South African businesses have been losing out in terms of productivity over the past few months as load shedding took its toll on the economy.
The acting CEO of the South African Chamber of Commerce and Industry (SACCI), Peggy Drodskie, recently remarked that load-shedding is taking its toll on business and that companies are losing productivity, with the suggestion that a power-summit might be necessary to discuss possible solutions.
"You tell your staff you needn’t come to work today because there is not going to be electricity, and then you find there is electricity and you’ve lost production. This summit is something where we need to put everything on the table and we need to thrash out common objectives and common remedies to the problems," she said in a recent interview.
South African philanthropist and businessman Vivian Reddy’s Edison Power Group, a returning platinum sponsor of the upcoming African Utility Week in May 2015, is in the business of helping to address the issue. BBQ spoke to Deputy Chairman, Shantan Reddy, about how the power crisis is threatening local business continuity in South Africa.
As Reddy points out, South Africa’s biggest setback in terms of its power challenges at the moment is the lag between the rapidly growing capacity required versus supply of required capacity. In terms of how this is hampering business, he says “The short term effect for small to medium business are causing damage, however not as severe as what the long term effects of load shedding will be on the current electricity infrastructure due to continual surges introduced each time the network gets re-energized. Hence, due to lead time associated with replacement of key infrastructure elements, it might have an even bigger impact on all industries across South Africa in the long term.”
When asked how the electricity crisis is threatening business continuity at the moment, Reddy says at this point, if the current timelines regarding new increased supply is adhered to, business will experience a dip, but not an abrupt discontinuation He also says South African business needs to adapt to current the state, as various measures are being made available to counter the effect of load shedding. Debating which sectors are hardest hit, Reddy says he thinks retails and manufacturing since they are most probably suffering from high-dependency on walk-in profile customers.
It is not uncommon to hear discourses surrounding the necessity to move to clean and renewable sources of energy to supplement or replace existing forms of power generators. Unfortunately, Reddy says at this point in time renewable energy is a bit far-fetched as a mass deployable and cost effective commercial solution due to the fact that neither regulatory nor agreed pricing structures are finalised and officially approved. He also says in terms of the investment potential in South Africa’s renewable energy sector, the potential for investment is a definite reality, however the question becomes proximity of realisation of return on this investment.
“We are involved in various renewable energy projects from fulfilling the role of EPC contractor to various levels of involvement. We are for instance the IPP licence holder to EPC level of execution. At this point in time the viability and sustainability of these [IPP] projects are yet to be proven within the current African context,” he says.
On the topic of why it is important to make power cost effective and how this can be achieved -- particularly for our local business community, Reddy says “The selling of power is the lifeline for utilities, hence preventing customers from moving towards alternative energy solutions, which has the potential of crippling the utility business model, should be deemed as a business critical initiative.”
He further remarks that in terms of what can be done from both a public and private sector point of view to deal with load shedding more effectively, they can allow the utility (Eskom) to engage them in more innovative load management initiatives.
According to Reddy, when it comes to the importance of proper training in the power industry, it is of vital importance to ensure both resourcing and supporting policies get addressed as part of the route towards sustainable electricity supply and utilisation within the industry.
Reddy says if he could speak directly to government and give some advice, he would tell them, “I believe our current power crisis is due to various elements linked to the legacy of the Apartheid era and not necessarily caused by the current government. However, I believe due to pragmatic measures taken by the current government it will be resolved within the next five years. Hence, my advise will be to stay focussed on the current, well thought through and formulated mitigation plans in action.
“Eskom should shift their core focus on becoming a generator of electricity mainly, and allowing a controlled measure of privatisation within the generation space as well. Lastly, it should assist the current municipalities to become proficient in transmission and distribution agents.”