Many organizations and people are aware of the necessity of decreasing their energy use; doing so has environmental advantages as well as cost savings. However, one of the most significant impediments to widespread adoption of energy-efficient technologies is the high cost of purchasing, installing, and maintaining these systems.
According to Barry Bredenkamp, the South African National Energy Development Institute’s General Manager of Energy Efficiency and Corporate Communications (SANEDI). According to Bredenkamp, one feasible answer is to purchase energy efficiency as a service rather than financing the purchase of cutting-edge energy efficiency technology on the company’s balance sheet, which are continually growing and improving.
“It’s understandable that many people are wary of investing their hard-earned money into technology that may have a long payback period and that may evolve far faster than the actual investment period, requiring new skills in the workforce to maintain and operate these new technologies, especially in these uncertain times.” “They might not think of energy efficiency as a top concern right now,” Bredenkamp added.
Given South Africa’s contribution to global greenhouse gas (GHG) emissions, however, being more energy efficient is becoming increasingly essential. “Because of our reliance on coal, we are contributing to climate change at a rate that is disproportionate to the size of our economy.” We must all make it a priority to reduce our power consumption.”
He argues that many nations are moving away from acquiring and maintaining technology in-house and toward contracting energy efficiency services through Energy Performance Contracts (EPcS). Interest in this solution is rising in South Africa, and it offers a way for facilities to ‘go green’ without making large upfront capital commitments.
The issue of capex can be solved by offering energy efficiency as a service
“Basically, an Energy Services Company – or ‘ESCo’ – obtains the financial support to fund their client’s energy efficiency project,” Bredenkamp says. As a service to the client, the ESCo acquires, installs, and runs the equipment. The client benefits from the energy and environmental savings, and there is an agreement to amortize the technological costs and split the savings based on the performance of the technologies installed and operated on the client’s behalf.
The customer does not have to pay for the technological changes, but he or she still benefits from the financial, environmental, and energy savings that such a project generates. Additionally, it allows businesses to focus on their core business while delegating their energy saving projects to industry experts.” After a predetermined period of time, the customer assumes full ownership of the assets and, if desired, continues to receive 100% of the savings.
“Energy-efficient goods are continuously developing, and the ordinary customer is unlikely to keep up with the pace of change,” says Bredenkamp, referring to the rapid pace of technological progress. The ESCo is incentivised to utilize the most efficient equipment available in this service-based business model, even if it involves upgrading an existing system within the contract time to maximize savings potential.”
In South Africa, this company concept has a lot of promise. While rising power prices mean that investing in energy-efficient equipment will provide a lower return on investment, it may be unrealistic to expect businesses to prioritize this expenditure in the current economic situation.
“The service-based business model makes energy efficiency projects more accessible while also providing local ESCos with business growth prospects – a market that, if pushed further, could provide many job opportunities,” said Bredenkamp.