“Energy management is the key to energy savings,” says RMS Heads of Innovation and Sustainability, Nicol du Toit and Frikkie Malan.
Nersa recently approved an 18.65% tariff hike for Eskom. This significant increase will come into effect on 1 April 2023 for Eskom consumers, with a similar rise in electricity costs most likely coming into effect for municipal consumers in July. This financial blow to businesses and consumers comes against the backdrop of daily load-shedding, often going as high as Stage 6, with the likelihood of even higher load-shedding stages looming daily.
Since load-shedding started in 2007, consumers have been hit with higher-than-inflation annual electricity price increases. This has resulted in the cost of a unit of electricity today being almost 7x that of 16 years ago.
The average commercial tariff in 2007 was 24.85 c/kWh compared to 147.52 c/kWh in 2020/21 (source below). The latest approved increase will bring the average tariff to 173.80c/kWh. If the cost of electricity increased with the average inflation rate since 2007, we should have been paying around 100c/kWh (Source: www.worlddata.info).
While energy costs have spiralled out of control, many consumers and businesses have had to spend additional money to buy generators, solar panels, inverters, and batteries to keep the lights on and the economy moving forward.
Figure 1: Average electricity price adjustments (source: https://www.eskom.co.za/distribution/wp-content/uploads/2022/04/Historical-average-prices-and-increase_v20210903_13h00_no-links_External.xlsx)
So, what does this latest increase mean? Energy costs will now make up an even more sizeable portion of the operating cost of a business. Consumers, who are already under financial pressure, will feel even more under siege.
Is there hope in all of this? RMS helps our clients to identify opportunities to save on their energy costs. Many of these opportunities can be implemented with little or no capital investment. We also help clients make informed decisions on how to mitigate the risk of load-shedding and keep their business operating. We can do this because we understand energy consumption trends in buildings and applicable tariffs and have the expertise to give our clients facts on how to weather the South African ‘energy storm.’
The current energy situation in South Africa highlights the need for the prudent management of energy usage. In the authors’ experience, between 9% and 17% of savings can easily be achieved by eliminating energy wastage in buildings. Even better, a consumer can achieve these savings with a simple payback period of between 12 and 30 months. Furthermore, energy consumers can realise further savings by monitoring significant energy users to ensure optimal operations and maintenance practices.
RMS helps energy consumers implement these practices using intelligent metering technologies, consumption data analysis, tariff analysis, and energy advisory services.