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Sibongile Thobakgale, area sales manager for South Africa at Aggreko Africa
Manufacturing is an inherently energy-intensive sector. According to the EIA, 35% of energy consumption in the US is attributed to the industrial sector of which 81% is used by manufacturing. In South Africa, the industry is equally the primary user of power at 52% of the total electricity consumption, and McKinsey points out that the continent as a whole has to redefine its energy consumption profile and approaches to ensure that energy provision is green, reliable and efficient. As manufacturing finds its way out of the dips and troughs caused by the pandemic, organisations are under pressure to invest in energy solutions that meet growing demand without extensive expenditure.
The reality is that manufacturing is one of the key African growth sectors. It can potentially shift the challenges that have limited economic growth and impacted unemployment by providing companies and communities with global opportunities. However, this growth will only be found in the arms of a trusted energy supply that can flex to meet demand and that doesn’t hit the bottom line. Typically, energy costs account for up to 20% of operational costs in this sector – a high price tag, especially when held up against the average business that only pays 1%.
Companies within the manufacturing sector are constantly looking for solutions that will allow them to improve productivity, reduce total energy use and potentially boost investment. There are benefits to reducing energy usage – lower energy demand means a lower carbon footprint, improved environmental impact, and transformed overall business sustainability. This lowered demand alongside trusted and stable energy solutions will also provide the business with improved resilience, sustainability and competitive advantage.
Ticking these boxes and gathering these benefits used to be a complicated, expensive and time-consuming process. Alternative energy solutions were weighty and required significant capital outlay to get on the ground and into operation. However, this is rapidly changing. There have been significant shifts in energy provision solutions over the past two years. Solutions designed to leapfrog legacy issues in access to supply, that are aligned with the unique complexities on the African continent, and that can be realistically implemented without adding excessive zeroes to the bottom line.
These hybrid approaches are designed to incorporate best-of-breed energy provision platforms into a cohesive ecosystem that can flex and adapt to changing business requirements. Considering that the sector is set to hit $667 billion by 2020, manufacturing energy has to be refined and redefined to ensure that companies are not affected by future energy prices and limitations on grid capacity. Self-reliance and resilience are two of the most important factors for success in the modern environment.
One of the energy provision methods that is currently gaining traction is gas. It offers a cheaper cost per KwH and can be outsourced which means that there’s no need to invest in a permanent, fixed plant and the costs that go with its establishment and maintenance. Using an outsourced solution manufacturing organisations can obtain gas on demand at a far lower price point and they can optimise their energy usage while reducing energy waste with meticulous planning and collaboration.
Gas corresponds well with Africa’s industrial growth and needs for reliable supply as the continent is currently home to more than 40% of the global gas discoveries this decade. Virtual pipelines can provide gas to areas that don’t have access to these gas discoveries and can then be used to replace other more carbon-intensive and expensive liquid fuels at the same time. This move to gas is also invaluable in helping the sector to overcome its traditionally negative impact on the environment. Currently, manufacturing and its sub-sectors account for 47% of the carbon emissions from energy usage which is approximately 440 megatons of carbon dioxide equivalent (MtCO2e). The mounting pressure to decarbonise the sector will continue to have profound economic implications for the continent so, because gas production can be flexible increased or decreased based on demand, it can be used as a renewable energy integrator and fill the gaps left behind by traditional energy solutions and sources.
Ultimately, manufacturing is now at a crossroads when it comes to energy investment and performance. By collaborating with companies like Aggreko that have developed robust, sustainable and reliable hybrid energy solutions, the sector can revitalise its energy footprint and its resilience without compromising on its green objectives. The future doesn’t have to be expensive or complicated, it just needs the right partnerships to move forward sustainably.