The state of our national grid paints a black picture for businesses
In the last few months, Eskom has declared power emergencies on a number of occasions and resorted to load shedding throughout the country for the first time since 2008. This is because energy demand is outstripping Eskom’s supply during certain peak times; the reality is that security of supply in South Africa is severely threatened. This year also saw the first time that Eskom conducted maintenance in both summer and winter and, as this continues, further load shedding is expected throughout South Africa. In addition, electricity tariffs have more than trebled since 2007 and are expected to rise continuously by at least 8% annually, doubling in the next 7 years. With the additional power plants, Medupi and Kusile, running years behind schedule and 10s of billions of Rands over budget and with new investments in additional energy plants coming too late, there doesn’t seem to be a light at the end of this dark tunnel for South African energy-users.
Further diminishing any hope in South Africa’s grid, Energy analyst Chris Yelland commented on the problematic state of the grid in February 2014 AFP article, entitled ‘Eskom is Holding back the South African Economy’, saying that “some of these are structural problems, some are political problems, some are just bad management… the bottom line is Eskom is not structured appropriately”. The same article describes how the South African economy “the biggest in Africa and a top emerging market, is being held back badly by a crisis at the sclerotic state-owned electricity provider Eskom”. It is therefore undeniably clear that the negative impacts of our ailing electricity grid on the economy are grave—and businesses are facing increasingly serious risks as a result.
Unstable electricity supplies severely threaten the survival of small and medium enterprises
Sasol and the University of Pretoria carried out a study in 2006 that examined the impacts of the 2006 electricity crisis on Cape Town based SMEs (a crisis that directly cost the Cape Town economy about $900 million). The study, entitled The Impact of Electricity Crises on the Consumption Behaviours of Small and medium Enterprises, surveyed 250 SMEs and found that SMEs are particularly vulnerable to external events such as electricity crises. The SMEs surveyed felt the impacts of the electricity crisis so extensively that the authors concluded that “unstable electricity supplies severely threaten the survival of small and medium enterprises”. A large majority of the SMEs surveyed (89%) were heavily dependent on a steady supply of electricity and most (80%) reported significant losses of trade or productivity during the crisis. SMEs contribute roughly half of SA’s GDP and employ more than half of the formally employed population; further highlighting the extent to which stable and affordable electricity supply is not only relevant but essential for South African businesses and the South African economy.
Figure 1: Van Ketelhodt & Wocke, 2006
Damages that affect businesses during electricity crises include, but are not limited to, damaged computers and other electronics, perishables damaged in refrigerators, non-delivery to clients and facilities becoming unable to operate. Other effects include increasingly expensive electricity tariffs.
Not nearly enough businesses are taking the critical actions needed to reduce their long-term risks
Shockingly, the research revealed that despite the widely felt negative impacts, only 19% of the surveyed companies considered the long-term impacts of unstable electricity supply in their business plans and about 20% hadn’t considered any change in electricity related behaviour at all. Almost 70% of all the respondents felt that there was not much they could do to improve their electricity consumption, and instead showed a tendency to wait for the crisis to pass without reducing their long-term vulnerability and risks. These are common misconceptions that will continue to cost businesses greatly. Other prominent misconceptions that the study revealed include: the thought that the crisis was only temporary in nature and the expectation for very long payback periods and limited initial financing options for alternative energy sources.
What these companies do not know is that there is in fact a lot that can be done to significantly reduce the risks associated with unstable and increasingly expensive electricity supply
The crisis is by no means temporary; Eskom’s supply already outstrips South Africa’s energy demand (on one occasion in June 2014 outstripping it by 8000MW), since demand continues to grow and increased capacity is slow and limited, it is clear that the worst is yet to come. Therefore, plans to reduce long-term business risks are absolutely essential. In addition, with the drastic decreases in the cost of Solar PV technology, Terra Firma Solutions has seen some of its Solar PV clients experiencing payback periods as short as two years and attractive funding options for the initial investment abound.
