ESKOM increase approved at 9,4%.
While ESKOM did not get their desired 16% increase , they did get a 9,4% increase which is another 1,4% OVER and above the approved annual increases of 8%.
While not a train smash for many of us, there is a cumulative effect going forward on the amount paid for electricity monthly and then as the next round of increases take effect next year.
As time goes on, those prices will increase to around R2,80 per Kwh, assuming that ESKOM ONLY get 8% per annum going forward, which at this juncture, seems unlikely.
As the increase date approaches, many of us will look for ways to reduce our consumption and save money every month and while we offer numerous solutions from simple geyser timers and blankets to LED lighting to Solar, what we really need here is a mindset change on HOW we view our energy consumption.
Apply the investment model.
Anyone who has investments already knows that this is a medium to long term process, with the REAL returns coming once compound interest has a chance to work it’s magic.
No wise and successful investor will look at a 6 month ROI and plug huge funds into that. They will look at 5 years, 10 years, 20 years and even 30 years!
For many of us living in a house we are paying off, this is the lifetime of our mortgage , so why don’t we look at energy saving the same way?
Because we (like most humans) seek INSTANT gratification.
We want it NOW!Not 20 years from now.
This is where we need to CHANGE our thinking.
We need to look at energy saving as a long term investment that pays dividends handsomely in time, not tomorrow.
Staying with the investment model, let’s compare some short and long term options.
Short term energy investments.
For simple and cheap solutions to reducing your energy usage NOW , look at geyser timers and geyser blankets, energy and water saving shower heads and LED Lighting.
These four cheap and simple solutions could easily reduce your monthly costs by between 25% and 40% and you could have those RIGHT NOW!
In fact , if you want to do it , go here to get a quote to have a geyser timer and blanket installed – BEFORE the price increase hits!
For less than R2000, you can cut around 25%-35% off your monthly bills by simply adding a geyser timer, blanket and energy saving shower head.
Take out your CFL lamps and 50W Halogen Downlighters and replace those with LED and you can probably add another 10% to that as well.
While these are all appealing and do offer immediate relief and short term return – typically around 4 months- it is the long term investments that make real sense.
Long term energy investments.
These are typically Solar installations as well as Solar power backup systems that use solar panels to create electricity that powers your home or business.
With the ESKOM Rebate dead in the water, these installations can range from around R15 000 to R300 000.
A retrofit solar water heating system – that uses evacuated tubes or panels to heat water and then feed that back to your geyser- can cost about R20 000.
While many may BALK at the cost, this is because you are looking at this with a short term mindset.
The return on this investment is more like 5 -10 years , but the long term benefits of significantly reduced water heating costs are immense.
Let’s go forward to the year 2020 and assume that ESKOM have managed to get a 20% increase for 3 years and then 8% – the kwh price will be around R4-00 per kwh.
Right now , it’s around R1,50 per kwh.
If you had to install a solar water heating system now at an investment of R20 000, you would start reducing your water heating costs by around 50% (conservatively).
If you use 1000Kwh per month, 50% of that is water heating = R1,50 X 500 kwh = R750-00 per month, divide that by 50% = R375 per month saving.
This is a R4500-00 saving over the first year = 22,5 % of the investment back in 12 months.
At this rate, the ROI will be around 5 years ASSUMING that the KWH tariff stays the same…which it won’t.
The Kwh increases actually SHORTEN the return on investment time proportionally.
Now, skip forward to 2020.
The Kwh tariff is now R4-00 and you are now using 50% less energy for hot water due to your solar installation.
This has now paid for itself and you are now saving R2000-00 per month and possibly more if you use your water wisely.
That’s R24 000 per year you would have been paying 4 years ago , but is now earning you 12,5% interest in an offshore investment account for your retirement.
Think about that for a minute.
Now look at heat pumps and solar power the same way.
Investing in this technology while Kwh tariffs are still very low has massive impact in just a few years time.
If you do not view your energy investments as long term assets that will reduce your monthly costs, your carbon footprint as well as add significant value to your own property then you need to shift your mindset and soon , before the next round of ESKOM increases come around.
For more info on solar solutions click here.