How FMCG factories can generate their own energy and save ... · Actual case study • Blue-chip FMCG producer in South Africa • Project development funded by EEP Africa (managed

How FMCG factories can generate their

own energy and save water from their

waste

Mike Smith

Economist, Talbot & Talbot, South Africa

• Fast-Moving Consumer Goods (FMCG) are high turn-over

consumable products

• Packaged foods, beverages, toiletries, over-the-counter drugs…

Introduction to FMCG

Image references: FMCG Futures

Energy

• Water and Energy are a major component in manufacturing

Raw

material

Packaging Raw Water

CO2

Effluent

Image references: HuffPost & Beverage Daily

Manufacturing: Resource use

• Water and Energy are a major component in manufacturing

Beer

Soda Drink

+/- 3.5 litres to make 1 litre beer

Slaughtered

Chicken11 to 17 litres per bird

+/- 3.1 litres to make 1 litre soda drink

Water & Energy Consumption

Energy & Water: Risk / Cost

• Continuity of supply

• Loss of production

• Shut-down, standing costs

• Process damage

Energy & Water: Risk / Cost

-

100

200

300

400

500

600

700

800

900

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Electricity price increase (average) CPI

2008 - 2011

27.4% year-on-year

increase

Electricity in South Africa2000 as base year = 100

694%

increase

since 2000

Energy & Water: Risk / Cost

• Water price

escalation, similar to

electricity price?

• Real cost of water to

be recovered

• Shortages…

Vaal River System

Reconciliation

Strategy already off

schedule

Energy & Water: Risk / Cost

The Solution or Opportunity

The solution: Technology

The solution: Technology

AD MBR RO

Gas

GeneratorBoiler

Effluent

Biogas

Recovered

WaterRecovered

Energy

Brine

Buffered water

storage

65%+

The solution: Technology

AD

Anaerobic Digestion

The solution: Technology

MBR

Membrane Bioreactor

The solution: Technology

RO

Reverse Osmosis

The solution: Technology

The opportunity: Financial

Energy

Water

Effluent

Electricity and/or Fuel Saving

Reduced CO2 Tax

60 – 90% Water Recovery

Reduced volume

Improved quality

The opportunity: Financial

Revenue value breakdown

dependent on:

• Status quo / sources

• Tariff pricing

• Tariff escalation

8.0 years R358 783 382 R74 517 496 17%

Simple Payback Net Saving NPV IRR

-

5000 000

10000 000

15000 000

20000 000

25000 000

30000 000

35000 000

40000 000

45000 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Savings by type

(100000 000)

(50000 000)

-

50000 000

100000 000

150000 000

200000 000

250000 000

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15

Ra

nd

CFADS vs Debt Balance / Retained Savings

Debtbalance /

retained

savings

The opportunity: Financial

Saving opportunities

employed

Water recovery___

Energy recovery___

Effluent discharge___

7.1 years R423 529 871 R109 145 148 21%

Simple Payback Net Saving NPV IRR

-

10000 000

20000 000

30000 000

40000 000

50000 000

60000 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Savings by type

(100000 000)

(50000 000)

-

50000 000

100000 000

150000 000

200000 000

250000 000

300000 000

350000 000

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15

Ra

nd

CFADS vs Debt Balance / Retained Savings

Debtbalance /

retained

savings

Saving opportunities

employed

Water recovery___

Energy recovery___

Effluent discharge___

The opportunity: Financial

Saving opportunities

employed

Water recovery___

Energy recovery___

Effluent discharge___

4.6 years R699 377 302 R259 461 584 36%

Simple Payback Net Saving NPV IRR

-

20000 000

40000 000

60000 000

80000 000

100000 000

120000 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Savings by type

(200000 000)

(100000 000)

-

100000 000

200000 000

300000 000

400000 000

500000 000

600000 000

700000 000

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15

Ra

nd

CFADS vs Debt Balance / Retained Savings

Debtbalance /

retained

savings

The opportunity: Financial

Case study

Actual case study

• Blue-chip FMCG producer in South Africa

• Project development funded by EEP Africa (managed by Nordic

Development Fund [NDF])

Case study: Financial

Water recovery___

Energy recovery___

Effluent discharge___

Project being developed within an SPV as a BOOT (Build, Own, Operate, Transfer)

15-Y operational & product purchase agreement

Client side savings

• Determined by tariff

escalations

• Scenario analysis

indicates 15-Y

savings of:

R 0

R 50 000 000

R 100 000 000

R 150 000 000

R 200 000 000

R 250 000 000

R 300 000 000

R 350 000 000

R 400 000 000

R 0,00

R 50,00

R 100,00

R 150,00

R 200,00

R 250,00

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

R /

m3

9.5% 10% 12% 14%

Case study: Financial

R 0

R 50 000 000

R 100 000 000

R 150 000 000

R 200 000 000

R 250 000 000

R 300 000 000

R 350 000 000

R 400 000 000

R 0,00

R 50,00

R 100,00

R 150,00

R 200,00

R 250,00

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

R /

m3

9.5% 10% 12% 14%

Client side savings

• Determined by tariff

escalations

• Scenario analysis

indicates 15-Y

savings of:

@ 10% - R102 million

Case study: Financial

R 0

R 50 000 000

R 100 000 000

R 150 000 000

R 200 000 000

R 250 000 000

R 300 000 000

R 350 000 000

R 400 000 000

R 0,00

R 50,00

R 100,00

R 150,00

R 200,00

R 250,00

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

R /

m3

9.5% 10% 12% 14%

Client side savings

• Determined by tariff

escalations

• Scenario analysis

indicates 15-Y

savings of:

@ 10% - R102 million

@ 12% - R576 million

Case study: Financial

R 0

R 50 000 000

R 100 000 000

R 150 000 000

R 200 000 000

R 250 000 000

R 300 000 000

R 350 000 000

R 400 000 000

R 0,00

R 50,00

R 100,00

R 150,00

R 200,00

R 250,00

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

R /

m3

9.5% 10% 12% 14%

Client side savings

• Determined by tariff

escalations

• Scenario analysis

indicates 15-Y

savings of:

@ 10% - R102 million

@ 12% - R576 million

@ 14% - R1.2 billion

Case study: Financial

Environmental & development impact

• 3.4 MWp energy capacity

• 28 000 MWh per year

• 10 thousand tCO2e avoided per year

• 876 million litres of water recovered per year

• 197 temporary jobs

• 17 permanent employees

Case study: Impact

Extrapolation

Extrapolated Impact

Extrapolated Impact

25examples

80 MW

700

GWh/year

22 billion litres of water

saved

425 new

jobs

5 000 jobs

supported

Mike Smith

Economist, Talbot & Talbot, South Africa

[email protected]

+27 82 822 4688