i
Assessing the barriers companies
face towards the implementation of
corporate energy efficiency
strategies
Gysbert Niesing
21990808
Mini-dissertation submitted in partial fulfilment of the
requirements for the degree
Masters of Business Administration, the North-West
University, Potchefstroom Campus
Study leader: Prof. R. Lotriet.
October 2012
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ABSTRACT
Global climate change and the electricity supply constraints could possibly be one of the utmost strategic issues facing businesses and consumers of all sizes currently in South Africa. Energy Efficiency is the ability to produce the same output but with less energy. The implementation of Energy Efficiency strategies is pivotal in order to sustain the climatic conditions as well as mitigate the supply constraints the South African utility Eskom is experienced.
The aim of this study was to reiterate the importance of energy efficiency strategies and to identify the barriers and challenges companies face towards implementing energy efficiency and energy management strategies. This dissertation identified incentives and rebate schemes available to promote energy efficiency strategies and discussed the policies and strategies the South African Government implemented towards realising the energy efficiency target of 12%.The literature review conclude with discussing best practices indentified by implementing corporate energy efficiency strategies.
The level of preparedness and progress in implementing an energy management system and strategies between the different companies were assessed. The target population includes the high intensity user group (HIU), listed and SME companies in the different industry sectors in South Africa.
The study concludes that there are still multiple challenges facing companies in implementing sustainable energy efficiency strategies. Although government and multiple stakeholders are initiating incentive and rebate models to promote the implementation of energy efficiency measures, industry still lacks the commitment to change their behaviour toward implementing energy management strategies.
Key terms: Energy Efficiency, Demand Side Management, Energy Management Strategies, Energy Management Opportunities, Energy Strategies.
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ACKNOWLEDGEMENTS
First, I want to thank Lord Jesus Christ for the enormous amount of grace and perseverance in accomplishing this study. Without the blessing received from Him, this task would have been impossible.
Then the following people as well:
To my wife Christi: without your love, support and patience this would not have been possible.
To my children, Dian-Louw, Lisa and Chanel: thank you for your love, understanding and patience when Daddy needed to work on his studies.
To Prof. R Lotriet, my study leader: for your support, vision and input which greatly contributed to the success of this study.
To Nelma Erasmus: for your professional editing.
To Lusilda Boshoff: for your guidance with the statistical analysis.
To my family: for support, prayers and belief in me. You taught me the value of hard work.
To all my friends and family: thank you for your support and prayers during this time.
iii TABLE OF CONTENTS ABSTRACT...ii ACKNOWLEDGEMENTS...iii LIST OF FIGURES...viii LIST OF TABLES...ix LIST OF ACRONYMS...x
CHAPTER 1: NATURE AND SCOPE OF STUDY ... 1
1.1 INTRODUCTION ... 1
1.2 PROBLEM STATEMENT ... 2
1.3 OBJECTIVES OF STUDY ... 3
1.3.1 Primary Objective ... 3
1.3.2 Secondary Objectives ... 3
1.4 SCOPE OF THE STUDY ... 4
1.4.1 Field of study ... 4 1.4.2 Geographic boundaries ... 4 1.5 RESEARCHMETHODOLOGY ... 4 1.5.1 Literature study ... 5 1.5.2 Empirical study ... 5 1.5.3 Data collection ... 6
1.6 LIMITATIONS OF THE STUDY ... 6
1.7 LAYOUT OF THE STUDY ... 7
CHAPTER 2: ENERGY POLICIES AND STRATEGIES IN SOUTH AFRICA ... 10
2.1 OVERVIEW ... 10
iv
2.2.1 Apartheid Era (1948 – 1994) ... 12
2.2.2 The Years after the First Democratic Elections (1994 – 2000) ... 12
2.2.3 The Period after 2000... 14
2.3 INCENTIVES IN SOUTH AFRICA ... 16
2.3.1 The Rebate Model ... 19
2.3.2 The Standard Product Model ... 19
2.3.3 Standard Offer Model ... 19
2.3.4 The Energy Service Company (ESCO) Model ... 20
2.4 TAX INCENTIVES ... 20
2.4.1 12I Tax Incentive Scheme ... 20
2.4.2 12L Tax Incentive Scheme ... 20
2.5 ENERGY EFFICIENCY ... 21
2.5.1 Global Overview ... 23
2.5.2 South African Overview ... 25
2.6 BARRIERS TO ENERGY EFFICIENCY ... 26
2.7 ENERGY EFFICIENCY MEASURES ... 29
2.8 CHARACTERISTICS OF ENERGY DEMAND REDUCTION TECHNOLOGIES ... 30
2.9 ARGUMENTS FOR CORPORATE EE STRATEGIES ... 33
2.9.1 Energy efficiency strategies and best practices ... 34
2.9.2 Pew Centre Survey Findings ... 34
2.9.3 The Seven Habits of Highly Efficient Companies ... 37
2.10 SUMMARY... 37
CHAPTER 3: EMPIRICAL INVESTIGATION ... 40
3.1 INTRODUCTION ... 40
3.2 RESEARCH METHODOLOGY ... 40
3.2.1 The target population ... 40
3.2.2 Sample selection and procedures ... 41
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3.3 FINDINGSFROMTHEEMPERICALSTUDY ... 42
3.3.1 Demographic information of the sample ... 42
3.3.2 The Energy Matrix ... 44
3.3.3 The Energy Matrix – Test for Differences ... 45
3.3.4 Energy Matrix – Energy Policy ... 48
3.3.5 Energy Matrix – Company Structure ... 49
3.3.6 Energy Matrix – Skills & Knowledge ... 50
3.3.7 Energy Matrix – Information Systems... 51
3.3.8 Energy Matrix – Marketing and Communication ... 51
3.3.9 Energy Matrix – Investment ... 52
3.4 ENERGY DRIVERS ... 53
3.5 THE NEED OF AN ENERGY BUSINESS UNIT ... 54
3.6 OPERATION AND IMPLEMENTATION OF EE INITIATIVES ... 56
3.7 REMOTE ELECTRICITY METERING ... 57
3.8 THE IMPACT OF EE INITIATIVES ... 57
3.9 INVOLVEMENT IN ENERGY MANAGEMENT STRATEGIES ... 57
3.10 REBATE INCENTIVES ... 58
3.11 KEY PERFORMANCE INDICATERS ... 59
3.12 BARRIERS TO ENERGY EFFICIENCY STRATEGIES ... 61
3.13 SKILLS NEEDED ... 62
3.14 OPEN-ENDED QUESTIONS... 63
3.14.1 Suggestions to improve EE activities within their companies ... 63
3.14.2 The biggest Successes toward EE strategies ... 64
3.14.3 Significant Setbacks ... 64
3.14.4 Largest Ongoing Challenges towards Implementing EE Initiatives ... 64
3.15 SUMMARY... 65
CHAPTER 4: CONCLUSIONS AND RECOMMENDATIONS ... 69
vi
4.2 MAINFINDINGS ... 69
4.2.1 High intensity user group ... 70
4.2.2 Listed Companies ... 71
4.2.3 The SME Companies ... 71
4.2.4 Overall findings ... 72
4.3 RECOMMENDATIONS ... 74
4.4 CONTRIBUTION ... 76
4.5 AREAS FOR FUTURE STUDY ... 76
4.6 CONCLUSION ... 77
LIST OF REFERENCES ... 78
ANNEXURES ... 1
ANNEXURE A: ENERGY MATRIX ... 1
ANNEXURE B: DESCRIPTIVE STATISTICS OF SAMPLE POPULATION... 2
ANNEXURE C: QUESTIONNAIRE ... 3
vii
LISTOFFIGURES
FIGURE 1:LAYOUT OF THE STUDY ... 7
FIGURE 2:OPERATIONAL CAPACITY AND RESERVE MARGIN ... 10
FIGURE 3:SOUTH AFRICA:HISTORY OF ELECTRICITY SUPPLY ... 11
FIGURE 4:POLICY &STRATEGY DEVELOPMENT IN SOUTH AFRICA ... 13
FIGURE 5:PHASES IN SAVING ENERGY ... 22
FIGURE 6:THE IMPORTANCE OF ENERGY EFFICIENCY PRACTICES ... 24
FIGURE 7:LEADING MOTIVATIONS TOWARDS IMPLEMENTING EE STRATEGIES ... 35
FIGURE 8:KEY CHAMPIONS INVOLVED IN ENERGY EFFICIENCY STRATEGIES ... 35
FIGURE 9:GREATEST CHALLENGES IN IMPLEMENTING EE STRATEGIES ... 36
FIGURE 10:DEMOGRAPHICS OF SAMPLE SIZE ... 43
FIGURE 11:ENERGY MATRIX ... 45
FIGURE 12:ENERGY STRATEGY DRIVERS ... 53
FIGURE 13:NEED OF AN ENERGY BUSINESS UNIT ... 54
FIGURE 14:ENERGY MANAGEMENT UNIT DEVELOPMENT ... 55
FIGURE 15:CHALLENGES IN IMPLEMENTATION AND OPERATION OF EE INITIATIVES ... 56
FIGURE 16:INVOLVEMENT AND COMMITMENT ... 58
FIGURE 17:REBATE SCHEMES ... 59
FIGURE 18:KEY PERFORMANCE INDICATORS ... 60
FIGURE 19:BARRIERS IN ENERGY EFFICIENCY ... 61
viii
LIST OF TABLES
TABLE 1:ANALYTICAL MACRO STRUCTURE OF SOME REBATES
AND TAX INCENTIVES ... 17
TABLE 2:A TAXONOMY OF BARRIERS TO ENERGY EFFICIENCY ... 27
TABLE 3:DSM INTERVENTIONS AND THEIR POTENTIAL SAVINGS (STAND ALONE) ... 29
TABLE 4:SEVEN HABITS OF HIGHLY EFFICIENT COMPANIES ... 37
TABLE 5:ENERGY MATRIX –TEST FOR SIGNIFICANCE DIFFERENCES ... 47
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LIST OF ACRONYMS
ASSP: Application Specific Standard Product
CDM: Clean Development Mechanism
CER: Certified Emission Reduction(s)
CEF: Central Energy Fund
CFL: Compact Fluorescent Lamps
DEAT: Department of Environmental Affairs and Tourism
DME: Department of Minerals and Energy
DoE: Department of Energy
DSM: Demand-side Management
EB: Executive Board of the Clean Development Mechanism
EE: Energy Efficiency
EEDSM: Energy Efficiency and Demand Side Management
EIA: Environmental Impact Assessment
EnMS: Energy Management System
EMO: Energy Management Opportunities
ESCO: Energy Service Company
GDP: Gross Domestic Product
x HIU: High Intensity User Group
HVAC: Heating, Ventilation and Air-conditioning
IPMVP: International Performance Measurement and Verification Protocol
IRR: Internal Rate of Return
kWh: kilowatt-hour
LED: Light Emitted Diode
LUX: Unit of Illuminance
M&V: Measurement and Verification
MW: Megawatt
MWh: Megawatt-hour
NERSA: National Electricity Regulation of South Africa
NEEA: National Energy Efficiency Agency
ROI: Return on Investment
SANEDI: South Africa National Energy Development Institute
SME: Small Medium Enterprises
UNFCCC: United Nations Framework Convention on Climate Change
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The biggest risk is not taking any risk...
In a world that changing really quickly,
the only strategy that is guaranteed to
fail is not taking risks.
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1.1 INTRODUCTION
The rise in energy prices, together with concerns about climate change, has increased pro-active action, globally to mitigate this situation. This resulted in the growing support for actions from world leaders, governments and business on certain energy-related issues has driven corporate commitment and government policy. Corporate commitment, run by the Department of Energy (DoE) in South Africa, develops energy efficiency and demand side management strategies in order to reduce its demand for electricity which is under severe pressure.
The parastatal utility, Eskom, is responsible for approximately 95% of all the electricity generated in South Africa. Eskom’s primary fuel source to generate electricity is coal, which makes it one of the largest contributors of green house gas (GHG) emissions internationally, as well as one of the world’s largest electric utilities when measured against generating capacity (Eskom, 2012).
Eskom has been experiencing supply shortages during their peak generation periods from 2007. During the first quarter of 2008 the electricity supply shortage resulted in blackouts in the country. These blackouts had a detrimental effect on the South African economy. Blackouts occur when the supply is less the demand, electricity shortages occur which results that some part of the country is without electricity for a certain period. The rolling blackouts and loss in production resulted in a decline of 1.57% in the economic growth in the first quarter of 2008 (Inglesi & Pouris, 2010:1). The main reason provided by Eskom for the energy crisis was the imbalance between the market forces of electricity supply and demand. Eskom also claimed that the additional contributing factor was the increase of 50% in electricity demand from 1994 to 2007. This dramatic growth in electricity demand was due to the implementation of the Free Basic Electricity
2 Policy in 2001, as well as the expansion of the economy after the sanctions had been lifted (Inglesi & Pouris, 2010).
During the first quarter of 2012 the electricity grid again experienced immense strain. Eskom has reiterated its call on the South African industry to urgently reduce its electricity demand by at least 10% to prevent rolling blackouts. Eskom also stated that they will commence activating the energy conservation scheme (ECS) if the country fails to reduce its consumption of electricity. The ECS is an initiative which will be imposed by Eskom, forcing specific industries and customers to switch off their electricity for a specific period of time in order to reduce the national electricity demand by 10%. The ECS will then be the only solution to sustain Eskom’s supply and continue with the planned maintenance schedule (Creamer, 2012).
