South Africa is set to see the effects of the 15,63% energy tariff hike while navigating the effects of the pandemic, a floundering economy and escalating costs. How do businesses still prioritise energy efficiency as a solution and not incur more overall costs?
The energy tariff hike, which came into effect on 1 April 2020, impacts all customers apart from the poor that will continue to use government’s free basic energy (FBE) service.
The tariff increase comes after the National Energy Regulator of South Africa (NERSA) and Eskom reached an agreement, following an order by the High Court of SA, to add R10-billion to the utility’s allowable revenue in 2021/22.
The above will undoubtedly have a considerable impact on tariff paying customers and put additional financial strain on an economy that is navigating the uncharted waters of the COVID-19 pandemic.
Energy is not only expensive but a liability
The question is therefore what can be done to mitigate the impending tariff hike’s impact on SA’s economy? For one, it is important to acknowledge that energy’s increasing cost will continue to put the economy at risk as businesses and industry struggle to overcome the resultant financial impact of higher energy costs.
Costs, therefore, need be controlled, and energy efficiency and savings remain the answer. Fortunately, there are today numerous feasible options available that can go a long way in helping businesses and industry cut costs whilst improving efficiency and realising longevity.
Effective power management has emerged as an important enabler of organisational energy efficiency. An integrated power and energy management software platform for example enables organisations to optimise its power distribution infrastructure, maximise operational efficiency, and improve bottom-line performance.
So how does it work? A power and energy management solution analyses and mitigates quality related issues while also tracking and optimising equipment performance. Importantly, it investigates energy consumption, uncovering potential saving and accurately allocates energy-related costs.
In real-world scenarios for example, power and energy management software can analyse and isolate the total energy usages from all electrical and piped utilities, identify waste and reduce costs.
The local Mining, Minerals and Metals (MMM) industries are major users of power and as a result will be impacted significantly by the tariff hike. The time is now for these industries to operationalise and integrate sustainability to become the successful resource companies in the future.
However, to realise MMM industries that are energy efficient, concrete steps based on an established sustainability strategy must be taken. Schneider Electric recommends these four important steps:
- Energy efficiency – reliable and efficient power distribution solutions;
- Yield improvement – digital-based integrated operations management;
- Low GHE technology adoption – renewable and micro-grid technology; and
- Green process – green products energy and automation – all part of the circular economy.
This will also see an increased shift by electro-sensitive users such as MMM industries towards self-generation options to save costs.
A sound sustainability strategy can realise numerous benefits such as reducing to minimum of 25% in energy costs by identifying and eliminating losses in energy uses and distribution. This is a significant amount that can go a long way in minimising the impact of the tariff hike.
With a strong sustainability strategy in place, MMM industries stand to benefit from considerable efficiency gains. Here, two pillars: the minimisation of resource wastage; and the optimisation of operations management processes through the integration of process and energy management efficiencies play critical roles.
Digital transformation as a tool for energy efficiency
The key to unlocking business value from digital transformation is to consume less energy without sacrificing productivity or comfort. These two goals, often thought to be contradictory, have come into alignment through the digital transformation of energy management and automation.
Software management tools bring visibility and control over enterprise-wide energy consumption. For example, before, facility managers were in the dark as to whether lights were getting left on. Now, they can automate lighting, HVAC, and other systems to ensure energy is used only when needed.
This above also benefits utilities as it provides full visibility of their network to mitigate energy losses and improving grid performance.
With a central dashboard, businesses can now easily locate and execute performance enhancements.
Ultimately, taking a number of important steps, local business and industry can weather the tariff hike storm while also establishing operations that are based on energy efficiency and sustainability processes and strategies.
By Taru Madangombe, Vice President, Power Systems, Schneider Electric