Eradication of Solar Power Unsustainability through Cost-Benefit Analysis: KwaZulu Natal Case Study

Abstract

As a developing country, South Africa relies on electricity as the most critical amenity needed for development. KwaZulu-Natal (KZN) is one of the nine provinces in South Africa that faces an energy supply challenge. KZN is also the warmest province among them all due to its location. As one of the warmest provinces, solar power could be utilised to assist in dealing with the energy crisis. This paper focuses on the cost uncertainties attributed to the implementation of solar power which will assist in meeting the demand of energy in the region. The unsustainability of energy has led to a near collapse of the region’s economy. This study also contributes to improving the scientific implementation of solar power in the region to deal with the unsustainability criteria observed. The employment of Cost Benefit Analysis (CBA) revealed solar power as one of the most reliable renewable energies for planned implementation bases. With the development of the Economical, Methodological and Environmental (EME) strategic framework which addresses all social cohesion of solar power, the early turn around has been seen through the use of cost-benefit analysis (CBA) in the region of KZN.

1. Introduction

Based on the economic state of the countries in the African continent where most of the countries if not all are still developing, energy becomes the most critical tool to develop the economy of such countries. Obaideen [1] believes that owning energy from the onset will yield economic and political incentives and improve the state of energy production. Fossil fuels remain the most reliable source of energy in a developing country such as South Africa. The challenges faced by other sources of energy make fossil fuels the most reliable source, even though it has a negative impact of emancipating a lot of carbon dioxide (CO₂) from the energy mix [1]. Coal has been the main source of fossil fuel in South Africa ever since the establishment of electricity which contributed massively to climate change [2]. Climate change caused by human beings is easily controllable compared to that of fossil fuel at the moment. Energy has often been one of the most vital issues for economic parties including countries, policymakers, economies, and people. Sustaining social-economic development is very crucial for modern energy services, depending on the relationship of energy and human development [3]. Looking back from the previous centuries, the world has become more globalized [4].

South Africa has joined other countries by contributing negatively to the environment through producing energy from fossil fuels. In the study of empirical analysis, the question of empirical level was not addressed properly [5]. Despite having regions such as KZN take part in the implementation of renewable energy, there still has been no Renewable Energy (RE) implementation improvement even when Currie et al. [3] conducted solar PV rapid technological evolution to demonstrate future-cost assumption through the Integrated Assessment Modelling (IAM). The energy sustainability development challenge is as a result of the rise in emerging nations [6]. The high level of unsustainability in the fossil fuel energy field has led to the importance of the study. There is a random scheduling of load shedding over the past decade due to Eskom’s (South Africa’s power utility provider) power failure caused by the shortage of energy generating material, e.g., coal [7].

Renewable energy has been facing the sustainability challenge that needs an effective response. However, Sakah et al. [8] have developed Sustainable Development Goals (SDGs) to promote sustainability overall, but energy has not been updated accordingly.

KZN contributes to solar energy significantly in South Africa as it always has a high temperature [9,10]. Western Cape has successfully implemented solar energy with a contempt that reflects KZN’s inadequacy to sustain solar power which led to unavailability of sponsors for any solar project in the region. Sunlight in KZN is more than enough to run solar energy in the province. Another region (Northern Cape) has been believed to have high concentration of solar and implemented a very large solar Concentrated Solar Power (CSP) with numerous financial support.

Only a few sectors have accepted solar to be exploited worldwide for it to be available, as it consists of minimum cost, and benefits a constructive economy [11]. Over and above, the KZN region is humid and subtropical with a warm winter and very hot summer [12]. Financial stability is one of the main challenges that is expected to hinder solar power’s performance. The main aim is to determine and eradicate the root cause of solar power unsustainability [7]. Additionally, the study intends to make recommendations to address the solar power unsustainability in the region of KZN [13]. As it is a scientific factor that an increase in demand will cause an increase in consumption, the South African population is rapidly increasing, and yet the energy generation sector has moved extremely slowly [14]. The objective of this study is to ensure sustainability of solar power in the region of KZN through the identification of financial techniques that will encourage financial stakeholders to invest in solar power projects. Achieving this will ensure the protection of the environment. The following questions are to guide the study:

-

Why is solar power believed to be highly unimplementable in the coastal regions such as KZN?

