DRAFT COMPREHENSIVE ENERGY

MANAGEMENT PROPOSITION
FOR FOOD PROCESSING PLANTS

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Contents

1. Overview

2. Energy Management In Food Processing

3. BCX Energy Management Services Proposition

4. BCX Energy Services Methodology

5. Solutions Development Framework

6. Potential Energy Efficiency Improvement Solutions

7. Realization Process

8. Key Activities

9. Engagement Model

10. Fee Structure

11. Next Steps

12. Annexures

a. EIMS

b. Energy Assessments

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OVERVIEW

Pro-active water, energy, and waste management have become three important ways to contain escalating
production costs, maintain economic growth, and improve sustainability in the food processing industry.

In particular, energy efficiency have the potential to significantly improve the competitive positions of those
companies intend on fully exploiting its potential. The cost savings that can result in optimally and systematically
reducing energy consumption runs in the hundreds of millions. At the same time, millions of tons of carbon dioxide
and related greenhouse gases that would otherwise have ended up in the atmosphere can be prevented.

It is towards tapping into this significant potential for energy efficiency improvements that this proposal is
offered to ABC Foods for the provision of energy management services.

At Business Connexion Industrial Solutions we are aware of the competitive industry the facility forms part of.
We are also aware that the facility is a subsidiary of one the largest and more prominent food manufacturers
in the world, where this company have aggressive goals with regards to energy management in particular, and
environmental sustainability in general.

With vast experience in the food processing industry, where we count the likes of Nestle South Africa, Unilever
South Africa, and South African Breweries as our customers, we have no doubt of the experience and value we
offer ABC Foods.

This energy management services proposal is a formal outline of the energy efficiency services we offer, and
the energy services partnership we want to develop with ABC Foods.

For the purposes of clarifying the Energy Services Value Proposition of BCX Industrial Solutions, it should be
pointed out that the energy efficiency offering has at its core the proprietary Optimized Energy Consumption
energy management methodology.

At its simplest, the Optimised Energy Consumption methodology links energy consumption and production
volumes in a linear relationship, where the unit of production should be produced at the lowest practical
energy input cost. Between the theoretical minimum energy consumption and actual current energy
consumption of the facility lies the energy efficiency improvement potential of the facility.

The objective with Optimised Energy Consumption is to determine this energy efficiency improvement
potential, and to identify those practical, cost effective energy efficiency solutions that will deliver the greatest
results. This should happen within an overall systems context, where product quality, production equipment
performance, or process integrity are not negatively affected by improvements in energy efficiency.

At a high level, the energy systems used in typical food processing includes process heating and cooling,
compressed air plants, motive components, etc. A number of energy efficiency improvement possibilities avail
themselves with reference to these major energy consuming systems.

As much as there is scope for improving the energy efficiency of these facilities, however, at this point it will be
very difficult to quantify or confirm the energy improvement potential.

The qualification and quantification of this energy efficiency improvement opportunity will be possible through
an energy assessment. As such, one of the first steps in improving overall energy management is the initiation

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of an energy assessment, the outcome of which can be used to chart a practical energy management
improvement program.

Hence one of the first actions recommended in this proposal is the conduct of an Energy Usage Assessment,
the outcome of which will not just provide us with a clear indication of the current energy efficiencies of the
operation and potential energy inefficiencies, but also the necessary information to draft a proper energy
management plant with realistic energy efficiency improvement targets and timeframes.

The Energy Usage Assessments and related Energy Efficiency Services offered by Business Connexion Industrial
Solutions, is explored further in the body of this proposal.

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 INTRODUCTION – ENERGY MANAGEMENT IN FOOD PROCESSING

The international food manufacturing sector is a multi-billion rand industry that transforms livestock and
agricultural produce into a diverse set of products for intermediate and final consumption by a number of
entities.

In this transformation process large quantities of energy gets consumed to power various processes and
machines.

Because of the energy intensiveness of food processing, the energy resource becomes an important input cost
for the industry. With raw material and labour as the dominant cost factors, energy resources typically ranks
third along with capital in terms of business costs.

As such, energy use has a significant impact on the bill of materials and the unit costs of the various outputs of
a food processing plant.

As an industry with typically thin profit margins as compared with other manufacturing and processing
industries, the containment of the ever increasing cost of the energy resource becomes an important
operations imperative for food processing plant management.

