Optimizing electricity use for business profitability

I have heard people talk about their businesses hitting the rocks year on year due to the high cost of operations. From high taxes to the high cost of utilities and the never-ending saga from regulators. If a business will survive in Ghana, the owners must take a keen interest in minimizing their operational costs as far as electricity is concerned.

As of the end of December 2021, the cost of electricity in Ghana was hovering around 0.369 cedis per kWh for households and 0.796 cedis kWh for businesses. Without paying attention to these numbers, it is difficult to sustain a successful business. Hence, it is significant to know what these numbers and their implications mean for business owners in simple terms. How can a business owner cut down on electricity costs without compromising output?

Many have introduced energy-saving equipment purporting to cut down power usage while regulators such as the Energy Commission have put in place serious sanctions on the use of faulty or ineffective equipment which tends to draw a lot more power.

Understanding the energy sector

Before I talk about the best way to optimize electricity, I would like you to understand how the sector works in Ghana. There are six (6) of the 127 megawatts turbines which are managed by the Volta River Authority (VRA). The main sources of power are thermal, and hydroelectricity and this sector is mainly regulated by the government with a little private sector participation.

• Ministry of Energy is responsible for formulating policies, monitoring and evaluating the performance of the sector in Ghana. The government’s programme to extend reliable electricity to all parts of the country is championed by the ministry and does not take responsibility for distribution.

• Volta River Authority and Bui Power Authority are responsible for power generation. This is a state-owned agency tied up with the responsibility of operations of the Akosombo Power Station, Kpong Hydro Power Station and Bui Hydro Power Station. Along this chain, there are also independent power producers who have been licensed to provide support in power generation.

• When this power is generated, there is a need to have it supplied across the various facets of the country. There are two names that readily come in mind in this regard i.e., Electricity Company of Ghana (ECG) and Northern Electricity Department Company (NEDCo). This may be the first time hearing about NEDCo when you are in the southern most part of the country but those up North are familiar with this name. When you take the map of Ghana and flip it into two equal parts, NEDCo handles the upper and ECG the lower part of Ghana for distribution of power purposes.

• “How much am I supposed to pay?” and “what equipment can I use?” are questions answered solely by PURC and Energy Commission respectively. This means that, when you are engaging any electrical vendor, you are expected to ensure this vendor is a licensed service provider by the Energy Commission. Do you feel cheated? or “you believe you are not paying for the right use of power? If your answer is in the affirmative, then the Public Utilities Regulatory Commission (PURC) is the place to seek redress. It is alleged some businesses suffer from the supply of quality power and yet are made to pay huge sums of money for what was not consumed or consumed in error.

The way forward for electricity

Thermal and solar energy production is the future of Ghana’s power generation. Though costly, for businesses, this is the most cost-effective way to keep operations running during difficult times. Consider solar systems, for example, a firm will require batteries, which have an average life cycle of three years, charge controllers, panels, and an inverter. This equipment requires a minimum of quarterly maintenance and is dependent of the act of nature to give optimal output. Many people will not tell you the whole truth because it is also their business model to keep afloat.

There have been conversations on the role of unregulated mining activities in the country is causing. One should not lose sight of the danger that is being posed to the citizens. The hardest to be hit is the hydroelectricity generation sector because of their dependence on water and if these activities of the unregulated miners are not clamped down on, we will be heading to the days of power crisis again.

Getting the best out of electricity

Now, given all this knowledge that has been acquired from electricity, I would like to take this opportunity to run you briefly through how you can optimize your business profitability whiles cutting electricity costs to a minimum of 25% in the first year.

This is a tried and tested method across several industries such as Banking, Telecommunications, and Supermarkets just to mention a few. To get the best out of electricity consumed, businesses need to take note of these 3 simple yet important things.

• Audit the power generation system to check for leakages resulting from faulty equipment. Most businesses run the machines and fail to maintain them unless it breaks down. You should be familiar with this statement by now; “Do not fix if it is not broken”. This is a wrong practice. As a business owner, you need to take interest in your electrical equipment and who services them. You need to be sure the certified service provider audits the power system routinely according to the schedule

• Take interest in what you are paying for by monitoring the supply sold to you. Most electricity bills supplied are “Estimated (E)” instead of “Actual (A)”, whatever this means. As a business, you are at risk if you keep having estimated bills for more than 2 months and you fail to take steps to correct this anomaly.

• Use what is needed and not what is supplied. The fact that the power distribution company is supplying you with excess power does not mean you should exhaust it. Ideally, a 14 sqm space occupied by two (2) officers will need just a 1.5hp operating at an optimal 23 degrees Celsius and not 16 degrees Celsius. This will only put pressure on the capacity, spend more on bill payments and reduce the time of replacing parts.

There is more to do in other to achieve the needed results of an average of 52% in 3 years whether or not there is an increase in tariffs.

Conclusion

Optimizing electricity use is every business owner’s responsibility and not just the technical assistant. First, consider how much money you are regularly allowing to go to waste. It’s like the accountant failing to file their tax returns leading to the liabilities of the business becoming weightier than projected and then consequently going to jail for this conduct.

Directors, managers, officers, and every other member of a company should not be sheltered from performing their part in enabling a business to flourish. The success of the business depends on all!

 

The writer, Eddie Cudjoe, is a Managing Partner with Airban Homes, a Real Estate and Property Management company in Ghana. He also works with Fidelity Bank Ghana, Properties & Facilities Management. Contact him on info@myairbanhomes.com or 030 298 4032.