-

What financial stakeholders are reluctant to support solar power energy in coastal regions?

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Will the implementation of solar power energy be sustainable for the next decade?

The use of quantitative approach techniques to analyse the data for scientific discussion has been endorsed for the implementation cost of solar power and its energy production [7]. The use of cost-benefit analysis was employed to address the implementation rationality of solar power by determining the return on investment (ROI) [13]. Based on the management of this article: Section 2 deals with historical information to provide an overview on solar power, sustainability and implementation of solar power. Section 3 addresses the technique used—the CBA model. Section 4 addresses the analysis of results and discussion. Section 5 presents our recommendations and Section 6 concludes the study.

2. Literature Review

2.1. Sustainability Overview

Sustainability is a critical aspect when it comes to implementing renewable energy in South Africa or any other country. Some key factors affect the sustainability of the world [15]. Malkki [15] analysed the learning result to recognise the learning outcomes and basics of the courses (such as engineering sciences), together with renewable energy along with sustainability [7]. The approach to sustainability and the skills required to develop renewable energy must improve to increase renewable energy and improve efficiency. Dostal [16] believed that the time profile of electrical and thermal energy varies, increasing energy supply unreliability; this brings a significant challenge as energy consumers consistently need reliability and availability [7].

Germany established the significant Renewable Energy Sources Act (RESA) that proposed favourable circumstances to effect savings in renewable energy electricity production, assuring steady feed-in tariffs (FIT) for close to two decades and even longer to ensure sustainability [17]. However, in as much as there is technology to generate electricity and technology affecting utilisation hours of electricity generation differ, sustainability remains the largest challenge [18]. Among all the forms of RE, solar energy seems to be the most reliable source, but the solar system relies mainly on sunlight energy, battery, panels and technology wiring, making it unreliable [19].

2.2. Financial Factors Affecting Renewable Energy

RE investors are exposed to high risk when the renewable energy project fails, which makes RE a financial risk compared to fossil fuel. RE thus requires a huge initial investment [19]. The total quantity of RE connected is reliant on additional influences contributing to the entire connection cost of the structure [20]. However, RE funding is still lagging [21]. Jadhav [20] confirmed that there is a lack of appropriate financial environment for RE, especially for solar technologies. Hence, the financial outlay on renewables seems to play a significant role in policymaking, but the challenge lies in policy and educational circles [22].

However, Polzin [23] believed that investors are discouraged by the lengthy repayment periods and lack of resources attached with extraordinarily controlling needs and consistent hesitations. These factors have negative economic implications for global RE projects, including the KZN region. Gxasheka [24] believed that reducing technology costs through competitive procurement programmes would lower SA energy prices [7].

2.3. Technological and Environmental Overview

Polzin [23] viewed RE technologies as major subjects connected with commercialisation as well as the dissemination of innovations. Feed-in tariff includes connecting RE sources such as solar PV, wind farms, micro-hydro plants, etc., on a service grid and exporting electrical energy to the service grid to be remunerated at a quantified rate per kWh for a certain period [25]. Figure 1 demonstrates a renewable solar power system’s general flow and system link. This system is in the form of technology that allows sunlight energy to be converted to energy and stored simultaneously for later use. This solar panel is connected to the grid.

Pan [4] believed that SA is classified as one of the greatest sunspots on Earth, and believed it was suitable for photovoltaic (PV) and Concentrated Solar Power (CSP) systems considering that performance and energy production from RE sources, such as PV and CSP, are extremely dependent on local conditions [27]. According to Marzo [27], Chile is one of the countries that demonstrated a speedy growth in solar energy technologies application in both PV and CSP. Jain [28] agreed that solar energy is enough and freely available, and solar PV and thermal applications are most suitable [7]. Therefore, solar PV and CSP can play a prominent role in providing clean energy in SA. The energy mix in SA consists of all types of energy technology playing a role in achieving expected capacity according to the national development plan established by the South African government. Solar PV and CSP are among these technologies [7].

2.4. Energy Consumption Overview

The energy consumption rate of a household tells us about the affordability of energy among families. It is important to measure energy consumption to understand the effects of energy barriers correctly [7]. As Damari [29] once said, the realm of energy consumption must be understood completely for the monthly consumption to be translated to an annual figure with a generated index by using the average consumption of the whole investigated population each month [7].

In the past few years, demand for non-renewable energy has declined due to its many challenges [7]. Figure 2 shows the relationship between renewable energy, non-renewable energy and primary energy for a developed country such as the United States (U.S). This figure clearly demonstrates that RE production has been in gradual growth for the past 35 years [7].

One of the most critical moves performed in 2017 by the Department of Energy was to implement the Department of Energy Renewable Energy Independent Power Producer (DoE IPP) power plants which increased the grid capacity by 872 MW [31].

3. Materials and Methods

3.1. Research Design and Gathering Approach

The crucial phase of design led to numerical phases or stages in the form of analytical techniques for it to be successful. All these phases or stages are interconnected. However, each phase or stage is independent of each other. The outlined research design model and its phases start with the problem discovery as an initial vital stage of the research—the sustainability challenge of renewable energy [7]. To proceed with the research, the next phase was necessary, which was data gathering.

The research on solar energy uses the case study of the KZN region. KZN is one of the provinces in South Africa and is made up of municipalities operating together at the local government level [7]. Several methods were used to gather data, including telephoning, emailing and face-to-face meetings to communicate with relevant personnel in the municipality [7]. More details on the communication methods are listed in

Table 1. Detailed gathering communication methods [7].

Communication Types	Description of Uses
Emailing	-Initially used to schedule meetings between the researcher and municipal representatives. -To receive data and send follow-up questions from the researcher to the municipal representatives.
Telephoning	-Used to remind the municipal representatives about meetings and to follow up of how far the person with expected data is.
Face-to-face meetings	-Used to introduce the researcher and to outline the type of data expected from each partner.

.

Data utilized in this research on solar energy was extracted from the database of eThekwini Municipality under the department of renewable energy. The primary data was obtained from the departmental database with the help of the Municipal manager, and the secondary data were obtained from the literature review [7].

3.2. Sample and Population

The population target for this study were the users of eThekwini municipality solar power projects developed in the past decade, which are available in the database [7]. The eThekwini municipality owns several buildings, and solar power is installed in some buildings, such as the Moses Mabhida stadium, the Metro police building and uShaka Marine World. Therefore, this study focused on the information provided by almost 370 solar panels installed by eThekwini municipality around KZN, Durban. The data received at uShaka Marine World was within the period of five years [7].

3.3. Cost-Benefit Model

The cost-benefit analyses (CBA) model is important in revealing the root cause of the region’s modification of solar power sustainability [7]. This tool assists in making financial decisions when developing a new project or reviewing an existing project. In general, charges increase, and resource demand increases, creating resource scarcity. If implemented, this will also create a shortage of renewable energy supply in the KZN region.

The cost-benefit analysis conducted in this study is divided into three sections: total benefits, total costs and, lastly, return on investment. Yang [32], believed that a cost-benefit analysis could be used to investigate whether the effort exerted to achieve the specific target was cost-operative or not [7]. The total benefits section (TB) deals with two kinds of benefits: tangible and intangible. The difference between the two is that tangible benefits are based on the performance of the business (for example, customer tariff cost) and intangible benefits are influenced by the system’s service (for example, rent and grid connection) [7]. The formulae used in this study to calculate this section is:

$$TB=\sum \left(T+I\right)$$

(1)

where:

• Σ—summation sign
• TB—total benefits,
• T—represents the sum of all the tangible benefits of solar energy activities carried out in the KZN region [7].
• I—represents all the activities that belong under the intangible category. Adding up all the activities with both tangible and intangible benefits give the required total benefits [4].

The other section of this study is total costs (TC). A total cost represents all the relevant costs needed to carry out the solar energy projects in the region of KwaZulu-Natal [7]. Based on information obtained from the database, total costs are also divided into two; the first is developmental costs (D), where these costs represent all the one-time costs in the solar energy projects. They do not have any effect when the projects are up and running; installation cost is an example. Installation cost is only charged once at the initial stage. The second cost that make up the total costs is operational cost (O) [7]. Operational costs are costs that will affect the solar energy project throughout the entire existence of the project. The operational costs for this study are the license operating cost, and the cost will be charged every year [7]. Therefore, it is necessary to calculate the total costs of the section using the following formulae:

$$TC=\sum \left(D+O\right)$$

(2)

where D represents the sum of all activities that belong to developmental costs,

$$D=\sum n$$

(3)

where:

• n is for all activities.

