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 high cost of utilities and the never-ending saga from regulators, if a business is to survive in Ghana the owners must take a keen interest in minimising their operational cost as far as electricity is concerned.
As at the end of December 2021, cost of electricity in Ghana was hovering at 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 cost 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 tend to draw a lot more power.
Understanding the Energy Sector
Before I talk about the best way to optimise electricity, I would like you to understand how the sector works in Ghana. There are six (6) of the 127 megawatt 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 government with a little private sector participation.
- The Ministry of Energy is responsible for formulating policies, monitoring and evaluating the sector’s performance in Ghana. Government’s programme to extend reliable electricity to all parts of the country is championed by the ministry, but it does not take responsibility for distribution.
- The Volta River Authority and Bui Power Authority are responsible for power generation. This is a state-owned agency tied up with responsibility for operations of the Akosombo Power Station, Kpong Hydro Power Station and Bui Hydro Power Station. Along this chain, there are also independent power producers which have been licenced to provide support in power generation.
- When this power is generated, there is a need to have it supplied across the country’s various facets. There are two names which readily come to mind in this regard: i.e. the Electricity Company of Ghana (ECG) and Northern Electricity Department Company (NEDCo). This may be your first-time hearing about NEDCo if 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 power distribution purposes.
- “How much am I supposed to pay?” and “what equipment can I use” are questions answered exclusively by the PURC and Energy Commission respectively. This means that when you are engaging any electrical vendor, you are expected to ensure such vendor is a service provider licenced by the Energy Commission.
Do you feel cheated, or do 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 lacking a supply of quality power, and yet are made to pay huge sums of money for what was not consumed or consumed in error. How does a company know they are paying for the quality of power that is required? How will you resolve phase rotation issues when they come up? These are questions the writer has answers to when contacted.
The Way Forward for Electricity
Thermal and solar energy production are 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 on acts of nature to give optimal output. Many people will not tell you the whole truth because this state of affairs is their business model for keeping afloat.
There have been conversations on the damage unregulated mining activities in the country are causing. One should not lose sight of the danger that is being posed to the citizens. The hardest hit is the hydroelectricity generation sector because of its dependence on water, and if these activities of unregulated miners are not clamped down on we will again be heading to the days of power crisis.
Get the Best Out of Electricity
Now, given all this knowledge that has been acquired on electricity, I would like to take this opportunity to run you briefly through how you can optimise your business profitability while cutting electricity cost by a minimum of 25% in the first year. This is a tried and tested method across several industries – such as Banking, Telecommunications, Supermarkets just to mention a few. To get the best out of electricity consumption, 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 machines and fail to maintain them unless they break down. You should be familiar with this statement by now: “Don’t fix it if it is not broken!” This is a wrong practice. As a business owner, you need to take an interest in your electrical equipment and who services them. You need to be sure a certified service provider audits the power system routinely according to schedule
- Take an 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 that means. As a business, you are at a risk if you receive 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 only 1.5hp of air-conditioning operating at an optimal 23 degrees Celsius and not 16 degrees Celsius. This will only put pressure on the capacity, increase spending on bill payments, and reduce the interval needed for replacing parts.
There is more to do in order to achieve the needed result of an average 52% reduction in cost over 3 years whether or not there is an increase in tariffs.
Optimising electricity use is every business-owner’s responsibility and not just the technical assistant’s. First, consider how much money you are regularly allowing to go to waste. It’s like an accountant failing to file the tax returns leading to liabilities of the business becoming weightier than projected and the business-owner consequently going to jail for this conduct.
Directors, managers, officers and all other members of a company should not be sheltered from performing their part in enabling the business to flourish. The business’s success depends on all!
The writer is a Managing Partner with Airban Homes, a Real Estate and Property Management company in Ghana. He is based in Accra, Ghana, and works in the firm’s corporate office. He advises several entities and businesses on power management issues, property acquisition, raising funds as first-time home owners and project management. Eddie also works with Fidelity Bank Ghana, Properties & Facilities Management. Contact him on [email protected] or 030 298 4032