Globally, there is a strong increase in the overt commitment that has been made, and the tangible efforts of individuals, organisations and governments to address the impact of climate change on business and society. Shareholders, customers and a broad spectrum of other stakeholders are increasingly vocal in their demand for companies to reduce emissions and play a role in the transition towards cleaner energy technologies. The biggest challenge is to how to achieve it.
South Africa’s legislative challenge
Being the world’s 14th largest emitter1 of Green House Gases and a signatory to the Paris Agreement, South Africa has committed to peak carbon emissions by 2025, plateau for about a decade and subsequently decline. A key element in achieving the ambitious Paris Agreement target is the recently published 2019 Integrated Resource Plan (IRP)2, detailing the long-term road map for energy generation. This includes a commitment from the Government to achieve approximately 33GW2 of low-emissions generating capacity by 2030. In an effort to encourage energy transition, the Government has introduced a carbon tax3, effective from June 2019. The current levied rate of R120/tCO2e is low by international standards; so the plan is to reduce it further by various tax-free allowances. However, it is expected that the tax will be increased after the initial review period.
What can industrial companies do?
Energy-intensive industries have a critical role to play in the transition towards cleaner, more sustainable energy technologies in South Africa. Companies in these industries now need to take proactive steps, to remain at the forefront of energy transition.
Over the past 20 years, Partners in Performance has worked with many industrial organisations to significantly reduce the environmental impact of their operations, through the optimisation of energy consumption and reduction in Green House Gas (GHG) emissions. Our firm works extensively in the industrial sector, where we assist our clients to plan and execute energy strategies that unlock long-term financial benefits whilst migrating towards sustainable energy profiles. Our work with clients focuses on four key levers:
- Increase energy efficiency
- Transition towards lower emissions sources
- Optimise consumption profiles
- Capture and reuse of energy
Increase energy efficiency
Many industrial companies have the opportunity to compress their energy usage through targeting their main energy-consuming processes. Often, they are able reduce their consumption and greenhouse gas emissions by up to 10%.
Here are several examples of how to enhance energy efficiencies:
- Increase the positive impact of maintenance practices in different areas: reduce steam and system heat losses, compress air leakages, improve motor efficiencies.
- Reduce level of rework.
- Cut the ‘idle time’ of non-productive equipment.
- Optimise activities across the value chain to make the operating model more energy efficient.
For example in Mining, shift to higher intensity blasting to lower the energy required for secondary crushing
Transition towards lower emissions sources
Given the natural environment in which they operate, most South African industrial companies are able to generate significant energy from low emission sources, reducing the unit cost of electricity by as much as 30%.
Shifting to alternative energy sources includes the transition from coal or diesel power to gas, as well as a move towards renewables, can either reduce or eliminate emissions.
As a caveat, in order to mitigate the impact of variability in supply, it is necessary to understand consumption patterns and implement balancing mechanisms such as grid support, diesel generators or commercial-scale energy storage.
Optimise consumption profiles
The benefit from understanding consumption patterns and subsequently adjusting behaviours can be significant. It is generally derived through two approaches:
1. Energy arbitrage
- The financial benefit is realised when a consumer is on a time-of-use tariff. Energy is bought and stored in commercial-scale batteries during low-tariff periods, and released into the operation during high-tariff periods.
2. Demand clipping
- This is achieved through proactive management of energy discharge or consumption. Financial benefit is achieved by lowering the maximum consumer demand, thus reducing the maximum demand charged by the utility company.
Capture and reuse of energy
In some operations, it may be possible to reuse, repurpose or store waste streams. This can include capturing and refocusing lost heat, repurposing waste materials to generate energy, or catching and storing emissions.
Relevant client engagements
Strategically sourced renewable energy reduced carbon emissions by 60% and improved Net Present Value (NPV) by $20m
A remote operation purchased energy from a gas-powered, monopoly-owned, island grid. The organisation wanted to find reliable, alternative power supplies to satisfy their increasing demand while lowering its greenhouse gas emissions.
We helped our client develop a robust technical and commercial case for a gas-based hybrid. This approach provided a balance between high penetration of wind and solar generation, with battery storage. The organisation now have the highest global renewable penetration for an island site and gained strong commercial benefit.
Reduced energy usage from non-bottleneck processes achieving 30% savings in energy costs
We helped a client to map how their energy prices varied over time, combined with the energy usage of non-bottleneck processes. This systematic approach identified that there was sufficient energy and
capacity to run these specific processes outside daily energy peaks.
Conclusion
The business imperative to reduce both energy consumption and GHG emissions is clear. Failure to do so will increase business risk and the cost of doing business, and in some cases jeopardise the existence of the business. Many opportunities exist to rapidly and significantly reduce emissions and energy consumption in existing and new operations.
Partners in Performance is an international consulting firm of business improvement experts with substantial experience in the mining and heavy industry sectors. We help our clients improve safety, increase production, lower costs and optimise Capex. Our clients typically choose to work with us when they need to gain big operational improvements and deliver them faster with longer-term, sustainable impact than might be achieved by doing it alone.
Unleashing potential I Lasting impact
References:
1https://www.carbonbrief.org/the-carbon-brief-profile-south-africa
2https://www.gov.za/sites/default/files/gcis_document/201910/42778gon1359.pdf
3https://www.gov.za/sites/default/files/gcis_document/201905/4248323-5act15of2019carbontaxact.pdf