Oct 05, 2012
Renewable energy presents major opportunities for SA corporationsBack
DURBAN|Africa|Industrial|Mining|Projects|Renewable Energy|Renewable-Energy|Resources|Africa|South Africa|Able Energy|Biomass Plants|Conventional Energy|Electricity|Electricity Supply|Energy|Energy Costs|Energy Projects|Energy-intensive|Solar Energy|Wind Energy|Martin Sprott
© Reuse this
He observes that there has been a noticeable shift in the last 12 months among heavy industrial companies from relying on the national grid to adopting renewable energy.
AT Kearney associate Niriksha Singh adds that energy-intensive companies, in particular, are more likely to switch from conventional energy to using renewable energy in the near future.
“It is not always possible to get energy from the grid, especially for those companies that are located in remote areas. In these cases, self-generation is necessary,” says Sprott.
Additionally, the United Nations Framework Convention on Climate Change’s seventeenth Conference of the Parties (COP17), held in Durban last year, highlighted the importance of renewable energy.
Sprott says many CEOs and senior officers have acknowledged the importance of renew- able energy. He recalls that, following the awareness raising activities around COP17, there was a noticeable uptake in carbon credit and renewable energy projects in South Africa.
However, he believes there is a need to develop coherent companywide strategies for implementing such projects, as many were only sporadically introduced.
Other challenges faced by companies considering the use of renewable energy include the geographical distance between the point of generation and the point of consumption and the lack of available materials for biomass.
Nevertheless, Sprott is hopeful that more companies will implement renewable energy projects, saying this will create good opportunities not only for the company but also for the surrounding communities where these projects are implemented.
Renewable energy offers a stable and secure electricity supply. It also reduces carbon dioxide emissions, which result not only in less carbon being taxed but also in a company’s reputation being boosted.
Singh agrees that the implementation of renewable energy is a good strategy for all companies, as it drives transformation and communicates to staff and customers that the companies are responsible.
“This is a good way for companies to build loyalty among their customers. A drive towards clean energy can lead to better operational and financial performances,” she notes.
Industries such as mining can imple- ment renewable energy projects to create job opportunities, provide electricity for local communities and as a means of community engagement.
For instance, mining companies can implement biomass projects and involve the local communities in growing biomass resources.
Sprott advises companies to consider partnership structures that will help overcome the capital constraints faced by renewable energy projects, but says a major barrier is the low rate of the return on investment.
“Typical retail companies and companies in other industries will want to see a 10% internal rate of return with relatively short payback periods. Most renewable energy projects, however, have lower rates of return and payback periods of up to 20 years.
“Companies need to find partners that have balance sheets and business models in place to support renewable energy projects. Such companies could be utility companies that negotiate offtake agreements with their partner companies,” he suggests.
Sprott says international development agencies and international development banks can potentially provide risk capital to companies to establish renewable energy projects.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines (150 word limit)
Other Electricity News
Power utility Eskom has implemented regular power cuts this year to prevent the national grid being overwhelmed, as South Africa faces its worst energy crisis in decades, Public Enterprise Minister Lynne Brown said earlier this week, adding that power outages cost...
Recent Research Reports
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
This Week's Magazine
Projected capital expenditure (capex) in the South African automotive assembly industry should reach a record R7.48-billion this year, says the National Association of Automobile Manufacturers of South Africa (Naamsa) in its 2014 fourth quarter business review. Capex...
After several years of navigating project-threatening red tape and currency fluctuations, the 4.4 MW Bronkhorstspruit biogas power plant, which will supply clean energy to a leading automotive manufacturer in Gauteng, is expected to enter production before June....
South African paper and pulp producer Sappi reported earlier this month that it would build a pilot plant for the production of low-cost Cellulose NanoFibrils, or CNF (nanocellulose) at the Brightlands Chemelot Campus in Sittard-Geleen in the Netherlands.
The long-term outlook for Nigeria is a country that has the potential to be very strong. So affirmed International Monetary Fund (IMF) Nigeria Mission Chief and Senior Resident Representative Dr Gene Leon on recently. "But we are starting from a point of huge...
Poor infrastructure planning and inadequate maintenance are becoming increasingly problematic for new developments and the associated infrastructure required to support such developments. In many urban and rural municipalities, the state of infrastructure has been...