Kriel ’ s presentation focused on a number of issues : the need to view cooling systems from a lifecycle cost perspective as opposed to capex ; servitisation ; and several landmark servitisation projects Energy Partners has recently managed .
INCORPORATING COLD CHAIN
ASSOCIATIONS
Outsourced cooling as a service
Based on a presentation to the GCCA Cape Town conference by EP general manager for refrigeration , Dawie Kriel , edited by Eamonn Ryan
Kriel ’ s presentation focused on a number of issues : the need to view cooling systems from a lifecycle cost perspective as opposed to capex ; servitisation ; and several landmark servitisation projects Energy Partners has recently managed .
All images : Cold Link Africa
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key challenge for Africa lies in the urgent need to develop efficient cold chains across the continent , where vast amounts of food are wasted . Kriel noted his personal experience of travelling in Africa and seeing plenty of fresh fruit stacked on the verges of country roads – whereas in towns there is little fresh fruit to be found .
Dawie Kriel , EP general manager for refrigeration
LIFECYCLE COST PERSPECTIVE
Kriel described this as the only way to look at cost – by comparing all the relevant cost elements – so as to gauge the cumulative effect of indirect and direct costs that ought to be taken into account . The biggest direct cost in the cold storage environment is energy , followed by the cost of capital investments , and finally the cost of maintenance .
Indirect financial costs include : temperature losses , security issues , and losses due to lack of management . Those indirect costs are seldom considered , but they can be an order of magnitude more than the direct cost . Refrigeration is a long-term investment , with some ammonia refrigeration plants lasting as long as 50 years , but typically averaging 25 to 30 years . The performance of the plant in large measure determines whether a food business fails or succeeds .
Generally speaking , 65 % of indirect costs come from the price of electricity , and even more so in the case of low temperature stored frozen products which can lift the proportion to 70-75 %. In comparison , capex ’ s proportion is typically 20-25 % over the 20-year lifecycle . Kriel noted that , notwithstanding electricity being the main cost driver , in many cases we most of the time don ' t actually know how much electricity is being used , or whether the amount of electricity used is the correct amount . In contrast ,
temperature and maintenance costs are usually closely monitored – demonstrating somewhat of a misplaced focus on capital expenditure and maintenance .
He noted that the electricity cost is driven not just by consumption but by the applicable tariff structure , with 230 options in South Africa , dependent on location . He noted the concept of coefficient of performance ( COP ) is important to understand – defined as ‘ how much cooling for every kilowatt hour of energy consumed ’. If a user doesn ’ t understand this concept , they will be lost in terms of trying to manage their energy bill .
Energy Partners spent approximately two years building a cooling meter to the point where it could accurately measure COP on behalf of customers . Only with such a tool can one then guarantee both temperature and COP based on actual data , in order to drive down the cost .
When building – or assisting a customer who wants to build – a new cold storage facility , the first issue to consider is the tariff structure that the customer has access to . However , this is not always possible to control because there are many other factors involved in determining the location of a new cold storage facility . Certain municipalities charge double Eskom ’ s rate – an enormous variable in the lifecycle cost calculation .
Solar PV in the South African context should always be integral to any refrigeration design . At the moment , one can probably get solar power at around one rand per kilowatt hour over a 20-year period , compared to somewhere between R1.50 and R2 for grid power .
An energy storage system such as thermal storage should also be seriously considered , but there are many other storage systems , including batteries . Diesel-generated power can be five times the grid cost .
SERVITISATION BENEFITS
This is defined as businesses buying a refrigeration outcome offering rather than a product . It represents an opportunity for businesses which operate cold storage facilities to not own their refrigeration systems , but simply buy cooling from suppliers . It takes the capex off balance sheet , improves efficiency and transfers breakdown risk to somebody who is a specialist ; provides predictable lifecycle costs because now they ’ re paying a tariff ; allows management teams to focus on their own functions ; and guarantees the COP . It provides a number of additional benefits such as shifting to a specialist the risk of unexpected breakdowns , regular business interruption , legal compliance to SANS 10147 , technology upgrades , environmental impact and the requirement for natural refrigerants .
Servitisation gives customers reliable , efficient cooling at the lowest lifecycle cost . Kriel presented a model to put battery , solar and cooling service into perspective for a refrigeration system , with some scenarios . Features :
• 20-year lifecycle cost
• 60 000m 2 facility with refrigerated space of 15 000m 2
• Mostly dry refrigeration
• Two-stage ammonia system
• Low temperature 1 400 kilowatts
• Maximum 1 500 kilowatts
The model thereafter compared the above to a solar system on that roof of 1 500 kilowatt peak , and a battery size of 2 560 kilowatt hours .
Kriel looked at three scenarios involving an owner operating with no solar , no batteries , and COP management :
• Outsourced cooling where the service provider manages the COP to maintain 80 % of day one peak efficiency through the 20-year period .
• Adding a solar PV system
• Adding on energy storage capable of handling four hours of loadshedding
The refrigeration system first cost is R70-million ; the battery cost R31-million ; and R6-million for a diesel generator . Diesel costs R20 / l ; solar PV R1 / kW / hour escalating throughout the 20 years at a fixed 6 %. The outsourced cooling is contracted to escalate at 6 %. For municipal tariff , the model assumed a modest 7 % escalation rate . According to this model , using Cooling as a Service ( CaaS ) would save R95-million over 20 years .
Dawie Kriel describing the Clover Queensburgh case study .
The addition of solar PV doubles that saving to almost-R180 million , noted Kriel .
CAAS PROJECTS
In terms of projects , Kriel observed that Energy Partners was the first provider of CaaS in South Africa , and recently completed a project for Clover – investing in and constructing a R360-million integrated energy solution at dairy producer ( see Cold Link Africa , September ). Clover SA ’ s Queensburgh plant provides solar-assisted cooling , heating and world-class utility management .
The project incorporated steam , refrigeration and solar and saved 40 % on their total electricity consumption , as well as a reduction of carbon emissions of 132 million tonnes over 20 years .
“ We put our money where our mouth is , investing R1.3-billion mostly in refrigeration and solar systems that we own and operate for our customers , and are really excited about prospects in Africa . In terms of the availability of money for energy and energy efficiency projects , there ' s no shortage of willingness to invest in these kinds of assets by banks and financiers ,” concluded Kriel . CLA
Energy Partners spent approximately two years building a cooling meter to the point where it could accurately measure COP on behalf of customers .
COLD LINK AFRICA • January / February 2024 www . coldlinkafrica . co . za 9