Alternative energy in the agricultural landscape

Estimated reading time: 8 minutes

• Solar power is becoming increasingly popular due to the country’s abundant sunshine and the rising costs associated with the electricity grid.
• The agricultural sector accounts for 10% of all installed solar (PV) systems, with a capacity totalling 60MWp.
• Producers who invest in renewable energy solutions can also reclaim value-added tax (VAT) on their purchases.
• The kinetic energy generated by moving water has great potential to generate electricity.
• Compared to traditional electricity generation methods such as coal burning, wind energy is a significantly cleaner and more environmentally friendly resource for generating power.

The adoption of renewable energy solutions in South African farming is gaining momentum as producers seek sustainable and cost-effective alternatives to traditional energy sources. Solar power is becoming increasingly popular due to the country’s abundant sunshine and the rising costs associated with the electricity grid.

Integrating solar systems allows producers to power essential operations such as irrigation, refrigeration, and processing, reducing their reliance on Eskom’s electricity supply. This shift not only helps cut down operating costs but also promotes environmental sustainability by lowering the carbon footprint.

Eskom’s frequent and substantial electricity price increases have further accelerated the switch to renewable energy solutions. The financial burden on producers has become significant, with tariff hikes for 2025/26 reported to be as high as 36,15% and increases generally exceeding 10% annually. By generating their own electricity, producers can mitigate the impact of these price hikes, ensuring more stable and predictable energy expenditure.

Solar power transformation

In South Africa, the agricultural sector is being revolutionised by solar power, offering an eco-friendly and economical energy alternative. The agricultural sector accounts for 10% of all installed solar (PV) systems, with a capacity totalling 60MWp. This figure is expected to increase by 10% each year.

The use of PV systems on farms offers numerous benefits. First and foremost, it provides energy independence, ensuring that farms have a steady, consistent and reliable supply of electricity all day, every day, provided the correct combination of solar panels and batteries are used.

While the installation of such a PV system can entail a significant capital expense, South African producers can benefit from Section 12B of the Income Tax Act, 1962 (Act 58 of 1962), which permits accelerated depreciation of renewable energy assets. This provision allows them to deduct the full cost of PV systems or other renewable energy equipment from their taxable income in the first year of installation.

Producers who invest in renewable energy solutions can also reclaim value-added tax (VAT) on their purchases. This additional benefit reduces the overall cost of implementing renewable energy projects, making them financially more attractive. The cost of PV systems has also steadily decreased over the last few years due to advancements in technology and increased production efficiencies.

Costs versus savings

In November 2023, Stockfarm published an article outlining the costs associated with solar power installation. For consistency, the same electrician provided updated estimates for the same solar packages. Figure 1 illustrates the price reduction from 2023 to 2024, primarily driven by a drop in solar panel costs. As a result, producers can now install the same solar packages for less, or they can add additional panels to increase power output.

While these prices are of course subject to fluctuations and serve only as rough estimates, a second electrician did confirm the same trend, namely that more powerful PV systems can now be installed at the same cost as in 2023.

Figure 1: Solar power costs 2023 versus 2024.

To provide a clearer understanding of solar installation profitability, the authors examined the case of a livestock producer in the Eastern Cape who installed a PV system. Assuming an annual increase of 15% in Eskom electricity prices, Table 1 shows that after five years, this producer could potentially save R4 149,74 per month. Over the past nine months, the producer’s average electricity bill was approximately R9 145, with monthly fluctuations ranging from R7 000 to as high as R11 000. After having installed a 16kW solar package costing R490 929, the producer’s monthly payment for the system is R8 366,90 over five years.

The system includes two 8kW hybrid inverters, four 10kWh batteries with wall mounts, and 20 x 540W solar panels. This setup supplies power to the shed, seven worker houses, the private residence, and a guest house.

Table 1: A comparison of grid electricity versus solar power.

The producer reported that they now use electric appliances such as stoves instead of paying for gas, as the system generates sufficient electricity. Battery usage is efficient, with only a 35% power loss overnight, and full recharge achieved by 13:00 daily. The system also powers small irrigation pumps around the house for nearby camps. In cases of insufficient electricity generation, such as on cloudy days, the producer can use a prepaid Eskom meter to charge the batteries.

This example shows that solar power is not only a clean energy source of energy but also a profitable one. With expected price increases of more than 30% in 2025, such a system can become even more profitable.

