Peter Goldberg, Managing Director, Wingold Illumination


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With the expected Eskom increases over the next five years, retail petroleum service stations are facing reduced profitability and some even closure as profits are continually eroded by rising operating costs. Electricity is one of the costs that can be managed and self generated.

This conference aims to examine best practices in energy efficiency and unpack the options and complexities of generating electricity from renewable energy specifically for retail fuel sites.

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Peter Goldberg, Managing Director, Wingold Illumination

  1. 1. FUTURE SERVICE STATION ENERGYManagement of Costs of EnergySubstantial Savings from Fitting Energy Efficient & LED LightingMy name is Peter Goldberg and I am the owner of Wingold Illumination, an organization that specializesin LED lighting.My talk today relates to LED Lighting and all its benefits and pitfalls.I will also discuss other issues relevant to energy saving which is based on my years of experience gainedin dealing with service stations in South Africa.Over the past few years I have examined and studied lighting, it’s design, the laws and regulations thatapply, the councils’ methods of operation and broader energy management initiatives.I am going to provide you with some insight and knowledge related to energy efficiency and savings.I am sure that by now all of you have been approached by salespeople offering you LED Lighting for yourservice station and all the massive benefits that follow. Free lights, incredible savings, great rebates etc.etc.When dealing with LED Lighting, it is vital to firstly understand the whole concept that surrounds energysavings, as this goes far beyond merely changing light bulbs.It is also essential that you all fully understand the many issues that surround the replacement oflighting with LED.The facts are … You SHOULD save money on your electricity account. You SHOULD save money on maintenance and replacement costs You SHOULD have an improved lighting environment You SHOULD receive a Certificate of Compliance from the installer/supplier You SHOULD qualify for the Eskom Rebate schemes that are offered, and receive the Rebate Lighting SHOULD comply with the requirements of The Occupational, Health and Safety Act You SHOULD receive proof that the lights are approved by Eskom You SHOULD have a base line measurement of your lighting consumption from the supplier You SHOULD have proof of SABS registration where applicable (for safety specifically) You SHOULD receive a minimum of a 2 year warranty on the LED Lights You SHOULD have a payback period of approximately 2 yearsIf these facts were all being delivered, the change to LED Lighting would be a No-brainer. The Occupational Health and Safety Act (OHSAT) prescribes MINIMUM lighting levels that arerequired for almost every possibility. South African National Standards (SABS) has regulations that dictate lighting levels for differentenvironments as well as job functions.
  2. 2.  National Regulator of Compulsory Specifications (NRCS) has regulations relating to the importand local manufacture/assembly of light fittings and lighting before they can be sold in thecountry. Insurance companies require some disclosure in regard to the change of lighting so that thecover offered is not invalidated. Electrical regulations relating to the installation of lighting also feature, and are more than justissuing a Certificate of Compliance.In other words, it is easy to install lighting that saves money, but the lighting must meet all the requiredspecifications.This is unfortunately NOT happening in South Africa.This puts you the dealers at substantial risk.If you are not, or have not, received these benefits and proof, you need to re-evaluate your supplier orhold a meeting with the supplier to establish these facts.It is vital to fully understand the issues that are generally not being taken into account when suchlighting conversions take place or are offered.There are many laws and regulations that relate to energy, specifically in the petroleum industry. Overand above these there are also many regulations imposed by the various oil companies in terms of theirsafety rules and regulations.This talk is to give you some ideas in regard to these matters so that when you are next approached bythe one of over 400 suppliers of LED lighting, you will at least have an idea of what to ask.I will also give you some real case study information derived from service stations that I have dealt with.The most important matter that you need to realize is that energy saving is not merely installing“green” products, like LED lights. It is a total culture that needs to be instilled in your business.Every staff member must be aware of what you are doing and how they can play a role in the energymanagement of your business.Managing Energy Consumption through Business Efficiency andHigh Rate of Return InvestmentThe first step, in order to prepare your business, for an energy management or energy efficiencyprogram is for you to start with an analysis of how and when you are currently consuming energy.This forms the base line from which you can measure the impact of any project that you may undertake.This measurement process mostly also provides an insight into where savings can be made with virtuallyno costs or investment.As a second step it is also recommended that you undertake a full analysis of your business so that youcan evaluate the income being produced by various energy consuming activities.Let me give you some examples so that you can see the benefits that are possible from these first twosteps in the process.
