Industrial Energy Efficiency Project SA Overview of Phase

Industrial Energy Efficiency Project - SA Overview of Phase I Outcomes Alfred Hartzenburg 21 July 2015

IEE – A Global Programme Operational in 17 countries Planned activities in 10 countries Operational South Africa Moldova Russia Turkey Ecuador Malaysia Thailand Viet Nam India Philippines Egypt Indonesia Iran Ukraine Colombia Macedonia Myanmar Planned Other donors activities ü Swiss State Secretariat for Economic Affairs ü UK Department for International Development ü Government of South Africa ü Government of Italy 1

Training Statistics ü >210 Training workshops conducted ü >3 000 Engineers, technicians and managers trained ü 119 National Experts ü 46 National Trainers ü 29 ISO 50001 Lead Auditors

Industry Engagement Participating Large Companies 153 SME Energy Assessments Conducted 231 Companies Reporting Savings 41 Host Training Companies 22 Candidate Companies 90 Demonstration Plants 77 Case studies developed 32 * Some of the 54 Actively Reporting Companies has signed to be Demo Plant for more than 1 Discipline

Industry Engagement Demonstration 77 20% Projects Case Studies Developed 32 8%

SME Energy Audit Trends

Implementation Savings Reported

Actual Savings En. MS / ESO Implementation Savings Achieved System k. Wh CO 2 (tonnes) Rand Value En. MS 901 098 244 857 336 889 608 205 ESO 440 524 889 394 132 237 538 706 1 341 623 133 1 251 468 1 127 146 911 Total (Payback Period less than 2 years)

Performance Summary Project Outputs En. MP benchmarking assessment/study (national and international). Formulation of 2 nd review of NEES Achievements Not Achieved Completed June 2012 Industrial Sector Consultation workshop on En. MP. Not Achieved Adequate numbers of institutions and personnnel accreditated for verification of compliance 29 ISO 50001 Lead Auditors Qualified Advanced (40) and Expert (41) and Vendor (2) Level i. >210 Workshops En. MS and ESO Training courses conducted ii. < 3000 Persons trained (cumulative). Total trained perons - est 2, 000 iii. 119 Experts qualified (cumulative). Establish 3 TRC's. iv. 46 National trainers v. 1 (PTA) established and 1 (DBN) under development. i. 205 energy audits completed i. 231 energy audits completed ii. 17 enterprises implement En. MS ii. 49 enterprises implemented iii. 8 enterprises implement ESO En. MS iii. 58 enterprises implemented ESO 25 case studies documented and widely circulated i. 32 Case studies documented and ii. 29 Case studies in progress Direct Energy Savings - 500 GWh Direct CO 2 e Savings - 478 500 tonnes 1 341 GWh saved 1 251 tonnes CO 2 e saved

Implementation Drivers ECM Implementation Drivers Size (%) annual electricity tariff Increase R² P-Value Significance F 0. 9920 0. 0040 No of Companies implementing ECM's 0. 9005 0. 0511 Electricity tariffs 0. 8930 0. 0550 Cooling Degree Days 0. 7473 0. 1356 Heating Degree Days 0. 7345 0. 1430 IEE Project Team Size 0. 6093 0. 2194 No of training workshops 0. 5049 0. 2895

Implementation Reality

Accelerants to Implementation Management Commitment Other stakeholder interest and support Required Implementation Aid Familiarity with principles of En. M Familiarity with ISO Management Systems eg. 9000 & 14000

Behavioural Economics

Reflections § Sub-metering pays dividends when verifying the performance of energy conservation measures (esp for bottom-up sanity checks) § Develop a strong measurement plan to verify results and see that it gets implemented § Energy savings from operational improvements are not permanent. Savings when plants are down evaporate when plants get busy.

Winning Culture and Environment • Demonstrable and visible top management commitment • An ISO / WCM environment promotes a culture conducive to sustainability • After exhausting no cost improvements a willingness to spend in order to save • Plant stability and reliability • Allocation of resources

Sustainability Failure • Energy cost proportionately low • Limited resource allocation • Low level of operator awareness and interest • Top management unaware and / or disinterested in energy team achievements and challenges • Competing and disruptive reporting priorities • Savings not sustained

Sustainability Failure ”…energy efficiency initiatives that are not monitored and maintained typically have a six-month half-life of their benefits. That is, they lose half of their economic benefits every six months if left largely untouched. ” Emerson’s James Beall, a principal process control consultant who helps manufacturers optimize their processes

Results of SA IEE Project interventions Solomon Coatings: Sockit Manufacturing: Willard Batteries: Mittal Saldanha: The company implemented the IEE Project SME energy assessment findings which turned the company back to profitability. The company saved around R 6, 500 per month over a period 10 months in electricity costs with a resultant increase in production output of 40%. The IEE Project identified four energy system optimisation opportunities and a fuel switch, all of which the Company implemented. The Company installed a paraffin boiler which allowed it to increased its machine pool by 30%. By implementing an En. Ms, supported by the IEE Project, the Plant has saved over R 3 million between 2012 and 2013. As a result of the energy savings the Plant has been expanded with 20% in production capacity. The IEE Project has directly assisted Mittal Saldanha to improve its energy efficiency and reduce production costs. It has facilitated the company saving approximately R 89 million n 2011 in energy costs, helping them to remain in business. SA IEE Project Outcomes 1 4 0 20 416 66 1 237 0 Direct Jobs retained Direct Jobs created 5 20 482 1 237 Total Direct Jobs *Outcomes largely attributed to the IEE Project’s interventions, but acknowledging that other variables would have influenced the outcomes to varying degrees across the study sites. 17 The world’s leading sustainability consultancy Tot Direct Jobs retained = 1654 Tot Direct Jobs created= 90 Overall Direct Jobs = 1744

Mapping Disposable Income* *Calculations in this slide are based on IEE Direct Local Employment = jobs crated/retained as a direct consequence of the IEE Project interventions. Disposable annual income earned by workers (IEE direct employment) living in the local community $ (excluding bonuses and overtime and after deductions and tax) Percentage earnings within local community R 25 mill Income retained p. a. in local community to generate further economic activity 1 2 R 42 000 R 90 000 Disposable Earnings R 206. 3 mill 72% $ Arcelor Mittal Steel Saldanha Works R 5 mill Disposable Earnings R 0. 25 mill 1 Solomon Coatings 2 Disposable Earnings R 0. 7 mill Disposable Earnings R 64. 6 mill 48% 75% Sockit Manufacturing Willard Batteries 18 The world’s leading sustainability consultancy

Acknowledgements • • • Project Funders: dti, Do. E, Seco, UKAid Implementing Agent: UNIDO Project Host: CSIR Project Custodian: NCPC-SA Skills Development: Wynand Van Der Merwe, Sybil Rowles, Phyllis Manamela • Marketing & Comms: Julie Wells, Fatimah Boltman, Constance Mokhoantle • IEEP Project Team: Faith Mkhacwa, Sashay Ramdharee, Milisha Pillay, Ngoanathari Maja, Bianca Latchman, Ajay Trikam, Brent Goliath, Adrian Rudolph, Phumla Makae

Key Milestones & Challenges • • IEEP Phase II National Energy Act 2008: Energy reporting National Energy Strategy Carbon Tax ISO 50002, 50006, 15015 Reliable Power Supply …

thank you any questions? Alf Hartzenburg ahartzenburg@csir. co. za www. iee-sa. co. za