Solar versus Eskom costs compared for farmers

Up to 54% savings may be achieved with solar

Eskom’s challenges have led to a steady rise in electricity tariffs and are expected to increase by up to 38% next year. These increases are particularly difficult for farmers as Eskom’s Ruralflex tariff is one of the highest usage charges in the market.

South Africa’s farmers are negatively affected by the rapid rise in energy costs imposed by Eskom, with many farming operations struggling to absorb these price hikes. Electricity is essential for irrigation, heating and cooling, and processing; therefore, controlling energy costs is crucial. Solar power is emerging as a practical and affordable solution to help farmers keep costs down and their operations competitive.

With the cost of solar technology dropping and affordable financing options available, farmers can lock in lower electricity rates and protect themselves from Eskom’s unpredictable price hikes.

This sentiment is echoed by Ross Simmonds, Managing Director of AFGRI Financial Solutions, an agricultural finance partner who said, “With energy costs rising rapidly, we are seeing a significant move by farmers to roll out solar to alleviate increasing financial pressures and we anticipate a sharper increase in 2025 following further tariff increases.”

Solar compared with Eskom’s tariffs for farmers

For farmers, switching to solar could offer substantial savings. Below is a comparison between Eskom’s current high-season Ruralflex tariff and the rates offered by Jaltech, one of the largest solar funders of commercial solar projects.

(Note: Eskom’s fixed cost component is not included, and the solar rate assumes a system without batteries.)

Jonty Sacks a partner at Jaltech explains, “If Eskom’s proposed 38% tariff increase is approved by the National Energy Regulator of South Africa (NERSA), electricity costs for farmers could skyrocket, making operations even more expensive.”

Solar energy, by contrast, offers more predictable and lower increases. Even if solar tariffs increase by 7%, the savings for farmers will still be significant, especially over the long term.

Here’s a look at what could happen if the tariff increases by 38% compared with potential savings when opting for solar.

Sacks added that Jaltech has seen a strong uptake from farmers to rather enter into an arrangement where the farmers purchase the energy produced by the solar system, rather than owning the solar system. This approach puts the responsibility on the system owner to produce electricity at a cost lower than that of the utility.

For farmers battling rising electricity costs, solar power is a sustainable, and cost-effective solution. With current savings of up to 41% and future savings potentially reaching 54%, the financial case for solar is compelling.

Source: Jaltech