Electricity Bill Recon:
>per month
per annum
In a review of ARISA's Phase I solar installation of 495kWp of panels (350kW Inverters) through a Power Purchase Agreement with Energy Partners, we have determined the following:
This page seeks to provide insight into a few questions:
- Is Eskom billing ARISA correctly?
- Are Energy Partners billing ARISA correctly?
- Do the Eskom and Energy Partners meters reconcile?
- Was it a good decision to enter the Power Purchase Agreement with Energy Partners?
- Would it be worth expanding the solar array and PPA agreement?
- Are there any other considerations? Timing, growth, strategic, optionality?
Monthly Billing Reconciliation
This table places the Eskom billing alongside Energy Partners' billing. It shows each Eskom billing month versus a calculated billing for Energy Partners on the basis of Energy Partners' VCOM Meter Systrem (middle two columns). The final two columns show the billing were billing to be based on plant consumption (without solar), i.e. had ARISA not entered into the Power Purchase Agreement.
| Bills Received | Energy Partners' VCOM Meters | No Solar Scenario | ||||
|---|---|---|---|---|---|---|
| kWh | Charges | kWh | Charges | kWh | Charges | |
| Energy Charge (PPA) | ||||||
| Energy Charge (Peak) | ||||||
| Energy Charge (Standard) | ||||||
| Energy Charge (Off-Peak) | ||||||
| Network Demand Charge | ||||||
| Ancillary Service | ||||||
| Administration Charge | ||||||
| Network Capacity Charge | ||||||
| Generation Capacity Charge | ||||||
| Service Charge | ||||||
| Reacctive Energy Charge | ||||||
| Legacy Charges | 0 |
0 |
||||
| Total Eskom Bill | ||||||
| Total Cost of Electricity | ||||||
| Saving | 40,000 |
|||||
The Eskom Billing reconciles very well with the Energy Partners' VCOM Metering system. There are some minor time-of-use variances which could be due to meter time setting differences (as well as interpretation and programming by oursleves).
Phase I Solar Monthly Savings
ARISA is saving between R35,000 and R49,000 per month with the Energy Partners 495kWp solar array relative to what they would be paying to Eskom had they not installed a grid-tied solar system.
The chart below is of the monthly electricity related billing received by ARISA from Eskom and Energy Partners. Thje Energy Partners billing is aligned to the time period of the Eskom bills. i.e. the Energy Partners cost comes from the Energy partners VCOM metering system for the time period of the Eskom bill and does not excatly match the calendar monthly bill generated and sent by Energy Partners for each calendar month due to differences in the time period.
The chart below is of the monthly electricity consumed by ARISA and generated by the Energy Partners solar array aligned to the time period of the Eskom bills.
Phase II Expansion Proposal
The favourable savings numbers indicate that the initial solar array was worth the 'investment' (PPA Commitment). The original array SSEG application was kept below 350kW to avoid triggering additional application hurdles. Larger application have since been passed, and today a larger array seems likely to be authorised. As a result, Energy Partners have propsed extending the Solar Array by a further 235kWp (using a 175kW inverter) at a PPA Rate of R1.29 per kWh (versus R1.24/kWh for the original array).
The following chart for the Year 1 annual costs of electricity shows that a larger array would reduce the ARISA Eskom bill. But it is important to note that this assumes that the current Eskom tariff regime remains "as-is" - i.e. "Offset" continues. The savings approach R150,000 per year, even after PPA costs have been taken into account.
In the Baseline Scenario, where only Phase I solar is installed, the costs payable to Eskom over 20 years would amount to a net present value of R3,203,969. Installation of Phase II, under the current Eskom "Offset" Regime would see the Eskom bill reduce further reduce to R2,625,687. However R43,727 or so in payments to Energy Partners would mean R150,000 in net savings for the first full year of the Solar Phase II.
More importantly, the two scenarios show the importance of "Offset" in the same time-of-use period. This is when surplus power generated by the system is used to offset ARISA's consumption in the same time-of-use period. Eskom has agreed to the Offset tariff for ARISA and hence the second scenario would apply assuming this policy continues for the period of the PPA contract. Here Eskom plus Energy Partners' costs would be lower then the baseline Phas I only scenario - i.e. favourable.
The first "No Offset" scenario however assumes that offset is "discontinued" for some reason. In this case, the TCOE would be higher than the baseline scenario. Hence it is not adivsable to enter into a PPA agreeement if we think there is a risk of the 'offset' being discontinued.
The Total Cost of Electricty chart shows the impact of the Energy Partners Phase II proposal for ARISA, when the cost of the initial investment is taken into account, alongside the PPA agreement alternative.
This shows that even at a WACC rate of 16.5% for ARISA, buying the plant outright beats a PPA agreement.
In a review of ARISA's Phase I solar installation of 350kVA Inverters with 495kWp of panels through a Power Purchase Agreement with Energy Partners, we have determined the following: