Large energy consumers have warned that Eskom's proposed electricity hikes of 16% a year for five years threaten economic growth and jobs. But environmental experts argue that energy-efficiency measures are being overlooked as a way to address power shortages and rising costs. Some estimate that the cost of energy-saving technologies could be four times less than the cost of new power plants.
The exact figures are difficult to determine because of a lack of data, but even according to conservative estimates the potential savings could be significant.
According to the Energy Intensive Users' Group of Southern Africa (EIUG), large industrial users account for roughly 44% of Eskom's sales. This does not include light to medium industrial users, which when included account for roughly 70% of all Eskom's sales.
Level of transparency
Oliver Stotko, principal environmental engineer at energy services company Carbon & Energy Africa, said it was relatively difficult to measure the country's energy consumption and the potential savings that could be made because of the low levels of transparency and disclosure of information.
But, he said, the measurement of greenhouse gas emissions by a company could provide a good indication of the electricity it consumed and point to potential energy savings, because Eskom's emissions factor was about one tonne of carbon dioxide emitted per megawatt hour.
Greenhouse gas emissions are measured at three levels. Scope one emissions refer to direct, on-site emissions released by fuel burnt by a company during its operations and by company-owned vehicles. Scope two emissions relate to indirect emissions released as a result of the electricity bought and consumed on site. Scope three emissions are those released indirectly, off-site, by, for example, outsourced activities. A number of major electricity consumers have voluntarily signed up to the Carbon Disclosure Project, which annually publishes a report in conjunction with the National Business Initiative.
The 2012 report lists several large users and their global scope two emissions, such as ArcelorMittal South Africa, African Rainbow Minerals and Sasol, to name a few.They recorded scope two emissions of 4 487 197, 1 200 816 and 9 308 000 tonnes of carbon a year respectively.
Using Eskom's emissions factor as a guide, this can provide an approximation of the electricity used by these companies in megawatt hours, according to Stotko.
He said there was "huge scope" for energy efficiency in South Africa, but data, particularly relating to baseline power consumption, was not publicly available or collated and the disclosure of information such as emissions remained voluntary.
"Energy-efficiency technologies are far cheaper than the infrastructure required for new power plants, which effectively power our inefficiencies with respect to electrical energy use," Stotko said. "Some figures report that energy-efficiency technologies are as much as four times cheaper than purchasing new power plants."
Work done by Carbon & Energy Africa indicated that potential electricity savings of about 5% in the industrial sectors of the economy could be achieved. But the estimates are off a 2006 base and are very conservative given the lack of available data, according to Stotko. Sectors such as mining and textiles have some of the highest levels of potential electricity savings — 8% and 9% respectively. Despite the conservative nature of these estimates, the potential savings could be significant.
Stotko estimated that the current electricity consumption of the industrial sector is roughly 120 000 gigawatt hours a year. A 5% saving would equate to 6 000 gigawatt hours a year. Meanwhile, the United Nations Industrial Development Organisation has estimated that, excluding oil refineries, the industrial sectors of developing countries could achieve energy savings of between 25% and 35%. The estimates take into account both fuel-based and electricity savings.
Large energy users have pegged potential savings, especially in respect of electricity consumption, at lower levels. Mike Roussouw, the EIUG chairperson, said the group examined the potential energy savings of the large users, assuming that all the companies launched energy-saving projects and that these could be realised.
The study, conducted in 2011, found that, in mining and related beneficiation industries, the maximum theoretical potential for reductions in scope one emissions was 3.4% in the medium term (or in less than five years) and 8% in the long term.
Scope two emissions
These figures were deemed to be achievable and would not result in a negative impact on the country's gross domestic product. In terms of scope two emissions, the maximum potential savings were between 2% and 4%, which excluded co-generation, according to Roussouw. These findings assumed that all possible future efficiency projects could be brought to fruition and that there would be sufficient capital available to pursue them.
Roussouw said there were a number of reasons for why the numbers were relatively low. Most large consumers treated electricity consumption and cost as part of their business and had already implemented energy-efficiency programmes where possible. This was either to save on costs or, where margins were very slim, to stay in business. Anything more than the savings outlined in the study required "blue-sky" projects, which involved testing new technology or production methods, Roussouw said.
"The newer it is the longer it takes to bring to the market and the less certainty there is that it will be a success. If it was easy, it would already have been done."
Stotko said capital expenditure constraints were a factor for many large companies seeking to manage debt levels in difficult financial times. In South Africa, capital funding is available, although only retrospectively, for approved green projects under Eskom's integrated demand management programme and the department of trade and industry's manufacturing competitiveness enhancement programme.