Start a Gas Appliance Company

Imagine living in a country of over 50 million people and the company that supplies close to 100% of the electricity is incompetent.

There are billions of Rands to be made from government incompetence in South Africa: healthcare, education, security, but those industries are saturated and some capital intensive, the next big opportunity for small businesses: electricity.

Eskom, the institution that generates 95% of South Africa’s electricity is by all intents and purposes bankrupt, it is no longer a going concern and is only kept alive for strategic reasons. They are in such a precarious situation that they cannot guarantee the supply of electricity, the grid can collapse at any moment, and their unsustainable future depends on electricity tariff increases far above inflation and an decreasing middle class subsiding an increasing poor.

This has caused many people to reduce their reliance on electricity, with lots of chatter of going off the grid completely, while not easy it’s not impossible, there might be an expense up front, but with Eskom’s constant increases that most of South African’s cannot afford, running alternative energy will look more and more attractive once Eskom’s rate eclipses alternative sources – something not outside the realm of possibility.

The business opportunity
There are three ways the man on the street is reducing his reliance on Eskom: a solar powered geyser, moving to LED lights, (and television) being powered by solar energy stored in batteries (in the form of a battery systems and DIY “powerwalls”) and gas powered appliances.

The first thing is usually the solar geyser, effectively moving hot water off the grid.

The second is storing solar energy to power the lights, charge phones, watch television and other small appliances. But the problem is battery storage is expensive, even DIY, you need thousands of 18650 cells to build a powerwall capable of storing enough energy to power all appliances for enough time until the sun can recharge them again. This is why there is the current business opportunity: gas powered appliances.

Gas appliances is not just for camping or boerewors stands and mobile shops. More and more residential houses are using two plate gas burners, four plate gas stoves/oven, gas fridges and freezers. This is becoming increasingly popular in areas where electricity is not subsidized.  The problem is these consumers are subsdising “indigent” households. I use the term indigent very loosely as some of these people can afford to but simply refuse to pay for electricity, under the current situation this is not sustainable considering these consumers are burdened with a myriad of other taxes: income tax, VAT, fuel levy and the incompetent tax mentioned above: private healthcare, private security/armed response and private education.

So even if people are not going completely off grid they are reducing their reliance and exposure to South Africa’s electricity grid where they are paying first world tariffs for a third world service.

Gas appliances will become more popular and common in future and not just in residential households, commercial as well, any small business catering or restaurant should do research there are six burner gas stove & ovens on the market that can be used as a backup.

Business Opportunities
There are a few business opportunities in this industry:

The manufacture and trade in gas appliances
Stoves, ovens, fridges, freezers, heaters

Gas cylinder supply, installation and refilling.
Make the process as seamless as possible offer a service, where you collect, deliver and reconnect the cylinder.

Another thing to look into: solar powered appliances
There are already solar/battery powered fridges and freezers available in SA

Selling your services
My rant above is enough to use as a sales pitch, but people are going to ask tough questions, one of that is how does the cost compare to electricity, it depends on the appliance. Let’s use a common item like a stove, let’s say gas costs slightly more on a kilowatt hour – if energy is transmitted or used at a constant rate over a period of time. That does not mean it will be more expensive to run overall than electricity.

Here is why:

Firstly, remember a stove is not run all the time, you switch it on you make your food you switch it off. Gas can last a long time.

Faster to ideal temperature: Electric stoves takes minutes to change the temperature with no guarantee of accuracy, this is quickly and accurately done with a gas stove. You can start cooking instantly with gas as the heat is there instantly no need to wait for a hot plate to heat up.

Faster cooking time: You get much better heat distribution with gas due to the flame distribution, electric plates needs your pots and pans to be flush to get the same, if your cookware is warped you will need to cook it longer with electric. Studies show that warped pans waste 50% of the heat used on a stovetop.

People who hate cooking in hot kitchens will be interested in gas as the kitchen is much cooler both during and after cooking compared to an electric stove.

Another market: People going partially off grid on principle
Many people are also going partially off grid – even if it costs them more – because they don’t want to support Eskom – an organisation they have no choice of using.

Many experts agree that the price that Eskom charges is far higher than it should be and this is simply to price in corruption. Corrupt businessmen, Eskom executives and government ministers act with a common purpose to defraud South Africans. This is why people don’t want to support Eskom any more than they should. If Eskom were a company in another country this “joint enterprise” would have resulted in racketeering charges and serious jail time. People don’t like to support a criminal organisation.

Power cuts in South Africa is the new normal, regardless of whether Eskom manages to avoid it for a while, it will come back. People need to be prepared for power cuts at any moment even if there was not one in a while. The fact is that Eskom cannot mention a year, let alone a decade when the electricity supply in South Africa will be stable again. Gas appliances, even a single burner will allow you to do important things such as boil water and even iron clothes for that important interview: