The cost of electricity is one of the highest expenses for Jamaican businesses, especially those in productive industries.
Speaking on MoneyMovesJa with Kalilah Reynolds, Energy consultant David Barrett said high electricity costs contribute to why many small and medium-sized businesses fail.
“The SMEs found that during the time when the oil prices were going up, that was in the top three reasons why some of them closed. Without the energy, there’s nothing much you can do,” he said.
He added that it is particularly challenging in Jamaica since the country has some of the highest electricity prices in the world.
“Our rates are running something like J$70 per kilowatt hour and that’s painful. We’re actually one of the highest-charged nations in terms of energy and that’s something that people don’t realise, they just pay their bill,” he noted.
He said that when it comes to saving on energy costs, there are steps businesses can take to reduce that expense.
According to Barrett, the first step is to increase energy efficiency.
“There’s always an opportunity to shave off kilowatt hours so that you can pay less. You can get an auditor and they’ll show you the areas where you’re wasting energy; lights that are on, ACs that are running when you don’t need them, etc,” he said.
He said the next step for many businesses is to consider renewable energy sources.
“For Jamaica, I think the sweet spot will be solar energy,” he noted.
The veteran Energy Consultant explained that solar is the best option, especially for the commercial sector. He said solar energy systems are modular and can be built and configured as needed. The system can also be installed onsite.
Barrett noted that it is an expensive upfront investment, but the efficiencies that come from having the systems produce a greater return on investment in a shorter period.
“It’s a big investment upfront but you have to look at it in its economic value. So, if you simply look at I’m going to pay this much and that’s very high upfront and that’s a deterrent to you, then your missing the golden pot because now you can reduce your energy costs from JPS,” he said.
He explained that the life span of solar systems if properly maintained is up to 25 years. He said businesses recoup their investment within four to seven years depending on how the systems were financed. He also noted that the cost of maintenance on solar systems is minimal.
“It’s maybe just to get someone to come in annually to check that all the wires are still attached in the right way,” he said.
The consultant said that wind energy is also an option for some commercial businesses but is trickier.
“But wind performance in the commercial space in Jamaica is not so good because wind needs a clear flow and where you have buildings that are changing the aerodynamics we don’t get the maximum out of wind,” he said.
