As solar energy systems continue to gain popularity in South Africa, many households have to decide whether to buy or rent an energy storage system (ESS). In this article we discuss a system aimed primarily at harvesting and storing solar energy – not only as a source of free energy, but also as a means of providing electricity to power essential loads during power outages caused by load shedding, load reduction, cable theft, transformer and switch-gear failures etc.
Renting an ESS means you immediately have access to ongoing support and advice, and if any part of the installation begins to malfunction, you can merely call the service provider and request service attention or maintenance in exchange for your rental fee.
When buying an ESS, homeowners will generally have to purchase an inverter, batteries, solar panels, mounting hardware etc, as well as the services of a qualified Installer to install and certify the necessary electrical components as required by law. This option allows for more control, but also requires ongoing supervision in terms of maintenance and repairs, for which the homeowner is responsible.
So, should you rent or buy your ESS? There’s a lot to consider.
Renting or Leasing
Should you decide to rent or lease, you agree with the ESS service provider to use their equipment for a specified period. You then gain the right to use the solar system to generate electricity for your home. So instead of having to pay for everything upfront, you pay a rental fee (typically monthly) to the service provider, in return for which they usually take care of all the necessary maintenance and repairs – in theory at any rate.
When you rent or lease a solar system, remember that since you do not own the equipment, the service provider maintains the right to remove the system if the agreement ends, and you are then left high-and-dry with nothing. When you factor in annual escalations, hefty buyout costs, difficulties and costs associated with transfer, removal costs, cancellation penalties etc, it is generally just not worth it. No asset value – zero investment value.
Owning
Conversely, owning a solar system entails purchasing and installing the entire system on your property, granting you full control. You then assume responsibility for all maintenance, cleaning and repairs, albeit you may want to pay an Installer to take care of this, over whom you can exercise control.
You also have flexibility when it comes to financing eg rent-to-own, solar financing, bond extension, bank loan etc. If you take into account the amortisation of costs for solar panels over a period of 10 to 15 years, and a return on investment typically around 5-6 years, it really is a no-brainer.
In the long run, buying is the more sensible option because it allows you to harness long-term financial benefits, whereas renting merely provides temporary access without the benefits of ownership.
What components do you need?
Whether you choose to rent or buy your ESS, the components needed will remain the same as they are essentially determined by your particular needs. An ESS consists of several key bits of equipment that work together to harvest and store energy into usable electricity.
A Hybrid Inverter is a critical component that:
a) takes grid-supplied electricity (eg 230Vac) and uses it to power your essential loads, at the same time charging batteries as a source of energy for later use. Should the grid fail, the inverter circuitry then kicks in to convert the energy stored in the batteries to 230Vac to power your essential loads until grid power is restored, or until battery reserves are depleted.
b) converts the energy generated by solar panels (DC) into alternating current (AC), which is the type of electricity used in most homes and businesses.
c) uses excess solar energy to charge batteries, and export energy to the grid once batteries are full (depending on the type of inverter chosen).
Batteries come in all shapes and sizes eg lead-acid/gel (both based on PbSO4 technology) and ‘Lithium Iron’, which use LiFePO4 (Lithium Iron Phosphate) technology. Lead-acid batteries are not recommended, as they are toxic and short-lived. LiFePO4 batteries are much safer, and have a much longer warranty and cycle life – typically 25-30 years.
It is important to properly calculate the total battery capacity required, as this determines the duration of backup power they are capable of providing, and the degree of grid independence, bearing in mind that batteries are usually the most expensive component in the ESS.
Solar panels or photovoltaic (PV) panels, are the most recognisable part of a solar-based ESS. PV panels are made up of individual solar cells that absorb sunlight (photons) and produce electrons, which then build up to produce a DC voltage. When a load is connected, the electrons can flow into the inverter as a current. The inverter then converts the DC current into the AC voltage needed to power AC loads, and charge batteries as necessary.
Mounting systems provide the structure and support for the solar panels. They ensure that the panels are securely installed on a roof, ground-mounted structure or other suitable location while allowing for proper orientation to maximise sunlight absorption. It is critical to use only the best materials and the services of a certified installer, as failure to do so could lead to fires and potentially lethal electric shock. Lightning and surge protection should always be installed.
Advantages of Buying
- Financial savings: Owning a solar system allows you to benefit from long-term financial savings. By generating your own electricity, you can greatly reduce or even eliminate your monthly electricity bills, leading to substantial savings over the system’s lifespan. Solar panels are durable and have a long lifespan, typically ranging from 25-30 years or more.
- Energy independence: Owning a solar system provides greater energy independence. You are less reliant on the grid, giving you more control over your energy production and reducing vulnerability to power outages or rising energy prices.
- Positive environmental impact: By generating clean energy from your solar system, you are actively contributing in reducing carbon emissions and mitigating against climate change.
- Long warranties: Many solar solutions come with a 10-year warranty. This gives you peace of mind, knowing your investment is safe should any part break or malfunction.
- Option to finance: Many banks and institutions offer appealing financing options for your solar system. Going this route, you keep full ownership of the system while having the flexibility to divide the substantial upfront cost into manageable instalments.
- Increased property value: Installing a solar system can increase the value of your property. Prospective buyers are attracted to homes with solar because of the potential for reduced energy costs, environmental benefits and the growing demand for power independence from Eskom.
- Customisation and control: When you own a solar system, you have the freedom to customise it according to your specific energy needs. You can determine the size, number of panels and system configuration, allowing you to maximise energy production and optimise your savings.
Disadvantages of Buying
- High upfront costs: Purchasing a solar system requires a significant upfront investment to cover the cost of equipment, installation and associated expenses. Although this cost may pose a challenge for some homeowners, there are ways to alleviate it. One option is to incorporate the cost into your existing home loan or utilise a credit facility.
- Higher monthly cost if financed: If you finance your solar system through your bank, your monthly repayments could be higher compared to renting a solar system. Your instalment will also vary based on fluctuations in interest rates.
- Responsibility for maintenance and repairs: After a certain period, the responsibility for service and maintenance costs of the solar system will shift to you, even if some solar installers offer an initial period of free service and maintenance.
- Insurance and warranty considerations: As the owner of the solar system, you will need to ensure that you have proper insurance coverage to protect against any potential damages or losses. Once your warranty expires, you will be responsible for any repairs or replacement costs not covered by your insurer.
- Limited flexibility: Once you install a solar system on your property, it becomes a semi-permanent fixture. If you decide to move or sell your home, you will need to either negotiate its value with potential buyers, or remove the system and pay for any remediation necessary.
Summary
Buying offers bigger financial benefits than renting over the long term, but both options offer the advantages of reduced electricity bills, continuous power supply and environmental sustainability. Although the upfront investment associated with buying a solar system is no small matter, selecting the appropriate financing option will help negate this obstacle.
Copyright: New IT Power Projects, December 2024