In SA, many companies have held back on implementing environmental or energy-saving initiatives, arguing they were too complex and costly, with lukewarm investment returns.
The hike in electricity prices, however, has steered thinking in a different direction.
Eskom has been full of gloomy news about the country's supply of late, as SA heads into the winter months, with warnings of continued constraints and possible power cuts.
The situation is likely to remain precarious until units of the country's two new major power stations - Medupi and Kusile - come on stream, in late 2012 and 2014 respectively.
Apart from the threat of blackouts, consumers and businesses face the second of a trio of Nersa-approved price increases, which along with previous hikes in 2008 and 2009, will see the cost of electricity going up five-fold between 2008 and 2014.
So, how are companies responding? Many have already begun participating in energy efficiency initiatives, which form part of Eskom's 'safety net' strategy. Previously, the savings generated through these schemes - in energy and rand terms - didn't make the capital outlay worth it. But as EE Publishers MD Chris Yelland points out, this is fast changing.
One such scheme - Integrated Demand Management (IDM) - aims to incentivise energy efficiency within organisations. The utility's Energy Efficiency Demand Side Management programme, formed in 2004, now falls under the IDM division. This sees Eskom covering a percentage of the cost of projects that enable companies to achieve verified reductions in energy consumption.
“You typically get a consultant in to identify energy-saving opportunities, approach Eskom with the project, and apply for a subsidy,” says Yelland. Eskom will establish whether the project is technically sound, and following completion of the installation, and verification of the achievable energy savings, Eskom could supply up to 50% of the project funding.
Energy is everywhere - it's in your real estate operations, your IT operations, your work force, your supply chain.
Karl van Orsdol, HP
Yelland explains that while energy-saving techniques do have long-term benefits, the business case hasn't been convincing. “These companies aren't doing it for nothing; it will bring ongoing savings, but very often the cost in the beginning makes the return on investment (ROI) unattractive.
“Say you have a payback period of eight years, for example. Now Eskom comes along and says it will cover 50% of the costs, because it will also benefit from the programme. Suddenly, the payback period is cut in half, and it becomes attractive.”
In the past, when the electricity price was still relatively low, the payback periods and rand savings weren't worth the effort. But as the price of electricity has risen, so has the ROI. “If you add a subsidy on top of that, what was a poor ROI a few years ago is now a very good investment,” says Yelland.
In future, he sees energy efficiency becoming a vitally important part of every business.
“I predict businesses will appoint a dedicated energy efficiency manager whose job it is to look at every single opportunity to save energy, in a way never done before in SA.”
Where to next?
So, saving energy is clearly on the radar for local companies. But how to go about implementing measures that could pay off?
In a recent Environmental Leader Webinar, Michel Gelobter, chief green officer of environmental and energy management software company Hara, suggested seeing it in terms of managing 'organisational metabolism'.
“We're seeing a shift from a world where people focus on parts per million of emissions and so on, to a place where people are looking at raw materials and millions of tonnes.” This includes considering what fossil fuels, raw materials, energy and water inputs are required, and how they play out in the organisation at different levels, he said.
According to Gelobter, this process typically follows four steps: discover, plan, act and innovate.
Discovery involves looking at the kinds of natural resource flows the organisation has, and what its historical baselines and usage has been, in order to create an environmental inventory. “But that's really just a starting point,” said Gelobter. “What you want to do is optimise - find ways to reduce emissions and inputs, save money, and ultimately, make more money.”
“So you take that moment in time when you have a clear inventory, and you go into the planning phase. From that historical perspective, you look at where you want to go in future, and bend the curve downwards to a clear target. Then you embed that into a plan and choose a set of actions you can take across the organisation to execute the plan,” Gelobter explained.
The final stage is innovation, which Gelobter says can stem from ideas employees or the public put forward, or from literature. “Try them out in a pilot phase or a small venue, and if they work, turn them into templates for best practice and spread them across the entire organisation.”
Also speaking during the Webinar, Karl van Orsdol, global chief strategist for energy and sustainability management at HP, noted that operational sustainability is to a large extent synonymous with energy use and resource efficiency.
It can also be a powerful vehicle for focused innovation. “We see a strong link between carbon and energy management and operational efficiency on the one end, and innovation in organisational transformation on the other.”
To get to this stage requires gathering detailed data on how energy and natural resources flow throughout the organisation. “You can't manage what you don't measure, and how do you optimise what you can't manage?” he pointed out.
But it's sometimes very difficult to get a handle on how exactly energy is used within an organisation, noted Van Orsdol.
“Energy is everywhere - it's in your real estate operations, your IT operations, your workforce, your supply chain. But often companies don't really know where they spend energy and how it impacts the business.
“It involves looking at where you can optimise costs and how to reduce risks, waste and emissions. How do you manage price volatility and the price risk of electricity if you're operating in 20 or 30 different countries? There are a lot of questions companies have to understand to get a good handle on energy sustainability and what it means in terms of their operations and investments,” said Van Orsdol.
Many companies see that when they venture into these parts of the organisation - the supply chain, facilities, the workforce - there are clear opportunities to save money and reduce energy spend, he added.
However, Van Orsdol also stressed that to invest in sustainable energy management, people need to see real ROI. “It needs to be a strong business decision; it can't just be a 'want to' kind of activity.”
IT factor
According to Wilson Korol, sustainability business leader for Avaya, there are two main ways for organisations to reduce energy consumption: reduce travel and reduce electricity use. In both of these areas, ICT can play a transformative role.
“Leveraging new technologies such as virtualisation and software-based solutions is a great way to minimise resource use while maximising the business value of communications systems,” said Korol.
He added that drivers for sustainability in the ICT sector include customers wanting reduced energy consumption and a smaller carbon footprint, which means making their communications infrastructure as efficient as possible.
According to Korol, another macro trend busy transforming society and the global economy is work mobility and digital collaboration. “The benefits of video communications include greater productivity, as you can have in-person meetings without ever leaving the office. It can bring geographically dispersed teams together for faster decision-making; lower travel costs; and increase employee satisfaction.”
I predict businesses will appoint a dedicated energy efficiency manager whose job it is to look at every single opportunity to save energy.
Chris Yelland, EE Publishers
Kobus de Beer, enterprise brand manager at Dell, says companies need to consider energy as part of a holistic approach to green IT. There are a number of short and long-term measures that can be taken in the data centre, all the way down to the desktop, he adds.
“One quick win specific to infrastructure is to make sure you're using the power management capabilities of the hardware and software you already have.
“If you have the option to purchase new hardware, then it's essential to purchase environmentally-friendly products that conform to industry standards such as Energy Star or EPEAT,” says De Beer. These will contain the most power-efficient components available to deliver the most efficient performance per watt configurations, he explains.
“Another powerful action that can be taken is to ensure your organisation is getting the most it can out of virtualisation in the data centre, which decouples software applications and services from hardware.”
While reduced power consumption is one benefit, there are many more, says De Beer, including conserved space and resources, greater computing flexibility, and improved ROI.
“It's important to continue building your short-term actions into a sustainable, long-term strategy with a full solution of hardware and software implementations.”
De Beer says more and more companies are becoming environmentally-aware and looking at ways to reduce their overheads.
“This is happening for a number of reasons such as the rise in electricity costs and organisations realising that merely keeping systems up and running is expensive, leaving fewer resources available to focus on core business and strategy.
“You shouldn't have to compromise on cost, performance or reliability to make greener choices.”
Share