And O represents the sum of all the activities that are carried out in the operational category [7],

$$O=\sum m$$

(4)

where,

• m is for all activities.

The third and last section on cost benefit analysis in this study is return on investment (ROI) [7]. Since this is a feasibility study, there is a need to calculate the profit or loss during the project’s existence. Earnings before income tax (EBIT) is the difference between total benefits and total costs [7]. The formula that represents this calculation is:

$$EBIT=I_i+TB+T{C}_{EBIT}$$

(5)

• I_i—initial investment
• TB—total benefits
• TC—total costs

Tax inclusion comes in at this stage, where benefits and losses are calculated to get taxable operating income. The taxable operating income is the difference between total benefit and total cost, excluding initial investment. The formula is as follows:

$$T_{oi}=TB-TC$$

(6)

The operating tax is calculated only when the taxable operating income is greater than zero and not less than zero [7]. The tax percentage is 28% on the taxable operating income, as arranged between the South African Revenue Service (SARS) and the municipality. This percentage was taken from the SARS tax table.

$$\mathrm{If} T_{oi}>0, T_p=T_{oi}\times 28\%$$

(7)

where:

• T_oi—Taxable operating income
• T_p—Tax payable

The return on investment (ROI) is the total output in the form that demonstrates the business loss or profit for each year [7]. The formula that represents the calculation of return on investment is presented below:

$$ROI=EBIT-OIT$$

(8)

where:

• EBIT—earning before income tax
• OIT—operating income tax.

The cost-benefit analyses will end after obtaining the return on investment for each year until the targeted period (seventh year). The probability is investigated using the statistical analysis tool that will assist in predicting the success rate of the installation of solar power in the region [7].

4. Results and Discussion

Financial Analysis and Projection of Cost-Benefit Analysis

The main objective of this economic model is to guide the potential costs of solar power installations in the eThekwini municipal area. Small (<100 KW) installations have been planned [7]. The model was developed to calculate the benefits of installing solar power in the region. It is divided into sections: output, income and rates, investment and installation, and expenses.

Table 2. Financial model component for a solar power system in eThekwini municipality [7,33].

1. Output	Unit
Total capacity	10 kWp
Annual insolation	1890 kWh/m2
Performance ratio	83.0%
Annual degradation	0.30%
Yearly production (first year)	15,687 kWh
Per cent self-use	95%
2. Income and rates
Customer tariff (avoided electricity)	1.35 R/kWh
Feed-in tariff	0.65 R/kWh
Carbon credit	0 R/kWh
Tax rate	28%
Inflation adjustment	7% per annum
3. Investment and installation
Turnkey EPC	18,000 R/kWp
Grid connection	R0
Project development	R1000
Other initial costs	R0
Decommission	0 R/kWp
4. Expenses
Upkeep (first year)	400 R/kWp/annum
Allowance for component change (first year)	1000 R/annum
Land/Roof Lease	0 R/annum
Insurance premium	0.8% of initial invest

represents the figures used to calculate the overall implementation of solar power in the KZN region [7].

The output section in Table 2 contains basic information containing the total capacity of 10 kWp, which is expected at the end of the desired period, which is 17 years. The income sections represent the income and rates component that was utilized to obtain the tangible benefit for the solar power system: it also describes how much the plant will earn. In addition, components such as inflation adjustments are used on all tariffs and operational costs [7]. Finally, the investment and instalment section deal with the investment and installation components such as turnkey, grid connection, and other initial costs. Among them is project development, which is useful in calculating the projected development cost found in the developmental cost [7].

The expenses section clarifies the expense components of implementing a solar power system. These components are insurance premiums as a percentage used to calculate the insured project material for a certain duration of time [7]. The upkeep component is used to obtain the solar connection system’s annual maintenance cost to ensure the system’s reliability and sustainability [4]. The allowance for component change (first year) is vital for component variance costs, and the land/roof lease is set to zero in this case because the municipality will own the land or roof used for the solar power project. Table 2 represents the possible percentage calculation for the duration of the study [7].

