With so much attention being focused on energy efficiency and renewable energy solutions in South Africa, an often overlooked financial savings opportunity comes from the changing of your electricity tariffs. This applies specifically to the commercial sector and not the residential, where there is little scope for adjustment.
Commercial retail, hospitality and office properties; manufacturing and industrial facilities are often subject to complicated and hard-to-decipher energy bills.
In South Africa, one is either billed directly by Eskom, by your local municipality or by your landlord. More often than not, the municipal tariffs are more expensive. A multitude of tariff structures exist in South Africa and although they may be formulated similarly, their costs per kWh or kVA can differ greatly. They also change every year!
Understanding the differences between the tariff options available to you, and also understanding what your rights (and risks) are when looking to change to an alternate tariff structure can be daunting. It’s not enough to know how much electricity you consume: you also need to understand when this consumption occurs and to what extent.
Commercial facilities often get an additional charge for the maximum demand of power they consume each month (kVA’s). These demand charges are designed to compensate the utility (Eskom) for the peak generating capacity that it must provide when large motors, air conditioners, and other commercial processes are started up as well as the network infrastructure needed.
For example, a commercial facility may pay a demand charge per kVA based on the peak usage in any given 30-minute period during a month. So if the facility had several large industrial processes start while their air conditioning and lighting was also operating, they could experience a demand peak or spike, and would be billed a demand charge for that month along with the kWh energy charges. This additional charge can amount to a substantial sum.
Deciding on what tariff alternatives are feasible, you need to understand the facility’s operational behaviour, trends, and typical consumption over a standard 12-month period. Many tariffs also increase over the winter period due to increased demand.
Below is an example of a simple tariff analysis that has been undertaken highlighting just the Rand savings prior to any energy efficiency implementations. This was undertaken at a commercial office space.
Annual kWh consumption
1 073 530 kWh’s
Current Tariff (Business & General tariff)
Annual Energy Cost
R1 224 683
Annual Service Cost
Annual Electricity Cost
R1 226 479
Proposed Tariff (Time of Use tariff)
Annual Energy Cost
Annual Network Access Charge
Annual Demand Charge
Annual Service Fee Charge
Annual Electricity Cost
As per the indicative financial figures represented in the tables above, the time-of-use tariff works out to be approximately R 355 700 cheaper per annum when compared to the current energy tariff.
Another important issue to consider is if you are being under-billed by your municipality. Although this may not be a directly tariff related issue, ensuring that you are being billed on your real consumption is important. Imagine changing to a ‘cheaper’ tariff and for the municipality to subsequently demand unpaid electricity bills for the last 3 years, and then on top of that, as a result of the now correctly calculated consumption, the tariff you changed to is no longer optimal due the increase in consumption on your bill!
Taking all of the factors into consideration and modelling various tariff options over a 12-month period needs to be undertaken by a professional. You want to make sure you choose the right option and not end up paying more.
Given the constant changes to tariffs across the country every year, a tariff analysis is typically undertaken by building an Excel spreadsheet modelling the alternative tariffs available alongside operational consumption to find the most optimal tariff. Terra Firma Solution’s Energy Monitoring and Management Software solution, COPPER, does this automatically. Every year as the tariffs are updated, the team upload all the new tariffs and the analysis can now be automated. As mentioned earlier, the operational behaviour is also critically important, so having a permanent energy meter installed at the incoming feed of the facility is required along with the last 12 months of electricity billing to ascertain a full year’s operational behaviour.
If you think you are being overbilled (or even under billed) you will want to find out sooner rather than later. Call or email us to get a quote for installing COPPER at your facility and getting a tariff analysis done.