Typical Mass and Energy Flows In a Food Processing Facility

Energy Water

Energy Conversion and Production

Distribution Support

Products
Raw Materials Production Processes
By-products

Waste Treatment

Waste Heat/Emissions Effluent Solids

The figure above indicates the flows of energy, water and raw materials in a typical food processing facility.
These energy flows are not random, and the bulk of the energy used in the facility generally end up in the
various energy systems and utilities used in the processing of raw materials.

The two primary energy utilities used in food processing is that of process cooling to prolong the shelf-life of food
products, and process heating, where raw food materials is transformed into various products for end-use.

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These utilities and other energy systems found in the typical food processing operation include, but are not
limited to:

Process Heating – This energy use area includes all process heating systems and differentiates between
indirect and direct heating end uses. Indirect heating refers to systems where an intermediate heat transfer
medium is used, such as steam or hot water. Direct heating systems do not have an intermediate heat transfer
medium and the end-use includes ovens, dryers, furnaces, and kilns.

Process Cooling - This energy use area includes all cooling and refrigeration systems, for example, cooling
towers, freezers, chillers, and associated refrigeration compressors.

Motive Power – This energy use area all motive power equipment, and is sub-divided into compressed air
systems, pumps, fans/blowers, conveyor belts, and all other motors.

Process specific – These includes process-specific equipment that uses energy but are not included in the usual
process heating, cooling, motor-driven, and ventilation end-uses. These include a specific process that applies
laser technology, where the operation of such a process is very sensitive to, for example, voltage fluctuations
or excessive harmonics.

HVAC – This energy use area include comfort heating and cooling systems, together with all ventilation
systems. Ventilation systems that are included can be associated with a process, for example ventilation of air
in a production area to maintain adequate air quality levels.

Lighting - This is generally not a large energy user in the industrial facility, but which also has potential for
energy efficiency improvements. All indoor and outdoor lighting systems are included in this energy use area.

The rule is that around 90% of the energy input into any manufacturing process if consumed in energy systems
such as those indicated above.

It thus flows that the bulk of energy efficiency improvements in the manufacturing operation will be derived
from these systems.

Energy Efficiency and Energy Intensity

To make an example of energy efficiency and intensity in the industrial, we take a hypothetical industrial
operation with an average monthly energy consumption of 1 MWh at 50% energy efficiency.

The average energy cost of the facility is 0.65c/kWh, and this specific facility has the potential to generate
approximately 400 kWh in energy savings if the potential optimal energy efficiency is 90%. These energy use
savings will generate for energy cost savings of R 260.00, and a reduction of the facility carbon footprint of 400
kg of CO2 equivalent.

This energy cost savings can go directly to the bottom line in increased profits, or accrue to the customer in
terms of lower prices for goods produced. The reduced carbon footprint, in turn, will reflect positively on the
facility.

Increased profits and/or reduced prices will go a long way in improving the financial sustainability of the food
processing operation, as well as improving its cost competitive position.

If the facility produces an average of 100 products for the indicated energy consumption, this would indicate
an energy intensity of 10 kWh/ unit of product, at R 6.50 energy cost per product.

After the energy efficiency improvement, where the efficiency of the process has been improved to optimal
efficiency, the energy intensity will drop to 6 kWh/unit of product, at an energy cost of R 3.90 per unit of
production. As the key metric with which to measure and track industrial energy consumption, energy
intensity can be illustrated in the well-known scatter diagram.

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 ** Please note that this particular scatter diagram is not an exact reflection of the example made earlier, but is used
for illustration purposes only.

The Energy Management Environment

No industrial facility exists in isolation, and a number of factors have to be continuously monitored in the
operation and management of the facility.

With regards to energy management specifically, the holistic environment that constitutes the complete
context within which this activity should be viewed can be depicted as follows:

Because of the key role played by food processing in society, it is also this sector that is generally under closer
scrutiny than most other manufacturing sectors. Issues like responsible environmental operations becomes
that more important, and activities like pro-active carbon neutral, zero waste, and water conservative
operations becomes paramount.

Within this context is energy management no longer a nice-to-have, but an essential strategic activity.

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BCX ENERGY MANAGEMENT SERVICES PROPOSITION

Introduction

BCX Industrial Solutions is a Process and Energy Optimization solutions provider, focusing on reducing process
operating costs as measured against industry-specific benchmarks.

The solutions provided by this division of Business Connexion include:

• Industrial Information Technology Solutions,
• Manufacturing Execution Systems,
• Process Automation and Control, and
• Strategic Energy Services.

