The rising cost of Utilities Management in South Africa
The utility costs of commercial property have increased exponentially since 2008. As a result, property fund owners are exploring alternative energy source options such as solar power, wind energy and natural gas, to ensure property sustainability and tenant rental growth.
Ironically, adoption of the above-mentioned alternative energy solutions result in reducing the demand of kilowatt per hour sales for public utilities, directly restricting sales for the public utility. In addition, Eskom and many other indistinguishable municipalities in South Africa have observed a uniform stagnation or decline in electricity sales. Such a homogeneous slowdown ought not be ascribed to an economic decline exclusively.
The abundance of land within South African should be preserved for habitation and agricultural purposes, which could synonymously help revamp an ailing economy. Dispersed resources present a further challenge for network planning and integration, scoping of infrastructure requirements, forecasting demand requirements for a supply area are exacerbating the challenges to balance energy supply and demand.
When connected to the traditional grid for supplemental supply, such facilities still require network infrastructure and ongoing maintenance, incurring further costs in addition to reduced sales and lost revenue. Such significant consequences therefore bring the new ‘tariff approach’ into play.
Thus, it is recommended that to benefit from the reduction in energy consumption, it is important to maintain control of the utility costs in commercial and residential property. Inevitably, the relationship is better understood between energy and time periods, Kilovolt-amps (KVA) demand, tariff structures, tenant energy patterns and cost of uninterrupted power supply.
The previously accepted process of billing a tenant on the same basis as a direct customer of the supply authority, has become obsolete. The utility management industry was largely self-governed and the new guidelines for resale of electricity published by The National Energy Regulator of South Africa (NERSA), which is subject to change, will take effect. The fundamental changes and impact of utility management on commercial and residential property are to be expected, along with additional changes to tariff structures.
The rising costs are shifting the world to adopt a ‘diversified energy movement’, which is affording the property sector the ability to navigate a new landscape, whereby the benefits of being connected to the grid can be observed as a luxury.