Another critical way to reduce the impacts and risks of unreliable electricity supply is information; information about the national grid and information about a company’s own energy-use. Terra Firma Solution’s Energy Efficiency Software, for example, enables companies to achieve exactly this by monitoring energy-use, optimising efficiency and, as a result, being well-equipped and prepared to face the challenges associated with the current energy crisis. The benefits of energy efficiency improvements are therefore substantial and far-reaching, allowing companies to experience incredible savings while significantly reducing their future risks.
Companies of all sizes can simply no longer afford to be left in the dark about actions to reduce long-term risks associated with South Africa’s electricity grid.
Ultimately, it is irrefutable that the costs associated with not monitoring and managing a company’s energy-use and not exploring alternative energy options are not only high but, as Van Ketelhodt & Wocke’s concluded, the costs are so high that they threaten the very survival of many South African enterprises.
SMART Energy Management Software has transformed the role of energy-users by placing them at the forefront of their own energy-use and keeping them informed about the performance of their electrical devices—as a result, SMART Energy Management Software has revolutionised the way energy is consumed in businesses. It engages occupants and employees and actively drives crucial energy efficiency behaviour change. Most impressively, SMART Energy Management Software achieves these aims through the use of easy to understand and easy to manage technology that is accessible from anywhere in the world.
In fact, it has become increasingly difficult to imagine businesses without SMART Energy Management Software—it is somewhat comparable to imagining cars without any of the important gauges on the dashboard. Admittedly, the outcomes of gauge-less dashboard are likely to be more dire, but the rationale behind the use of these technologies is much the same.
Figure 1: Easy to understand, real-time Terra Firma Solutions’ energy efficiency software solution
Monitoring energy-use allows a business to meet a number of essential cost saving objectives and reduce critical energy-related risks, including; achieving tariff optimisation, reconciling bills, monitoring of demand and power factor, measuring and verifying savings, setting targets and reporting, increasing life-span of electronics, energy visibility and identifying wastage.
Energy Visibility allows energy-users to promptly detect and swiftly respond to critical issues without even stepping on-site.
The Pyramid of Energy Savings discusses the essential steps needed to achieve maximum cost-savings from SMART Energy Management Software. They include; energy visibility, meaningful actions and people engagement.
Figure 2: ElsterICT’s Pyramid of Energy Savings
Energy Visibility and Meaningful Actions
The software system empowers energy-users through providing energy visibility. Energy visibility ensures that energy usage is not only monitored, but that it can easily be managed and reduced. The Energy Management Software shows wastage in a number of ways based on complex optimal energy efficiency algorithms. This wastage can be quickly identified both on-site and remotely from a various devices such as smart phones and tablets. The software displays the energy usage in an easily interpretable format that enables the user to make important decisions and take the relevant actions that lead to significant operational and cost savings.
In addition, the information displayed in the Energy Management Software represents real-time energy usage (with as little as a 5 minute time delay). This is essential because reliable and up-to-date energy data further allows businesses to promptly detect issues and take the necessary actions to bring energy usage and production back to its optimal state. It may also help indicate larger mechanical malfunctions at an earlier stage and help identify asset performance, thus preventing significant mechanical damage and non-optimal production or performance levels.
People Engagement is the final, yet vital factor that drives sustainable energy efficiency behaviour change. A key component of the Energy Management Software offered by Terra Firma Solutions is the Foyer View. Foyer View is a large screen display that makes energy consumption visible to all employees and helps embed energy efficiency in the company’s core values. Engaging employees is the most effective means of achieving meaningful energy efficiency behaviour change since employees are able, and encouraged, to take an active role in the common goal of achieving energy efficiency. The European Environment Agency published a 2013 report entitled Achieving Energy Efficiency Through Behaviour Change: What Does It Take? The report presents Elizabeth Shove’s (2003) research that argues that “routine consumption is controlled to a large extent by social norms and is profoundly shaped by cultural and economic factors”. Shove goes on to explain that current energy consumption patterns reveal that energy-users are generally not aware of their routines and habits. Building on this, it is clear that enhancing the awareness of energy-use actively engages employees and supports the development of a new social norm in which energy efficiency is valued. The key finding from Shove’s research is that in order to successfully achieve behaviour change, the focus should be on transforming collective conventions (social norms) as they are the most powerful tool to ensuring sustainable consumption patterns. The Foyer View component is therefore a key factor for achieving optimal cost-savings.
