Is Installing a Home Solar System Worth It?

A Case Study in South Africa

I visited my parents’ home recently in Cape Town, South Africa, and noticed the big shiny solar panels on the roof. They had just forked out some serious cash to upgrade the system and wanted to know why they were still having to buy electricity from the grid.

This turns out to be quite a tricky question, and to answer it we’ll have to go deep into the economics of solar as well as energy usage habits.

How we live

The house is a rambling old 1920s structure that has grown organically over the years. At this point it’s really two separate households — the main family home, and an additional section for tenants with a separate entrance. The electrical system reflects this higgledy-piggledy growth, with three (!) separate connections to the grid

Our electrical consumption is on the higher side, since at any point there are between five and ten people living in the house, most of whom are working from home due to COVID. Electricity usage doesn’t vary much by season, as in South Africa neither central heating nor air conditioning is common — average daily temperatures are between 10–30 degrees Celsius (50–90 degrees Fahrenheit). Some rooms are equipped with portable electric heaters for very cold winter days.

What we have installed

Cape Town has pretty good solar potential — according to the SolarGIS map of South Africa, we receive an average daily total of 5.2 kWh / m² of horizontal irradiation, equivalent to about 1900 hours of annual average sunlight hours. That’s about 2–3X more energy potential per panel than Germany.

The house has 13 panels installed on a north-facing roof. Since each panel is 265W, the total power output of the system is 3.45kW (more on how to interpret these units later). There is also an 8kWh battery plus all the charge controllers, inverters, fuses etc. We are still connected to the grid and buy some prepaid electricity from the state monopoly Eskom.

My parents did the installation in two phases — an initial 8 panels plus the inverters and wiring, then about two years later they added a battery, more panels and more inverters. The total cost of the system was about R250,000 ($16k USD).

How much solar energy do we produce?

Before we get into the data, we need to define power and energy:

Power is the rate at which work is done, while energy is the capacity to do work. Energy is the total amount of power used over time.

We have a 3.45kW system, meaning at peak hours it has a power output of 3450W. If we used 100% of this power for an hour (say by turning on 300 lightbulbs or continuously boiling two kettles), we’d use 3.45kWh of energy, about one person’s daily energy usage.

The system comes with a nifty real-time dashboard from the inverter company (Victron Energy), which is absolute heaven for a data nerd like myself. Using it, we can see every second exactly how much power is being produced and consumed right now, as well as calculate the annual energy production.

For example, right now it’s a partly cloudy day and the PV system is producing 2623W, of which half is being used to run appliances in the house (1271W to Critical Loads), the other half to charge the battery (1117W), and a tiny amount fed back into the grid.

Annual solar production

If we look over the longer-term, we see that we generate an average of 500 kWh per month, or 6000 kWh per year. We generated a max of nearly 700kWh in December, the sunniest month of the year, and this will drop nearly in half to 380kWh in June. This is one of the issues with a solar systems— the max power output is quite high but it doesn’t always generate electricity when you need it.

We see a similar cycle on a daily basis, with the system generating power from 7am to 7pm, hitting max power of 3.2kW at about 1pm. Given that our system is rated at 3.45 kW (13 panels * 265W), this means we have a system efficiency of about 93% (very good according to industry standards). Losses are due to factors like temperature, rooftop orientation, dust/covering of the panels, and efficiencies of the inverter and wiring system.

We use about 70% of the solar energy we produce directly, the other 30% (around 2000 kWh per year) gets fed back into the grid. The City of Cape Town has a net metering system, but it’s extremely fiddly to set up and so we are currently not receiving any energy credit back from the grid.

Is the system performing correctly?

As a sanity check, I also estimated what our annual energy production should be based on our system and location, and got a result of 5900 kWh, meaning that our system is performing as well as expected.

I use the following formula:

Annual electrical production(kWh) = System power (kW) * annual solar irradiance (kWh / m²) * system efficiency (%)

Assuming an efficiency of 90% and an annual solar irradiance of 1900 kWh/m², we get the following result:

Annual electrical production(kWh) = 3.45 kW * 1900 kWh / m² * 90%

= 5900 kWh.

Is the battery helping?

Batteries help to solve the problem of intermittency, since excess power generated during the day can be stored in the battery and used at night. We have an 8kWh battery installed (lithium iron phosphate for the curious), which is working as expected and supplying about 30% of our daily energy needs. Currently, we only use 70% of the battery’s capacity so that it can be charged back up to full — apparently this is necessary to extend the battery’s lifespan.

How much electricity do we use?

