Since the price of fuel is regulated, and retailers are given a fixed cents-per-litre margin, it’s a volume-driven business, and reduced demand is making it tough for fuel retailers. So, what can they do to cut costs and become more self-sufficient?
One option is to embrace advances in energy technology. The rise of fuel retail has come with increasing demands on energy supplies. Refrigeration, in particular, is an energy-hungry process. But fuel retailers and forecourt operators in South Africa face two acute challenges in this regard: high energy costs, and low energy certainty.
Electricity is expensive, and its supply uncertain. In addition to load shedding, many areas are structurally power constrained, and an aging infrastructure continues to add pressure to the grid. South Africans have lived with this reality for many years, and retailers of all types have invested in diesel generators. But they are costly, noisy and inefficient.
Grid-tied solar systems are simple, comprising nothing more than solar panels and an inverter linked to the municipal electrical grid. The panels convert sunlight into useable alternating current when it’s available. They aren’t connected to batteries, and so switch back to the municipal grid at night or when the sun is obscured. During the day they can easily produce enough energy to power fuel pumps, a retail store and an administrative backend.
The worldwide shift towards electric vehicles (EVs) and other alternative fuel technologies is slow but accelerating rapidly.
More alternative-fuel vehicles on the roads will place demands on fuel retailers; some obvious and some less so. Batteries will be required to address spikes in demand, especially in the first phases of electrical vehicle adoption, and provision made for LNG or hydrogen fuelling capacity where warranted. But charging an electric vehicle is not like pouring petrol into a tank. It takes time: Tesla’s most powerful chargers, the 150 kW Supercharging stations, take 30-40 minutes to charge today’s Tesla Model S to 80% capacity.
Forecourts will increasingly be built to accommodate longer visits, becoming convenience hubs where refuelling is offered as one service amongst many. Shopping, entertainment, and pick-up services (such as online retailer lock boxes) will proliferate. Your children will play while you work and your EV charges. Partnerships with retailers, restaurants, and quick-service food chains will be key to developing convenience ecosystems, and they’ll all be tied together through digital networks and associated payment and reward schemes.
The forecourt of the future will probably look remarkably different. For owners and operators, preparing for this future begins with taking a clear-headed look at their current energy circumstances. An appraisal of energy cost and availability allows them to take control over these variables, giving them an advantage when planning for the continued sustainability and cost effectiveness of their businesses.