Taking a profitcentric approach to navigation of energy transition
With the expected implementation of the Carbon Tax Bill in 2019, amid rising energy prices, companies should consider developing new energy strategies to curb their energy consumption, says financial advisory firm PSG Group subsidiary Energy Partners engineering head Barry Drotsche.
The ideal strategy to contain and manage the energy spend of a business should include, firstly, the relationship between the company’s profits and its energy expenditure, which can also help to reduce the carbon footprint, he says.
“Each operation is different and a business owner has to know whether a chosen solution will provide the best return on investment. It is, therefore, important to understand how much of the energy costs are absorbed by the business, how much can be passed on to customers and which parts of the operation is responsible for unrecovered energy spend.”
It makes sense to invest in energy-saving measures that are primarily focused on reducing the costs to the operation. Energy management measures, such as having active control measures in place, using efficient lamps and running air-conditioning during early off-peak times, could have a more pronounced effect on profit margins than installing solar photovoltaic (PV) systems, he highlights.
However, businesses that have to absorb more of their daily energy costs without being able to pass the costs to clients could benefit from investing in generation capacity, such as PV or hybrid energy solutions, which are more cost effective than the grid.
“A manufacturing operation or a business that has to keep its own pricing low for customers to remain competitive will see a direct link between its total energy expenditure and its profit margin. Investing in a PV system to reduce the amount of electricity it takes from the national grid during daylight hours may, therefore, be the logical first step in this instance.”
Drotsche adds that effectively measuring electricity consumption and quantifying the effects of different energy-saving interventions are paramount.
He points out that having an in-depth understanding of energy-saving strategies from the start will enable a business to build a solution around its individual needs.
“A thorough understanding of what a company needs to grow its profit margin increases the ability to innovate around existing challenges and obtain the most profitable solution for the business,” Drostsche concludes.
Comments
The
functionality
you are trying to access is only available to subscribers.
If you are already a subscriber, you can Login Here.
If you are not a subscriber, you can subscribe now, by selecting one of the below options.
For more information or assistance, please contact us at subscriptions@creamermedia.co.za.
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation