The impact of residential rooftop solar PV on municipal finances: An analysis of Stellenbosch

Electricity utilities throughout the world are responding to the increased uptake of rooftop solar photovoltaic (PV) in the household sector. Although the increase of decentralised solar PV is seen as progressive for sustainable development, it is not without financial implications for electricity utilities. There is a concern in South Africa that allowing rooftop solar PV connection to the grid will reduce electricity sales for local governments and thus their revenue streams from electricity. An investigation was carried out to examine the financial impact that increasing installations of grid-connected rooftop PV at a household level might have on local governments in South Africa. Stellenbosch Municipality was used as a case study, and two different approaches were used. The first considered the maximum grid capacity for distributed generation, as determined by the South African grid standards. The second was based on individual households that would gain the most financial benefit from investing in rooftop PV. The outcome indicated a financial reduction in total electricity revenue of 0.6–2.4% depending on the approach followed. A fixed monthly charge of about R363 would counter these potential financial loses, but entail a disincentive for households to invest in solar PV installations.