The SMART Energy Management software is an unrivalled cost saving tool for any business
SMART Energy Management Software therefore drives continuous savings through sustainable energy efficiency behaviour change and provides the essential energy visibility needed to transform the role of energy-users by making them actively involved with, and in control of, vital energy usage information. It is difficult to believe that before Energy Management Software was available, valuable energy usage information, which is now so easily accessible and interpreted, once wasn’t monitored, measured or actively controlled and businesses repeatedly and extensively felt the losses of unexpected and unnecessarily high energy bills.
The above headline refers to a retail business that has a canteen for staff, a hardware store
connected to their general retail (food and pharmacy) store as well as a liquor store. All of the
various stores are located in different areas in a small mall.
The business owners were becoming increasingly concerned about rising energy costs that seem to
be outstripping the approved municipal electricity tariff increases. It seemed as if the costs continually escalate every month without justification. Bringing it to the attention of the landlord who supplies the electricity hasn’t helped,primarily due to the fact that the landlord knows little about the complexity of tariffs and is, in effect just passing on the costs to the tenants as a utility.
Landlords often just charge tenants pro rata depending on the square meterage of their
stores. If they do have to draw metered statistics per tenant, it’s often through equipment that was installed years ago, which is neither
maintained or checked regularly. In some cases, tenants have either increased or decreased the size of their shops with the electrical reticulation remaining unchanged. This facilitates a general outcome of one shop contributing a portion of their neighbour’s allowance or vice versa. You can conduct this verification yourself; just turn off the main switch in your shop and see if anything is still actively consuming current (if so you’re connected to your
neighbour’s electricity supply), or go next door and ask if anything happened or any equipment was rendered inactive (if so, they are connected to your power supply).
We were engaged by the business owners to help them understand their electricity costs. Our first recommendation was to install permanent metering in order to understand the actual consumption of each
store of the business. We installed a meter at the main incoming feed for the main store and sub-meters for the refrigeration, butchery, bakery, kitchen, the liquor store and hardware store.
It took less than two weeks after the meters were installed to discover an innocent billing error by the landlord had been costing the business owners over R400 000 a year in incorrect billing allocations. That alone paid for the meter installation; many times over as it were. A few weeks later , the impact of being able to identify poor behaviour caused by the staff (and this was essentially only due to unintentional bad behaviour ) resulted in the management team saving more than 10% of the store’s monthly electricity consumption. In some instances, well over 25% of the total billed amount was saved!
A perfect example of this was the bakery.
The standard habit of the bakery staff was to come to work early in the morning and turn on all of the equipment simultaneously, and then head outside for a smoke break whilst waiting for the ovens and proofers to warm enough to start baking. This bad practice resulted in high demand charges that often occurred during one of the high peak tariff periods that resulted in increased electricity costs. Simply by identifying this behavioural trend (and many others) from an energy management behaviour perspective, the business was able to save an additional R100 000 per annum.
If you consider that most retail businesses thrive on high volume sales albeit with low margins – some as low as 3,5% – to generate the equivalent of R50 000 in savings, the store in question would have had to generate at a minimum of R1,5m in revenue! In this case, saving energy for the store created a far greater return on investment than selling 150 000 individual cans of Coca Cola!
If you are watching your electricity costs continual rise but know that your operations are unchanged, contact us to discuss how we can help you identify problems and start saving money!
The question that the headline poses can prove challenging to answer. There are no fool proof ways to distinguish between one electrical design consultant and the next when it comes to their application of energy efficiency within their design or technology recommendations. In truth, just as with all professions, not all Electrical Engineers are born equal.
The skill sets one should identify for when deciding whom to entrust with the design of your electrical system should include a good understanding of renewable energy, energy management systems (like ISO 50001), smart control systems and demand optimisation. If you aren’t sure what some of that means, ask the prospective electrical engineer to explain it to you. If they can explain it and it makes sense, then you are off to a good start. It goes without saying that asking more than one professional to explain their knowledge doesn’t hurt either!
