Maximising the value of battery energy storage systems in the Western Cape by leveraging time-of-use tariffs

The document assesses the potential for Western Cape businesses to leverage time-of-use (TOU) tariffs through BESS arbitrage, comparing the repurposing of existing systems against new installations. It finds that while upgrading existing BESS offers high internal rates of return (IRR), new installations are more sensitive to tariff escalation rates and investment horizons, with a 15-year outlook generally improving financial performance.

• Businesses that already own BESS installed for loadshedding mitigation can repurpose these systems for tariff arbitrage if they are on a TOU tariff, potentially realizing high financial returns because the primary capital expenditure has already been incurred.
• The financial attractiveness of new BESS installations for arbitrage is heavily dependent on electricity tariff escalation; a historical 12% annual increase makes more municipalities viable compared to a moderate scenario of 12% in year one followed by 6% annually, which often results in IRRs below the 10.5% prime lending rate.
• Extending the investment horizon for new BESS from 10 to 15 years improves the internal rate of return (IRR) across more municipalities by allowing more time to recover fixed costs and accumulate savings.
• The viability of BESS arbitrage is limited by the fact that TOU tariff structures are not uniformly available across all municipalities and are often restricted to specific business types.
• Repurposing existing BESS for arbitrage may require specific technical upgrades, including advanced energy management systems, inverter reprogramming or replacement, TOU compatible metering, and BMS firmware updates.
• Key risks to BESS arbitrage include potential changes to TOU pricing structures by NERSA, battery degradation caused by excessive cycling, and the impact of power outages which deprioritize arbitrage and may leave batteries discharged during failures.

APA

GreenCape (n.d.). Maximising the value of battery energy storage systems in the Western Cape by leveraging time-of-use tariffs. https://greencape.co.za/wp-content/uploads/2026/01/GC-Industry-Brief-Energy-BESS-Digital-medium-res.pdf

Chicago

GreenCape. Maximising the value of battery energy storage systems in the Western Cape by leveraging time-of-use tariffs. n.d. https://greencape.co.za/wp-content/uploads/2026/01/GC-Industry-Brief-Energy-BESS-Digital-medium-res.pdf.

Wikipedia

{{cite report |author=GreenCape |title=Maximising the value of battery energy storage systems in the Western Cape by leveraging time-of-use tariffs |url=https://greencape.co.za/wp-content/uploads/2026/01/GC-Industry-Brief-Energy-BESS-Digital-medium-res.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greencapendmaximising, author = {{GreenCape}}, title = {{Maximising the value of battery energy storage systems in the Western Cape by leveraging time-of-use tariffs}}, institution = {GreenCape}, url = {https://greencape.co.za/wp-content/uploads/2026/01/GC-Industry-Brief-Energy-BESS-Digital-medium-res.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }