10 tips to help your small business survive rising electricity costs

Rising electricity costs can destroy your small business as all indicators point to 2023 being another year that spiralling energy costs will drive an immediate cashflow crunch for businesses, with surging inflation causing a spending slowdown.

“South African small business owners are understandably shocked by the unprecedented tariff increases that Nersa approved. This is going to lead to inevitable price increases on everything, driving inflation way past the current 6-7% which is already crippling growth and job creation,” Roger Hislop, energy management systems executive at CBI Energy, says.

Most municipalities with distribution licenses will also add a higher markup, meaning that come the beginning of April, South Africans may expect to see an increase of up to 22% or more on their utility bills, depending on who their local supplier is.

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“These huge cost increases, together with continued low reliability of energy supply, are going to not only strengthen the case for installing solar and battery storage, but also clearly show that private generation is only half the solution. Everyone needs automated energy management and load control systems to reduce wasted consumption and optimise power availability.”

Hislop says the only solution in the short term is for businesses to use electricity more efficiently, use less and treat it like the scarce resource it has become. With many small businesses facing a financially challenging 2023, Hislop gives these ten tips to help them take control of their electricity costs:

1. Understand your bills:

Many business owners do not know what they are paying for, such as ‘time of use’ tariffs and Notified Maximum Demand penalties. If you understand these terms, some simple behaviour changes can help you take 20-30% off your business’ electricity bill.

2. Check your bills:

Install managed smart meters behind your utility meter to confirm your bill is correct. You will also be able to see day by day what your consumption trend is to identify runaway usage before you get a month-end bill shock.

3. Measure, measure, measure:

Put managed smart meters on key distribution boards or large loads to understand where your consumption is happening and when.

4. Energy design:

Build a simple plan around which parts of your business are energy-critical, such as IT infrastructure, production machines, knowledge workers’ computers and communications systems.

Consider which areas are your first, second and third priority electricity consumers to help you plan around energy resiliency systems.

5. Schedule your loads:

Putting bigger loads on an automated schedule can easily save 10% on your bill. Air conditioners, geysers and hydro boils do not need to be on at night and most office lighting can be switched off too.

Basic dumb timers can do the job, although a better option is centrally managed load controllers that let you quickly adapt to changing conditions.

ALSO READ: How to build a financial buffer for your small business

6. ‘Just when required’:

Do not leave anything running unless it is needed. Install load controllers on your meeting room air conditioners, for example. This, combined with a room occupancy sensor, means you only consume power when necessary.

7. Manage your physical environment:

Review your office design and make it more efficient. For example, use less electric lighting and more natural lighting options such as light pipes and draught-doors to reduce your heating and cooling costs.

8. Implement small-scale embedded generation (SSEG):

In South Africa, SSEG is generally generator sets or solar PV. Generators are a useful stopgap, but their energy is very expensive per kWh.

The price of solar systems, on the other hand, is falling, although pent-up demand is keeping costs high. Shop around and make sure that you talk to an installer with strong credentials and a solid (referenceable) track record.

9. Apply load management to your SSEG:

By managing your loads using even a basic Building Energy Management system, you can reduce the size of the inverter and batteries you need, while also ensuring that it is not tripped by overloading.

You can optimise this when you use energy to “sweat the sun” – in other words, do not waste sunlight by starting the day with full batteries.

10. Consider the impact of energy security on your business:

Electricity costs come directly off the bottom line, but reduced productivity, damage to equipment or machines and not being reliably open for business all have a more serious negative impact. You must understand this to successfully navigate our energy crisis.