Looking at the realtime data, we use about 800 kWh per month, for a total of 10,000 kWh per year. This means our solar system can only provide about 60% of our current electrical demand.

There are some fascinating sub-patterns when you dive into the data, for example:

  • Some nights we saw a 1000W energy usage between 11pm and 7am, which turned out to be one of the tenants using a portable electric heater.
  • Every day at 12pm there’s a 3000W spike due to a geyser turning on for a scheduled heating.

Given that we don’t get 100% of our energy needs from the solar system, we need to buy prepaid credits each month.

Energy bought per month

Until November last year, we were spending about R2000 ($150) per month on buying 750 kWh from the grid. From November onwards when we upgraded the system, the total monthly spend has been R1500 ($100) or less for around 500kWh. Interestingly, the price of electricity fluctuates from R2.12 to R2.92 per kWh, apparently depending on the time of the month it is bought at.

The total amount bought from the grid in the past year was about 11000 kWh at a cost of R26000 ($1500), which is a lot! This pretty much equals our annual electricity consumption, although next year’s spend should be lower due to the additional battery and panels.

How is that electricity being used in the household?

We know how much electricity we’re using, but not exactly where it’s all going. Without investing in a bunch of fancy measuring equipment, we can do a bottom-up estimate by walking through each room, counting all the appliances and their power ratings and estimating how long they are used for every day. I got an estimate of about 12000 kWh, which matches with the prepaid credit numbers and is slightly lower than the recorded numbers. You can see the detailed sheet here.

The biggest user of energy is the heating system, with about 34% of total usage, followed by kitchen appliances at 32%. Most of the heating is used to power the 3 geysers, of which 2 already have heat pumps installed.

We have between 20 and 30 incandescent lights still installed in the house, which are about 5X more power-hungry than fluorescent or LED lights. Replacing these alone would cut our energy usage by about 5–8%. Other big offenders are the portable electric heaters (6%), and the ovens (10%).

How to get more out of our system?

There’s a gap between how much energy we produce and consume — our solar system produces about 6,000 kWh annually, of which only 4,000 kWh is used directly in the house. Given an estimated consumption of 10,000 kWh, we’ll need to buy 6000kWh from the grid. At R2.4 (15c) per kWh, this will cost us R15,000 (1050 USD) per year.

There are several ways to reduce this amount we’re paying for prepaid electricity from the grid:

1. Reduce energy usage through efficiency gains

We can reduce our energy usage about 15–20% by doing the following things:

  • Replacing all incandescent bulbs with fluorescent ones
  • Getting rid of all the portable electric heaters (need an alternative for winter)
  • Consolidating or removing one of the geysers
  • [Optional] Replacing the oven with a more efficient one

See the detailed sheet here for suggested improvements.

Annual savings: 2126 kWh * R2.40 = R5000.

2. Register with City of Cape Town net metering system

We feed back 200–240 kWh per month to the grid, and we should receive a discounted credit of 80c per kWh from the city in return. Even though this is only about ⅓ of the price we buy electricity for, it’s still worth it to get this system set up properly. We should chase the city to get our credit registered.

Annual savings: 200 kWh * 12 months * R0.8/kWh = R1920

3. Install 2–4 more panels

If there’s space, we should install a few more panels to increase our output. This will help during the day, especially in conjunction with an increase in battery capacity. Adding 4 more 265W panels will produce another 1800 kWh per year.

Annual savings: 1800 kWh * R2.4/kWh = R4320.

4. Increase battery capacity

Currently the battery only goes down to 30% charge to ensure that it gets charged back to full every day. This is a protective measure aimed at increasing the battery lifespan. However, the battery is usually fully charged by about 4pm, meaning we could safely decrease the lower charge limit to 20%. This would give us another ~1 kWh of electricity per day.

Annual savings: 1 kWh * 365 days * R2.40/kWh = R876

In total, these measures would cut our annual energy bill by 60%, from R20,000 ($1300) per year to R8,000 ($520). Reducing it all the way to zero would cost significantly more, either in terms of buying more energy efficient appliances or adding another battery.

Concluding Thoughts — Was it worth it?

It seems like our monthly spend has been lower since the system was upgraded, and with some tweaks we can get it down to a few hundred rand a month. At this rate, the system will pay for itself in about 8 years, which is a fairly long payback period. In the interim though, my parents enjoy full power during scheduled blackouts (load shedding as it’s called in South Africa), and peace of mind due to a lower carbon lifestyle.

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John Micah Reid

John Micah Reid

Technical product manager, interested in telling stories through data. https://www.linkedin.com/in/johnmicahreid/