  3. 3. Case Study 11. A site had an electricity bill of approximately R 60,000 per month. This was not a particularlylarge site in terms of litres being pumped, or in terms of its retail offerings.When I did an assessment of the site for a possible LED Lighting retrofit, many issues wereuncovered. These includeda. A double chip fryer was being run 24/7.When we analyzed the income generated, specifically at night, we found that the cost of energyoutweighed the income generated.We immediately implemented an operating instruction to staff that from 8pm every night, thefryer would be turned off completely.During the day only one fryer was run.2. The same site also had display fridges (open in front) that had special curtaining installed. Thiscurtaining was never used. Once again the amount of late night turnover was such that we wereable to lower the curtains, thereby reducing the running time of the refrigeration compressor.3. The automatic doors to the shop were not working, resulting in the air conditioning runningalmost full time to maintain a temperature that was set too low anyway. We changed therequired temperature setting to a comfortable 23 degrees (from 18 degrees). We also repairedthe doors thus controlling the outside air flowing into the shop and reducing the air conditioningrunning time.4. Other issues that we looked into included, refrigerator door seals, toilet, office and store roomlights (being left on when no-one using these rooms), oven capacity vs income generated etc.5. We then assessed the lighting to examine the capital cost that would be required, the Eskomrebate that would be paid and the return on investment.As you will see on the Slide, Case Study 1, the Return On Investment was extremely good, with apayback, at the time, of just over 2 years. Thereafter the reduced overhead or increased profit was overR 150, 000 per year.Not bad for an investment that will show returns for a long time after the repayment period.Because of the investment required, I also gave the dealer the option of replacing only the canopy lightsor only the shop lights, so that he could see which option would give the best return both immediatelyas well as into the future.These options also help those businesses that are currently cash strapped.Now you can see the real benefits that are available to you in an energy analysis and LED Lightretrofits. The returns are immediate, with Eskom contributing to the investment, which will help inpaying for any other energy saving projects that you may consider.Let’s now look at the issues that you need to consider when selecting an energy project as well as whenselecting your supplier.I am not going to go into too much detail for each point as we will then be here for more than a day.1. Analysis of your energy consumptionThe suppliera. Should have all the specialized required equipment and metersb. Should provide you with references
  4. 4. c. Should be qualified in electrical and/or electronic business and preferably registered withSANAS2. LED Lightinga. Must comply with SABS and NRCS requirements.b. Must be approved by Eskom to qualify for Rebatec. Must comply with SANS 10114-1:2005 This determines the light levels required in thedifferent work places.(The light level is measured at approximately 1 meter from the floor. This is known as LUX level.When suppliers talk about the LUMENS this refers to the light level at the light and is of no valuewhen assessing the real light output of a particular LED light.)d. Supplier should take Lux level readings during his assessment. This will show what light levelsare currently running in the various areas of the site. The meter that should be used must becalibrated by a registered authority (A certificate must be able to be produced).These lux levels will be used as a base line for the comparison that will be provided after theimplementation of the lighting project. Obviously full lux levels must be taken after the project iscompleted.e. The electrician used must be able to provide a Certificate of Compliance once the project iscompleted.f. Your insurance company must be advised that you have changed your lighting to LED andshould issue a written acknowledgement that will not affect your cover.The issues above are extremely important in ensuring that the site is compliant with the OccupationalHealth and Safety requirements of the law.Your supplier should have all of the knowledge and certification related to the issues shown above.If not, all I can say is beware.The saving on the investment that may be offered by a supplier through lower pricing, may cause severeproblems at a later stage, if the issues above are not taken into account in the proposal/quotationprovided.It is possible that someone will walk into your site and offer you LED and energy savings bulbs fornothing, claiming that Eskom will pay for the lighting.This sounds great.However, all of the above issues must be taken into account. Failure to comply can be extremelyexpensive.The type of lights offered can also have a major impact on the long term savings that you canaccumulate.An example is using an energy saving light that provides a far lower energy saving than a LED light.The lower savings are what you are stuck with for the long term, resulting in severe losses on potentialsavings, even if you get a large saving on the investment value.3. Assessment of Energy Consumption and LightingOne of the problems that we all face is the reading of meters by the council and the tariffstructure that we are paying.In your industry I have seen many different tariff structures being used by various councils and