1.2 PROBLEM STATEMENT
Since the electricity crisis, Eskom has been working with government and the industry to analyse the challenges in order to balance the electricity supply and distribution with demand. The Department of Energy (DoE) and Eskom released the policy document “National response to South Africa’s electricity shortage” in January 2008 (DoE, 2008). On the supply side, the document aims to ensure that the R343 billion new electrical generation capacity projects over the next five years stay on track. However, none of the new expansion projects are expected to be operational before 2013 and therefore significant restoration of the Eskom operational reserve margin will require comprehensive interventions on the demand-side (DSM) (Department of Minerals and Energy, 2008).
However, in order to mitigate the supply constraints it is crucial that industry start taking the notion of energy efficiency and demand reduction seriously. The high intensity user group has already been quite successful about implementing energy efficiency strategies. However, to have a sustainable impact in demand
3 reduction all industries small and big should take part in implementing strategies to reduce their energy consumption.
The South African Government has also implemented an energy efficiency strategy, setting a goal of 12% improvement in energy efficiency by 2014, subject to projected consumption (Department of Minerals and Energy, 2008). Energy efficiency initiatives are the fastest and most cost effective way to reduce energy intensity and to reduce GHG emissions.
Energy efficiency (EE) and renewable energy projects will play an enormous role to mitigate the risk regarding the availability of electricity, as well as reducing GHG emissions in future.
1.3 OBJECTIVES OF STUDY
1.3.1 Primary Objective
The primary objective of the research study was to evaluate the needs and barriers that companies face toward the implementation of their energy efficiency strategies.
1.3.2 Secondary Objectives
In order to meet the objectives, the study investigated the important drivers responsible for establishing and driving the energy efficiency initiatives in those companies. Some of the drivers that were assessed were the current energy prices, the GHG emissions, social responsibility and improving their products or services.
The research study will also evaluated the involvement of key personnel and departments as well as some key challenges that companies face towards implementing EE initiatives. Each company’s commitment in employing an
4 energy manager or implementing an energy business unit for its operations was assessed.
1.4 SCOPE OF THE STUDY
1.4.1 Field of study
This study focuses on a sample of three different groups (categories) of companies in South Africa. The barrier to conduct a representative sample of the industry was not feasible, because the scope of this study and the size of the South African industry. The sample was made up of thirty companies (10 company per category) in order to evaluate their seriousness and effectiveness in implementing energy management initiatives in their organisations. The first part of the sample consisted of companies which form part of the High Intensity User-group (HIU), the second sample consisted of companies listed on the Johannesburg Stock Exchange (Listed) and the third sample was assembled from Small Medium Enterprise (SME) companies in South African.
1.4.2 Geographic boundaries
The research study focused only on companies operating within South Africa.
1.5 RESEARCH METHODOLOGY
The nature of this research question means that a quantitative as well as a qualitative approach was followed in meeting the objectives specified in this study. Research is a process that uses current knowledge and information and analyses it in a systematic way in order to obtain or discover new facts about the particular field of study (Welman & Kruger, 2004:2). In order to meet the objectives of this study, a detailed literature review and empirical study was conducted.
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1.5.1 Literature study
A broad literature review was conducted to establish the status quo in South Africa about its seriousness in implementing systems to reduce the energy demand on macro level as well as micro level. This study will mainly focus on electricity reduction, but it is equally important to bear in mind that electricity as well as other energy sources are part of Government Policy development and regulatory activities. The study gives an overview of the supply versus the demand of electricity in South Africa and will include an overview of the current energy efficiency and demand reduction policies of the South African government. It gives an overview of some incentive and rebate schemes available to promote demand reduction, as well as a broad overview of the needs and barriers about implementing energy efficiency initiatives. While investigating the current policies, incentive schemes and initiatives, the researcher reviewed the barriers encountered by industry about these schemes. In order to change the industry’s behaviour, some incentives or perceptions of top management need to be changed. The literature review comprises of textbooks, government acts and regulations, academic journals and research done on the World Wide Web.
1.5.2 Empirical study
The empirical research was done by means of the analysis of quantitative data as well as qualitative interviews. A pilot survey was distributed to a small sample size in order to get feedback on the questionnaire. The feedback from the respondents was used to make amendments before the questionnaire was sent to the sample population. The questionnaire was compiled with the assistance of an existing instrument constructed by the Pew Centre in 2009, called the Global Climate Change Corporate Energy Efficiency Strategy. The research questions were changed to fit the objective of this study, although some of the questions from the existing study were used without changing them.
6 The questionnaire was developed in such a way that the questions were clear and simple. The questionnaire first of all consisted of questions on the type of organisation being investigated. It then investigated the specific drivers the companies experience about implementing energy saving strategies. It was taken into consideration that some of the respondents would not be familiar with all the energy management activities in their organisation. To mitigate this barrier, the researcher limited the distribution of the questionnaire to either top management, energy representatives, or the engineering, facility management or procurement departments.
1.5.3 Data collection
Data was generated by means of the questionnaire, combined with informal interviews with some of the respondents.
The capturing of the data was done by the researcher and the analysis of the data was conducted by the Statistical Consultation Service Department at the North-West University. The researcher tried to enhance the understanding of the reader when explaining the conclusion and interpretation of the results.
1.6 LIMITATIONS OF THE STUDY
The following limitations were identified during this study:
Confidentiality was ensured, but some company representatives were still reluctant to enclose specific information about their operations. The cost, time and the respondents’ availability to participate proved to be a challenge. The SME companies’ participation toward energy reduction initiatives was over-estimated and it necessitated personal interviews with participants.
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1.7 LAYOUT OF THE STUDY
The research study is divided into four chapters. Figure 1 illustrates the layout of the study.
Figure 1: Layout of the study
(Source: Own Compilation)
Chapter 1 explains the framework in which the research study has been conducted and why the research questions are relevant towards the reduction of electricity demand and greenhouse gas emissions. The chapter briefly discusses the electrical supply versus the demand situation in South Africa. The chapter includes an introduction, problem statement as well as the primary and secondary objectives of this study, followed by research methodology, survey layout and limitations of the study. Chapter 1 concludes with the layout of the study.
