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SMEs must prepare for increased electricity tariffs - expert

Jan 30 2017 05:01

Cape Town - The next eight years will likely see an above-inflation year-on-year electricity tariff increase of at least 6% to 8%, according to Mila Loubser, head of Engineering Intelligence, a division that does forecasting, modelling and monitoring in the energy sector for Energy Partners.
The large investments Eskom is currently making in infrastructure are likely to affect energy tariffs in the near future. This will make it increasingly important for business owners to consider alternative sources of energy, in her view.
Since 2008 the average tariff increase in South Africa has been around 300%, her research shows.

"In light of the upcoming 2017 Budget Speech, we are also waiting to find out if the government will introduce a new carbon tax. If this is the case, tariff increases could be as high as 13%,” says Loubser.

This trend will have the largest impact on small and medium enterprises (SMEs).

“As we have seen in previous years, energy tariff hikes and other power related issues such as load shedding, had massive impacts on the operating costs and the already low profit margins of SMEs. There are, however, opportunities for smaller companies to reduce the impact of power costs and supply on their business,” she adds.

Cala van der Westhuizen, spokesperson for Energy Partners Home Solutions, notes that SMEs should take advantage of the incentives provided for the installation of renewable energy solutions.

“SMEs need to keep in mind that they can claim a percentage of the cost of solar and other renewable energy solutions back from SARS. Some banks also offer financing to their business banking clients for renewable energy solutions,” he says.

Alternatively, Van der Westhuizen notes that businesses can also consider financing options from certain service providers. There are a number of benefits to installing solar energy solutions in small businesses, all of which contribute to reducing operating costs and downtime in the event of power outages, according to Van der Westhuizen.

“A full solar solution can reduce the average SME’s electricity consumption by as much as 30%. This figure is of course dependent on the nature of the business. Additionally, custom heating, cooling and energy efficiency solutions have also resulted up to 30% reductions in electricity use for a number of our clients,” he says.

“With this in mind, it is important for business owners to do a proper cost-benefit analysis to ensure that they are making the correct decisions, implementing the right energy solutions and using the optimal financing vehicle to reduce their annual energy spend.”

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