The kilowatt hour (kWh) is a unit of trade for energy distribution utilities, which holds a hidden resource. Let’s examine why utilities should focus more on the kWh to increase revenue and manage loads.
For some politicians, the kWh is a bargaining chip during elections as they promise to keep the unit cost down. To a young midwife in a rural health centre a kWh makes a difference between the safe delivery of a child and a maternal death. Yet to an energy investor; all boardroom discussions come down to the margin of a kWh.
Many utilities spend budgets on energy efficiency campaigns urging users to change their behaviour by switching usage patterns. However, providing clarity on the unit(s) of measurement is often overlooked as an element to completing such worthwhile campaigns successfully.
In 2015, Uganda spent nearly $3.5 million replacing 850,000 fluorescent bulbs with LEDs in nearly 300,000 households. This regulator-funded programme focused on households along feeder lines that showed increasing peak demand. This excellent endeavour sought to save 30MW but with peak demand growing at 6% the saving is yet to be achieved.
During 2012 to 2014, and drawing from experiences in Mexico and South Africa, Kenya distributed over five million CFLs to reduce peak demand and as a precursor to behavioural change towards energy efficiency and saving 100MW. Factoring in loads other than from lighting the MW saving has not been achieved.
In terms of behavioural change, it was found that a household that replaces five LED bulbs could erode the envisaged gains by buying a cheap and inefficient rice cooker. Empowering such a household with information on how the fluorescent light, the LED bulb and the rice cooker consume the kilowatt hour would deliver better results. Kenya Power’s Pika na Power (2016) is a good example of a campaign that entices customers to cook with power by demonstrating the kilowatt hours (and their cost) needed to cook a meal versus use of other energy sources.
Taking control via an app
In Uganda, Umeme Limited embedded a usage calculator in a utility app that allows users to input power ratings of their home devices, record usage duration and calculate the kilowatt hours consumed by each device. Customers can therefore compare power usage between electronics before they commit their prized shillings to electricity bills.
Since the app’s development in 2016 – accessible on Android, iOS and Windows – bill acceptance levels in small and medium enterprises (SMEs) though improving has been low in the region. In 2017, 4.2% sales growth was registered in this segment by Kenya Power and yet nearly six months later, SMEs were part of the chants calling for “switching OFF Kenya Power”, dissatisfied with the bills they were receiving.
This in part stems from poor pricing of their services that erodes their margins. Hiring certified energy managers to interpret automated metering data, for tariff planning and power factor correction, is out of reach for most of these SMEs. SME owners, managers, their machine operators and bookkeepers can better save energy if they all understand how to convert horsepower to a kilowatt, or to calculate the power factor. Better still would be if such a calculator is provided in a user-friendly mobile-enabled format. Consumers can then use this information to price their output better and to direct their energy saving efforts better.
New energy connections
In 2017, Kenya Power made 1.8 million new connections and Uganda’s Umeme achieved a growth of 0.18 million. These exponential numbers present a fresh and growing interest in the business of electricity. Customers who are also retail shareholders of utility stocks are seeking more information on metering and regulation. Customers want to trust that the utilities are measuring their usage accurately and be given the resources to validate their consumption data. A lot of this data will have a kilowatt hour central to the engagement, and most of it will be featured online. Ask any policy maker about the cubic capacity of his car. They will get it right because it determines the money spent on fuel. If the question is changed to the power rating of their household fridge, the answers are varied and in many cases are far from accurate. Absence of this knowledge results in important policy positions on pricing, and other regulations about electricity, being made without a common understanding of the kilowatt hour.
Unpacking bill elements – the kilowatt, power factor and maximum demand, etc. – will form the foundation for customers to understand how utilities function. It is this bill information that will lead to consumers understanding what they need to do in order to save money and extend their trust in utilities to continue serving them. This is the power of the kilowatt hour to increase utilities’ revenue, support SMEs in their endeavour to reduce operating costs, and educate households in efficient electricity usage. ESI
About the author
David Birungi is the manager for digital media services at Umeme Limited in Uganda where he oversees the integration of digital media across service channels and reputation management. David has a wealth of experience in operations of energy distribution in a highly regulated market and is a member of the Chartered Institute of Public Relations of UK and the Public Relations Association of Uganda.