Above all, don’t be misled by the promise of a ‘cost effective’ design or solution (read cheap) without understanding the potential higher energy and maintenance costs you could incur in the long run which will quickly mitigate any initial CAPEX savings enjoyed to begin with. This is why you should look to engage an electrical engineer that understands energy efficiency and demand management and knows how to calculate the ongoing costs to your business, not just the price of the equipment.
As the saying goes in Afrikaans, “Goedkoop koop is duur koop”, roughly translated into English it means buying cheap is expensive. buy cheap pay twice
So where to begin? Like any long term and costly investment (it’s costly to retrofit afterwards), look for a professional to help you. In this case, look for Professional Electrical Engineers with demonstrable energy efficiency and demand management experience and good references. They should be registered with ECSA (Engineering Council of South Africa) and have some additional qualification or have completed specialised and accredited training such as Energy Efficiency Management training with Terra Firma Academy or Certified Energy Management training certified by the AEE (Association of Energy Engineers).
A simple example of the financial benefits of installing smart energy efficient lighting and control as opposed to a standard fluorescent solution below.
|Typical Design||Smart Design|
|Fitting Type||Standard T5 Fluorescent||LED with Smart Controls|
|Annual Operating Hours||3 931||2 769|
|Annual kWh||974 762||415 693|
|2015/2016 Electricity Costs||R 1,496,623||R 722,915|
|Saving||R 0||R 773,709|
|Additional CAPEX||R 0||R 1,443,500|
|Return on Investment||54%|
|Five Year Operating Costs||R 9,137,035||R 4,413,466|
|Five Year Saving||0||R 3,280,069|
With so much attention being focused on energy efficiency and renewable energy solutions in South Africa, an often overlooked financial savings opportunity comes from the changing of your electricity tariffs. This applies specifically to the commercial sector and not the residential, where there is little scope for adjustment.
Commercial retail, hospitality and office properties; manufacturing and industrial facilities are often subject to complicated and hard-to-decipher energy bills.
In South Africa, one is either billed directly by Eskom, by your local municipality or by your landlord. More often than not, the municipal tariffs are more expensive. A multitude of tariff structures exist in South Africa and although they may be formulated similarly, their costs per kWh or kVA can differ greatly. They also change every year!
Understanding the differences between the tariff options available to you, and also understanding what your rights (and risks) are when looking to change to an alternate tariff structure can be daunting. It’s not enough to know how much electricity you consume: you also need to understand when this consumption occurs and to what extent.
Commercial facilities often get an additional charge for the maximum demand of power they consume each month (kVA’s). These demand charges are designed to compensate the utility (Eskom) for the peak generating capacity that it must provide when large motors, air conditioners, and other commercial processes are started up as well as the network infrastructure needed.
For example, a commercial facility may pay a demand charge per kVA based on the peak usage in any given 30-minute period during a month. So if the facility had several large industrial processes start while their air conditioning and lighting was also operating, they could experience a demand peak or spike, and would be billed a demand charge for that month along with the kWh energy charges. This additional charge can amount to a substantial sum.
Deciding on what tariff alternatives are feasible, you need to understand the facility’s operational behaviour, trends, and typical consumption over a standard 12-month period. Many tariffs also increase over the winter period due to increased demand.
Below is an example of a simple tariff analysis that has been undertaken highlighting just the Rand savings prior to any energy efficiency implementations. This was undertaken at a commercial office space.
Annual kWh consumption
1 073 530 kWh’s
Current Tariff (Business & General tariff)
Annual Energy Cost
R1 224 683
Annual Service Cost
Annual Electricity Cost
R1 226 479
Proposed Tariff (Time of Use tariff)
Annual Energy Cost
Annual Network Access Charge
Annual Demand Charge
Annual Service Fee Charge
Annual Electricity Cost
As per the indicative financial figures represented in the tables above, the time-of-use tariff works out to be approximately R 355 700 cheaper per annum when compared to the current energy tariff.
