Lower interest rates, declining consumer inflation, and decreasing petrol costs will provide much-needed financial relief for household budgets. However, with a double-digit increase in electricity tariffs in 2024, a trend that has persisted for several years now, households should consider using these savings to protect themselves from future electricity tariff hikes.
This is according to Marc du Plessis, executive head of Standard Bank’s LookSee home efficiency platform.
“It’s been a tough few years for household finances, but now we’re entering a cycle where reduced inflation and interest rates will free up some disposable income. Families need to bear in mind, however, that above-inflation electricity tariff hikes could quickly put budgets back under pressure,” he says.
“Investments in solar powered systems now, could provide immediate savings on household electricity bills and ensure affordable homeownership for years to come.”
Latest figures from Stats SA reveal that annual consumer inflation slowed to 4.4% in August, the lowest point since July 2021. This improved performance contributed to the Reserve Bank’s Monetary Policy Committee decision to drop the repo rate by 25 basis points to 11.5%.
South Africa’s electricity tariffs, on the other hand, have significantly outpaced inflation, increasing by an average of 9.5% annually over the last 10 years. What’s more, media reports suggest that Eskom has requested another considerable increase from the National Energy Regulator of South Africa (Nersa) for 2025/26. Nersa has confirmed that it has received the revenue application, and that it will be published for stakeholder comments and public consultation as part of its process.
It’s for this reason that household interest in solar solutions has shifted from power outages protection to the ability to save money by generating their own electricity.
“There’s no doubt that households are increasingly turning to solar solutions to get relief from high electricity tariffs as the savings on the monthly bills can be used to cover most of the finance repayments and once the loan is paid off the savings go straight back into the budget,” says Du Plessis.
“Households can now also use their increasing disposable income to pay off their financing faster, ensuring they access the savings sooner.”
The affordability of solar solutions has also improved significantly with component prices dropping by as much as 20% to 30% since the beginning of the year, and the introduction of low-cost finance for residential solar installations. Households will need to act soon if they want to benefit from government’s Energy Bounce Back Loan Guarantee Scheme as this is a limited-time offer, adds Du Plessis.
LookSee’s Solar Loan offering is based on this scheme and will come to an end in February 2025. The loan offers low interest rates starting at prime +1% and capped at maximum of prime +2.5%.
“The variable interest rate ensures households will benefit as the repo rate comes down further.”
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