With the Energy Services Proposition, the objective of BCX Industrial Solutions is to work with the customer in
the pro-active management of the energy resource for maximum long-term utility at the lowest practical cost.

With increasing global competition, shrinking capital budgets, and constantly escalating operational expenses,
the need have never been greater for companies to get maximum utility out of every resource.

Enabling such a resource efficient operational process is Industrial Solutions` core competency, and we
improve operational processes with the application of solutions proven in countless operations worldwide.

When a facility runs efficiently, there is no resource waste or losses, and such a facility saves on operational
expenses, which translates into improved profit margins.

With the key metric against which to measure energy consumption and any improvements in the efficiency of
energy usage being energy intensity, specifically energy usage per unit of production, it is only logical that
energy consumption in general and energy management in particular should be juxtaposed against
operational processes and process outputs.

With an increased need for sustainable energy efficiency improvements, BCX Industrial Solutions is channelling
its considerable process optimization expertise into developing energy management solutions that will deliver
results with a structured, systematic energy management methodology: Optimised Energy Consumption.

With the Optimised Energy Consumption methodology, the intention is to work steadily toward eliminating all
forms of energy waste and inefficiencies in operational process and process equipment.

As a full energy services company and energy management systems integrator, BCX Industrial Solutions
supplies that expert focus of formalised, results-oriented energy management within commercial and
industrial processes.

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Value Proposition

BCX Industrial Solutions offers energy management services from the very point of energy resource sourcing
and procurement, through the energy consumption chain in the facility, down to the end-use of the utilities
made possible by the application of energy resources.

South Africa is currently in a very interesting situation where energy management and efficiency
improvements are concerned. That position is where energy efficiency was an almost unknown concept in the
country as early as five years ago, and suddenly a vast horde of service providers offers almost every possible
energy savings gadget under the sun.

Needless to say, this situation makes for quite a high level of confusion, scepticism, downright mistrust, and
misrepresentation.

Within this cluttered environment, BCX Industrial Solutions stands out as that energy management services
provider who follows the clear principles of systems integration. These principles allows for an independent
approach to energy management and efficiency improvements, and selecting those best-practise solutions
that’s best for the unique operation and circumstances of the customer.

In addition, BCX Industrial Solutions offers a few more dedicated elements to energy management that will not
just make the entire process transparent, but will also assure a positive outcome of the energy management
and efficiency improvement project.

These elements are:

1. A dedicated energy management services methodology developed out of endless engagements with
numerous customers in the industrial sector. This methodology is termed Optimized Energy
Consumption, and draws upon the process optimization history of BCX Industrial Solutions.
2. A systematic, structured process with which to investigate, evaluate, and implement energy efficiency
improvement opportunities, starting with Needs Analysis and ending with On-going Servicing and
Maintenance.
3. A detailed level of energy use investigation that goes far beyond just the surface elements of energy
consumption in a specific area, combining a systems approach with strong engineering principles to
identify and recommend No Cost, Low Cost, and Capital Investment efficiency improvement
opportunities within a specific energy system/use area.
4. The proper definition and application of energy efficiency and optimization principles, with specific
reference and focus on energy conversion efficiency in industrial processes.
5. Registration with Eskom as Energy Services Company (ESCO).

When dealing with BCX Industrial Solutions, the customer thus has the peace of mind that no solution will be
forced down upon the customer due to brand and/or product obligations. Instead, potential solutions will be
evaluated independently, and recommendation made on a specific solution only after thorough investigation
and evaluation.

The primary aspect that differentiates the energy management services of BCX Industrial Solutions is that we
do not sell a specific product. In other words, we are under no pressure to force square pegs into round holes
just to make target.

Instead, we can concentrate wholly on understanding the operations and processes of the customer, the key
influencing energy use factors within the operation, and develop the best solution that will fit the unique
requirements of the customer.

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Capabilities

As a full-service energy services company, BCX Industrial Solutions has a strong set of capabilities that not just
allow for the proper identification of energy efficiency improvement measures, but also the optimal
implementation thereof.

Therefore, the energy management services capabilities possessed by BCX Industrial Solutions include:

• Energy Management Leadership: To provide sustained, consistent program direction, coordination,

and facilitation toward achieving facility and program goals and objectives.

• Database And Information System Establishment: To develop and implement a utility database and
information system that enables efficient data input, robust analysis, useful and flexible report
generation, and precise query capabilities.

• Energy Consumption Monitoring and Analysis: To monitor and analyse electricity consumption data
and trends, at the system, mode, division, and location level, using the utility database and
information system described above.