Another important issue to consider is if you are being under-billed by your municipality. Although this may not be a directly tariff related issue, ensuring that you are being billed on your real consumption is important. Imagine changing to a ‘cheaper’ tariff and for the municipality to subsequently demand unpaid electricity bills for the last 3 years, and then on top of that, as a result of the now correctly calculated consumption, the tariff you changed to is no longer optimal due the increase in consumption on your bill!
Taking all of the factors into consideration and modelling various tariff options over a 12-month period needs to be undertaken by a professional. You want to make sure you choose the right option and not end up paying more.
Given the constant changes to tariffs across the country every year, a tariff analysis is typically undertaken by building an Excel spreadsheet modelling the alternative tariffs available alongside operational consumption to find the most optimal tariff. Terra Firma Solution’s Energy Monitoring and Management Software solution, COPPER, does this automatically. Every year as the tariffs are updated, the team upload all the new tariffs and the analysis can now be automated. As mentioned earlier, the operational behaviour is also critically important, so having a permanent energy meter installed at the incoming feed of the facility is required along with the last 12 months of electricity billing to ascertain a full year’s operational behaviour.
If you think you are being overbilled (or even under billed) you will want to find out sooner rather than later. Call or email us to get a quote for installing COPPER at your facility and getting a tariff analysis done.
Knowledge is power, in this case, power saved
The age-old saying that you can’t manage what you don’t measure holds especially true when it comes to a business’s energy-use—and the cost of missing out on the low-risk, high reward opportunities associated with managing and monitoring energy-use are greater and more far-reaching than one might expect.
Overall energy consumption reductions of up to 50% can be achieved by monitoring and managing energy-use with the aim of improving efficiency. These savings can clearly benefit any size enterprise, across business sectors, making energy efficiency extremely desirable. However, the energy crisis in South Africa, growing energy demand, grid reliability concerns and the increasing cost of electricity have meant that efficiency has become a necessity for South African businesses to remain profitable. Energy efficiency allows companies to improve their risk management and to achieve cost savings.
The impacts are significant but also far-reaching, benefiting many aspects of a business and the greater environment
According to the McGraw Hill Construction 2011 SmartMarket Report, buildings consume 40% of energy in the U.S and release 38% of the national Carbon Dioxide (CO2) emissions. By taking action to increase efficiency, businesses who occupy inefficient designed and operated buildings, stand to greatly improve their profitability, productivity, market differentiation and the natural environment. This is due to consumers’ and employees’ proven desire to be affiliated with environmentally responsible organizations. It has also been shown that efficient buildings have higher occupancy rates and increased asset value compared to a buildings operating at default efficiency. Efficiency also reduces CO2 emissions and supports environmental awareness which further encourages environmentally responsible decision-making.
Energy efficiency management utilises both intellectual and physical resources
South Africa’s historically low electricity prices have resulted in wasteful business practice and now, with increasing electricity prices, there is a pressing need for behavioural change. A 2012 Greentimes article, written by Terra Firma Solutions MD Ed Gluckman, discusses how the “business case for implementing energy efficiency is becoming stronger year by year as Eskom continues to raise electricity prices and energy efficient technology continues to become more affordable”. The increased affordability of energy efficient technology now means favourable ROI with paybacks in less than two years for certain technologies.
Each business sector has its own challenges and unique opportunities from energy efficiency—in each sector, opportunities outweigh challenges
Below are examples from Terra Firma Solutions (TFS) case studies which reveal savings that can be achieved from creating and implementing valuable, result-driven energy efficiency strategies and utilising various energy efficiency technologies:
TFS has helped a large number of offices achieve significant savings. Using TFS built energy monitoring and management software, companies are able to consistently manage and monitor energy-use, in real-time and from a number of easy-to-use devices, thus ensuring long-term benefits, reduced risks and optimal energy-use based on TFS calculated algorithms. Offices have managed to reduce their consumption by up to 40%, resulting in savings of tens of thousands of Rands annually.
Over R1m annual savings have been achieved with a payback period of 3.3 years
In a retail sector example, TFS helped a popular Cape Town shopping centre reduce consumption by 1.67million kWh, or 25%, by implementing a number of energy management measures. These included, but are not limited to, retrofitting, improving control and behavioural change. TFS also achieved a kVA reduction of 162 kVA, or 4%. Combined, these results meant a total annual saving of R1.250 million with a 27% 1st year ROI and a 3.3 year payback period.