Chapter 2 consist of a comprehensive literature review on the development of energy strategies and policies in South Africa. The literature review firstly investigated the gap between the electricity supply and demand in South Africa. It
8 gives an overview of the different energy efficiency rebate and incentive schemes available in South Africa. The literature review is then be followed by an in depth review of the needs and barriers companies face about implementing energy efficiency strategies and initiatives. The literature review is followed by reporting on the Pew Centre findings on a study done on companies to identify and report on leading-edge energy efficiency strategies, best practices and barriers indentified in the market. It ends with a summary of the seven habits of highly efficient organisations in the United States.
Chapter 3 provides an empirical study done amongst three categories of companies of different sizes in the South African market. A questionnaire and non-structured interviews were used to understand and meet the objectives specified in this study.
Chapter 4 provides the conclusions and recommendations obtained from the questionnaires and personal interviews, followed by opportunities for possible future research topics related to this research study.
9
We simply must balance our demand for
energy with our rapidly shrinking
resources. By acting now we can control
our future instead of letting the future
control us.
Jimmy Carter
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CHHAAPPTTEERR22::EENNEERRGGYYPPOOLLIICCIIEESSAANNDDSSTTRRAATTEEGGIIEESSIINNSSOOUUTTHHAAFFRRIICCAA
2.1 OVERVIEW
Eskom produces about 95% of South Africa’s electricity - with a maximum generated capacity of 41 194MW - and is also responsible for about 45% of the electricity used in Africa (Eskom, 2012). According to News 24 (2011) Eskom invested about 20 billion rand during the past few years in the re-commissioning of three power stations which had fallen into abeyance for the past 20 years. This investment was done due to the supply constraints and the failing of operational capacity of the existing power generation capacity. Part of Eskom’s strategies to overcome the supply constraint they face, is the building of new power generating operations like the Madupi and Kasile units, implementing renewable power generating initiatives and promoting demand side management and energy efficiency participation.
Figure 2: Operational Capacity and Reserve Margin
(Source: Eskom, 2009 )
11 Figure 2 illustrates the extent of the South African supply constraint. During the electricity crisis in 2008, the reserve margin fell to practically nil, resulting in the implementation of load shedding and conservation measures (Eskom, 2009). As predicted this situation will persist up to 2016 (South Africa, 2010). The situation impacts on the probability of load shedding and rolling blackouts - as experience in 2008 – happening again.
2.2 ENERGY AND POLICY DEVELOPMENT IN SOUTH AFRICA
South Africa’s energy policy development consists of three different periods in the South African history, as illustrated in Figure 3.
Figure 3: South Africa: History of Electricity Supply
(Source: Own Compilation)
The strategic intent of energy policies differed during each period. However, the primary objective has always been the growth of the South African energy supply sector.
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2.2.1 Apartheid Era (1948 – 1994)
During the apartheid regime the focus of energy policy development was on energy security, with the main drive in the industrial sector because of its role in economic growth and security. Electricity provision was only limited to specific ethnic groups who formed only 11% of the total South African population (ERI, 2006:6). Part of the government strategic intent was to focus on energy security for the industrial sector, which resulted in the decision to produce liquid fuel from coal through the government-owned entity, Sasol. Until then all refined oil products had been imported, implying a potential political and economic security risk. Production at Sasol started in 1954 and the Mossgas plant was developed in 1992, both subsidised by the government (ERI, 2006:6).
2.2.2 The Years after the First Democratic Elections (1994 – 2000)
After the 1994 elections, the government’s main objective was to deliver basic services to the poor. These services include basic electricity supply to all, which was resulted in the development of The National Electrification Programme which was implemented from 1994 to 1999. During this period, industry did not participate in EE initiatives; the perception was that it was the government’s responsibility to ensure a stable supply at an affordable price. From 1994 onwards multiple policies were developed to promote and improve energy supply and demand in the country.
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Figure 4: Policy & Strategy Development in South Africa
(Source: Own Compilation)
Figure 4 illustrate some of the important polices and regulations the DoE and the South African Government implemented after 1994.
The National Electrification Programme was followed by the White Paper on Energy which was published at the end of 1998 after consultations with the government, business and the public sector. The White Paper consisted of the following objectives, which form the foundation of South Africa’s energy policy:
Increasing access to affordable energy services
Improving energy governance
Stimulate economic development
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Securing supply by means of diversification.
2.2.3 The Period after 2000
White Paper for Renewable Energy 2003
The Department of Mineral Affairs and Energy introduced the White Paper for Renewable Energy in 2003. It focused on the importance of ensuring energy security through diversification of supply. The purpose - as stated in the White Paper - was to set goals and objectives for Government enabling them to ensure that renewable energy becomes a significant part of its energy portfolio. A target was set of 10 000 GWh of energy to be produces by renewable energy technologies (DME, 2003).
Energy Efficiency Strategy 2005 & 2008
The Energy Efficiency Strategy for South Africa was introduced during 2005 and reviewed in 2008. This was the first Energy Efficiency Strategy for the country with the aim to align energy sector development, socio economic objectives and the development and implementation of energy efficiency practices in the country. The review of the Energy Efficiency Strategy sets a national target for energy efficiency improvement of 12% by 2015 (DME, 2008).
National Energy Regulator Act 2004
The National Energy Regulator (NERSA) was established in 2004 in terms of the National Energy Regulator Act 2004. NERSA was mandated to regulate South Africa’s electricity, gas and petroleum industries. The idea behind the single regulator for the three industries was to improve efficiency and to promote participation by the SME sector in the energy sector.
15
National Energy Act 2008
In November 2008 the South African Government introduced the National Energy Act, with the aim of becoming the corner stone of energy governance and regulations. The act’s main objectives are the following (DME, 2008):
Ensure an uninterrupted supply of energy
Promote diversity in the supply of energy and resources
Facilitate the effective management of energy-demand, as well as conservation of energy
Promote research on energy.
Promote appropriate standards and specification for equipment, systems and processes
Ensure proper collection of data and information relating to energy supply, transportation and demand
Provide for the optimal supply, transformation, transportation, storage and demand of energy;
Provide regulations for certain safety, health and environmental matters pertaining to energy
Facilitate access to energy to improve quality of life
Commercialise energy-related technology
Ensure effective planning of energy supply, transportation and consumption
16 In order to meet the above-mentioned objectives, the Department of Energy Affairs introduced a regulatory body who is responsible to facilitate and manage these activities. SANEDI (South Africa National Energy Development Institute) was introduced as the regulatory body by the National Energy Efficiency Agency (NEEA) and the South African National Energy Research Institute (SANERI).
