With rising electricity costs and worsening load shedding, Imraan Mukadam explores how poultry farmers and businesses can secure their energy future through solar power and alternative solutions.
Even a cursory reading of South Africa’s leading media quickly evidences that the proverbial chickens have well and truly come home to roost. There appears to be very little coherent strategy to guide us out of the darkness imposed by years of corruption, misuse and abuse of public funds.
Coupled with the sudden return to stage 6 load shedding plus approved electricity tariff increases of 12%, 6%, and 6% over the next three years, South African consumers and businesses face an incredibly steep upward battle.
We’ve been promised reforms and urgency too many times to count. We are now at the point where business, consumers and industry can no longer afford to wait for this fabled land of certainty.
We know that energy is the lifeblood of South Africa’s economy, and the livelihoods directly impacted by it. We also know that the unpredictable nature of power pricing and erratic availability has created a fragile foundation for economic growth.
Without the certainty of a stable energy supply at competitive prices, businesses are left to contend with crippling operational inefficiencies and, in many cases, unsustainable costs.
But what practical steps should businesses and industry be taking today to secure their survival when it seems that every odd is stacked against them?
Taking charge in the era of load shedding
A prime example can be found in South Africa’s agricultural sector, specifically in poultry farming. Broiler chicken farming plays an unassuming yet significant role in South Africa, providing affordable protein for millions of people.
According to the South African Poultry Association (SAPA), the poultry industry value chain employs around 58 000 people and, as the second-largest agricultural industry, is valued at R65 billion. The industry’s operations are heavily reliant on electricity to maintain the correct environmental conditions for growing and processing chickens.
Stable power is critical for maintaining cool and fresh conditions, as a temperature spike for even a few minutes could destroy entire broods of chickens.
The absence of continuous and reliable power risks significant disruptions, causing financial losses, job cuts, supply constraints, and higher prices for consumers.
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In such an environment, hopefully waiting for promised reforms and energy cost reductions is simply not an option. The solution lies in self-sufficiency and the investment in alternative energy sources.
Many farmers have already recognised the risks associated with reliance on Eskom and invested in diesel generators. However, generators can quickly near the end of their useful life, and the rising costs of diesel make them an increasingly expensive option. As a result, the investment case for solar energy is becoming more and more appealing, especially as this technology becomes more affordable and efficient.
If a mid-sized broiler chicken farm is investing in a solar power system, what could they expect to pay? The system would cost around R5 million and, while the upfront costs could initially cripple a business, the financing options available today make this investment far more accessible than ever before.
Investing in solar
By negotiating a payment plan averaging R150 000 per month, escalating at 6% annually over the next seven years, the farm would be able to secure a stable and predictable energy supply immediately. After the seven-year term, the farm would own the system outright, providing them with free energy for the remaining lifespan of the system, which could be another 10 to 15 years.
Additionally, the national energy regulator, Nersa, recently published for public comment its rules to compensate businesses and consumers who generate excess power through renewable energy systems, such as solar, when feeding that power back into the grid.
This move, which aims to encourage more people to invest in solar energy, could provide another stream of income for farms that generate more energy than they need. This would make renewable energy investments even more financially viable, allowing compliant businesses to accelerate their payback periods and benefit from additional savings.
This solution sounds compelling, but the reality is that many businesses in South Africa are still waiting for an energy revolution that is unlikely to materialise in the near future. While we may see slow progress in the implementation of renewable energy strategies or price adjustments, these developments are unlikely to come soon enough to help businesses avoid ongoing electricity price hikes and outright power cuts.
Yes, the government’s promised energy reforms are important but they are still in development. Eskom’s financial recovery plan, while necessary, is still in the early stages, with no budget certainty.
Our economy cannot afford to rely on vague promises of future price stability or the hope of a final end to load shedding if it’s to start growing and creating jobs now.
We know that our economic drivers cannot afford to wait indefinitely for their practical realisation by the state. Our future is uncertain, but energy supply and prices don’t have to be. That power is in our hands.
- Imraan Mukadam is a director of DG Energy at DG Capital. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or positions of Food For Mzansi.
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