The Starting Point
What Does Electricity Actually Cost?
Before a solar system can be sized or its business case built, you need to know the true cost of the electricity being replaced — not just the published energy rate. This farm was on a local municipal supply. For this analysis, savings are modelled against the two Eskom direct tariffs most relevant to agricultural clients: Landrate (fixed-rate, small power user) and Ruraflex (time-of-use, large power user), both effective 1 April 2025 at FY2026 rates.
The critical variable is whether the farm stays connected to the grid or disconnects entirely. These two scenarios use different saving rates and produce very different payback calculations.
Hybrid — Grid Connected
The Eskom connection is retained as a backup. Fixed daily charges — network capacity, service, administration, generation capacity — remain payable regardless. Only variable energy charges are saved per kWh displaced.
Saving per kWh displaced
Landrate: R2.87/kWh · Ruraflex: R2.59/kWh
Off-Grid — Full Disconnection
The Eskom connection is terminated entirely. All charges are eliminated — both variable energy and all fixed daily charges. The saving per kWh is the full blended rate.
Saving per kWh displaced
L1: R5.85 · L2: R7.10 · L3: R9.21/kWh
Why this distinction changes everything
Most solar proposals are calculated on the published energy rate only — even for off-grid systems. This understates the saving for clients who disconnect entirely. A Landrate 3 client who goes off-grid saves R9.21/kWh, not R2.87/kWh. On 116,724 kWh annual generation at 80% self-consumption, that is the difference between R267,000 and R860,000 in annual savings — and between a 3.5-year and 1.1-year payback on the same hardware.
Eskom Tariff Analysis at 30 kWh/Day (Excl VAT)
The True Cost of Grid Electricity
Landrate 1, 2 and 3 — Fixed Rate
The variable energy charges are identical across all three tiers at 287.00 c/kWh (energy 224.93c + ancillary service 0.41c + network demand 61.66c). The difference between tiers is entirely in the fixed daily network capacity charge. At 30 kWh/day, fixed charges represent 51% to 69% of the total daily bill.
| Tariff | Variable R/kWh | Fixed R/day | Variable/day | Total/day | Blended R/kWh |
|---|---|---|---|---|---|
| Landrate 1 | R2.87 | R89.41 | R86.10 | R175.51 | R5.85 |
| Landrate 2 | R2.87 | R126.86 | R86.10 | R212.96 | R7.10 |
| Landrate 3 | R2.87 | R190.32 | R86.10 | R276.42 | R9.21 |
Fixed R/day = network capacity + service & admin + generation capacity charge. Excl VAT. At 30 kWh/day.
Ruraflex — Time of Use
At 30 kWh/day with a double peak profile (10 kWh peak / 10 kWh standard / 10 kWh off-peak), the annual weighted blended energy rate is R2.59/kWh excl VAT. This is the variable saving rate for a Ruraflex client staying grid-connected — fixed kVA charges remain payable on top.
| Period | Season | Rate excl VAT | kWh/day | Cost/day |
|---|---|---|---|---|
| Peak (07:00–09:00, 18:00–21:00) | High (Jun–Aug) | 690.99c | 10 | R69.10 |
| Standard | High (Jun–Aug) | 172.75c | 10 | R17.28 |
| Off-peak | High (Jun–Aug) | 115.16c | 10 | R11.52 |
| Peak | Low (Sep–May) | 286.77c | 10 | R28.68 |
| Standard | Low (Sep–May) | 161.23c | 10 | R16.12 |
| Off-peak | Low (Sep–May) | 115.16c | 10 | R11.52 |
| Annual weighted blended | 92 high + 273 low demand days | R2.59/kWh |
What solar costs vs what the grid charges — excl VAT
30 kWh/day at Eskom FY2026 (1 April 2025). Blended rates assume off-grid disconnection.
