Are your business’ electricity costs a given? Maybe not, says expert

Opportunity knocks for those who manage their energy consumption during lockdown, Energy Partners Intelligence executive director Mila Vicquery told Fin24.

Energy Partners is a division of PSG Group that provides its clients, including outsourced supply contracts and capital solutions. It has been helping businesses manage their power usage during the lockdown period. 

On Wednesday, Eskom spokesperson Sikhonathi Mantshantsha told Fin24 that at the beginning of the lockdown planned maintenance stood at 4 200MW, which has doubled to 9 000MW.

Vicquery says despite commitments from Eskom that load shedding is unlikely during the national lockdown due to falling demand, businesses should continue to keep their energy consumption in check.

Cost cruncher

Vicquery urged businesses to inspect tariffs and look at both fixed and variable charges, because as much as 10{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of total operational costs in a business can go to energy.

“The lockdown period, from and economic perspective, speaks to us all as categorising costs and reducing costs on all fronts and running operations and cost effectively as possible. Electricity and energy is a high component in income statements,” said Vicquery.

Vicquery said while electricity consumption would always be a cost for a business, even some of the fixed components on an electricity bill could be managed and visibility and transparency were in businesses’ control.

“Eskom has already increased tariffs… This emphasises the importance of a cost management strategy and put those cost strategies into the daily approach of the business.

“Now is the best time to scrutinise and investigate energy costs since business is winding down. Businesses often tend to treat electricity bills as a given, like salaries and rental. The way that salaries are being investigated, energy consumption can be managed and adjusted,” Vicquery said.

She said while coronavirus presented its own challenges to businesses, a number of other challenges were waiting on the other end of the pandemic, including an 8.76{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} electricity tariff increase that kicked in on Wednesday, an under-performing currency and a technical recession.

“Practically, under lockdown, all businesses can increase visibility (of their consumption). If you want to do something about energy costs, you have to be able to adapt. These changes all create an impact. To adapt and increase flexibility, you have to have a clear view of what your energy use is,” she said.

Coalface sectors

Vicquery said essential industries, mainly retail and healthcare, were getting support from Energy Partners through real-time monitoring as well as recommending and monitoring changes in their operations.

“Food companies are changing hours and that impacts on consumption. If you want to manage demand, you can install devices that will alert you on consumption so you can manage it. In retail, we see opportunities to reduce night shift, have earlier hours exclusive to the elderly, baking and food preparation at certain hours being moved to less expensive hours.

“Healthcare will clearly see an increase in patient volumes, but time will tell what impact this has on the sector. Essential equipment like ventilators and other machinery will bring higher consumption, but this can be managed if you have control over monitoring your costs,” she said.

Energy asset investment

Vicquery said businesses that have developed their own source of energy in order to be less reliant on Eskom may experience the strain of financing this energy. Hence Energy Partners’ strategy of investing in alternative energy components and selling them back to business and complete utilities. 

“Businesses can combine solutions and look at what they can do with zero capital spend. We are willing to invest and buy business assets to bring them more efficient solutions and sell them back the utility. This is in conditions where cashflow is tight,” she said.

The rationale, she explained, is that businesses can then focus on core business operation. The return on investment comes in the form of kilowatt hours, a plant or equipment they could not otherwise afford to maintain, she said.

“In a situation like a lockdown, our clients who use hybrid solutions, we are not experiencing any difficulties. The only issue would be export to the grid when volumes are low. If a business operates less, it will likely have less reliant on the grid, making solar power more efficient,” said Vicquery.

She said while there was an option to not be fully reliant on Eskom, energy from the grid could still be managed with behavioural challenges and business should not just focus on one element of their energy challenges.

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