Considering the government’s plan, the cost-benefit study was carried out with the expectation period in mind. The CBA in

Table 3. Cost Benefit Analysis (CBA) for solar energy in eThekwini region.

Cost Benefit Analysis (CBA)
Total Benefit (TB)	Year
	Unit	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17
Total Tangible Benefit
Energy produced	kWh	15,687	15,640	15,593	15,546	15,499	15,452	15,405	15,358	15,311	15,263	15,216	15,169 15,122		15,075	15,028	14,981	14,934
Self-use	kWh	14,903.00	14,858	14,813	14,769	1472	14,679	14,634	14,590	14,545	14,500	14,456	14,411 14,366		14,321	14,277	14,232	14,187
Feed in tariff	kWh	784	782	780	777	775	773	770	768	766	763	761	758	756	754	751	749	747
Feed in tariff	R/kWh	1	1	1	1	1	1	1	1	1	1	1		1 1	1	1	1	1
Customer r tariff	R/kWh	2	2	2	2	2	2	2	2	2	2	2		2 2	2	2	2	2
Carbon credit	R/kWh	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Total TB cost	R/kWh	30,590	30,498	30,406	30,314	30,223	30,131	30,039	29,947	29,855	29,764	29,672	2958	29,488	29,397	29,305	29,213	29,121
b) Intangible Benefit
Rent cost	R/kWh	300 300		3000	3000	4500	4500	4500	4500	4500	4500	5000	500	500	5500	5500	5500	5800
Grid connection licence	R	1100	1100	1100	1100	1100	1100	1100	1100	1200	1200	1200	1200	1200	1200	1200	1200	1200
Total benefit	R	34,690	34,598	34,506	34,414	35,823	35,731	35,639	35,547	35,555	35,464	35,872	3578	35,688	36,097	36,005	35,913	36,121
Total CT (expenses)
a) Developmental cost
Project development	R	50,000
Labour cost	R	−44,000
Transportation cost	R	45,000
Solar panel cost	R/m′	25,000
b) Operational Cost
Facilities management	R/kWh	−1000	−1070	−1145	−1225	−1311	1403	1501	1606	−1718	−1838	1967	−2105	−2252	−2410	−2579	−2759	−2952
Depreciation	R	36,200			0	0	1	0	0	0		0	0	0 0 0			0	0
Allowance of component change	R	1000	10,700	1145	1225	1311	1403	1501	1606	1718	−1831	1967	−2105	−2252	−2410	−2479	2759	2952
Maintenance cost	R/kWh	−4000	4280	4580	4900	5243	5610	−6003.00	6423	6873	7354	7869	8419	9009	9639	10,314	11,036	11,809
Insurance premium	R	1448	−1448	1441	1448	1448	1448	1441	−1448	−1448	1441	1441	1448	−1448	−1441	−1441	1448	1448
Total cost	R	207,641	7868	−8317	−8798	9313	9863	10,452	11,083	−11,157	−12,479	13,251	14,077	16,919	−15,907	−16,919	11,002	19,161
EBIT	R	8042	2673	26,189	25,610	25,610	25,867	25,137	24,465	23,798	22,985	22,621	21,703 20,727		20,100 19,086		17,911 16,960
Taxable operating income	R	−172,958	2673	26,189	2561	2651	25,867	25,137	24,465	23,798	22,985	22,621	21,703	20,727	20,100	19,086	17,911	16,960
Operating income tax	R	0	7484	7333	7173	26,189	7423	7243	7052	6850	6660	6436	6334	6077	580	5653	5344	5015
Operating income After Tax	R	−172,958	3421	33,522	32,789	33,933	3311	32,239	31,315	30,462	29,421	28,955	2778	26,531	25,843	244,301	22,926	21,709
Return On Investment (ROI)	R	−172,958	−138,744	−10,522	−72,434	−38,501	−5391	26,848	58,163	88,624	118,045	147,000	174,780	201,311	227,154	251,583	274,509	296,219