Other significant energy-related institutions include the National Energy Regulator of South Africa, NERSA (responsible for the regulation of liquid fuels and electricity) and the Central Energy Fund, CEF (involved in promoting energy research, renewable energy and energy efficiency) which became part of SANED, as declared by the 2008 Energy Act (South Africa, 2008).
2.3 INCENTIVES IN SOUTH AFRICA
Government regulations alone are not enough to force industries to reduce their energy demand. Energy prices and incentives play a significant role in promoting and implementing strategies and projects that will lead to a reduction in the demand for energy. The Department of Energy introduced various incentives and rebate models, illustrated in
Table 1, suitable for different sized industries to assist them in reducing their energy demand and becoming more efficient. The following topics will discussed some of the incentives available in South Africa and indicate their suitability for different-sized companies and industries.
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Table 1: Analytical Macro Structure of Some Rebates and Tax Incentives
(Source: Own Compilation)
The Department of Energy drafted its first Energy Efficiency Strategy during 2004 and was reviewed in 2008. It was the first government document aimed towards the development and implementation of energy efficiency practices in the country. The scope of the strategy was the immediate implementation of low-cost interventions, as well as projects with short payback periods. The strategy sets a goal for an overall national improvement in energy efficiency of 12% by 2014. To achieve a 12% reduction in electricity demand, government considered achieving its goal through the following measures (Winkler et al., 2007):
Energy Efficiency standards
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Education, information and awareness creation
Research and development of different EE technologies
Support of energy audits
Monitoring and targeting
Green accounting.
A policy to support the EE and DSM programme for the electricity sector was released in 2010 through the Standard Offer Incentive Scheme. This policy, called Energy Efficiency and Demand Side Management (EEDSM), aims to focus on the effective management of the electricity demand in South Africa with the purpose of reducing demand by implementing energy efficiency interventions within the residential, commercial and industrial sector. The EEDSM policy intends to (DME, 2010):
Provide a structure regarding the regulator’s role in the various EEDSM interventions;
Provide for the integrated resource plan to include EE as a resource standard
Ensure EE is used ahead of more expensive supply options
Provide a structure for tariff-based financial incentives necessary to stimulate energy efficiency
Introduce a governance structure for the standard offer model for financing EEDSM interventions
Provide for regulating certainty regarding the scope and extent of tariff-based financial incentives for EEDSM
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Provide the framework for the setting of targets relating to various EEDSM interventions in the domestic, commercial and industrial sectors.
Eskom is actively involved in EEDSM projects by means of its various rebate models and DSM mechanisms. The following sections briefly explain the different rebate models available in South Africa:
2.3.1 The Rebate Model
In the residential market water heating systems or geysers account for approximately 30% to 50% of the total electricity consumed by an average household (Eskom, 2011). The Rebate Model constitutes a rebate scheme in which a rebate is paid directly to consumers. The model reduces the cost of solar or heat pump technologies significantly.
2.3.2 The Standard Product Model
The Standard Product Model was specifically developed to create capacity to implement small to medium size products in the South African industry. The scope of this programme is to replace less energy efficient technologies with new energy efficient equivalents. The EE technologies are “off-the-shelf” components and therefore the model is referred to as the Application Specific Standard Product (ASSP). The Standard Product Model is widely used in the commercial sector because of the minimum administration cost involved (Eskom, 2011).
2.3.3 Standard Offer Model
The standard offer is a mechanism which acquires demand-side resources through efficiency and load reduction for which a utility (Eskom) purchases the load reductions based on a predetermined rate. The Standard Offer Model is a performance-based programme on energy savings in the commercial industrial and agricultural sector. This model is more complicated and takes longer to be approved, but is still much simpler than the Eskom Model (Eskom, 2011).
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2.3.4 The Energy Service Company (ESCO) Model
ESCOs that are accredited by Eskom operate by establishing a three-way partnership between the ESCO, Eskom and the client and use the expertise of DSM technologies and programmes to determine the best way of obtaining electricity savings for consumers. The ESCO model is for larger guaranteed saving initiatives. Eskom supports these projects by funding up to 100% of the financial benchmark value for viable energy efficiency projects.
Because the ESCO Model is more complex and is mostly used by the industrial sector, it involves substantial capital as well as legal contracts (Eskom, 2011).
2.4 Tax Incentives
2.4.1 12I Tax Incentive Scheme
The DoE and the Department Trade and Industry (DTI) introduced the 12i Tax Incentive Programme that belongs to the Industrial Policy Project of 2010. The allowance focus towards providing investment support in Greenfield as well as Brownfield manufacturing projects (DTI. 2010).
This 12i incentive for manufacturing related projects has a mandatory 10% demand reduction component. According to the DTI, since the Section 12i was announced, the programme had already supported 13 projects with a capital investment value of R21.7 billion (DTI. 2012)
2.4.2 12L Tax Incentive Scheme
More recently the DoE introduced a new tax incentive for companies called Section 2L Tax Incentive Scheme. Section 2L will allow companies a tax deduction determined by a set formula to the amount of energy saved relative to a yearly baseline. This allowance means that taxpayers will benefit from the
21 energy saving, as well as claiming tax benefits from the energy savings achieved (CMVPSA, 2012).
Another benefit is that this tax incentive does not only apply to electrical energy, but to all kinds of energy like fossil fuels, coal and diesel. If tax payers are listed with Sanedi and can provide proof by an M&V professional that the company saved on their energy consumption, then the client has the opportunity to claim.
2.5 ENERGY EFFICIENCY
Government policies, regulations, incentives and other drivers will heavily influence energy efficiency and demand side management development for all the different market sectors in South Africa.
Energy efficiency refers to the improvement or reduction in the demand for energy of a given level of activity like heating or lighting. The reduction in consumption is usually associated with technological changes, like more efficient motors, the installation of heat pumps or renewable energy technologies. However, energy efficiency begins with a change in human behaviour, as well as industry whose “quick demand reduction” which will impact consumption. The diagram below illustrates the process to follow when implementing energy saving initiatives.
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Figure 5: Phases in Saving Energy
(Source: Energy Cybernetics, 2011)
The reduction in consumption can also result from “non-technical factors” like the implementation of an Energy Management System (EnMS) or good operating practices (World Energy Council, 2012). Energy efficiency can have the largest positive effect in reducing the greenhouse gas emission in the world in the short term. This is mostly due to human behaviour and operational efficiency that have a huge impact on the global energy footprint (Prindle, 2010).
