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The implications of onsite generation versus wheeled energy

There are two reasons businesses should consider replacing as much of their utility-supplied power with renewable energy: Above-inflation electricity price hikes, and the looming impact of carbon taxes.

So, how can businesses protect themselves from these factors? The answer is simple: aim for as close to 100% renewable energy coverage as possible.

When renewable energy is mentioned, many people immediately think of rooftop solar. However, onsite solar has several limitations businesses should consider:

  1. Single technology
    With an onsite solar solution, you are limited to a single resource and one generation technology - solar. The effectiveness of this technology depends entirely on weather conditions and the availability of sunlight at your business premises.

  2. Structural limitations
    The size of your roof or available land will limit the amount of power you can generate. For example, Discovery's head office in Sandton has 8 functional floors, but only one roof. After covering the roof with solar panels, it only replaced about 3% of the building's total electricity consumption.

  3. Geographic limitations
    Your location also plays a role. For example, the North West province enjoys high levels of solar radiation for most months of the year, while areas with a coastal climate like KwaZulu-Natal have more overcast days and rainfall, particularly in summer, making solar generation inconsistent.

  4. Batteries and Storage
    Batteries allow you to store excess energy for later use, but they come at a high cost, and many businesses don't have the luxury of installing them. Without batteries, solar energy must be consumed as soon as it is generated - otherwise, it is wasted. If your business shuts down unexpectedly (such as during a strike), the solar panels will still generate energy but you won't be able to consume it, leading to wasted costs.

For these reasons, onsite solar generation can be risky and not offer a complete solution. You may end up generating renewable energy but not consuming it. Furthermore, if you have opted to lease your solar panels, your supplier may still charge you for the energy generated, even if you don't consume it, eroding potential savings.

With onsite solar, businesses typically achieve only 8% to 39% replacement of their total electricity demand, depending on theindustry and the size of the operations. This means that, at best, 61% of your electricity consumption is still exposed to future utility price increases and carbon taxes.

At this point, you might think that a logical strategy would be to install onsite solar and then replace your business's remaining demand with wind energy. However, procuring both solar and wind energy can introduce excessive costs that many businesses overlook.

The solution: Renewable energy wheeling

Wheeling is a different approach to procuring renewable energy. It involves shifting the location of renewable energy generation from your business premises to resource-rich areas in South Africa where large-scale renewable energy plants are located. The generated energy is then "wheeled" through the national grid to your business.

Onsite generation vs wheeled energy: Pros and Cons

Here's how the two models compare:

  1. Technology
    Onsite generation relies on one technology or source - solar. In contrast, renewable energy wheeling relies on various energy options for more flexibility. You can source energy from solar farms, wind farms, hydropower plants, or even small biomass projects.

  2. Structure
    Onsite solar is constrained by the design and size of your building, while wheeling is not impacted by your business's structural limitations. Large utility-scale renewable energy plants can generate more power than a single business could ever need.

  3. Location
    Onsite solar is limited by the natural resources available in your area, but with wheeling, you can access the best solar and wind resources across South Africa, to maximise the efficiency of energy generation and drive down costs.

  4. Energy consumption
    Onsite generation requires energy to be consumed immediately, otherwise, it's wasted. With wheeling, you benefit from monthly banking, meaning you can store excess energy and use it later within the same month. This allows businesses to manage the volatility of renewable energy generation and consumption more effectively, reducing wasted costs.

By wheeling renewable energy instead of generating solar energy onsite, businesses can increase their renewable energy coverage from between 8% and 39% to as much as 73%. Furthermore, Discovery Green has developed a wheeling model that increases this coverage to 90% for all businesses .

Another advantage to wheeling is that there are no upfront costs. There's also no need for structural changes at your premises, such as reinforcing your roof to handle the extra weight of a solar solution. Wheeling is a contractual arrangement, with energy delivered through the grid and a reconciliation process with your utility supplier happening in the background. This is a major benefit for businesses, as there are no disruptions to operations and no initial financial outlay.

While onsite generation offers a viable starting point for renewable energy adoption, it comes with limitations that can leave businesses exposed to utility price increases and carbon taxes. Wheeling, on the other hand, provides a more flexible and cost-effective solution, offering greater energy coverage and protection. By leveraging wheeled energy, businesses can protect themselves from the volatility of utility prices and carbon taxes, securing a sustainable, low-risk energy future.

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