7 ways SMEs can beat the rising cost of electricity

Electricity is a basic, but vital operational resource for any organisation. Unfortunately, it is an increasingly costly commodity that is putting a lot of financial strain on businesses, especially SMEs. Over the next eight years, South Africa is likely to experience above-inflation hikes in electricity tariffs of as much as 6% to 8%. This could even reach as high as 13%, if government introduces their planned carbon tax.

 

Electricity Prices

Figure 1: The graph shows the growing average cost of electricity (cents p/kWh) from 2006 until 2017/2018. Source: Numsa

If you are an SME owner you are most likely experiencing the impact of growing electricity prices on your profit margins and operating costs. But there is light at the end of the tunnel. Because you run a smaller operation, it is much easier to manage your energy spend. Here are seven tips to help you beat the rising cost of electricity:

 

1.  Energy-efficient lighting

 

Lightbulb

Replacing your business’ regular light bulbs with energy-efficient LEDs is a simple, cost-effective way to minimise your electricity usage.

 

A business that keeps regular office hours operates for at least 40 hours a week. Considering that most offices keep their lights on during that time, and even after hours, it is no wonder that lighting accounts for most of the electricity used in many businesses.

 

One of the simplest and most cost-effective ways to minimise your business’ electricity usage, is replacing regular light bulbs with energy-efficient LED units. They use 90% less electricity than standard light bulbs and because they have a longer lifespan, your business’ lighting will require less frequent maintenance. But it is important to note that merely replacing the light bulbs will not guarantee the maximum savings due to the transformers used in the older fittings.

 

Using natural light to your advantage is another simple way to save on electricity: Open the blinds more often to lighten the workplace, consider installing a skylight or paint the office walls in lighter tones that automatically brighten indoor spaces.

 

2.  Switch off and unplug

 

Remind your employees to switch off all the lights and electrical equipment at the end of the day. Place small posters or stickers next to light switches to remind staff about this energy-saving rule, and even introduce a small fine for those who forget: For example, if the last person to leave the office neglects to switch off the air conditioner, he or she must buy a round of coffees for everyone in the office.

 

Many people do not realise that electronics still use power even when they are turned off. You might be surprised to hear that equipment that is still plugged into the wall socket can “leak” up to 0.05 kWh, which is the equivalent of about R0.05 to R0.10 worth of electricity every hour. While it does not seem like a lot, it will add up, especially if you have multiple appliances plugged in at the same time. To put this into perspective: 10 PCs plugged in overnight will “leak” around R10’s worth of electricity per week and as much as R50 during weekends, which add up to about R400 at the end of the month. It is therefore a good idea to unplug everything in your office before you leave for the day, or at least at the start of a weekend or holiday.

 

3.  Introduce work-from-home days

 

Work from home

Allowing your staff to work from home on certain days will save your business electricity.

Give your business an energy break and your employees a reason to smile by allowing staff to work from home on certain days. Thanks to technology such as Skype, email and safe network connections, this will not disrupt your business, but rather amount to significant electricity savings in the long run.

 

4.  Take charge of temperature control

 

A business’ productivity relies on the comfort and happiness of its employees, which is why air conditioners have become a workplace essential in our exceptionally warm summers. They are, however, very heavy electricity users. The cooler the setting, the more electricity they use. That is why it is a good idea to switch on the air conditioner early in the day, on a milder setting that gradually cools down the office as the day gets warmer. This is much more efficient than trying to quickly cool down an area during the hottest time of the day by blasting the air conditioner at its maximum setting.

 

If you are located on the ground floor, consider planting deciduous trees outside your windows, which will provide shade during summer. And, to avoid the excessive use of heaters or the air conditioner on a warm setting during winter, keep the heat inside by ensuring your office’s doors and windows seal properly.

 

5.  Rethink the office kitchen

 

The office kitchen is a great place for saving electricity. Because an SME has fewer staff members, a smaller fridge that uses less electricity might be sufficient, while a hot water urn is a good energy-efficient alternative to a regular kettle. Also, replace the microwave and toaster with newer, more energy-efficient models that might be more expensive to purchase, but will help your business save money on electricity over time.

 

6.  Get your staff on board

 

Energy Smart

Encourage your employees to become energy conscious.

 

7.  Go solar

 

Utilising the sun’s energy to power your business will help you significantly reduce its monthly electricity bill. According to Cala van der Westhuizen from Energy Partners: “Depending on the nature of the business, one of our customised solar solutions could help cut an SME’s electricity bill by as much as 30%.”

 

On top of that, SARS also offers certain tax concession for businesses that go solar. A business can deduct the 14% VAT portion off the cost of the solar system, as well as deduct the full cost of the installation of a solar energy solution from their business income tax in the first year. This benefit effectively means that your system is discounted at another 28% through the saving in tax.

 

While many SME owners might be scared off by the initial cost of installing solar, it is true that a state-of-the-art system will pay for itself with what it saves on electricity over time. “The repayment term of a solar PV system for a commercial installation is close to around four years, depending on certain factors like self-consumption and the tariff structure. With solar panels that have a 25-year production warranty, it’s very much like buying 25 years’ prepaid electricity at five years’ cost,” says Van der Westhuizen.

 

Energy Partners Home Solutions also offer various financing options for SMEs that do not have the capex available to purchase the system outright. According to Van der Westhuizen: “As a registered financial services provider, many of our clients purchase a system that is financed by us and which they can easily pay off out of the operational budgets of their businesses. In certain cases, we can even offer a Performance Lease Agreement, which allows for the installation of the system at a fraction of the cost.”

EPHS

Author EPHS

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