The world is pro-actively busy to develop new green technologies but unfortunately this research and development phase needs time to penetrate the market. These technologies - usually in the beginning of their life-cycle - are very
23 expensive. Therefore energy efficiency buys the research and development companies time and assists with positive market penetration.
Energy efficiency presents the lowest GHG emission reduction cost option. It is often a non negotiable option, because it presents financial benefits within a relatively short payback period.
2.5.1 Global Overview
According to the World Energy Outlook 2011 Fact Sheet, the planned policies regarding the use of the escalating fossil energy use will lead to an irretrievable and potentially catastrophic climate change situation. If firm policies are not enforced, emissions will continue to escalate and projections are that in 2035 the energy related emissions could increase with more that 20%, resulting in a temperature increase of more than 3.5% worldwide. The importance in reducing the global ambient temperature by 2% by 2020 is crucial; if the temperature should increase with more than 2% it will have devastating effects on the planet. The goal under the United Nations Framework Convention on Climate Change (UNFCCC) requires that the long-term atmospheric concentration of greenhouse gases (GHGs) be limited to 450 parts per million of CO₂. Currently the average CO₂ level is about 393 parts per million but is increasing rapidly. In order to realise this goal strong policy action is mandatory and the probability of success is approximately 50% in limiting and/or avoiding the global temperature increase to 2°C. (World Energy Outlook, 2011)
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Figure 6: The Importance of Energy Efficiency Practices
(Source: Limaye, D.R., 2011)
Despite this global record, industry still resists the adoption of energy efficiency initiatives. The lack of awareness is possibly one of the most significant barriers towards energy efficiency. The World Bank highlights the pivotal role EE plays - in comparison with alternative technologies - to lessen the energy crisis in the World. As illustrated by this diagram, the renewable energy initiatives and projects are important and will grow between 19 - 23% in the next 17 years. However, EE initiatives need to improve in order to reduce the global temperature, GHG emissions and energy security locally, as well as globally.
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2.5.2 South African Overview
As discussed earlier, the South African government started taking energy efficiency seriously in 2004 with the launch of the Energy Efficiency Strategy. Nevertheless, it was during 2008 when the rolling blackouts occur, that the South African industry started to realise the crisis in the electricity supply of the country. According to the Department of Minerals and Energy, South Africa still has not done enough research into energy efficiency initiatives. It is estimated that energy efficiency initiatives throughout the different sectors in South Africa could still save between 20 - 30%. (DME, 2010)
Energy Efficiency programmes represent a winning solution for consumers, as well as the environment, through the reduction of GHG emissions; in the long term they will lead to improved energy security (South Africa Energy Report, 2011). Energy efficiency has a direct impact on the energy intensity of a country, which can be described as the measurement of the quantity of energy required to produce a product. The intensity level depends on the quantity of energy required to produce the product. According to the South Africa Energy Efficiency Report, the total energy intensity decreased from 1990 to 2009 at about 0.4% per year. However, since 2000, the total energy intensity decreased more rapidly to a 1% per year average (South Africa Energy Report, 2011). Since the total energy intensity target for South Africa is 12%, it is of the utmost importance for industry to be more aggressive in implementing energy efficiency initiatives in order to reach the target of 12% set by government.
The question remains: what should happen before industry starts taking demand reduction seriously. Doug Kuni, MD of the South African Independent Power Producers Association commented on this behaviour from industry. He blamed Eskom for buying electricity back from companies when the electricity supply became under strain. This situation resulted in a perception that the electricity crisis is not as serious as it was in 2008. Because of this, industry does not take demand reduction seriously enough. (South Africa Integrated Energy, 2012).
26 Kellerman also indicated that the South African consumers are wasting millions of rands each year on the demand side due to the inefficient use of electricity. Every unit of electricity saved on the demand side can result in up to three units of electricity less to be generated on the generation side (Kellerman, 2009:12). Den Heijer (2004) summed up the benefits of increased energy efficiency as follows:
Energy efficiency saves the end-user money
Energy efficiency improves the environment
Energy efficiency improves and increases the awareness of energy improvement behaviour
Energy efficiency directly contributes to the reduction of GHG emissions.
2.6 BARRIERS TO ENERGY EFFICIENCY
Sorrel identified six barriers in the public and commercial sector that prevent companies from implementing energy efficiency projects effectively. A two-year research study regarding the barriers to energy efficiency initiatives is illustrated in Table 1. The aim of the study was to identify the barriers and establish if policy and organisational change could have a positive effect to overcome those barriers (Sorrell et al., 2004).
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Table 2: A taxonomy of barriers to energy efficiency
Risk The short paybacks required for energy efficiency investments may represents a rational response to risk. This could be because energy efficiency investments represent a higher technical or financial risk than other types of investment, or that business and market uncertainty encourage short time horizons.
Imperfect information
Lack of information in energy efficiency opportunities may lead to cost-effective opportunities being missed. In some cases, imperfect information may lead to inefficient products driving efficient products out of the market
Hidden Cost Engineering-economic analysis may fail to account for either the reduction in utility associated with energy efficient technologies, or the additional costs associated with them. Consequently, the studies may overestimate energy efficiency potential.
Access to capital If an organisation has insufficient capital through internal funds, and has difficulty raising additional funds through borrowing or share issues, energy efficient investments may be prevented from going ahead. Investment could also be inhibited by internal capital budgeting procedures, investment appraisal rules and the short-term incentives of energy management staff.
Split incentives Energy efficiency opportunities are likely to be foregone if actors cannot appropriate the benefits of the investment. For example, if individual departments within an organisation are not accountable for their energy use they will have no incentive to improve energy efficiency.
Bounded rationality Owing to constraints on time, attention, and the ability to process information, individuals do not make decisions in the manner assumed in economic models. As a consequence, they may neglect opportunities for improving energy efficiency, even when given good information and appropriate incentives.
Barrier Claim
(Source: Sorrell et al., 2004)
A significant hurdle in the implementation of EE and electricity demand reduction was the electricity prices all South Africans paid in the past. The result of relatively low electricity prices was that industry just was not motivated to become more attentive about energy. Various studies confirmed that Eskom’s electricity price was among the lowest in the world. (Mtepa, 2002)
28 In most countries energy conservation regulations, energy labelling and energy efficiency standards play an important part to enhance demand side improvement. South Africa was slow in developing standards and regulations about energy efficiency, which in turn was also a barrier to demand reduction. The main driver towards DSM projects in South Africa is the utility company, Eskom. Energy efficiency, unfortunately, lacks the same driving force that DSM is experiencing. The reason is that Eskom will lose revenue through the reduction of electricity consumption when implementing energy efficiency projects. (Den Heijer, 2004). However, the DOE drafted its first Energy Efficiency Strategy during 2004, and part of the scope was to implement EE and DSM projects to achieve demand savings. These initiatives were implemented by Eskom.
Fawkes (2005) suggested in that barriers in the South African industry are due to attitude, resistance to change, cheap energy resources, lack of capital and uncertainty about long-term projects given the financial instability both internationally as well as locally.
Another hurdle towards realising EE initiatives is that some projects are often not motivated by viable business scenarios. When looking from a return on investment (ROI) perspective, the available investments in energy efficiency projects are estimated to be worth billions of dollars each year. However, the actual investment levels represent only a portion of the existing opportunities (Den Heijer, 2004).
Established financial measurements such as ROI, Internal Rate of Return (IRR), as well as simple payback methods are effective when companies distinguish which projects to include in their budgets. However, organisations tend to evaluate EE projects using the same criteria. This underestimates the added benefit inherent in EE projects which will be financed by the saving achieved. Ironically, organisations who do not implement EE projects will continue to pay
29 Eskom for wasted and underutilised energy, which may be 30% or more of the current utility bills. (Zobler et al., 2003)
2.7 ENERGY EFFICIENCY MEASURES
The change in new technologies and the principle of economics of scale have influenced renewable energy technologies like solar heating as well as LED lighting technologies that resulted in the plummeting of renewable prices. The EEDSM practices change and evolve each year. Energy audits on DSM interventions and their potential savings at different sites have resulted in the findings - represented in Table 3. Although the number of audits was limited, the potential savings for DSM measures indicate opportunities to save, ranging from 5% to 40% on end-user processes (Howells:, 2006).
Table 3: DSM interventions and their potential savings (stand alone)
Use of electricity/measure Considered Ste a m S y s te m Th e rm a l m e a s u re s VSDs Eff ic ie n t lig h ti n g Com p re s s e d a ir s a v in g HVAC Ref ri g e ra ti o n L o a d S h ift in g
Indirect uses – boiler fuel 15% 5%
Process heating 5%
Process cooling and refrigeration 10% 20% Machine drive – included compressed air 5% 5% 15% 15% Facility heating, ventilation, air conditioning 5% 10% 30% 20%
Facility lighting 40%
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2.8 CHARACTERISTICS OF ENERGY DEMAND REDUCTION TECHNOLOGIES
When looking at the segregated DSM savings percentages in Table 3, it is clear that lighting and HVAC have the largest demand savings potential on the demand side.
Thermal Insulation
Energy Efficiency in a thermal system comprises of the building envelop which consists of the floors, walls, roof, windows and doors. It is this envelop that separates the varying conditions outside this from the inside. To do this, the envelope must control the flow of heat, energy, air movement, moisture penetration and solar heat. (Winkler et al., 2005).
Heating Ventilation and Air Conditioning
The heating, ventilating and air conditioning (HAVAC) system delivers conditioned air, heated and cooled, to various parts of a facility. The system consists of motors, fans, ducting, controls, temperature probes, dampers and heat exchange units that are working together to deliver the desired results.
Some of the hints to improve the operation of HVAC systems are:
Switch off air-conditioning if the building is unoccupied
Eliminate re-heating of conditioned air when pre-conditioned air is reheated in a heating-coil in a duct system
Eliminate the mixing of hot and cold air
Set the set points in summer as high as possible, and in winter as low as possible
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Use a computerized control function to operate the different set points, dampers and valves and fans.
Some barriers that prevent the optimal use of HVAC systems include the lack of expertise to operate the system efficiently, lack of awareness of facility managers and a perception that energy service is not an integrated part of the facility manager’s responsibilities. The latter results in a possible lack of funds, due to incorrect budgeting (Winkler et al., 2005).
High Efficiency Motors
Electric motors account for about 33% of all electricity used in the industrial sector and almost 50% in the commercial sector. Like the HVAC system, the electricity consumed is mainly due to the use of electric motors and fans in the system. Energy Efficient motors like VSD motors are readily available and are up to 8% more efficient than the standard induction motors (Barney et al 2008). Fitting variable speed drives (VSD) on fans can reduce the energy consumption by 15% per square meter (Winkler et al., 2005).
Efficient lighting systems
As indicated in Table 3 the lighting system provides many opportunities for cost effective energy savings. The lighting levels in industrial facilities encompass only a small part of the total energy bill and are cost affective to implement because of the simplicity of identifying EMO in industrial processes. Another benefit of the replacement of EE lighting initiative is that it creates awareness about becoming more energy efficient. Some initiatives include:
Replace fluorescent lamps with magnetic ballasts with lamps with electronic ballasts
Install a photocell control system to adjust lighting level according to the LUX level (daylight harvesting)
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Exchange incandescent lamps with compact fluorescent lamps (CFL) or light emitting diode (LED) technology
Replace inefficient fluorescent lamps with T-5, T-8 or LED lighting technology with occupancy control
Replace bill board signage with LED technology
Replace Mercury Vapour lamps with High Pressure Sodium lamp or CFL lamps
Reduce lighting levels in areas where illumination is above the maximum level
Introduce skylights and other building design features to improve daylight harvesting (Barney et al., 2008).
Barriers to efficient lighting systems include the initial cost to replace or refit the existing lighting system, split incentives, lack of consulting engineers in efficient building energy practices and a lack of understanding the rebate structure available to replace inefficient lighting.
Heat Pumps for Water Heating
A heat pump will reduce the energy consumption of a normal resistance heater with approximately 70%. Part of Eskom’s rebate scheme is to reduce the barriers because of the high investment cost and assist consumers to install heat pumps.
Solar Water Heating
Solar water heating is becoming one of the fastest growing demand reduction initiatives to replace existing electric geysers in the South African market. One of the barriers to solar water heaters is the high investment cost, installation barriers by technicians and the possibility of operational problems (Winkler et al, 2005).
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Compressed Air Systems
Compressed air is probably the most expensive energy source on site. Of the total energy supplied to a compressor, as little as 10% may be converted into useful energy. The average leakage rate is estimated to be between 20% - 50%. Some off the energy saving opportunities are:
Replace less efficient equipment and install VSD drives
Use heat exchange technologies to optimize heat from the compressor for other purposes like water heating
Implement a leak detection system to reduce leaks
Use compressed air for what it is intended
Install a computerized control system.
2.9 ARGUMENTS FOR CORPORATE EE STRATEGIES
When examining this literature review it is evident that the consumption of energy is at a critical stage in South Africa. The factors that drive policy and strategy development are largely due to the risk of electricity security in South Africa. This is mainly due to a lack of proper strategic planning of the depletion of their existing electrical supply infrastructure, economic growth and the electricity supply to all citizens within the South African borders.
