Some of the talking points influencing the narratives around rooftop solar in South Africa are not supported by national data, according to new research.
Josh Dippenaar and Bernard Bekker, researchers from Stellenbosch University, collated system-wide data to test the actuality of narratives currently dominating South African energy discourse.
Their dataset comprised national tariffs covering all 165 licensed municipal distributors in South Africa with cost-of-supply results for each customer category, wholesale purchase prices from utility Eskom, assumptions about residential and C&I solar PV uptake and a qualitative analysis of primary stakeholder sources and municipal audit findings. The data was used to explore narratives around revenue generation, cost recovery, systemic inefficiencies and regulatory interventions.
Dippenaar and Bekker’s findings are presented in the research paper Who pays for rooftop solar? Cost shifts, stakeholder perspectives and policy tensions in South Africa, available in the journal Energy Policy. The paper explains that with around 10% of national installed generation capacity now lying behind the meter, debates around rooftop solar in South Africa are becoming increasingly polarized.
Dippenaar told pv magazine that several of the widely-repeated narratives in the debate around rooftop solar in South Africa are not supported by the data.
“In particular, the idea that municipal electricity revenue is broadly a ‘cash cow’ is not accurate,” he explained. “Across 165 municipal distributors, most are under-recovering the cost of electricity supply, with an average surplus margin around -7% in 2023.”
Analysis in the paper explains that most municipalities are under-recovering electricity costs and rely heavily on cross-subsidies, a mechanism in which costs are transferred between different groups of electricity users, in order to support low-income customers.
The paper adds that cross-subsidization comes mainly from high usage C&I and higher paying domestic tariff categories and highlights a structural vulnerability that is central to understanding the risks and trade-offs of solar uptake.
“Cross-subsidies are a major feature of the system,” Dippenaar continued. “We estimate electricity tariffs redistribute roughly $1 billion per year through cross-subsidies, which is important for affordability and low-income support, but it also means municipalities can be vulnerable to erosion of high-paying customer classes.”
The research also explored the narrative that solar drives major cost shifts, due to solar users contributing less to shared grid networks, in turn leaving other customers to shoulder a larger share of fixed costs.
Dippenaar said that while rooftop PV cost shifts do exist, they are moderate in aggregate and vary significantly by municipality and tariff structure. The research paper adds that the findings challenge the assumption that rooftop solar uptake is primarily driven by the opportunity to exploit tariff design for financial gain.
“Other factors appear to play a stronger role in driving adoption, including tariff levels, the severity of loadshedding, income levels and national incentives such as solar tax rebates,” the paper says.
Dippenaar said results from the research support the need for a more evidence-based approach to tariff reform and regulation, explaining that while rooftop PV is not the root cause of municipal distribution challenges, it can expose and amplify underlying financial and governance weaknesses.
“Rather than framing rooftop PV as the primary threat, the focus should be on designing tariffs that recover residual network costs transparently while maintaining incentives for PV where it provides value, including reliability benefits under load shedding,” Dippenaar suggested.
He added that solar policy in South Africa needs to be paired with practical improvements in metering, registration, and enforcement.
“Non-compliance and broader revenue leakage, via illegal connections, billing inaccuracies and non-technical losses, can outweigh the modeled PV-related revenue erosion in many distressed municipalities,” Dippenaar told pv magazine.
“Beyond tariffs, policy should prioritize improving compliance and reducing non-technical losses, since those interventions can improve municipal financial stability while allowing rooftop PV to scale more smoothly.”
In March, South African utility Eskom said it was issuing notices against 14 municipalities over outstanding debts. Municipal debt across the country had surpassed ZAR 110 billion ($6.6 billion) at the time despite a debt relief program introduced by the National Treasury.
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