LIGHT-BULB MOMENT - JSE MAGAZINE

LIGHT-BULB MOMENT

With electricity shortages becoming a way of life, many SA businesses have recognised the importance of energy efficiency in their operations

LIGHT-BULB MOMENT

Discussions (and magazine articles) about energy efficiency in SA tend to start and end with complaints about load shedding. And while Eskom managed, happily, to provide the country with a full month of uninterrupted supply in August, load shedding will continue to cast a long and ominous shadow over the country’s power grid for as long as demand continues to outstrip supply.

Load shedding is only the symptom. Strip away the politics and speculation, and a major underlying cause of SA’s power problems is that the private sector simply doesn’t place much importance on energy efficiency. This was one of the findings of an internal study conducted by the National Business Initiative (NBI) earlier this year.

When asked: ‘How confident are you that South African businesses are taking the issue of energy efficiency seriously?’, those surveyed – all experts from within the NBI’s Private Sector Energy Efficiency programme – gave an average score of 5.4 out of 10. They also only gave a score of 4.8 out of 10 in the category regarding the importance SA companies place on energy efficiency.

‘Our experience has indicated to us just how important it is to create awareness in the private sector, from the on-the-floor employees all the way through to an executive level,’ says NBI head of energy and member of the Ministerial Advisory Council for Energy Valerie Geen.

‘It is only when all staff are aware of and appreciate energy-efficiency plans that real savings and tangible results can be achieved in businesses. In addition to this, there is also a lingering misconception that energy is an unavoidable and uncontrollable operating cost, whereas the truth is that significant reductions can be achieved across
small, medium and large businesses, regardless of the industry.’

National Cleaner Production Centre of South Africa (NCPC-SA) director Ndivhuho Raphulu agrees. The NCPC-SA is a national government programme hosted by the CSIR on behalf of the Department of Trade and Industry that ‘promotes the implementation of resource efficiency and cleaner production (RECP) methodologies to assist industry to lower costs through reduced energy, water and materials usage and waste management’.

Raphulu says: ‘The issue is not as much about industrial sector performance as it is about the level of environmental impact caused by certain sector-unique operations and processes. Textiles, leather, iron and steel, and certain automotive and agro-processing-related processes undertake some of the most damaging environmental activities. Within each of these sectors there are shining examples of leading RECP stewardship cultures.’

He adds that this, sadly, is more an exception than the rule. ‘There are many more companies in these sectors who consume water, energy and materials solely for economic benefit and with scant regard for the environment,’ he says. ‘Perceptions that re-use and recycling are the only RECP options are sadly misplaced. Reduction at source presents the greatest benefit of all RECP strategies.’

That’s the thinking behind Energy Solutions Business (ESB), a division of Cummins Power Generation. ESB was established in 1999 in a bid to create high-efficiency cogeneration projects, where the generator produces both electricity and useable heat from one fuel source. Initially, ESB operated in Europe where the market for cogeneration was well established, with one-third or more of electricity in some countries stemming from cogeneration systems.

Research by Cummins found that cogeneration reduces energy use by a half. Every 1 MW of co-generation saves around 2 700 tons of CO2 a year, ultimately resulting in savings for businesses on their energy bills. According to a Cummins statement: ‘The benefits to the customer and consumer are numerous, including compliance with emission standards, improving reliability of their power supply and demonstrating commitment to environmental responsibility.’

The company has won several awards in climate change and carbon-emission reduction circles, acknowledging the contributions Cummins has made to the global energy crisis. ‘Acknowledgement from customers whose businesses have been saved from closing down due to non-environmental compliance and unreliable power supply has been rewarding,’ says Schuyla Goodson Bell, MD of Cummins Southern Africa.

Energy extra2
‘Large-scale energy savings not only save energy but input costs as well –allowing companies to save jobs’

NDIVHUHO RAPHULU, DIRECTOR, NCPC-SA

Locally, Cummins Southern Africa has created a corporate-wide challenge to involve all employees in saving energy through its Energy Champions programme, which trains employees to identify energy savings at their sites. ‘It starts within,’ says Goodson Bell. ‘Cummins established an energy-efficiency team, as well as a capital fund that helped create dedicated, annual funding for energy-efficiency improvements. Most importantly, we created a corporate culture of energy saving and sustainability with our employees that is now part of the way the company does business.’

