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WORDS: DEBBIE HATHWAY :: PHOTOS: SUPPLIED
Retail tenants in South African shopping centres are turning to renewable energy sources to overcome the country’s energy crisis challenges and ensure uninterrupted trade. As major retail supermarket giants spend exorbitant amounts on diesel for backup energy generation, collaborative efforts and innovation are necessary.
The recent South African Council of Shopping Centres (SACSC) Retail Trading Index Quarter 1 2023 Collabinar highlighted the plight of shopping centres. While these experience increased foot traffic, there is a concerning rise in gross operating costs. The retail cost-to-income ratio has surged to 45%, compared to 37% in 2018. Electricity constraints have made it more expensive for tenants to operate, with MSCI revealing that 29% of a tenant’s operating costs can be attributed to electricity. As landlords are obligated to recover 100% of electricity usage, the economic strain on tenants has made it impossible for landlords to increase rental costs.
Prominent retailers like The Shoprite Group of Companies and Pick n Pay spend significant sums on diesel each month to sustain their operations. However, relying on diesel generators poses several challenges, including fluctuating diesel prices, high running costs, maintenance expenses, and the eventual need for generator replacement. Diesel generators are an inadequate solution for commercial-scale energy generation.
Tenants are now questioning the recoverable costs associated with diesel usage, as they find them unmanageable. Consequently, tenants are reassessing their total cost of occupation and seeking ways to reduce this figure. Energy management systems have proven effective in reducing unnecessary energy consumption. Manual adjustments in energy usage, such as modifying employee behaviour, turning off electricity after store hours (if feasible), minimizing air conditioning usage during winter, or slightly adjusting temperature settings, can result in significant energy savings.
Innovative technological solutions have the potential to unlock efficiencies and enable properties to become more self-reliant. In addition to solar energy, which offers long-term economic benefits, gas-converted generators are emerging as a cost-effective alternative, with a kilowatt hour costing only R4.25. Tenants can also explore thermal storage instead of traditional cold storage facilities, reducing energy consumption by 20% to 25%. Smart meters for water and sensors for lights and equipment have also proven effective in reducing energy and water consumption.
Broll Property Group’s Energy, Water, and Sustainability (EWS) division has helped organisations reduce their energy bills by identifying billing errors and saving significant amounts of water by detecting leaks that conventional methods missed.
To ensure a continuous and sustainable energy supply, shopping centres must harness the potential of innovative technologies. Renewable energy sources, such as solar power, offer long-term benefits, while generators present costly and environmentally hazardous alternatives. By embracing renewable energy, shopping centres can keep their tenants’ lights on, and doors open, ensuring ongoing trade and success.
Alloys Khoabane, Head of Facilities Management at the National Metrology Institute of South Africa (NMISA) weighs in on the company’s LinkedIn post: “The immediate gain before implementing renewable energy is looking at current efficiencies. Power factor correction of incoming power must be prioritised; anything under 95% is unacceptable. Also, as mentioned, billing must be spot on, proper metering must be deployed and existing metering must be investigated through calibration or verification. Human behaviours must be altered to eradicate unnecessary power consumption.”
Embrace renewable energy: Make a strategic investment in renewable energy solutions like solar panels or wind turbines to generate clean and sustainable electricity for your business. South Africa’s ample sunlight makes solar energy particularly advantageous. By adopting renewable energy sources, you can decrease reliance on external power providers, achieve long-term energy cost savings, and contribute to a healthier environment.
Conduct energy audits: Regularly conduct energy audits to pinpoint energy inefficiencies and areas for improvement within your business operations. Energy audits involve analysing energy consumption patterns, identifying opportunities for energy conservation, and implementing energy-efficient measures accordingly. Through this thorough evaluation, you can uncover hidden sources of energy waste and make informed decisions to optimize energy usage.
Implement smart building automation: Install smart building automation systems that integrate sensors, controls, and data analytics to optimize energy consumption. These systems can automatically adjust lighting, HVAC, and other equipment based on occupancy, time of day, and environmental conditions. By leveraging intelligent technology, you can minimize energy waste and maximize energy efficiency throughout your facilities.
Encourage remote work and flexible schedules: Embrace remote work or flexible schedules, which can help reduce energy consumption associated with commuting and office operations. Encouraging employees to work from home or adopting staggered work hours can decrease electricity usage, lower heating or cooling requirements, and reduce overall energy demand. This approach saves energy, increases employee satisfaction and improves work-life balance.
In its publication titled ‘Renewable energy market analysis: Africa and its regions’ (IRENA and AfDB, 2022), the International Renewable Energy Agency (IRENA) examined the finance landscape of Africa. The analysis revealed that despite the continent’s immense potential and energy requirements, only 2% of the total global investment in renewables, amounting to $60bn (excluding major hydropower), out of the $2.8 trillion spent between 2000 and 2020, was allocated to Africa.
Furthermore, a significant portion of the investments made between 2010 and 2020, approximately three-fourths, was concentrated in four countries: South Africa, Morocco, Egypt, and Kenya. These countries have relatively favourable risk-return profiles due to their supportive policy and institutional environments, regulations, access to finance, and market characteristics such as size, prospects, and stability. Southern Africa emerged as the primary recipient of renewable energy investments on the continent during the 2000-2020 period, followed by North Africa.
However, in the World Energy Transitions Outlook (WETO) 2023, IRENA calls for annual renewable power additions of 1,000 GW by 2030 to keep the 1.5°C climate target within reach. Following the first Global Stocktake concluding at COP28 in the UAE in June 2023, IRENA’s Director-General Francesco La Camera said: “We face the harsh reality that we are not on track to deliver on the Paris Agreement. Our only option is to follow the most promising, science-based pathway – one that puts renewable energy at the centre of the solution while leading countries to energy security, reduced energy costs, and forward-looking industrial development. The energy transition must become a strategic tool to foster a more equitable and inclusive world.”