A large packaging company, with an energy bill in excess of hundreds of millions of Rands per annum, approached TFS to help them with their energy efficiency and management. Incredible savings were achieved:
- The packaging company had high voltage levels which damages equipment and operates inefficiently. Implementing voltage optimisation through PowerSines optimisation product helps to company eradicate overvoltage supply and voltage fluctuation.. The optimisation resulted in R212 793 annual savings with a 4 year payback period.
- Lighting upgrades and the facility showed annual kWh savings of 69 543kWhs and R62 812 annual savings with payback period of fewer than 2 years.
Similarly large savings were achieved in the agricultural sector, for a JSE listed company, by the help of TFS. This company had an annual energy bill in excess of R120 million. TFS achieved savings of R850 000 through its energy efficiency projects with payback periods of between 0 and 2.7 years.
TFS also analysed the company’s tariffs and found a cost reduction of R563 833 annually by changing the client to the optimal tariff for their business. TFS implemented power factor correction which saved the company an additional R80 000 per annum with a payback of 2 years.
Energy efficiency is the first step towards reaching the ultimate goal of net zero energy
Energy efficiency for businesses is a low-risk investment, which yield substantial rewards. Taking steps to achieve efficiency is essential for businesses across sectors because of the far-reaching benefits and long-term savings. Companies in the US have fast adopted energy efficiency practices, with 91% of all surveyed companies for the 2011 SmartMarket report, having conducted energy efficiency upgrades in the previous two years. The ultimate goal that will yield the greatest benefits, however, is reaching as close to net zero energy as possible by combining energy efficiency strategies and renewable energy. Reducing energy costs to as close to net zero as possible will provide the platform for long term sustainable growth and profits for businesses across multiple industries.
We were recently asked by the one the largest fresh produce markets in Africa, whose site is enormous (150 000m² under-roof, roughly the surface area of 18 rugby fields) with multiple halls and massive refrigerated areas to conduct a detailed Energy Management Assessment or EMA.
We were asked to investigate the site in detail as the market has expansion plans, but found itself constrained by two primary factors; the electricity supply available to them, and the outdated and inefficient equipment currently in use, from old lighting to motors in need of upgrading.
By now you can image what a detailed analysis might require and the scope of the task at hand, especially if a facility is spending hundreds of thousands of Rands per month on electricity. What is often referred to as an Energy Audit is merely a ‘walk through’ inspection of a facility, a simple scoping exercise to establish an overview of their current energy utilisation and consumption. This, however, is not detailed enough to allocate serious funding towards. For that, an EMA. needs to take place.
An EMA is a detailed study whereby we identify, analyse and prioritise the opportunities available to a business for improved energy management through a set of EMO’s( Energy Management Opportunities.) Which, in layman’s terms means we identify ways to reduce your energy bill, or determine ways by which we increase the available energy to your facility or site. As part of an EMA, you develop an understanding of the energy use, identify the types and cost of the energy use, and in which capacities it is being used or wasted. You then identify and analyse cost effective ways of utilising the energy through improved operational techniques, equipment, and processes or technology.
More often than not a significant energy management opportunity (EMO) stems from the identification of poor behaviour. Depending on the facility, savings of up to 30% can be achieved through behaviour modification, through regular training and retraining are critical in maintaining this saving.
The majority of the energy consumption at the market arose from refrigeration (41%) and lighting (21%), with the most significant EMO’s around the lighting. The implementation of a control system, such as day / night sensors and timers ,as well as the upgrading to more energy efficient alternatives could yield savings in excess of 5 650 000 kWh’s , which could conservatively yield R7 780 000 in savings per annum. This is a huge saving which more than covers the costs of undertaking an EMA.
Another interesting aspect to this EMA was the scoping of a gas trigeneration plant. There was a nearby gas line which could be accessed and utilised. This would allow the market to generate additional electricity, heating and cooling in order to accommodate the planned expansion, considering the insufficient municipal power supply. The capacity of the trigeneration plant had to be balanced against the cooling required by the existing and future refrigeration, along with other market power requirements, all of which would be supplemented by the installation of a solar PV plant alongside the existing municipal supply.
