| Summary: | South Africa (SA) faces an electricity shortage in the next three to five years due to the demand for
electricity exceeding supply. But that does not mean industry needs to grind to a halt. Rather it
demands a concerted and coordinated effort to ensure that the electricity resources, which are
available, are used with optimum efficiency and minimal waste, even as Eskom invests in bringing
new generation capacity online.
Electricity constraints are far from a uniquely South African phenomenon; rather, they are a reality
faced by countries in the developed and the developing world. As a global reality, this gives Eskom
and every South African, the opportunity to share in solutions to the issue. There is a vested interest
for everyone to use less electricity wherever possible. That interest lies in reducing the cost of living
or doing business in reducing the impact on the environment and in ensuring demand doesn’t exceed
supply.
In response to the energy challenges facing South Africa, Eskom has established an Integrated
Demand Management (IDM) Division. IDM is dedicated to ensuring security of electricity supply
through coordinating and consolidating the various initiatives aimed at optimising electricity use and
balancing electricity supply and demand. A key aspect of this programme is the promotion and
implementation of more energy-efficient technologies, processes and behaviours amongst all
consumers.
Through IDM, all of Eskom’s demand management initiatives are brought together in a single
programme. In the past there was a degree of confusion for customers when it came to promoting
demand management initiatives; this was due to various departments within Eskom selling demand
management solutions in isolation from each other. As a result, these were neither synchronised nor
optimised. The result was confusing and difficult for customers to engage meaningfully with Eskom’s
demand reduction initiatives.
The IDM objective is to ensure single ownership of Demand Side Management (DSM) strategies,
objectives and operations throughout Eskom. It takes a market-driven approach to understand and
meet consumer requirements and provides a platform from which Eskom can collaborate with
government, external stakeholders and consumers.
Since inception at the end of the 2012 financial year, the DSM programme in South Africa has realised
a verified demand power saving of 3076 Megawatts (MW). This was achieved as a result of the
various technologies implemented, ranging from Compact Fluorescent Lights (CFL’s) to optimisation
of processes at deep underground mines. The saving achieved to date is mainly due to the initiatives
in the residential sector contributing 2333 MW.
Concerns were therefore raised regarding the slow uptake of electrical energy savings in the
Commercial and Industrial (C&I) sectors. One of the biggest problems cited for poor performance in
these sectors is the onerous Energy Services Company (ESCO) funding approval process for Energy
Efficiency Demand Side Management (EEDSM).
Energy Services Companies (ESCOs) face major problems in obtaining approval for EEDSM projects via
the ESCO model funding process. Some of these problems are: the evaluation process being too
lengthy and too technical; project proposals being rejected as the evaluation process is not well
understood; the need for various reviews by separate technical, financial, and procurement
committees; Eskom did not negotiate contracts in a simple, efficient manner. In view of these
problems, there was an urgent need for an improved process.
This dissertation covers the development of a new IDM process called the Standard Offer (SO) for
Project Developers (PDs) participating in the Commercial and Industrial (C&I) sector of South Africa.
The study will develop a process to simplify the ESCO funding model for better market uptake on
energy efficiency projects.
The benefits of implementing this approach will streamline the process of evaluating project
proposals, reducing the burden on Eskom staff and facilitating a larger pipeline of energy efficiency
projects.
The new SO process was implemented and tested on a large retail store in South Africa. Each step
was evaluated against the requirements of the new process and compared against the present ESCO
process.
It was proven through implementation, the new SO process is successful in increasing market uptake
for EEDSM, improving approval turnaround times and reducing the burden on Eskom staff. === MIng (Development and Management Engineering), North-West University, Potchefstroom Campus, 2014
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