  5. 5. within the same council area.If you have undertaken a full analysis of your energy consumption it will be relatively simple forthe professional to determine whether you are on the best tariff for your business. The analysiscan also show the “real” demand and consumption which will allow you to make the relevantdecision about insisting on meters being read regularly.The exercise will also provide accurate readings of consumption which could show up faultymeters (either in your favour or against you).If your account is being based on estimates, it is quite possible that you will not see the benefitsof any energy saving initiative. This is because the council does not base your usage on realconsumption.A study that I undertook for a client, of his lighting, showed a potential saving of approximately20,000kWh per month. This is substantial in monetary terms and the client approved theproject.When I had completed the energy consumption analysis and I had fully analysed the client’selectricity account it was obvious that they were being grossly undercharged by the council.They were being billed for approximately 8,000kWh.Obviously I could no longer guarantee any savings.The organisation has however started to accrue amounts for the probable account that willarrive when this mistake is discovered.The client will at least not receive the massive shock that would have followed this discovery ifhe had not undertaken the full analysis of his consumption.4. Electricity AccountsIt is absolutely essential that you fully understand what you are paying and why. This will bereflected in the energy analysis exercise that should be undertaken. This analysis will costbetween R 7,000 and R 20,000 depending on the detail that is analysed on your site.5. Product QualityThis may sound obvious. But how do you determine whether the quality is any good. The SABSand Eskom approvals are not any guarantee that the product is of high quality, specifically forthe particular use of the product.The supplier must be able to provide references and be willing to install samples in a section ofyour site that allows you to see the light levels, and ensure that you do not have any short termissues (such as bulbs flickering, or “blowing”). This should carry no costs at all.The Warranty offered should not be less than 2 years.This applies to well-known brands as well as unknown brands.In order to successfully manage energy it is necessary to have business processes to plan, monitor, andcontrol energy use, in the same way that you manage other business priorities, such as labour,materials, and other costs.For organisations that do this, energy management is “business as usual”.It is important to understand that electricity or energy management is not a once off activity that allowssavings to be achieved. It has to become part of the culture of the business. Every staff member must betrained and learn about energy management.
  6. 6. In the past electricity was considered to be a necessary cost that was not managed because thealternatives were unaffordable and the charges were determined by “law”.Electricity was considered to be cheap and was always available.2008 changed this perception.As we have all come to realize, electricity is an overhead that needs to be managed and controlled inorder to reduce its impact on profitability and even survival.However, for most of us, the account from the Council, Eskom or our landlord is still “goobledegook”.The Meters that we have on site, provided by our energy supplier (Joburg City or Eskom etc), give us noreal information, and the bills we receive also give no real added value, merely showing what ourDemand is and how much we have consumed in a given period.We then must also put up with the ESTIMATES that are used to assess our consumption and demand.Only to get a terrible costly shock when finally a reading is performed and our bill arrives.We have now arrived at the beginning of the ENERGY MANAGEMENT ERA.Hundreds of “new” products and services are being offered in the market place and incredible stories ofsavings are emerging.However, we do not know if the products and services are in fact going to work, and save us the moneypromised, and therefore we wait and lose even more money.We are now at a point where we have, at least, a basic understanding of some of the products andservices that will enable us to reduce our electricity demand and consumption.These include Solar Power, LED Lighting, Heat pumps, Kilowatt hours and Demand charges.The beginning of any major strategy, such as energy management, raises the issue of the capitalrequirements and competing priorities, which becomes extremely important.Obviously with unlimited capital this would be relatively easy. But in the real world we do not have thisunlimited capital resource.In order to develop an energy management strategy, we need to understand what this implies.A brief definition of Energy Management is“The judicious and effective use of energy to maximize profits (that is, minimize costs) andenhance competitive positions.”(Capehart, Turner and Kennedy. Guide to Energy Management, 2nd Edition. Fairmont Press Inc., 1997)What this means for us in terms of setting goals for actions to be taken include the following ELIMINATE WASTE: Ensure that energy is used at the highest possibleefficiency. MAXIMISE EFFICIENCY: Implement the most appropriate technology—from abusiness case perspective—to meet your needs.