Hydro energy

Another alternative renewable energy source on farms is hydro energy, which generates hydroelectric power. This form of electricity is produced through the kinetic energy from moving water or streams. The kinetic energy generated by moving water has great potential to generate electricity.

The Consumer Energy Centre states that hydroelectric power is the most efficient means of producing electricity, with modern hydroelectric plants achieving energy conversion efficiencies of around 90%. Cost savings are realised once the initial investment in infrastructure is made, as the running costs of hydroelectric power are relatively low, reducing electricity bills.

As for the generation of hydroelectricity on a farm, the authors studied an example found in Scotland, where a farm in Auchencheyne, Dumfries, utilises a small-scale hydro generator to cut costs and generate extra income. Their system uses a 46m fall from the water catchment site to a 20kW turbine to generate electricity. This system generates 85 000kWh annually, generating an income of £22 100 (approximately R518 000) per year while offering additional savings on the farm’s electricity expenses.

Hydro energy in South Africa

A prominent example of hydroelectricity on farms in South Africa is Lowmar Farm in the Eastern Cape. This farm, situated on the Great Fish River, installed a hydroelectric power system to maintain its operations, particularly during load shedding. The hydroelectric plant at Lowmar powers different farm activities, including irrigation systems, shearing sheds, a walnut cracking facility, an industrial pelleting facility, cold rooms, workshops, and private houses on the property.

This setup has significantly decreased the farm’s dependence on the national grid, ensuring continuous productivity and reducing losses caused by power outages. The large-scale system cost approximately R24 million and is expected to yield positive results after three years, saving the farm around R9,5 million over ten years.

Another documented example is found on a dairy farm in KwaZulu-Natal. The farm, with the capacity to milk 900 cows, is fully powered by a hydroelectric plant that also supplies Eskom with electricity. The power output of this system depends on the flow of water from the Mooi River, with 110kW produced per year on average. In addition to powering a 60-point rotary dairy parlour, it also powers its milk cooling and water heating systems, centre pivot irrigation systems covering around 170ha, and portable pods that irrigate 80ha of land. This brings about savings of between R50 000 to R180 000 per month on electricity.

Wind energy

Wind power is often perceived as viable only for large-scale projects or mega businesses. However, wind energy can benefit small and commercial producers as well. We spoke with Eugene Marais from Red Cap Energy, a company that develops wind farm projects nationwide.

While wind energy typically involves significant investment, Marais explains that producers can benefit by leasing small portions of their land for these projects. Although the electricity generated is fed into the national grid, the lease agreements provide producers with capital that can be reinvested into their farming operations, or obtain alternative energy sources such as solar power.

In addition to the financial benefits, current wind turbines have a physical footprint of approximately 0,6ha, including the hardstand area, and therefore occupy a relatively small area of land. The footprint area can to an extent also be micro-sited in consultation with the landowner, therefore not sterilising land use. A wind farm generally spans a wide area, consisting of numerous farm portions, providing greater capital opportunities to more landowners and the local community.

Read more about Biogas as a renewable energy source in South Africa.

Clean, environmentally friendly

As part of the development process, large-scale wind farms undergo several environmental and technical studies that require approval to ensure the proposed development is suitable for land use, is sustainable, and has a minimal negative impact on the environment. These studies include specialist assessments in heritage, ecology, birds and bats, and aquatic and botanical studies, ensuring the development’s impact is limited and mitigated.

Marais also highlights that, compared to traditional electricity generation methods such as coal burning, wind energy is a significantly cleaner and more environmentally friendly resource for generating power.

Essentially, wind farms are a large-scale energy solution that contributes to overall electricity sustainability and availability in South Africa, while leasing land for turbines can provide a significant financial boost to private landowners. The income generated depends on several factors, including the number of turbines, wind speed in the area, how frequently the wind meets the necessary speed threshold, and grid and development costs. Importantly, there are no costs to the landowner during the development, operation, or decommissioning phases.

Food for thought

We live in exciting times when it comes to the development of alternative energies. As technologies evolve, these energy sources will become more efficient and affordable. The agricultural sector should seize these new advancements in order to remain competitive in production. – Danie Naudé, Siphiwe Tshabalala and Meyer van der Merwe, University of the Free State

For more information or references, email nauded@ufs.ac.za. For more information on wind energy, email Eugene Marais at eugene@red-cap.co.za.