Gerrit Ledderhof, Strategy Manager, the Carbon Trust on why energy efficiency is an imperative for South African business - and how energy challenges are being tackled through the Private Sector Energy Efficiency Project
South Africa is historically a fossil fuel based economy with a significant reliance on coal and imported oil as its key sources of energy supply. As a result of a natural abundance of coal, together with the historically and comparatively low price of electricity, the South African economy has developed along both an energy and carbon intensive trajectory.
Currently a number of critical issues are driving an increased need for energy management within South Africa, including:
- Rising domestic energy prices – the price of electricity is set to rise by 8% a year for the next 5 years, following requests by Eskom, the national generation utility, for a 16% increase and historical rises of over 20% annually in the previous 5 years;
- The pursuit of energy security – with aging generation capacity, few opportunities for interconnection, and limited domestic production of non-coal fossil fuels, South Africa is heavily exposed to supply fluctuations;
- The impacts of climate change – South Africa is particularly vulnerable to climate change with a large proportion of the population likely to be adversely affected by extreme climate events in addition to the challenges posed by reduced rainfall and warming in an already arid country;
- Government policies – the South African Government has been active in creating policies and regulations in an effort to drive change, enacting or exploring policies covering energy efficiency, tax incentives, energy management, and a carbon tax.
Combined, these factors make energy efficiency an imperative for South African business – even those where energy is currently not seen as a material business cost. Unfortunately, the country is plagued by a lack of widespread cultural awareness and systematic take up of energy efficiency by business and industry. This is evidenced by:
- The high energy intensity of the economy
- The continued danger of load-shedding, unscheduled service outages, and the need for repeated daily “beat the peak” messages from Eskom;
- Limited or incomplete uptake of finance available for energy efficiency projects;
- Widespread stakeholder opinion that energy efficiency is a missed opportunity;
- Absence of sound business-to-business case studies on the benefits of energy efficiency;
- Lack of accepted benchmarks for best practice;
- Limited and nascent domestic capability on energy efficiency opportunity identification and implementation.
In an effort to tackle these challenges, the UK Department for International Development (DFID) is funding the National Business Initiative (NBI) to implement the Private Sector Energy Efficiency Project (PSEEP). Governed by a multi-stakeholder steering committee led by the South African Department of Energy, the objective of PSEE is to support the awareness and uptake of best practice in energy management and energy efficiency by South African industry, focusing on implementation and unlocking the key barriers to action.
The project is expected to engage with some 60 large, 1000 medium and 2500 small businesses and organisations through three core services:
- Strategic energy management, a holistic engagement with large corporates to help improve operational energy efficiency and support the development of a comprehensive energy and carbon strategy;
- Survey-based support, a face-to-face assessment and review of energy use for medium-sized companies, identifying energy savings opportunities and developing a suggested implementation plan; and
- Remote advice, including publications, tools, and advice via the project website and a dedicated contact line.
Over the course of the project these engagements are expected to generate lifetime energy and carbon savings of 4,000 GWh and 3.6 million tonnes of carbon, equivalent to roughly R3.5bn and 1% of South Africa’s emissions in 2008 respectively.
The project itself is modelled on over 10 years of Carbon Trust experience in supporting private sector implementation of energy efficiency and energy management in the UK, where our work with companies typically resulted in energy savings of 20% and has reduced energy costs by some £5 billion.
With proven energy savings and tailored packages of support, there is no better time than the present for South African businesses to engage with energy efficiency, driving down their own costs and playing their part in building a sustainable, low-carbon and prosperous South Africa.
To find out more about the Private Sector Energy Efficiency Project, visit www.psee.org.za