  7. 7.  OPTIMISE SUPPLY: ensure your supply of energy is at the lowest possiblecost.In order to carry out these activities it is patently clear that we need to first gain a full understandingand a picture of how we are currently using electricity/energy.“It is important to understand that electricity or energy management is not a once off activity thatallows savings to be achieved. It has to become part of the culture of the business.”As a result, we need to establish What are we consuming (in terms of energy) What consumes the energy. What the cost of energy is for the different equipment and/or departments in our business. When we have peaks in demand and what causes these peaksThere are a number of steps that one must follow to establish an energy management solution.1. Get to understand what you are charged and how the charging method operates. This meansexamining your electricity account in detail, understanding the charges and how they comeabout.All municipalities, Eskom and Landlords offer different Tariff structures. Are you getting the best“deal” from your service provider? How do you establish the answer to this question? And whatcan you do about it?2. Analyse your business and the turnover/profits generated by each product segment. Then lookat the electricity used to generate this turnover/profit.Eg. Petrol and Diesel is pumped, lights are required at night to be able to offer this product.Compressor needed for tyres.Hot Chips – Chip fryerPies – Microwave ovenEtc etc.3. Analyse equipment using electricity that is essential but is not product segment specific. Eg. Airconditioning, signage, toilets etc etc.It is possible to establish the electricity being consumed by specific equipment etc. An energy consultantcan attach meters to your distribution boards to obtain readings of demand, consumption and time ofuse. This is the start of the process.A full analysis of your energy usage will reveal1. At what time is your demand peaking2. What equipment is causing this peak3. Are your phases balanced4. How is equipment being run and is the equipment correctly maintained to ensure no loss ofefficiency.Refer to Slide for Case Study 2 for savings from LED Lighting.Recently a full analysis of energy consumption undertaken at a service station revealed the followinga. The compressor was running for extreme periods of time – A subsequent check showed leakingair and pipes causing a minimum of R 3,000 per month lost on energy consumption anddemand.
  8. 8. b. The phases were not balanced causing substantial peaks in demand which could quite easily bereduced (Approximately R 2,000 per month)c. Geysers were consuming far too much power. The public area geyser has been switched offsaving about R 700 per month.d. A particular oven being used was running 24 x 7. A newer oven which only operates whenproduct is placed in the oven will save about R 1,000 per month.e. Only the canopy lights had been changed to LED. The other lights will be changed and saveapproximately R 3,000 per monthThe investment in the analysis was around R 14,000 resulting in possible savings of R 140,000 perannum.The total investment in all of the issues uncovered will be well less than R 135,000We have also been able to determine that the tariff that is being paid to Joburg City is in fact the besttariff for this site.An idea of the analysis is shown in the pie chart presented.As you will see, on this site Debonairs is consuming the bulk of the power. This is followed by the AirCons, refrigeration and freezer, followed by the Lights.This has enabled the dealer to now assess his business in terms of turnover generated and profitabilityversus the cost of power and other direct overheads.The assessment of the lighting is shown in Slide 2. This site had already had its canopy lights changed toLED, so the assessment is for the shop only.The Investment required after the Eskom rebate was approximately R 37,000 and this would be repaidby savings in less than 2 years.
  9. 9. Obviously the savings will continue indefinitely.This dealer has implemented an energy saving strategy that involves all the staff.We are working on incentivising staff so that they look after the profit potential as well.