While SMEs may not have the capital to invest in large scale energy saving projects, they can implement measures that are more modest yet still worthwhile.
Satellite images of the Earth at night tell a story of two worlds. Up top there’s Europe and the Mediterranean outline of North Africa, all lit up and sparkling. Below that lies Sub-Saharan Africa, a region that – with a few bright yellow exceptions around Gauteng and the Niger river delta – seems blanketed in blue darkness.
‘With the lowest power consumption per capita in the world, Sub-Saharan Africa is arguably the darkest section of the global village, with investments, social and economic growth and job creation hobbled by frequent outages, load shedding and total blackouts,’ Amadou Hott, the AFDB’s vice president for energy at the time, writes in a recent online post. ‘Over 645 million Africans lack access to electricity. Yet the continent is rich in energy resources, with well over 10 TW of solar potential, 350 GW of hydroelectric potential, 110 GW of wind potential, and an additional 15 GW of geothermal potential. All of this is outside Africa’s huge reserves of coal and gas, which can provide some of the continent’s cheapest electricity. Surrounded by energy wealth, most Africans still wonder why their countries are so power poor.’
Switch that god’s eye view to the daytime, and it’s a similar story when it comes to water. In the north, Europe is lush, green and well irrigated; while Sub-Saharan Africa is a dry, yellow continent where droughts and water shortages have long been a fact of life.
South Africa – despite its bright yellow lights and many rivers is no exception. In February, the Department of Water and Sanitation told a ministerial interactive session on transformation that, without intervention, the country faces a deficit of an estimated 3 000 billion litres of water per year by 2030. The same month brought confirmation that state power utility Eskom was creaking under a debt of R435 billion (representing some 15% of SA’s total sovereign debt).
That scale of debt obviously leads to liquidity challenges and seriously hamstrings the country’s ability to add new electricity connections or support local economic growth. Speaking at the DLO Africa Power Roundtable event in Sandton, hosted by law firm Webber Wentzel in April, then Energy Minister Jeff Radebe emphasised that Eskom on its own could not supply the R1 trillion of investment required in power generation, transmission and distribution needed by 2030, under the government’s Integrated Resource Plan (IRP). Radebe said business’ participation would be essential, adding that he would use his best efforts to remove any obstacles to private sector solutions.
‘Big business, for its part, is moving towards corporate power purchase agreements (PPAs), deals that allow for the direct procurement of renewable energy from Independent Power Producers (IPPs), and are seen as a way to reduce corporate carbon footprints and save on energy costs. Interest in corporate PPAs in South Africa is set to rise even further with the introduction of a carbon tax (June 2019), along with the finalisation of the practical implementation of the 2015 Paris Agreement at the Katowice Climate Change Conference (in December 2018), both of which encourage corporates to set targets for the reduction of carbon emissions,’ Kieran Whyte, partner and head of the Energy, Mining And Infrastructure Practice at Baker McKenzie, and Mike Webb, senior associate at the firm, write in a media statement. ‘As a result, many major global corporates have joined the RE 100 Club, where a corporate commits to obtaining 100% of its energy from renewable resources. The big driver in terms of corporate PPAs, however, will remain the economic benefits, because while non-renewable energy costs are increasing, the price of renewable energy is becoming cheaper.’
So where does this leave the little guys? Small, medium and micro-sized businesses are a key driver of the SA economy. Yet, according to the 2018/19 SME Landscape report, 91% of the country’s small businesses generate annual revenue of less than R1 million a year. Thoughts of PPAs with renewable energy suppliers are a distant dream to these entrepreneurs and that’s even before you consider the spiralling cost of water.
Yet cost-saving digital technologies and Industry 4.0 solutions don’t have to be beyond their reach. Barry Bredenkamp, GM of energy efficiency at the South African National Energy Development Institute (SANEDI), argues that corporates and small business both need to take responsibility to effect change in sustainable energy. ‘Creating awareness at every level of society is a priority not only about electricity and energy but about water and waste too,’ he says. ‘Everything is integrated and resources are limited. Companies of varying sizes can also look at adopting policies such as ISO 50001, which supports organisations in all sectors to use energy more efficiently through the development of an energy management system. It helps people to be aware of what they’re doing and identify opportunities to improve efficiencies and reduce waste.’
Bredenkamp underlines the ‘huge opportunities’ for digitalisation in creating energy efficient solutions. ‘If we do, as we must, take the whole sustainable energy drive seriously, and incorporate Industry 4.0 technologies and up-skill people, we will stimulate the growth of a whole new industry and all that it represents,’ he says.
Smart meters are a powerful example of this kind of data-driven technology. By recording and reporting resource consumption in real time, they help consumers reduce waste and maximise their water or energy spend. In the case of prepaid smart meters, utility companies are able to protect themselves from bad debt because the resource is no longer sold on credit.
Ask Darren Oxlee, chief technical officer at SA metering firm Utility Systems, about the key benefits of smart metering technology when it comes to SMEs, and he’ll rattle them off in quick succession. ‘If you just look at water metering, the major advantages of smart metering are, first, a reduction in non-technical losses, which means a reduction in the amount of treated or potable water lost in the system through leaks and theft,’ he says. ‘Non-technical losses in South Africa cost billions in lost revenue every year. About 37% of water in our system is lost. Reducing these losses would help fund desperately needed infrastructure provisioning and maintenance.’
Next, he points to revenue enhancement, by means of more accurate billing and implementation of prepaid water and end point consumption control, which requires installation of a smart water valve.
‘Water usage has never been managed at the “end point” and introducing this can have a significant impact on water consumption,’ says Oxlee. ‘This is especially important for providing communities with their constitutional right to water while limiting consumption to prescribed daily allocations.’
Finally, says Oxlee, smart meters provide accurate data that is critical to understanding reticulation issues and for capacity planning. ‘Data can also be used to build models based on deep learning and artificial intelligence, giving deeper insight into water usage,’ he says.
Meanwhile, Godfrey Marema, chief operating officer of electronics manufacturer Landis+Gyr South Africa, believes smart metering holds the key to solving challenges, such as electricity bill defaults, billing errors and Eskom’s mounting debt. ‘Smart meters enable municipalities to accurately record electricity usage and read consumption remotely, resulting in accurate billing, thereby improving collections,’ he writes in a recent online post. Implementing smart metering solutions offers utility companies the ability to remotely disconnect non-paying consumers and reconnect them after paying their bills, at a click of a button.
‘To top it all, this new technology enables utilities to remotely detect electricity theft and disable electricity dispensing immediately. The other advantage is that consumers are able to track their consumption and manage their energy usage better through the in-home display units.’
Marema insists that SA cannot ignore the benefits brought by smart metering technology and the need to invest in it. More skilled labour will be required to design, manage and maintain these systems, so the argument that technology will take jobs away doesn’t hold any weight.
‘Smart metering is already available on tap in South Africa – conceptualised, designed and manufactured right here at home,’ he writes, adding that this is a good example of South Africans providing solutions for themselves.
However, most of all smart metering allows for optimal resource usage, and that’s incredibly valuable in the SME space in particular. In a country, and on a continent, where electricity and water supplies are limited – and in a sector of the economy where money is always tight – no drop or pulse should go unaccounted for or go to waste.