Vukile Property Fund, the specialist retail property Reit (real estate investment trust), will invest about R350m in backup power as it deploys a strategy to supplement the electricity supply to its malls.
Vukile said in a statement that this solution “augurs well for continuous trade of all the tenants in these malls, at lower costs and CO2 emissions than diesel, while providing Vukile with the opportunity to manage the long-term impact of rising electricity costs, its biggest operational cost line item, beyond the current crisis”.
The electricity crisis is a risk to retail jobs, livelihoods, and the ability of many South Africans and their communities to function adequately and safely.
But Vukile’s management said it had found a cost-saving, reliable and sustainable energy solution to the power crisis for retailers in its large portfolio of primarily township and rural shopping centres.
“The Vukile values of treasuring partnerships, embracing the idea of social cohesion, and driving shared value permeates how we do business. This initiative is not only financially accretive but also drives sustainable malls and ensures that our numerous communities continue to be comprehensively serviced, even in the current challenging context,” said CEO Laurence Rapp.
“It is imperative that all sectors of SA work together, innovate and find solutions to the current national energy crisis and beyond. This exciting initiative is Vukile’s attempt to do exactly this,” he said.
Vukile would invest so that 17 landmark shopping malls nationwide received solar photovoltaic (PV) powered battery systems to give their shops more affordable and environmentally friendly power.
“The electricity crisis poses a risk to our tenants and communities that we cannot ignore, so we have identified a solution that will save money for both Vukile and our tenants in the long run and keep them sustainably powered through and beyond load shedding,” said Itumeleng Mothibeli, the South African MD at Vukile.
Mothibeli said that some 70% of Vukile’s malls traded during load shedding.
“We would like to increase this number to 100% by giving our retailers the option to tap into a cheaper, more sustainable and clean form of backup power than the currently widely used diesel-powered generators,” he said.
Vukile’s research showed that while diesel-driven generators had been a suitable solution for lower levels of load shedding in the past and continue to be so in certain cases, in continuous Stage 3 or higher load shedding levels, the financial cost of backup solutions made them no longer feasible in most cases.
Vukile said they carried unsustainably high fuel costs, substantial maintenance costs and contributed to carbon and noise pollution. On average, total electricity costs for tenants increased by between 25% to 30% based on having to run generators at R8 to R10/kWh during load shedding over the period January to October 2022. This was unsustainable.
Vukile would provide its tenants with the option of reliable solar power, which, combined with battery storage, costs less than grid power.
This would also save many retailers the hefty cost of installing their own backup systems, particularly diesel generators that are unsustainable at higher load shedding stages.
Vukile’s new hybrid solar-battery grid-tied systems will give shopping centres at least three sources of power : solar PV, battery backup and the national grid. These silent systems are easy to integrate into malls’ existing power networks, need little maintenance and are simple to expand. According to Vukile they are especially effective for shopping centres, as the busiest trading hours coincide with daylight hours when the sun can power solar PV panels. Retailers have the option to augment this further with generators for days when solar generation is constrained.
The roll-out of this project has been fast-tracked and can be achieved in about half the time required to install generators. The first phase is scheduled for completion by the end of 2023.
“We are excited about this cutting-edge solution which will create value for Vukile and all its stakeholders. It is financially accretive for Vukile, provides a cost-effective solution for tenants and ensures access to retail, food and even data for our consumers. Apart from this, our renewable energy-based solution lightens our carbon footprint. Ultimately, this ensures a sustainable outcome for our investors,” said Rapp.