South African businesses face several challenges related to the supply of energy that powers their operations.

FNB Commercial sustainability head Kyle Durham explores key challenges unpacked in FNB’s sustainable energy white paper, and ways in which businesses can unlock the solutions needed to overcome them.

Continued Energy Uncertainty and Rising Energy Costs

South African electricity prices have significantly increased over the past three decades, compared with inflation over the same period.

This challenge, coupled with energy uncertainty remains a critical concern for South African businesses. Although loadshedding has lessened as from Q2 2024, there is no guarantee that it will not return. And, even in the continued absence of loadshedding, local power outages remain common especially in remote, rural and poorer communities. There is also a persistent chance of ‘normal’ interruptions to grid supply – caused by extreme weather, infrastructural damage, theft and other factors.

Energy Quality

South Africa’s power quality is deteriorating. Voltage, frequency and waveform variations, power surges, brownouts and electrical line noise can damage connected equipment and decrease its longevity, leading to system inefficiencies or shutdowns. This power quality varies widely across South Africa. This has resulted in many businesses, such as agricultural operations, experiencing the lowest quality power.

Climate Change Demands

Because electricity in South Africa is typically generated through a mixture of coal and diesel, this significantly contributes to nearly half of the country’s greenhouse gas emissions. The contribution of electricity to the emissions profile of South African businesses is increasingly being monitored by regulators and international companies. Carbon-intensive sources of power can mean the difference between a contract or tender being refused, and initiatives such as the European Union’s Carbon Border Adjustment Mechanism mean that punitive levies could potentially be applied to South African exports that use this power as an input.

These challenges are answered by innovating to meet the energy needs of the present without compromising the resources and energy supply of the future. South Africa could significantly reduce its carbon footprint, lower energy costs and improve the reliability of energy supply by adopting renewable energy. Businesses can play an important role here – and succeed in not only maximising their own profits but also helping to grow the country’s economy.

Businesses can get more information on the trends, challenges and opportunities facing South African businesses through FNB’s sustainable energy white paper.