SMEs should collaborate to solve power issues | Fin24

SMEs should collaborate to solve power issues

Dec 09 2014 07:51
Electricity pylon

South African state-owned companies have signed the United Nations Global Compact. (Duncan Alfreds, News24)

Johannesburg - More than ever companies need to look for solutions, rather than be hamstrung by a lack of power to their business, according to Volker von Viddern, managing director of Marsh Risk Consulting.  

Many businesses are on high alert to find ways to manage business interruptions as a result of the current power deficit in SA.

Businesses are increasingly looking to solutions on managing the aftermath of power outages longer than 8 hours, including water shortages, IT blackouts and Telecommunications blocks.

"On top of this, they would do well to also consider the looming 2016 deadline for government’s controversial carbon tax law," warned Von Viddern.

Companies not topping the JSE Climate Performance Leadership Index will need to lower their carbon emissions significantly within the next year to avoid steep penalties.

"Or they will be hit hard, which could have a negative impact on their bottom line. These are the kinds of risks that companies, big and small, need to consider," said Von Viddern.

The government intends to tax emissions at R120 per tonne. A 60% threshold has also been proposed, which will make the actual rate R48 per tonne.

What is currently uncertain is whether this tax will apply to small businesses or not, but chances are that a minimum threshold will be set for the tax, and this will be fairly large in its first iteration.

So, ultimately, early preparation for renewal power sources is as relevant to small businesses as it is to their large counterparts, in his view.

"While having a clear business interruption risk strategy is more vital than ever, and while big industry have considered the issues and impact at length, there is also room for small and medium enterprise to find their own innovative solutions to potentially cover off business interruption risks, the rising cost of electricity and the need to reduce carbon emissions," said Von Viddern.

"Eskom has called on large industry to reduce their power usage, but this does not mean that the next tier of business cannot find alternative, viable solutions to play a significant part in this."

Von Widdern is of the opinion that looking at collaborative alternative power sources can both reduce small businesses’ risks on business interruption and their electricity bills.

"SMEs are usually at a disadvantage when considering the critical mass requirements of alternative power systems, because they are geographically dispersed," he said.

"However, innovative thinking along the lines of 'neighbourhood power mutuals' may create the scale and cost efficiency that facilitate alternative power generation models while running a generator may not work, a group of small players could look into photovoltaics feeding into a battery storage system as a potential solution."

eskom  |  small business  |  sa economy  |  energy  |  entrepreneurs


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