Gridlocked in possible Stage 16? Solutions for sustainable power
Photo credit: Owen Erasmus
Why businesses should still be considering solar energy and storage despite the relief in load shedding
For years, the government has been promising an end to load shedding. On 28 April, after then 32 consecutive days of suspending load shedding, Eskom said power cuts would remain suspended until further notice.
So, if load shedding seems to have improved, why should businesses still consider solar?
1. Load shedding may not truly be a thing of the past
In President Cyril Ramaphosa’s State of the Nation Address earlier this year, he expressed confidence in overcoming the crisis, but his optimistic outlook was challenged when, shortly after the address, load shedding was escalated from Stage 3 to Stage 6. The reality is that there seems to be no permanent end in sight, despite the current reprieve. During 1 January to 4 March this year, we had already experienced an estimated 1,656 hours of load shedding. This not only results in financial losses for business sectors, but also affects long-term growth prospects.
Officially, there are now 16 stages of load shedding – up from eight under the previous code. The revision to the Code of Practice has been approved by the National Energy Regulator of South Africa (NERSA). A major change is that load shedding now runs across 32-hour cycles, not a typical 24-hour one, says MoneyWeb. Although NERSA maintains that it is unlikely to be implemented, it remains a terrifying prospect.
Winter and the post-election periods are still ahead of us. According to news reports, The South African Reserve Bank (SARB) expects around 200 more days of load shedding in 2024, despite the past few weeks having been power cut free. “Although the full implementation of the energy and logistics sector reforms will ease the performance challenges in these network industries, inadequate electricity supply and logistical bottlenecks are expected to remain a drag on the economy,” the SARB said.
2. Rising electricity costs
There is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2022, electricity tariffs increased by 653%, whilst inflation over this period was 129%. Thus, electricity tariffs increased four-fold (or quadrupled) in real money terms in 14 years, according to Power Optimal. This steady increase in electricity is likely never going to stablise, even if load shedding seems to have eased over the last few weeks. A large portion of users that continued to pay Eskom’s hiked tariffs, are now investing in solar and storage solutions. This means that Eskom’s income will likely decline, which will lead to more price hikes as municipal debts keep rising.
Source: Business Tech
3. Solar offers long-term cost benefits
Solar installations are initially heavier on the pocket, yes, but the long-term benefits outlive the short-term costs. Depending on a unique business’ energy profile, the payback period is usually only around 4 – 6 years. Businesses maintain operations and become future-fit through a stable, clean and inexhaustible renewable installation, reducing losses due to interruptions in manufacturing or service, and protecting against future electricity tariff increases. The value of business premises may be enhanced, especially when selling a property with a proven, working solar energy solution.
Some businesses may benefit from a tax incentive, whereby businesses can claim an upfront deduction of 125 per cent of the cost incurred to acquire qualifying assets used in the generation of electricity (including supporting structures) against their taxable income. The solution must be brought into use before 1 March 2025, so ask your tax advisor for more information asap.
4. Sustainability strides
We all share a responsibility to make a contribution towards a greener, prosperous future and reducing emissions – aligning with the United Nation’s Sustainable Development Goal 12, ensuring sustainable consumption and production patterns, which is key to sustain the livelihoods of current and future generations. Solar solutions make an invaluable contribution to businesses reducing their CO2 emissions.
5. Consumer, procurement and investor choice
According to a 2023 McKinsey study, consumers care about sustainability - and back it up with their wallets. For businesses producing goods that form part of the retail supply chain or global trade, it is important to embrace sustainability to ensure the viability of their businesses into the future. With society expecting more sustainable economies, this will set the tone for future business, politics and legislation, according to Deloitte. Concerns and regulations stemming from sustainability potentially affect all aspects of global trade, from raw materials to final goods, as well business partners and suppliers across the entire value chain. As sectors lean heavier on Environment, Social and Governance (ESG) frameworks due to these international consumer, procurement and investor pressures, a renewable energy solution is a strategic step in the right direction.
Are other businesses investing in solar?
The growing demand for renewables and less grid reliance in South Africa speaks for itself. Environmental Geographical Information Systems (E-GIS) released an interactive map service for SA Application Data which clearly indicates that South Africa’s business sectors are taking the right steps and making the sustainable switch, with solar PV making a significant contribution.
Solutions for Sustainable Power
At RenEnergy, we’ve been trusted by our clients in South Africa since 2012, building long-standing partnerships and evolving their solutions when their requirements change. We have a team of consultants, designers, engineers, procurement professionals and installers that work together to ensure your solution is of the highest possible quality.
Unlocking the full potential of solar energy requires more than just technology – it demands expertise. Our extensive intellectual property and thorough understanding of solar applications give us a competitive edge in the market. Let’s talk about how solar can benefit your business in the long run. Choose experience. Choose innovation.