below was conducted for 17 years since almost 10 years still remain to achieve the NDP plan [7]. The extra seven years were added to ensure the performance moved forward after attaining the government plan by 2030. The users will share the energy produced by solar power, and the feed-in tariff is considered to obtain the total energy used [7]. The annual degradation of 0.30% is also considered for the yearly energy produced. This assists in understanding the actual amount of energy that can be produced. The tangible benefit of the project is obtained by adding the feed-in tariff and customer tariff costs. The two parameters are calculated based on the region’s annual target of solar power implementation. The calculations are as follows:

$$FTC=FTR\times FTCh$$

(9)

where,

• FTC—feed-in tariff cost,
• FTR—feed-in tariff rate,
• FTCh—feed-in tariff charge.

The feed-in tariff rate is 784 kWh in the first year. The feed-in tariff charge is R1/kWh. However, this charge is not expected to increase for the next 17 years because solar power is still in the developmental stage [7]. Feed-in tariff costs are added to the customer tariff to obtain the actual cost. The customer tariff is as follows:

$$CT=SE÷ST$$

(10)

where,

• CT—customer tariff,
• SE—self-use energy
• ST—self-use tariff

This formula was obtained from a percentage of 95% set by the region for that year. The combination of these figures in the first year gave us R30,590/kWh, which is the total tangible benefit. The carbon credit in this cost is R0/kWh, but there are no charges related to it at this point. The intangible benefit is another part of the benefit that completes the possible total benefit of the solar implementation project in the region. In this project, there is a rent and grid connection, where rent will assist the project in generating income by renting the solar system to the municipality customer with an initial fee of R3000 for the first four years because rent still costs the municipality for maintenance and installation. This figure is recommended to be 1.7% of the investment cost. The four-year fixed-term drive by the expected solar power challenge is still minimum at the initial stage. The next four years (5th to 9th year) and eight remaining years will increase to R4500 and R5500, respectively, because solar system output increases by 100 kWh yearly. This will also be affected by maintenance costs that the system will need due to the increased capacity of the solar system [7].

Grid connection will be an annual charge when the customer has installed his/her own solar power system. This is conducted to control the grid connection and properly maintain the grid system. These charges are not that high compared to the rent cost since they only come at a value of R1100 per year for the first 9 years and increase to R1200 per year for the rest of the duration of the project, and these charges will be directed to the greenhouse gas emission funds of the municipality.

The solar power system project in the region of KZN will face many challenges since it is in the initial phase [4]. The solar energy project for the duration of 17 years will require R181,000 for the project to be successful. This financial model shows that solar implementation will not generate profit for approximately five years [7]. The return on investment was presented/given in Table 2. In the first year, it will run at a loss of about R172,598. During the first year, almost 4.4% will be returned by the project.

The increase will begin to show from the second year since the project will be running at about a loss of R138,744 and will manage to accumulate a 23.3% return on the initial investment. This shows an amazing return in the short term of about 19.1% difference from the first year. In the third year, solar projects will be running at a loss of about R105,223 and will manage to return almost half (41.9%) of the initial investment. This demonstrates a positive sign of the project since the project duration is 17 years, yet in the third year, it returns almost half of the investment [7].

In the fourth year, it will run at a loss of R72,434 with an investment return of 60%, and in the fifth year, 78.7% will be returned by this solar energy project since it will be running at a loss of R38,501 in that financial year. This will be the last loss of the project since, in the sixth year, the solar project will manage to reach the breakeven point. In the sixth year, the solar energy project made no loss or profit. In other words, every cent invested in the project will be fully returned in the sixth year. As every cent invested in the project has been returned, the project will start generating profit from the seventh year. The first proof that profit will be generated will be equivalent to R26,848 which is almost 15% of the initial investment.

The return on investment has been delayed by the project’s total cost, such as development and operating costs. These costs are considered running costs for a solar project in the region. The most respectable aspect regarding developmental costs is that they are one-time costs [7]. The contribution of the developmental costs to the solar energy project, in this case, is the sum of project developmental cost (PD), labour cost (LC), transportation cost (TC) and solar panel cost (SC) to the value of R168,000. The developmental cost is almost 93% of the proposed investment. The calculation details are given below:

$$\begin{array}{c}Developmental cost=\sum \left(PD+LC+TC+SC\right)\hfill \\ =(\mathrm{R}1670+\mathrm{R}3330)+(\mathrm{R}45 \times 8 \times 122 \times 1)+(320 \mathrm{km} \times 140.6)+\mathrm{R}29000\hfill \\ =\mathrm{R}5000+\mathrm{R}44000+\mathrm{R}45000+\mathrm{R}29000\hfill \\ =\mathrm{R}\mathrm{168,000}\hfill \end{array}$$

(11)

On the other hand, the operating cost is not a one-time cost but a recurring cost every year [7]. This has a contribution of R43,648 which adds almost 24% to the investment cost in the first year of the project. Among other operating costs are facility management cost (FC), depreciation cost (DC), allowance of component changes cost (AC), maintenance cost (MC) and insurance cost (IC) [7]. However, the depreciation cost will be further calculated for the next period of 10 years since it only affects the value of the solar system, not the investment and encourages proper maintenance. Most solar systems can only be removed when defective, but most solar systems showed high levels of defects and required more maintenance after ten years [30]. To add to that, the NDP still has almost ten years to yield results; therefore, the study can focus on a minimum of ten years for it to be in line with the government’s plan, particularly for the KZN regional government [7]. Calculation details used are given below:

$$\begin{array}{c}Operating cost\left(OC\right)=\sum \left(FC+DC+AC+MC+IC\right) \left(12\right)\hfill \\ =\mathrm{R}1000+(\mathrm{R}181000\times 20\%)+\mathrm{R}1000+(10 \mathrm{km}\times \mathrm{R}400)+(\mathrm{R}181000\times 0.80\%)\hfill \\ =\mathrm{R}1000+\mathrm{R}36200+\mathrm{R}1000+\mathrm{R}4000+\mathrm{R}1448\hfill \\ =\mathrm{R}\mathrm{43,648}\hfill \end{array}$$

(12)

These two costs (developmental cost and operating cost) have overturned the return on investment for almost 5 years but in the first year have demonstrated a loss of R172,598 to zero costs in the sixth year, as clearly demonstrated in Figure 3 [7].

A positive cost trend will be seen in the next ten years after the 15% increase in the seventh year. A consistent 15% increase will be seen each year throughout the estimated period. In the 12th year, the profit will almost double the investment cost with a profit of R174,780. This is almost equivalent to 97% of the initial investment, which ensures the future financial stability of the energy department in the region.

In another part of the country, such as Johannesburg, one can look at a repayment period of about 7.9 years to install a solar power system of the same quantity [31]. Whereas here in eThekwini (KZN municipality), it will take a payback period of approximately 6 years, according to the research conducted in eThekwini municipality. According to Ozorhon [34], the service life of a solar power project is seen to be very long to generate profit after the breakeven point. Therefore, investors appreciate the fact that any solar power investment should give a return on investment within the estimated timeframe and will not take a longer time, as is the case with fossil fuels [34].

In the tenth year, the depreciating value is R4859, but the system remains controllable above 10%. Depreciation values could assist in the maintenance schedule to keep the solar system in good performing shape. Ghenai [35] claims solar systems can have a lifespan of almost 25 years with a solar cell efficiency of 16%.

5. Recommendations

5.1. Economical, Methodological and Environmental (EME) Framework Analysis of Measured Solar Challenges

Figure 4 was developed to overcome the solar power unsustainability in the KZN region. It proposes the path from potential solar power factors to better regional solar performance.

The economic advantages of solar power give direction to the aspects of the solar power system to be funded. If funding of solar power in the region is directed to SP technology depreciation and SP technology implementation costs, the sustainability of solar energy could be easily achieved.

5.2. Economic Breakdown of Solar Power in the Region of KZN

SP technology depreciation—the funding will focus more on the age of solar technology to keep it up to the required standard. The standard of the solar power system will be ensured using a proper maintenance plan [7]. Equipment such as solar panels must be kept in good shape to avoid premature failure of the system. Panels are affected by dust and corrosion that occurs during solar power supply [7]. On the other hand, the battery duration is affected by its chemicals [7]. Therefore, it would be more beneficial if funds were directed at dealing with the critical solar contributors that can easily collapse the solar system.