It goes without saying that if you need to evaluate these types of complex and costly opportunities for improving energy management, you should certainly evaluate the energy management company in terms of its experience and expertise.
Equally critical for the process to be a successful endeavour is support from the client throughout the EMA. An average EMA can take between eight to eighteen weeks, as much of the information required is typically operations related. Sourcing of historical energy and production data is often a point of delay in most EMAs, however, it is key in accurately determining a historical baseline. By using historical data to formulate a baseline, significant energy users were identified, quantifying the baseline and creating a means to start the identification of wasted energy.
Anything this complicated and time consuming warrants a focused approach by individuals that specialise in energy efficiency, with documented practical experience in successfully implementing the relevant solutions.
If you want to find out what it would cost your organisation to have this kind of insight, contact us for a free proposal.
Achieving improved energy efficiency for industrial and manufacturing businesses is an ongoing challenge. Operational managers and engineering teams are ultimately measured against productivity – and rightly so – as opposed to chasing energy cost savings. As much as the management team or the company’s executives might expect the engineering team to manage both objectives, it isn’t always feasible without the time, resources or specialist skills being available internally.
When I meet with prospective manufacturing and industrial clients regarding energy efficiency, it’s either someone in management who has a strategic goal in mind, or it’s the engineering manager (or equivalent operational person) who has been mandated to find energy savings for the business. Our role is often one as a consultant undertaking an Energy Management Assessment first, to identify the potential savings of a facility and recommending the solutions, and hopefully implementing them.
The value in a specialist undertaking both the assessment and the implementation of the recommendation is that the supplier of the equipment is kept honest. This results in savings upfront by sizing and costing the solution correctly with a detailed financial analysis to motivate the project.
A good example of this is an Energy Management Assessment Terra Firma Solutions undertook for a cosmetics manufacturer based in Cape Town. This was a relatively straightforward assessment with some quick and easy interventions identified. The study itself took 3 months and required walkthrough site visits, measurement and hours of analysis.
An immediate opportunity identified was the installation of Power factor correction (PFC). PFC was implemented on three incoming transformers to the facility to reduce the maximum demand (kVA) of the facility by 121 kVA per month. PFC units monitor the reactive power within a system and activate capacitor banks to reduce the reactive power and therefore the maximum demand.
For the non-technical: it is a common, tried and tested solution to save money by reducing the maximum demand charges faced by some manufacturing and industrial sites, depending on the electricity tariff they are on. The PFC opportunity was identified with one week’s worth of data and another week of analysis and specification. Smart metering was also installed throughout the facility. Other recommendations under consideration are a lighting retrofit.
This project would likely not have seen the light of day unless a specialist had had the time to do the site visit, measurement and analysis of the savings opportunities. Implementing the PFC project was relatively straightforward with the specialist PFC supplier and client preparing for a shutdown to complete the installation.
The project financials are summarised in the table below:
|Power Factor Correction Project||Value|
|Project Cost||R 417 996|
|kVA Saving||121 kVA|
|Financial Saving||R 435 771|
|Payback Period||0.8 years|
|1st Year Return on Investment||104%|
|Net Project Value (10 years)||R 3 234 658|
|Internal Rate of Return (10 years)||112%|
You would think that with such great financial performance, the PFC project would have been implemented almost immediately. As it turns out, it took a year almost to the day, to install the PFC project from when we initially started the assessment. The decision-making process was slow and savings of over R400k were not taken advantage of. Once the PFC was installed, however, the savings easily paid for the initial consulting fees many times over and created the budget for installing permanent metering at the site.
The delay in implementing the project was not a wilful act to delay, but rather the typical time some larger organisations take to make decisions. In the end, savings have been enjoyed and would likely never have seen the light of day unless the client recognised that having a specialist in energy efficiency assist them would generate results sooner. Asking their own technical team to undertake the assessment and implementation could have negatively impacted their primary role of managing production.
We love finding energy efficiencies in business. If you want to know what an Energy Management Assessment might cost your business, contact us for a free proposal.