Vukile Property Fund (JSE: VKE), the specialist retail property REIT (real estate investment trust), will invest around R350 million in backup power as it deploys a strategy to efficiently supplement the electricity supply to its malls. The 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 specialist retail property investor Vukile has 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.
Laurence Rapp, CEO of Vukile, comments, “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.”
He adds, “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.”
In its quest to help tenants face the challenge of load shedding, Vukile has undertaken extensive research and is investing significantly so that 17 landmark shopping malls nationwide get 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,” says Itumeleng Mothibeli, MD SA at Vukile.
Emphasising that it is in the interest of all stakeholders to have all tenants trading sustainably within a mall, Mothibeli adds, “Some 70% of our malls trade 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.”
Vukile’s research shows that while diesel-driven generators have 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, the financial cost of current backup solutions makes them no longer feasible in most cases. They carry unsustainably high fuel costs, substantial maintenance costs and contribute 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 R8-10/kWh during load shedding over the period January to October 2022. This is unsustainable.
Rather, Vukile will provide its tenants with the option of reliable solar power, which, combined with battery storage, costs less than grid power. This will also save many retailers the hefty cost of installing their own backup systems, particularly diesel generators that are unsustainable at higher load shedding stages. When retailers’ operating costs are reduced, consumers stand to benefit too.
The communities served by Vukile’s malls benefit by being able to meet their daily retail and leisure needs without the stress of power outages. They’ll also have much-needed access to data from the free Wi-Fi networks available at Vukile’s shopping centres during power outages.
Energy management has become a core competency for Vukile, and its energy management solutions will ultimately reduce costs.
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. 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,” notes Rapp.
