s direct customers. And as of 1 July 2021, Eskom’s municipal clients will receive an average increase of 17,80%.
This is a frightening eventuality that Organised Agriculture must be prepared to face. And this is on the back of myriad of expense increases to the agricultural sector that threatens to cripple the entire industry.
But this is an industry that has faced many hardships and trying circumstances throughout the history of farming in South Africa. This is an industry that constantly explores possible solutions to problems and adapts to the environment in which it operates.
And this is exactly the reason for Agri Eastern Cape embarking on an exploratory investigation into possible renewable energy solutions that will positively impact the productivity and livelihood of the Agricultural sector in the Eastern Cape.
The first question that is always asked, is: “Why renewable energy?”
The fact of the matter is that Loadshedding is here to stay for at least another 3 to 5 years. It is a reality that we must accept and we must adapt our operational procedures to suit this new way of life in South Africa. To further add to the economical impact of Loadshedding, the use of traditional power sources is currently the fastest growing expense in daily operations in the agricultural sector.
Simply put, it has become an absolute necessity to find alternative solutions to traditional power sources in the Eastern Cape Agricultural Sector.
Once the decision is made to find an alternative energy solution, the next question is whether this solution should be Grid-Tied or Off-Grid. In order to answer this question, the farmer must first understand the difference between the two options and the impacts of each:
Off-Grid means exactly that. You are completely off the Eskom grid. There is no power supplied to you by the national power supplier and you are completely on your own. The benefit of the Off-Grid solution is that you do not rely on any third party to supply your energy. You are 100% in control of your power supply. But that also means that you are 100% on your own when problems are experienced. It is important when considering this option to also plan for disaster. Consider all your options and have a back up plan in place. Just in case it is needed.
The Grid-Tied solution works well for the individual or entity that is not quite ready to completely move off the grid and would still like the safety net of the traditional power supplier in place, should it be needed. The benefit of this solution is that in theory, you have a better chance of never being without power. The drawback on the Grid-Tied solution is that you will not be free of expenses as you will still have to pay Eskom a fixed daily cost in order to have Eskom infrastructure and availability at your site.
It is imperative that the members of the agricultural sector do their homework and fully understand the impact that these options and solutions will have on their operational output as well as their operational expenditure. These factors need to be considered in totality and how this will affect the profitability and sustainability of the operation.
It is not the position of Agri Eastern Cape to say either solution is better than the other. It is the position of this office to rather investigate the solutions in detail and provide the information to its members so the members can make an informed decision on what solution best suits their specific needs.
The final consideration and question around renewable energy solutions is financing. Agri Eastern Cape has begun consultations with various banks and finance institutions to develop suitable financing solutions for its members. The aim is to assist the farmer in obtaining the necessary finances needed to purchase the renewable energy infrastructure needed to start with an alternative energy solution. At present the options being considered are and Asset Finance Option and a Property Finance Solution.
Again, the aim of Agri Eastern Cape is to determine all possible solutions and provide this information to its members so that the individual farmer is in an informed position to better decide on the solution that suits the specific needs of that farmer and the individual agricultural operation.
For more information on renewable energy solutions contact Günther Pretorius, Natural Resources and Economics Manager at Agri Eastern Cape.
041 363 1890