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The Chamber’s third quarter survey results indicate that businesses in Nelson Mandela Bay are increasingly embracing alternative energy solutions to mitigate the impact of loadshedding, so as to limit the impact of the country’s electricity crisis on their operations.
“This is a positive step towards ensuring business continuity and reducing disruptions caused by ongoing power shortages. The results also reflect the growing awareness among businesses of the need for energy resilience in the long-term,” says Denise van Huyssteen, Chamber chief executive officer.
Van Huyssteen further adds that the shift towards alternative energy sources can also have broader positive effects, such as reducing greenhouse gas emissions and promoting sustainable energy practices.
Some of the common alternative energy sources that businesses are implementing include inverters, solar power, backup generators, energy storage solutions like batteries, which enable them to generate their own electricity or store excess power when it is available for use during loadshedding periods. This ensures they are able to maintain their production schedules, meet consumer agreements, and ultimately, improve their operational capacity.
The Chamber surveyed 84 companies, 78% of which indicated they were sourcing alternative energy sources, compared to 64% from the second Quarter. There has also been a positive sentiment from 28% of the businesses who indicated that they anticipated no further retrenchments, compared to 39% in the second Quarter.
The report also showed that 43% of those surveyed implemented short time in the third quarter, compared to 48% in the second quarter and 75% in the first Quarter. Due to the implementation of short time, on average, salaries or wages have been reduced by 27% per employee, per business.
A total of 44% said they were putting their investment and expansion plans on hold, compared to 52% in the second quarter, and 91% in the previous quarter, while 30% are going ahead with their investment plans, with 25% indicating they do not have any investment plans.
Survey results further revealed that 411 jobs were lost between Q1 and Q3 due to retrenchments, with 168 reported for Q3, the largest between the periods under review.
A total of 411 jobs were lost since the beginning of this year, with 168 of these reported for the third quarter. The largest proportion of the businesses (81%) reported no retrenchments in Q3, while 19% pursued this course of action. “It is important to note that these results are reflective of the businesses who participated in the survey,” says Van Huyssteen.
However, the monthly estimated losses to the local economy showed a slight improvement of R0.9 billion for Q3, compared to R 1 billion in Q2. This indicates the positive impact the pivot from over reliance on the grid has had to businesses who are using alternative energy sources.
According to Nedbank’s Impact of load-shedding report on small businesses in the Township Economy 2023, an estimated 5% of South Africa’s GDP was wiped out in 2022, and that the country lost R4 billion per day when the country was on Stage 6.
Taking into consideration that in September the country marked its 40th day of stage 6 load-shedding, an estimated R160 billion has been wiped off the GDP as a result, according to JL Erero’s latest report in the Journal of Economics and Political Economy on the impact of loadshedding in South Africa. He has indicated that the country loses R4 billion a day for every day where stage 6 implemented.
In Q3, 73% of the businesses who participated in the Chamber survey continued to report decreased profits in their balance sheets. This was further exacerbated by a myriad of factors such as an inability to meet customer demand, damage to equipment/machinery or stock, inability to meet production targets, loss of customers, inability to meet export volumes, the shutdown of operations/plants, pending retrenchments, retrenchments, and pending company shutdown, respectively.
A notable recommendation from 18% of the businesses, who in this category mostly represented manufacturers, is that a 24 hour schedule should be implemented more widely to help businesses better plan their operations during loadshedding and be operational for a defined period of time. Public-Private-Partnerships between business and the government are also proposed to develop immediate load-shedding mitigation strategies, while working on long-term solutions to the energy crisis.
To date, 40 large manufacturers participate in the 24 hour stage 5+ schedule, while 34 others did not meet the criteria of having a clean electricity feed and the minimum required megawatt output. This schedule was developed part of collaborative efforts between the Municipality’s Electricity Directorate and the Chamber to collaborate in order to mitigate the impact of loadshedding on the local economy and jobs.
“The 24 hour stage 5+ voluntary schedule has played a pivotal role in providing less frequent disruptions and better predictability for those large manufacturers who have met the criteria to participate in this intervention. While a frequent operational shutdown of 24 hours may not be ideal, however, it is an effective intervention to frequent on/off disruptions.”
“It is thus vital that we continue to partner with the Municipality to find ways of enabling more manufacturers to mitigate the risks associated with loadshedding. In particular, it is vital that going forward load curtailment be explored as a broader consolidated solution to enable the participation of more manufacturers in the metro.”
The Chamber has initiated a trailblazing Renewable Energy Cluster which is supported by 40 manufacturers, representing approximately 20% of the metro’s electricity usage.
“We anticipate that the solar generation aspect of this development will come on stream at the end of next year, while wind generation will follow later in 2025. A key area of focus for us is engaging with the various stakeholders to find solutions for this renewable energy, which will be procured by local businesses, to be used as an off-set for loadshedding for the metro as a whole.”