In mid-March this year, consumer insights firm BrandMapp released its first-ever SA Blackout report, which asked South Africans about their experiences with load shedding. Of course, you can guess what the responses were like. Some 44% said they’d seen a decrease in productivity at work, while 20% said their company had seen a ‘significant’ loss of revenue. Among the self-employed respondents, 33% said they had lost some business/billing, while 14% said they’d had to close their business.

‘We’re talking here of a total 44% of self-employed entrepreneurs losing money when the power goes down,’ says Brandon de Kock, BrandMapp’s director of storytelling.

‘Seventy-five percent also say their personal costs have increased. These are the risk-takers, the sole businesspeople and founders of start-ups who are vital to our economic health and play an outsized role when it comes to generating much-needed employment. They also face barriers to accessing finance to get them through tough times. In the fullness of time, we will have a better view of load shedding’s impact on the multitude of small businesses that we rely on to drive innovation and create employment, but given that they were only just starting to recover from the craziness of COVID, one can’t help feeling a bit bleak about the short-term health of the sector.’

It’s not hard to find a South African who doesn’t have a problem with load shedding. Jan de Villiers, shadow minister for small business development in the opposition DA, recently described the country’s electricity crisis as ‘the greatest and most severe threat facing small businesses and families. It is the worst crisis that democratic South Africa has ever faced, and it demands immediate attention and action more urgently than any other crisis before it’.

Government agrees. Speaking at a National Energy Crisis committee briefing in August 2022, then-Minister in the Presidency Mondli Gungubele said that ‘load shedding is the single-biggest constraint on South Africa’s economic growth. Government is taking bold steps both to address the immediate crisis and to make load shedding a thing of the past’. And to that end, Stella Ndabeni-Abrahams, the Minister of Small Business Development, announced in January that her department was trying to find solutions aimed at lessening the devastating impact of load shedding on small businesses.

‘Our aim is to find immediate solutions that can be urgently effected to avoid disastrous consequences, such as the closure of small businesses and job losses in the SMME sector,’ she said. ‘This sector was devastated and is still barely recovering from the ruinous effects of COVID-19. We cannot afford to lose more businesses and jobs.’

In the meantime, there are solutions and workarounds for those SMEs. The BrandMapp survey, which targeted respondents living in households with a monthly income of more than R10 000, highlighted a few of those potential solutions in its report.

In a sense, SMEs face the same problem as big businesses. ‘Big business and energy-intensive users are increasingly recognising that if they do not address the supply side, there is a real possibility that it could be detrimental to their very existence,’ says Krishna Pillay, director at project finance advisory firm Cresco. Pillay explains that major energy consumers are already making investments in alternative energy sources.

‘A stumbling block, however, is that an investment in renewable-energy projects is often disproportionately high for the vast majority of organisations,’ he says.

‘Characterised by relatively low returns on investment and long payback periods, the risk of assets becoming stranded is real for many commercial and industrial organisations, particularly for mining companies.’

SMEs have the same challenge, albeit on a smaller scale. Sure, you can instal solar panels or a battery system at your small factory or home office, but how long will it take to pay them off?

Two University of Johannesburg academics believe they may have a solution. Writing for the Conversation, doctoral candidate Ofentse Olunloyo and professor Tankiso Moloi suggest that the concept of the sharing economy holds promise to minimise load-shedding disruptions. They argue that SMEs could, for instance, share energy-generation infrastructure such as mobile battery storage units, portable generators and solar panels.

‘By sharing resources and equipment, SMEs could reduce operational costs and increase their resilience in the face of power cuts,’ they write. ‘The sharing economy could also help them connect with other businesses in their community, creating new opportunities for collaboration and partnerships.’

As an example, they point to SonnenCommunity, where homeowners with a battery-based energy storage system share their excess energy with community members through a digital platform that enables energy trade and communication between members. Another example is Gridmate, a peer-to-peer energy-sharing platform that allows people to donate energy to those in need.

‘In the South African context, energy generation infrastructure could be shared among community members with different scheduled power cuts. However, for the system to work, communities setting up this arrangement must be in close proximity to one another,’ they write. ‘This is because the scheduled power cuts – known as load shedding – are normally set up in a way that one zone will have power, while another has its power cut.’

However, sharing resources is neither practical nor possible for all businesses. Those who need their own power sources are turning to solutions such as solar and/or battery back-up – and even here, there are multiple options.

Batteries that are built from scratch are called ‘first life’ batteries. Lance Dickerson, MD of Revov, believes second-life batteries are – as he puts it – ‘the ones that provide excitement for those who wish to genuinely go green and make investment decisions that don’t add to the planet’s strain’.

Second-life batteries, he explains, are made by repurposing the good cells in replaced electric vehicle batteries. ‘That’s an important distinction,’ he says. ‘They are not second-hand. They did not exist before being built, it’s just that they have EV cells – not cells built specifically for storage. This is a benefit, as EV cells are designed to withstand very harsh conditions, and because good cells are used, their lifespan is almost identical to first-life batteries.’

In the solar space, too, more options are coming available as the market matures. Solar has become a popular option – especially since the February 2023 Budget Speech, when Minister of Finance Enoch Godongwana announced that individuals who installed rooftop solar systems would be able to claim a 25% rebate of the cost of the panels, up to a maximum of R15 000.

In that light, Jeremy Lang, chief investment officer at independent SME financier Business Partners, advises that small-business owners explore installing solar-energy systems to power their operations.

‘Not only will this help to alleviate pressure on the national grid, but it will also ensure business continuity – a vital factor given that load shedding will likely persist for a long while longer,’ he says. ‘This could also bring good news for small businesses in the formal sector, which will realise gains in the form of a 125% deduction in tax in the first year for all renewable-energy projects.’

Lang also highlights government’s proposal to provide solar-related loans for SMEs on a 20% first-loss basis. ‘What this means, essentially, is that small businesses will be able to secure loans from finance providers where National Treasury will assume 20% of the initial loss,’ he explains. ‘This will help mitigate the total risk on behalf of lenders and hopefully make these loans more accessible to a wider base.’

Subscription models are also making solar a more attractive option than it has been in the past. Versofy Solar, for example, offers a subscription model that removes the cost of ownership required to maintain the product. So instead of paying for a full system upfront, users can sign up for a 60-month rent-to-own subscription or a solar-as-service option over 36 months. ‘Another huge benefit to subscriptions is that it allows the end user to constantly have access to the latest and greatest technology,’ says Ross Mains-Sheard, Versofy Solar co-founder and CEO.

That level of accessibility and affordability is what SA’s energy-strained SMEs have been waiting and hoping for. And as these technologies mature, alternative energy sources such as solar and battery power are steadily becoming more appealing than the national grid.

‘We find ourselves in a perfect storm, with the cost of electricity from the national grid rising significantly each year while, on the other hand, the cost of solar is on a downward trend,’ says Mains-Sheard. ‘We are very close to a scenario where renewables will not only be the best environmental option, but the more economical one as well.’

By Mark van Dijk
Image: Gallo/Getty Images