While South African companies recognise the potential to reduce costs and emissions through improved energy efficiency, and have successfully introduced certain mitigating measures, there remain “substantial” opportunities for further innovation, investment and process changes for greater energy efficiency gains, asserts a recent report by market researcher Nielsen.

The research, which was conducted on behalf of the Energy Efficiency Leadership Network (EELN), a programme of the National Business Initiative (NBI), found that energy efficiency initiatives were most successful in companies with long-term strategies and a formal structure to support energy efficiency improvements, rather than those who adopted “kneejerk” responses to the threat of carbon taxes and high energy prices.

Of the 30 large companies that participated in the research, 33% had only implemented formal energy efficiency initiatives at an executive level.

Only 8% of companies had a dedicated structure for energy efficiency, while 13% were currently developing a formal structure.

“These findings are critical in determining how the private sector can be supported by our programmes in the future,” said NBI’s head of energy Valerie Geen, adding that some of the issues that large companies were struggling with would be important points for consideration when barriers to energy efficiency were being dealt with.

Among the most pressing recommendations that had emerged from the Nielsen study was the need to embed a culture of energy efficiency in bottom-line calculations and managers’ performance measures.

Moreover, energy champions should be recognised and incentivised, while the value of energy audits should be demonstrated to local businesses.

In addition, the report, which was co-funded by the South African German Energy Partnership (Sagen) and the German Development Agency (GIZ), found that government should establish innovative funding solutions and incentives to promote investment in new technologies.

It further called for energy efficiency to be promoted among real estate agents and property owners, and for solutions to be found to challenges associated with energy efficiency in leased buildings.

“South African companies have come a long way in energy efficiency measures that save money and reduce business risk and environmental impact. Areas for continued support to companies include capacity building, agreeing on reporting and measurement methodologies, and support in technology choices for energy efficiency improvement,” commented EELN technical lead Dr Peter Mukoma.

Companies interviewed by Nielsen indicated that they were motivated to embrace energy efficiency, particularly in light of steep increases in electricity prices.

However, according to the research, only 40% of companies had set energy reduction targets, with businesses identifying obstacles to target setting as a lack of energy consumption baselines and accurate methods of measurement.

Moreover, while companies acknowledged the establishment of baselines as important, they found the process challenging, with most neglecting to perform energy audits as a result of high outsourcing costs and a lack of in-house skills or organisational capacity.

Only 26% of companies surveyed had undertaken comprehensive energy audits, while 18% had an energy audit currently in progress and 17% had performed no audits. Most of these were unstructured and informal.

The report also noted that a number of respondents said investing in new production equipment and technologies was considered to be the most effective way to introduce energy efficiency.