How Our Cape Town Factory Cut Its Electricity Bill by 74% With Solar
I'm a numbers person. I was not going to spend R1.1 million on solar panels because they're "the right thing to do for the environment." I was going to spend R1.1 million on solar panels because the spreadsheet told me to. So let me show you the spreadsheet — or at least, the important parts of it.
Our Starting Position
We run single-shift operations, 06:00 to 17:00, Monday to Saturday. We manufacture specialist packaging — it's a precision process and load shedding is genuinely disruptive because some of our machinery doesn't take kindly to sudden power cuts mid-cycle. Scrap rates spike when the power goes off unexpectedly. Restarting certain processes takes 45 minutes. On a bad load shedding week, we were losing R40,000–R60,000 in scrap, lost production time, and overtime to catch up.
Our electricity bill was sitting at R148,000 per month on average — R1,776,000 per year. We're on a City of Cape Town industrial tariff with a peak demand charge component, which means time-of-use optimisation is available to us as an additional lever.
The System We Installed
After three quotes and significant deliberation, we went with:
- 120 kWp of solar panels — 300 × 400W Tier-1 monocrystalline panels across our east and west-facing roof sections (no north-facing flat sections of adequate size, so we split between orientations)
- Two 60 kW hybrid inverters in parallel
- 80 kWh of lithium battery storage — sized to carry our critical production loads through a 2.5-hour load shedding block with margin
- Time-of-use programming to charge batteries from grid at off-peak (midnight to 06:00) and discharge during peak tariff periods
Total installed cost: R1,085,000. We paid cash — the Section 12B deduction made this straightforward for our accountant.
The Numbers After 11 Months
The system has now been running for 11 months. Here's the performance data:
- Solar production: 162,400 kWh generated in 11 months (roughly 178,000 kWh annualised). Design target was 173,000 kWh/year — we're tracking slightly above, which the installer attributes to our east-west split giving a longer production window during the day than a pure north-facing array.
- Self-consumption rate: 94% of solar production consumed on-site (we have enough load to absorb almost everything the panels produce during operating hours)
- Grid consumption: Down from 38,200 kWh/month to 9,900 kWh/month — a 74% reduction
- Electricity bill: Down from R148,000/month to R38,500/month — a saving of R109,500 per month
- Annualised saving: R1,314,000
- Simple payback period: R1,085,000 ÷ R1,314,000 = 0.83 years — under 10 months
The Load Shedding Benefit
In the 11 months since installation, we had load shedding during operating hours on 84 days. Before solar, each of those days would have involved some combination of production disruption, scrap, and overtime. Since solar, we've had zero production stoppages attributable to load shedding. The inverter switches to battery instantaneously. The CNC machines don't even blink.
I estimate the avoidance of production disruption is worth R35,000–R45,000 per month based on our historical scrap and overtime costs during load shedding periods. I'm deliberately excluding this from my payback calculation to be conservative. It's a real benefit but harder to attribute with precision.
The Unexpected Benefits
Three things I didn't anticipate:
1. A major contract with a German client. We supply packaging to a food company with European parent oversight. Their procurement team did an ESG audit of their South African supplier base last year. Our solar installation — reducing our scope 2 carbon emissions by an estimated 92 tonnes of CO2 per year — was flagged as positive. Two competitors who were also being assessed had no sustainability initiatives. We retained the contract at renewal; we're told one competitor did not. I can't prove the causal link but I know the procurement team mentioned our solar.
2. Staff morale improvement. Our production floor gets hot in summer. Before solar, we ran air conditioning sparingly because of electricity cost. With the solar system covering our daytime consumption, running the factory A/C costs us essentially nothing from the grid during daylight hours. The production floor is noticeably more comfortable in summer. Productivity is up. I'm attributing part of that to temperature comfort.
3. The Section 12B deduction was larger than expected. Because we paid cash, we were able to claim the full 125% deduction in our 2025 tax year. Our accountant says this generated a tax saving of R327,000 — considerably more than I'd mentally budgeted for. My effective net cost of the system is now R758,000 after tax. The payback period on that basis is under 7 months.
What I'd Do Differently
Very little, honestly. The main thing is that I should have done it in 2023 instead of 2025. Every month I delayed was a month of R148,000 electricity bills that could have been R38,500 electricity bills. The total cost of the 2-year delay was approximately R2.6 million in excess electricity costs.
If you're a manufacturer or industrial business owner sitting on the fence, I'll tell you what I'd tell my younger self: the analysis doesn't need to be perfect. The data is clear enough. Go and get three quotes, build the model, and then sign the contract. The only regret is waiting.
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