As mentioned in this chapter, mitigation plans started in 2004 when the government introduced the first Energy Efficiency Strategy with the objective to implement strategies and plans to limit the electricity security risk. The second driver, which promotes policy and incentive development, was to reduce GHG emissions in order to limit the global increase in temperature. This global crisis resulted countries starting to share their knowledge regarding energy efficiency,
34 best practices and the allocation of energy efficiency funds to promote the reduction of GHG emissions in all countries.
2.9.1 Energy efficiency strategies and best practices
The Pew Centre on Global Climate Change did extensive research on companies to identify and report on leading-edge energy efficiency strategies, best practices and barriers indentified in the market. It was found that those companies with successful energy efficiency strategies engaged all people at different levels and across all functions in their organisations and by breaking down the walls between different business units and other organisational domains. This kind of winning strategy goes beyond cost management, productivity improvement and innovation; it actually created new streams of customer and shareholder value (Prindle, 2010).
2.9.2 Pew Centre Survey Findings
This literature study provides some of the important findings from the Pew Centre study. The first finding was to indentify the drivers or leading motivations towards energy efficiency strategies.
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Figure 7: Leading motivations towards implementing EE strategies
(Source: Prindle, 2010)
It is evident (Figure 7) that the commitment in reducing the carbon footprint was the leading motivation, followed by increasing energy costs.
Figure 8: Key champions involved in energy efficiency strategies
36 The second objective was to identify the key role players, which are involved in implementing strategies and managing the energy demand reduction. Figure 8 illustrates the involvement of the different management levels. Senior management, followed by plant and facility managers were identified as the key role players being involved in energy efficiency strategies.
Figure 9: Greatest challenges in implementing EE strategies
(Source: Prindle, 2010)
Figure 9 illustrates the challenges faced by the companies in order to implement energy efficiency strategies. These challenges include funding, employee engagement, top management commitment, time constraints and a lack of knowledge. Product funding was the greatest challenge these companies faced to implement strategies to reduce the demand in their organisations. These findings should be compared with the finding in the empirical study to identify differences as well as correlations between companies in the United Sates and the South Africa.
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2.9.3 The Seven Habits of Highly Efficient Companies
This literature study is concluded with an illustration in Table 4 of the seven habits of highly efficient companies. These habits were reported by the Pew Centre; previous programmes like Energy Star were also engaged (Pew, 2010).
Table 4: Seven Habits of Highly Efficient Companies
* Efficiency is an integral part of corporate strategic planning and risk assessment and not just another cost management issue or sustainability "hoop" to jump through.
* Efficiency is an ongoing part of the organisation aspiration and metrics for itself.
* At least one full-time staff person is accountable for energy efficiency performance.
* Energy efficiency is part of the company's culture and core operations.
* Corporate energy management leadership interacts with teams in all business units.
* Employees are empowered and rewarded for energy innovation.
* Energy performance results affect individuals performance reviews and career advancement paths.
* Goals are organisation-wide. * Goals have specific target dates.
* Goals are translated into operating/business unit goals. * Goals are linked to action plans in all business units * Goals are specific enough to be measured * Goals are updated and strengthened over time
* The system collects data regularly from all business units. * Performance data is visible to senior management in a form they can understand and act upon.
* The data is normalized and baseline. * Energy Performance data is shared internally and externally. * Data collection and reporting is as glandular as possible. * The system is linked to a commitment to continuous improvement.
The system tracks performance against goals in a regular cycle.
* The energy manager/team has adequate operating resources. * Companies invest in human capital * Business leaders find capital to fund projects.
* The company has met or beat its energy performance goal. * Resources are sustained over a multi-year period. * Successful energy innovators are rewarded and recognized.
* An internal communication plan raises awareness and engages employees.
* Success are communicated externally.
4. The Strategy Relies on a Robust Tracking & Measurement System
5. The Organisation Puts Substantial Resources into Efficiency
6. The Energy Efficiency Strategy Shows Demonstrated Results
7. The Company Effectively Communicates Efficiency Results 1. Efficiency is a Core Strategy
2. Leadership & Organisational Support is Real & Sustained
3. The Company Has SMART Energy Efficiency Goals
(Source: Prindle, 2010)
2.10 SUMMARY
Energy efficiency and demand reduction is a reality. It is past the stage that consumers can do blame shifting to governments or the utility. If consumers do not start changing our habits towards using energy more responsibly, nature will guarantee some horrific effects on our climate.
38 From the literature review, it is apparent that government and various stakeholders are implementing policies and strategies to mitigate the supply constraints. The rebate and incentive schemes available is mainly due to reduce the supply constrain in electricity. However, internationally governments are being pressured to start reducing the GHG emissions footprint to support strategies to reduce the carbon intensity.
Numerous challenges and barriers were described towards the implementation of energy efficiency projects and management strategies. The literature review conclude with some arguments toward the implementation of corporate energy efficiency strategies. Best practices were discuss following a study done by the Pew Centre of Global Climate Change. The next chapter describe the empirical investigation to meet the primary objective of the research study to evaluate the needs and barriers that companies face towards the implementation of their energy efficiency strategies.
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However beautiful the strategy, you
should occasionally look at the results.
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C
CHHAAPPTTEERR33::EEMMPPIIRRIICCAALLIINNVVEESSTTIIGGAATTIIOONN 3.1 INTRODUCTION
In the previous chapter, a literature study was conducted on the different incentives and policies on promoting energy efficiency and demand reduction in South Africa. The impact on the needs and barriers were also described, both globally and locally. This chapter covers the empirical investigation in order to determine the impact and barriers of the different business sectors. The research will provide insight concerning the level of preparedness and progress in implementing an energy management system, the important drivers driving the energy efficiency initiatives and give some insight into the needs and barriers the companies face about the implementation of their energy efficiency strategies.
The objective was to analyse the data generated by means of a questionnaire as well as interviews that were held with some of the companies and relevant stakeholders in order to formulate conclusions.
3.2 RESEARCH METHODOLOGY
3.2.1 The target population
The target population chosen for this study consisted of three groups of companies, each of different size and category operating in South Africa. The population includes the High Intensity User Group (HIU), which comprises of mining, and material manufacturing sectors with an exceptionally large energy footprint; companies listed on the JSE (Listed), but not part of the HIU, as well as a group of Small to Medium Sized (SME) companies in different sectors in the industry. The rationale behind the three categories was to establish whether commitment and managing their energy demand have an impact on the size of a company’s overall strategies.
