The significant gap between electricity supply and demand in South Africa, coupled with inclining power tariff increases, is a compelling reason for businesses to reduce electricity consumption. The good news is that energy cost reduction is relatively simple to achieve and can lead to significant improvements in bottom-line performance.

Energy consumes a significant portion of any organisation’s spending, accounting for 5 to 20 percent of a typical company’s costs. This is spiralling upwards as tariffs continue to increase into 2012 and companies must find ways of managing their electricity bills simply to ensure corporate sustainability. Equally compelling, however, is the motivation of ensuring a future for our country and its people.

Many organisations, however, have an awareness of their energy consumption and how to reduce it. They need to understand and actively manage their energy use – and their energy sources, including possible ways to produce their own energy. A comprehensive energy management strategy offers a number of potential advantages including significant savings, improved profitability, greater customer loyalty, a cost-edge over competitors, lower business risk and a company-wide awareness of sustainability that can rein in resource waste across the board.

Cost savings, customer loyalty and sustainability all argue strongly in favour of active corporate energy strategies. But the most crucial spur for action in South Africa is the risk that a company’s operations could be disrupted by energy shortages, outages or escalating prices. The current realities of the electricity sector are therefore forcing business to re-evaluate energy consumption.

In addition, worldwide the trend is towards a greener future. If business does not adjust, it may not find many global markets in future as countries begin to demand environmentally friendly products.

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Written by George Tshesane (gtshesane@deloitte.co.za) and Linda Seroka (lseroka@deloitte.co.za) of Deloitte Consulting

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