SA companies recognise the potential to cut costs and emissions through energy efficiency and have successfully introduced measures which save money and reduce business risk and environmental impact. However, there remain substantial opportunities for further innovation, investment and process changes for greater energy efficiency gains.

This is according to new research conducted by Nielsen on behalf of the Energy Efficiency Leadership Network, a programme of the National Business Initiative, funded by the SA German Energy Partnership and the German development agency.

Energy efficiency initiatives are most successful in companies with long-term strategies and a formal structure to support energy efficiency improvements, rather than kneejerk responses to the threat of carbon taxes and high energy prices, the research found.

Of the 30 large companies which participated in the research, in 33% of cases energy efficiency initiatives had a formal structure only at executive level. Only 8% of companies had a dedicated structure for energy efficiency, and 13% were currently developing a formal structure. 

“These findings are important for us in determining how the private sector can be supported in our programmes in the future,” says NBI’s Head of Energy, Valerie Geen. She adds that some of the issues that large companies are struggling with will be important points for consideration when barriers to energy efficiency need to be addressed.

EELN has a critical role helping companies to reduce energy consumption, says Xolile Mabusela, Director for Energy Efficiency and Environment in the National Department of Energy. The network should help government to promote energy efficiency, and at the same time help business to develop energy management strategies, baselines and targets. Mabusela said business has achieved a lot since the National Energy Efficiency Strategy was promulgated in 2005.
Companies interviewed by Nielsen said they were motivated to embrace energy efficiency mostly by recent steep rises in electricity prices and a genuine commitment to sustainability measures. The benefits included cost saving, reduced carbon footprints, good corporate image, positive consumer perceptions and preparation for future legislation linked to energy consumption reporting.

According to the research, only 40% of companies had set energy reduction targets. Businesses said obstacles to target setting included a lack of energy consumption baselines and accurate methods of measurement.

Companies said the establishment of baselines was very important but they found the process challenging. Energy audits are vital to identify energy saving opportunities, but audits were neglected by many companies due to high outsourcing costs and a lack of in-house skills or organisational capacity.

Only 26% of companies surveyed had undertaken comprehensive energy audits. Audits were in progress by 18% of companies, 17% had done no audits at all, and part-audits were conducted by 39%. The research found energy audits were mostly unstructured and informal.

“South African companies have come a long way in energy efficiency measures which 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,” says Dr Peter, Mukoma - technical lead of the EELN. “Across all sectors there are still substantial opportunities for further innovation, investment and process changes for greater energy efficiency gains.”

A number of respondents reported that investing in new production equipment and technologies was considered to be the most effective way to introduce energy efficiency.

A number of recommendations emerged from the Nielsen study, which said an energy efficiency culture should be embedded in bottom line calculations and managers’ performance measures. It said energy champions should be recognised and incentivized, and the value of energy audits should be demonstrated to SA businesses.

Skills should be tackled with the support of the NBI and EELN, and government should put in place innovative funding and incentives to promote investment in new technologies.

The report also 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.

About the National Business Initiative
NBI is a voluntary group of leading national and multi-national companies working together towards sustainable growth and development in South Africa  through partnerships, practical programs and policy engagement.

About the Energy Efficiency Leadership Network
The Energy Efficiency Leadership Network promotes and supports energy efficiency improvements in SA business. It was established by the National Business Initiative  in partnership with the Department of Energy and Business Unity South Africa (BUSA). It currently has 58 signatories representing big business in SA. The chief executives and heads of these organizations and companies have signed a voluntary energy efficiency pledge.

About the South African German Energy Programme
SAGEN aims to make conditions more attractive for investing in renewable energy and energy efficiency. SAGEN helps public organisations and industry associations to achieve their renewable energy and energy efficiency objectives. It is a supporter or the Energy Efficiency Leadership Network