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TYNEANDWEAR FINANCE OPINION

Wednesday July 17 2019

Power cuts - what cost effect do they have on businesses?



Johnny H

JOHNNY H | Researcher




Power cuts - what cost effect do they have on businesses?

The cost of power cuts

Power cuts used to be much more prevalent in the UK, but do still happen.  For example, in June 2017, Edinburg Airport suffered major disruption because of power issues, and only days before over 60,000 homes were left powerless.

A loss of power has cost issues for homes and the business sector.  In the following article, Flogas, who supply gas for business use, look at the issue:

Causes

There are a number of different causes of power cuts. Harsh weather conditions are one – in January 2015, one million people across North Eastern Scotland were left without power as a storm struck the power lines. Similarly, in Florida following Hurricane Irma’s path of destruction, 4.4 million homeowners were left without electricity.    

There is also the issue of the growing energy supply gap in the UK. Jenifer Baxter, head of energy and environment at the Institution of Mechanical Engineers said, “Under current [government] policy, it is almost impossible for UK electricity demand to be met by 2025,”.  Alongside proposals to phase out coal-fired power and a lack of investment in national grid infrastructures, power failures and blackouts are expected to become more common. There are also the more uncommon reasons for a blackout such as the squirrel that bit through power cables in Somerset which left 1,000 homes without electricity.

Location can also impact how often you could be left without power. The South of England suffered the most blackouts in the UK in 2015 with 124 incidents. Most of the power failures last only a few hours but some can last days or weeks. Regardless of their cause, they are inconvenient and can have detrimental effects on businesses.

Loss of finance

Power cuts in the UK last for around 50 minutes on average. This may not sound a lot but with a single hour of downtime estimated to cost a small business £800 — it could be very damaging. Understandably, larger organisations see higher losses from a power cut but it is also expected that they can recover quicker too. When Google lost its power in 2013, they experienced losses of £100,000 per minute!

Losses as a result of power cuts can come from many different business aspects. Not having access to electricity can mean that employees cannot communicate with customers and are therefore losing out on potential sales. For an ecommerce company, they do not have access to their website to monitor sales and client requests. There is also the risk of losing unsaved material which can be costly to small businesses.

Minimising disruption  

For the most part, power cuts are unavoidable. However, there are certain steps that small businesses can take to reduce the damage caused by a power cut.

Firstly, consider buying a UPS (uninterruptible power supply). This allows a computer to keep running for a short while when the mains electricity has gone off. Often, a warning sign will come up to alert the user that a power cut has occurred – giving them time to save any unfinished work.

A standalone generator can also prove useful for businesses. This can be used in emergencies for when power runs out as it does not rely on the working of the grid electricity. If you are considering going off-grid with your power supplies, it is worth considering gas cylinders too.

Of course, saving your work as you go can also help for a basic back-up in the event of a power outage. This could be a way to inform customers that your power supply is down, and you won’t be able to answer queries — this maybe on a mobile device.

Sources

http://www.agcs.allianz.com/insights/expert-risk-articles/energy-risks/

https://www.theguardian.com/environment/2016/jan/26/engineers-warn-of-looming-uk-energy-gap

https://www.upssystems.co.uk/standby-power-products/protecting-your-business-with-standby-power/

http://searchdatacenter.techtarget.com/definition/uninterruptible-power-supply

http://www.npr.org/sections/thetwo-way/2017/09/13/550674848/power-outages-persist-for-millions-in-florida-georgia-and-carolinas-after-irma



"A loss of power has cost issues for homes and the business sector"
Flogas UK








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