Amid unpredictable load shedding and rising electricity tariffs, a growing number of homeowners have turned to solar power as an environmentally friendly and increasingly cost-effective alternative to coal-powered electricity. In addition to the long-term pecuniary and sustainability benefits of renewable energy, the installation of solar photovoltaic (‘PV’) systems, including rooftop panels, inverters, and battery storage systems, generally increases a property’s resale value. In the City of Cape Town’s defined area of electricity supply, solar-powered systems are subject to various regulatory requirements. As the weather heats up and more homeowners invest in solar installations, this article helpfully outlines these legal prerequisites.
Mandatory registration
In accordance with the City of Cape Town’s Electricity Supply By-Law (‘the By-Law’), small-scale embedded generation (‘SSEG’) systems, which include all alternative sources of power with a generation capacity of no more than 1 mega-volt ampere (1000 kVA) connected to the wiring of residential, commercial, and industrial premises, must be registered for authorisation prior to installation.
The impetus for registration is two-fold. First, pre-authorisation reduces the risk of electrical hazards and fires resulting from installations which do not meet established safety standards. Given that the Occupational Health and Safety Act – a national statute – places the burden on the property owner to ensure the safety of any electrical installations, registration is in the interest of SSEG users. Second, it allows the City to record and manage the number of grid-tied SSEG systems to prevent overburdening the electrical infrastructure and disrupting the quality of electricity generation.
To simplify the process, registration is split into two stages: application to install and final approval. First, property owners are required to submit an application form to the City to install an SSEG system. Earlier this year, the City rolled out an online portal for applicants to reduce turnaround times and enhance transparency. The application form requires the confirmation of various technical details related to installation. Predictably, this will necessitate the assistance of one’s selected solar PV service provider who may apply for authorisation on behalf of the property owner.
In reviewing an application for installation, the City may visit the property to confirm that the meter and electrical connection supports embedded generation. Once the City is satisfied, it’ll issue a Permission to Install letter, which confirms that the applicant may procure, install, and test an SSEG system.
Post-installation, the second leg of registration requires the applicant to submit a grid-tied SSEG Installation Commissioning Report signed by an ECSA-accredited electrical engineer, a Certificate of Compliance confirming that the electrical installation meets all regulatory requirements, a final copy of the circuit diagram, and a duly signed Supplemental Contract for Embedded Generation. Upon receipt, the City will issue a Commissioning Approval letter within ten working days.
The consequences of non-compliance
Under the By-law, failure to formally register any SSEG installation is a criminal offence punishable by a fine and or imprisonment. In addition to causing potential electrical hazards, unauthorised systems may interfere with the quality and sustainability of the electrical grid supply. Accordingly, unauthorised users will be issued with a contravention notice, in terms of which they are instructed to disconnect their SSEG installation within five working days of receipt, supply a Certificate of Compliance, and formally apply for authorisation to proceed with the installed system. Further, non-compliant property owners may have their power disconnected.
Notably, registration is a prerequisite for owners to participate in the City’s ‘Cash for Power’ initiative, which enables grid-tied users to sell surplus electricity back to the City in exchange for a credit on their municipal accounts. Calculated in line with a ‘feed-in’ tariff, the financial incentive of feeding surplus energy back onto the electrical grid is somewhat – initially – dampened by the additional costs of installing an Advanced Metering Infrastructure meter and the payment of a small monthly administration fee.
How do the regulatory requirements impact the sale and transfer of property?
In the property law context, an unauthorised solar-powered system is deemed a latent or hidden defect in that it is not reasonably discoverable by the average purchaser prior to the conclusion of a sale. Where a seller is aware of this defect, they are obliged to disclose it to the purchaser. In transactions involving an estate agent, section 67 of the Property Practitioners Act requires this defect to be formally disclosed in the Immovable Property Condition Report, which is annexed to the sale agreement. It is then within the purchaser’s discretion to accept the property as is and obtain the City’s authorisation after transfer, or to insist that the system is registered prior to transfer.
Alternatively, the seller may opt to decommission the SSEG system. Upon notification to the City, the system will be disconnected from the electrical network – at the seller’s cost – by removing the wiring connecting the inverter to the PV panels and network.
In accordance with the Electrical Installation Regulations (‘the Regulations’), the transfer of ownership from seller to purchaser is contingent upon the issuance of a Certificate of Compliance. While the Regulations do not expressly refer to solar-powered systems, an ‘electrical installation’ is deemed to include SSEG systems. As such, a compliance certificate confirms that the system complies with prevailing safety standards and is in working order – or verifies its disconnection status. Usually, the cost of obtaining the certificate is borne by the seller. Additionally, the new owner is required to sign a Supplemental Contract post-transfer.
SSEG systems, particularly solar-powered installations, are an increasingly common feature of South African homes. Pursuant to safety and grid management purposes, these systems are governed by various regulatory requirements, which invariably impact the sale and transfer of property.
*The author’s article includes text she had previously provided for publication on an online platform earlier in the year for STBB.
