It's an uncertain time if you own a fuel station. You'll be concerned about the decline in fuel sales that is now a market trend. The industry estimates that global retail fuel purchases will have declined by 9.2% between 2019 and 2030, driven by a slowing global economy, the adoption of electric vehicles (EVs), and the rise in both remote work and online shopping.

This decline in demand will affect more than your core business of selling petrol and diesel – lower traffic caused by reduced fuel consumption will impact your forecourt retail operations too.

How should owners in the retail fuel industry be preparing for the future?

EV adoption in South Africa

Ironically, although EVs are reducing demand for fossil fuels, the technology also gives fuel retailers the opportunity to develop a new revenue stream. Industry estimates predict that demand for EV charging at fuel stations will have increased by 36% between 2019 and 2030.

South Africa's auto industry is likely to transition away from internal combustion engine vehicles slowly. However, the ban on new petrol and diesel engine sales in the European Union from 2035, in line with climate action commitments, means the local manufacturing industry will have to pivot to EVs. Rising international market demand, driving the development of local manufacturing capacity, should also stimulate investment in EV infrastructure across the supply chain in SA. With improved economies of scale, South African EV prices should come down over time.

All these factors will strengthen the outlook for local EV charging infrastructure. Existing fuel stations are ideally placed to support this transition, even though it will take time and investment to scale up EV manufacturing and infrastructure.

How solar charging can boost fuel station revenue

Installing EV charging facilities offers fuel retailers strong revenue potential. Only around 100 of South Africa's more than 5,000 fuel stations currently offer EV charging, so there is enormous potential as the market evolves and matures, especially if you move early. Although the distance per charge is still a key factor affecting the location of EV charging stations, this range is improving constantly, and it will become less important as the number of charging stations increases.

However, adding charging stations to your forecourt is not the only opportunity available. A recent real estate study by Cushman & Wakefield/Broll indicates a shift in fuel station offerings away from relying almost entirely on fuel sales alone (currently about 90% of revenue), to a more diverse set of 'mobility solutions.' This would see fuel stations offer a wider range of fuel options, including natural gas, electricity, and green hydrogen.

Because EV charging takes longer than fuel, hydrogen, or gas refills, fuel stations can expand their offering beyond existing forecourt retail. These could include parts, repairs, and vehicle services, plus non-automotive businesses such as pharmacies, laundries, and even coworking spaces. Letting customers multitask while they recharge their batteries expands your station's retail possibilities.

Turning fuel stations into green energy leaders

EVs reflect the growing demand for alternative energy. Far from remaining dependent on oil, many oil companies are diversifying their energy offerings and pivoting towards green energy. Sasol, for example, has several projects underway to advance the manufacture and adoption of green hydrogen in the heavy-vehicle sector. The fuel is produced from water using renewable energy, allows for quick refuelling, and has the energy density needed to power heavy vehicles over long distances. Green hydrogen can also be supplied by existing stations, further diversifying your product offering beyond petrol and diesel.

Like many other South African businesses, fuel station owners have suffered heavy expenses in the fight against load-shedding. Diesel and generator costs have hit fuel stations' bottom lines, and many can't reduce these costs by installing solar or renewable energy because of contracts with site owners more committed to petrol and diesel. However, as the Sasol example shows, this mindset is shifting. As the global move to renewable energy accelerates, fuel station retailers are well positioned to lead the market. Their buildings and forecourts offer a lot of roof space out in the sun, so they're ideally suited for solar photovoltaic installations.

The outlook for fuel stations is more positive than it seems. While installing renewable energy systems and upgrading your site to offer alternative energy supplies and enhanced retail services will cost money upfront, it presents a viable, future-proof strategy for keeping your business profitable.

To support clients in the fuel retail sector, Nedbank has developed Nedbank Business – Sustainability Solutions. The value of the renewable energy investment itself is used to tailor funding to a retailer's business cycle, making the investment more affordable. In addition to renewable energy solutions for retailers, Nedbank also offers a range of affordable home and business solar financing options through Avo Solar.