The SP technology cost will be directed to the implementation of solar power. The technology must be the latest technology to ensure the efficiency of the solar power system. The technology upgrade will cost slightly more, reducing the costs budgeted for SP technology depreciation [7].

5.3. Methodological Breakdown of Solar Power in the Region of KZN

The main reason why the research overlooked the solar power methodology is that the potential solar power has and the less increase in its implementation of solar power from small scale to large scale in the KZN region. At this stage, the KZN region can function best at a small scale [7]. The other reason was to eliminate investment risks due to an incorrect method being carried out. The cost of a solar power system will be reduced if the correct methodology is used. The proposed reduction in solar power costs can be achieved by looking into two aspects of solar:

• Solar power research and development—this aspect can benefit the region since there will be a better understanding of the technology required in the KZN region. It will prepare the solar power system organizers for future technology and increase the opportunity to develop relevant technology for the region rather than benchmarking against developed countries, e.g., Germany [7]. There is nothing wrong with benchmarking, but it must be remembered that other countries use technology that suits their solar radiance and temperature. This creates an opportunity for solar power products with superior performance to be manufactured once the relevant parameters have been analysed [7].
• Solar power training and financing policy—this will assist in reducing implementation time and the waste of solar power material, provided training is maximized through proper training policies to ensure proper skills transfer for renewable energy as a whole at the regional level [7]. This process will need to be guided by policies directed towards renewable energy such as solar power [7]. For example, a solar power financing policy should be developed since the author was unable to access such a policy for the KZN region during his research for this study. Both SP research and development as well as SP training and financing policy could help reduce the premature collapse of the SP system [7].

5.4. Incapacitating Solar Power Unsustainability in the KZN Region

Global emissions of greenhouse gases are extremely high and they incapacitate the amount of oxygen required. However, the study focused on ensuring the sustainability of solar using CBA. The below diagram collaborated the solar power resources to efficiently implement solar power in the coastal region. Protecting the environment is highly recommended for the solar power project to be the opposite of the current fossil fuel when it comes to damaging the environment. A proper integration of skill and technology used will reduce solar power uncertainties [7]. The CO₂ emission measures can play a prominent role in making the world feel more confident about solar energy as a viable alternative to fossil fuel energy [7].

The diagram above has multiple phases and these phases interlink each other. Phase A takes place first and interacts with phase B on the project’s cost-benefit analysis model. Phase B will then include the technical way of solar power implementation and leaves it in the integration of skill analysis. Phase C evaluates the crucial points from phase A. Phase D will then deal with integrated solar system skills, processing of the eradication of negative factors through CBA and ends at efficient regional solar power.

The study outcomes reveal the importance to track the regional solar power sustainability to be able to identify the backlog to the proper implementation and growth in the KZN region. Results from this research study further revealed a positive correlated relationship between productivity and quality. In order to improve the growth of solar power in the region of KZN as an alternative to energy supplied from fossil, there is crucial need for research scientists to ensure sustainability in its implementation. The results clearly demonstrates that return on investment will be attained from the 6^th year onwards as long as sustainability measures are maintained. The proper sustainability relies on solar power education, skilful technicians and closing the investors gap. The literature, results analysis and CBA model assisted in determining the cause of the gap within the solar power in the KZN region.

6. Conclusions

The study of solar power implementation in coastal region using the CBA method yielded positive results, where multiple tools such as root cause analysis played a crucial part to direct the next move on solar power by determining the level of success on the solar project in the region of KZN.

Based on the results obtained in the study, solar power can be implemented without any unforeseen challenges as a literature review outlined all possible challenges. The study discussed the proper way of implementing solar power in the region such as KZN. Through proper sustainability discussed in Section 5 above, the implementation of solar power can easily contribute to positive outcomes which can in turn yield profit as a means of tracking regional solar power sustainability.

The literature clearly tells us that the implementation of solar power in SA is still far behind other countries, such as Germany [7]. Nevertheless, solar power is a promising alternative energy supply in South Africa [7]. The research revealed that solar power has potential in the KZN region, but more research needs to be performed in the field of solar power sustainability in rural areas, where electricity from the grid is hardly supplied.