Firstly, let’s admit that you will find it very difficult but not impossible to entirely get off the Centlec grid, but it is not impossible.
Solar panels are getting more practical with a higher output and less expensive by the day.
Not having solar power in a country that has a surplus of bright, strong, sunny days is simply not an option.
For sectional title units it is possible to allow installers to put in their own systems free of charge.
The advantage being that they maintain the system and do the installation at no cost to you.
They supply you with electricity at the same rate as Centlec, less a percentage and you will be able to get electricity at around 75 percent of the cost of Centlec power.
While their fees seem to be set to rise by seven percent per annum, Centlec is likely to be anything from 10-25 percent and who knows how long the load shedding periods will be.
Care must be taken that the system that you buy is an offline system, not a grid-tied system.
The reason is that a grid-tied system only works when the power from Centlec is up.
An off-grid system has a battery backup so that when the power is down, the batteries supply the power.
The batteries are charged during the day by the sun.
Depending on the battery size, you can have power for three-12 hours when the sun goes down.
You need to be practical.
Do you really need power all night?
Are you prepared to link to Centlec from say 10 pm to 6 am and pay their charges?
Either way the savings from these systems is a decent 25 percent at the beginning rising every year as the Centlec increase percentage exceeds the solar installation.
Body corporates should realise that there is a tax incentive that these contractors use.
That is a 100 percent rebate on the cost of installation.
This means that if the system costs R1 million, the body corporate only pays an income tax of 38 percent once they have sold electricity exceeding the cost of the installation.
After that, 62 percent of the income goes towards the body corporate income.
Let’s look at it more practically:
If the body corporate borrows R1 million at the bank at seven percent over five years, then the cost would be in the region of R20 000 per month.
Let’s assume there are 20 units in the complex, that means an average of R1 000 per month repayment per unit.
My feeling is that most units, especially townhouses, would use this amount of electricity anyway.
So, R20 000 x 12 is R240 000 income per annum.
Effectively the system pays for itself from day one.
Next year the electricity from Centlec is likely to go up by 15 percent.
Let’s say the charge for your solar only went up by 10 percent, to R22 000 per month.
But if interest rates don’t rise then your payment of the load is still only R20 000.
You could pay off the extra R2 000 per month.
In effect, it is unlikely that you have to pay tax on your electricity sales until the end of year five, by which time you will have paid off your loan.
At 10 percent increase in electricity in year six you should be collecting R39 000 per month but you won’t have to pay back money to the bank.
You will have to pay 38 percent tax – less the initial R50 000 tax free – on this income which means that the body corporate will receive an after-tax income of R259 000 per annum or R21 600 per unit per annum or R1 080 per unit per month.
I would think that this would pay your levy or at least just about all of it.
Sounds good to me. At least it is worth looking at.
I have solar in my own house. Together with a prepaid meter, I pay around R1 000 per month in winter, down from around R4 500 without the solar.
- Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.