Variable energy only (hybrid)
Ruraflex
TOU annual weighted
Landrate 1–3
Variable energy only
Full blended rate (off-grid)
Landrate 1
Fixed R89/day included
Landrate 2
Fixed R127/day included
Landrate 3
Fixed R190/day included
Solar cost (fixed forever)
Solar — this system
25-yr locked, delivered
The Solar System
System Specifications
| Parameter | Hybrid (grid-connected) | Off-Grid |
|---|---|---|
| Solar array | 60.76 kWp (98 × 615W) | 70.7 kWp (114 × 615W) |
| Inverter | 2 × 30kW hybrid 3-phase | 2 × 30kW off-grid 3-phase |
| Battery nominal | 60 kWh | 180 kWh |
| DOD / usable | 100% / 54.2 kWh | 100% / 162.7 kWh |
| Battery cycle life | 10,000 (27.4 yrs) | 10,000 (27.4 yrs) |
| Annual generation | 116,724 kWh | 135,204 kWh |
| Total cost incl VAT | R927,355 | R1,682,677 |
Payback Analysis
Two Scenarios, Two Calculations
Scenario A — Hybrid: saving the variable energy rate only
| Tariff basis | Rate saved | Annual saving (80% SC) | Payback (R927,355) |
|---|---|---|---|
| Ruraflex (grid-connected) | R2.59/kWh | R241,944 | 3.8 years |
| Landrate 1–3 (grid-connected) | R2.87/kWh | R267,704 | 3.5 years |
Scenario B — Off-Grid: saving the full blended rate
| Tariff basis | Blended rate saved | Annual saving (80% SC) | Payback (R927,355) |
|---|---|---|---|
| Landrate 1 (off-grid) | R5.85/kWh | R546,343 | 1.7 years |
| Landrate 2 (off-grid) | R7.10/kWh | R662,994 | 1.4 years |
| Landrate 3 (off-grid) | R9.21/kWh | R859,931 | 1.1 years |
80% self-consumption of 116,724 kWh = 93,379 kWh displaced. The applicable scenario depends on whether the Eskom connection is retained or terminated.
"The question is not just which solar system — it is whether to keep the grid connection. For a Landrate 3 client, terminating the connection and going off-grid turns a 3.5-year payback into a 1.1-year payback on the same hardware."
Off Grid Engineering — Project Analysis
25-Year Cost Comparison
Solar vs the Grid Over Time
Solar's cost is fixed the moment the system is commissioned. The grid's cost compounds every year. At 8% annual escalation, the Ruraflex energy rate grows from R2.59/kWh today to over R15.00/kWh by year 25. Solar stays at R0.53/kWh throughout.
Solar — Year 1 to 25
R0.53/kWh
Battery cost delivered, fixed
Ruraflex — Year 1
R2.59/kWh
Energy only, excl VAT
Ruraflex — Year 25
R15.78/kWh
At 8%/yr escalation excl VAT
| Year | Ruraflex (8%/yr) | Landrate 2 blended (8%/yr) | Solar |
|---|---|---|---|
| Year 1 | R2.59/kWh | R7.10/kWh | R0.53/kWh |
| Year 5 | R3.80/kWh | R10.43/kWh | R0.53/kWh |
| Year 10 | R5.58/kWh | R15.31/kWh | R0.53/kWh |
| Year 15 | R8.20/kWh | R22.48/kWh | R0.53/kWh |
| Year 20 | R12.04/kWh | R33.01/kWh | R0.53/kWh |
| Year 25 | R15.78/kWh | R43.27/kWh | R0.53/kWh |
All excl VAT. 8% annual escalation. Ruraflex = energy-only variable rate. Landrate 2 = full blended rate (off-grid scenario). Solar = battery subsystem cost ÷ 25-yr lifetime kWh delivered.
Important Considerations
The TOU Cycle Warning
Fully cycling twice daily voids certain battery warranties
A financially sound strategy on Ruraflex is to charge batteries during cheap off-peak periods and fully discharge during Eskom's morning (07:00–09:00) and evening (18:00–21:00) peak windows. However, fully discharging twice daily to capture both windows equals approximately 730 cycles per year. Some battery technologies void their warranty above 700 cycles per year. Always verify the cycle limit before specifying a battery for a TOU peak-shifting application.
Outcome
Result
The hybrid 60kW system was selected, maintaining grid connection as backup and preserving export credit eligibility. The battery — 10,000-cycle, 100% DOD chemistry — requires no replacement within the 25-year horizon and carries no cycle restriction that would be triggered by a TOU peak-shifting strategy.
At a locked solar cost of R0.53/kWh against a Ruraflex rate growing from R2.59 to R15.78/kWh over 25 years, and a payback period of 1.1 to 3.8 years depending on tariff and connection scenario, the financial case for this installation is unambiguous.