Electricity – like air and water – is something that many people and businesses take for granted. That is until (as load shedding has demonstrated)  the supply runs out. Now, as power outages take their toll on the bottom line, energy efficiency is no longer just a cause for the tree huggers; it’s a big concern for bean counters as well.

‘Electricity constraints and rising electricity tariffs have motivated companies to reduce their energy consumption,’ says Nedbank’s carbon specialist Marco Lotz, who won the 2014 South African Energy Efficiency Association Patron of the Year award. ‘Also, investors and shareholders are placing increasing demand on companies to disclose more information around their operational impact on the environment. These are major driving forces behind this radical shift in thinking sustainably.’

Lotz believes that disclosure initiatives such as the not-for-profit CDP have helped move energy efficiency into mainstream business thinking. The CDP works with companies and cities to measure, disclose, manage and share vital environmental information – providing an overview of 81% of the world’s largest public companies and seeking ways to reduce their carbon footprint.

So far, it’s working: in 2014, almost half of the SA companies participating in the CDP scored above 90/100, representing a marked improvement from the 2013 median of 83.

Locally, the NCPC-SA and CSIR are hosting the Industrial Energy Efficiency (IEE) Improvement Project, which aims to demonstrate the positive impact of energy management as a means of reducing CO2 emissions and to illustrate the effectiveness and financial impact of in-plant energy management.

‘Initially, in 2010 and 2011, the uptake was slow,’ according to Raphulu. ‘The intention and the value of the project was not clearly understood by industry. But as the project demonstrated the value and benefits of the energy management systems and energy systems optimisation approach – and companies heard of and trusted the NCPC-SA and the project – we experienced escalating levels of interest and participation.’

One of the reasons for this, Raphulu believes, is because the project has a holistic approach and a practical, on-site application. ‘We have spent a great deal of effort building capacity in South Africa and establishing the relevant standards in this country to allow industry to improve on energy efficiency over the long term,’ he says.

‘One of the backbones of the project – and the business model/approach of the NCPC-SA – is the training of experts in the field. The companies that participate in the project are often used as host plants for training, and a larger number still are used by candidates to implement their practical training.’

This programme helps ensure that there are either plant engineers equipped with the skills to implement continuous improvement, or that there is a relationship with an expert consultant who can offer the company support.

‘The benefits have been real and tangible,’ says Raphulu. ‘Large-scale energy savings not only save energy but input costs as well. This has, in fact, allowed some companies to save jobs. Other companies, such as Sockit, have been able to increase their production, thus allowing them to employ more people. Energy savings also translate into GHG [greenhouse gas] savings, which will help companies report on their environmental performance as well.’

Energy extra

The Sockit example is small in scale but impressive nonetheless. The Cape Town-based company produces socks for international brands such as Nike and Adidas, and employs about 50 employees at its factory in Parow. Like so many SMEs, the scale of Sockit’s operation didn’t justify the recruitment of a maintenance engineer – so maintenance has happened reactively, resulting in what the NCPC-SA report charitably describes as ‘a steady deterioration in efficiencies over time’.

The factory also had limitations in the amount of electrical power available, which narrowed the firm’s growth. However, following an IEE audit in December 2011, Sockit saved 92 000 kWh of energy, increased its production capacity by 15%, reduced its electrical energy demand by 30%, and was able to employ four more people. According to NCPC-SA estimates, Sockit’s initial investment of R550 000 produced an annual saving of R140 000, paying for itself within four years.

‘What’s important to note is that an energy-management system is not only a set of technical interventions. It is based on behaviour change,’ says Raphulu. He adds that, as of 31 July 2015, the NCPC-SA’s IEE project had helped companies save 1 340 GWh of energy – valued at R1.1 billion and equivalent to 1.2 million tons of CO2.

By any measure, that’s a huge bottom line saving and it serves (if you’ll forgive the expression) as a significant light-bulb moment for SA business. Energy efficiency is no longer an environmental concern. It’s now a business imperative.

By Will Sinclair
Image: Andreas Eiselen/HSMimages