To remain competitive in an environment with limited natural resources and ever-increasing
operational costs, energy efficiency cannot be ignored. From this perspective the need for
Energy Service Companies (ESCos) has arisen to address the supply constraint of national
utilities and emission reductions faced by governments, to mitigate climate change. This has
led to the development of two energy-efficiency finance business applications in South
Africa, namely Demand-Side Management (DSM) under Eskom and the Clean Development
Mechanism (CDM) under the Kyoto Protocol.
The technologies developed by ESCos, primarily for DSM energy efficiency projects, can be
directly applied to generate Certified Emission Reduction (CERs) units, or carbon credits
under the CDM business model. ESCo executives now need to decide which option will be
more profitable; a once-off Rand/MW value from Eskom-DSM or an annual return on
investment (ROI) from selling CERs over an extended crediting period. With a volatile CER
price and bureaucratic registration procedures, it is very important that managers have all the
right information at hand before making such decisions.
A unique energy-efficiency investment decision model is developed that incorporates cost
benefit analysis, based on the ESCos chosen risk profile. All attributes to the model of both DSM and CDM are defined, discussed and quantified into a decision analysis framework that
would minimize risk and maximize profit. These attributes include life cycle analysis,
technology transfer, cash flow, future CER prices, and associated project and political risks.
The literature and background information that builds up to the development of this decision
model serves as a complete handbook with guidelines to the South African energy services
industry and investors.
This study proposes a new energy-efficiency methodology under the United Nations
Framework Convention on Climate Change (UNFCCC) that would increase the amount of
CDM energy efficiency projects in South Africa and internationally. The methodology is
designed to improve control system efficiency of any large electricity consumer instead of
being equipment-specific. This implies that developers can use the same methodology
regardless of whether the end-users are clear water pumping systems, compressed air
systems, fans etc. This will reduce the cost of registering new methodologies with the
UNFCCC and make CDM a more lucrative option to ESCos and other developers.
This new energy-efficiency methodology and finance decision model was used in a case
study to test its validity and accuracy. Two supporting technologies, REMS-CARBON and
OSIMS, were developed in conjunction with HVAC International and tested at the clear
water pumping system of Kopanang gold mine. The results from the case study demonstrated
that this model is an acceptable tool in ensuring that ESCos gain maximum benefit from
energy efficiency finance initiatives.
Due to the experience gained with the modalities, procedures and pitfalls of DSM and CDM,
further suggestions are made for new protocols to follow the Kyoto Protocol post-2012.
South Africa and specifically ESCos could be very well positioned in a global “cap-andtrade”
future carbon market. / PhD (Mechanical Engineering), North-West University, Potchefstroom Campus, 2009
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nwu/oai:dspace.nwu.ac.za:10394/10582 |
| Date | January 2008 |
| Creators | Bolt, Gerhardus Derk |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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