• Energy Rate Monitoring, Analysis, and Strategy Development: To regularly monitor electricity rates
by user group, consumption levels, and time of day; and analyse that data to develop strategies for
engaging utility companies in rate negotiations.

• Energy Assessments: To conduct regular energy assessments at facility, process, and equipment level
to identify excessive energy consumption levels, and opportunities for cost-effective, practical energy
efficiency improvement investment and/or changes in operational practice.

• Evaluation of Potential Energy Management Investments: To assess, evaluate, and prioritize

potential energy efficiency improvement projects, programs, and activities for potential investment –
including the capacity to estimate the lifecycle costs and benefits of alternative investments and
initiatives, and their payback periods.

• Implementation of Selected Energy Efficiency Strategies and Projects: To implement selected

energy efficiency improvement projects in a timely and cost-effective manner, whether capital
projects or operating practices.

• Professional Project Management: To manage energy efficiency improvement projects within the
framework of Prince2, thus ensuring a well-run project with assured outcomes.

• Post-Implementation Evaluation: To evaluate the effectiveness, actual costs, and associated benefits
of each significant energy efficiency improvement project implemented to inform decision-making on
future investments (an appropriate assessment period would have been established for each
project). This includes Measurement and Verification activities.

• Energy Management and Conservation Training: To educate and raise the awareness of staff
throughout the operation of the customer, toward generating buy-in and support of planned energy
management activities, while encouraging and enabling active participation and innovation.

• Energy Performance Management: To establish Energy Management performance goals, objectives,

metrics, benchmarks, and targets; and the on-going capability to monitor and assess progress at
relevant levels of customer operation.

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Solutions Offered

The scope of energy efficiency solutions and services offered by BCX Industrial Solutions to identify, quantify,
and improve energy efficiency in a facility include:

Strategic Energy Management Services

• Energy management planning
• Energy management program development
• Energy education and training
• Energy use assessments

Energy Efficiency Improvement Solutions

• Load management
• Retrofitting
• Waste heat recovery
• Energy use process improvements
• Preventive maintenance programs
• Power quality improvement

Energy Information Management Solutions

• Energy information management system design and supply
• Energy use monitoring and analysis
• Energy billing and tariff structure analysis
• Energy load profiling

On-Site Energy Generation Solutions

• Waste heat to energy solutions
• Anaerobic bio-digestion systems
• Co-generation units

Renewable Energy Supply Solutions

• Photo-voltaic solar energy supply

It should be noted that not all solutions will lead to an absolute reduction in the amount of energy used in a
specific operation.

Solutions like tariff and billing structure optimization can potentially generate energy cost savings through the
implementation of a cheaper tariff structure.

Similarly will load management generate energy cost savings by shifting load from expensive peak energy
consumption periods, to cheaper off-peak and standard energy consumption periods.

BCX Strategic Energy Services – Value Proposition Strengths

From the onset BCX Energy Services was designed to be stand apart from the current crop of energy
management services providers in the country.

A number of factors contribute to making BCX Energy Services a worthy, differentiated provider of strategic
energy services, and the main reasons can be summarised as follows:

1. We view energy consumption as a managerial activity, subject to the same management

principles exercised across other functional disciplines.

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 2. Energy is viewed as much more than just an unavoidable expense, but as a scarce resource with
inherent value that can make or break the long-term sustainability of the operation.
3. Energy is evaluated in the same way as raw material and other productive assets, where it is an
integral part of overall operational processes and the output of such processes.
4. As a company, we function as energy system integrator, sourcing and configuring energy
efficiency improvement solutions that address the unique challenges of the individual customer.
This allows us to evaluate any energy project completely independently, providing advice that is
in the best long-term interest of the customer, fitting various constraints and variables specific
to the operation of the customer.
5. We go out of our way in addressing any potential barriers that prevent the adoption of energy
efficiency practices in the operation, for example capital constraints. To overcome this we have
an energy efficiency purchasing option called performance contracting. This is a model where
BCX Industrial Solutions identify, specify, source, configure, and commission the energy
efficiency improvement solution as a turnkey project, with the payments coming out of the
energy savings generated.

Finally, with due regard to the rigorous manner in which we do our energy assessment and energy efficiency
improvement solutions development, we can guarantee the energy savings projected in our energy savings
investment analysis.

The energy management approach offered by BCX Industrial Solutions is comprehensive in its applications of energy
efficiency principles, and exhaustive in its investigation of energy efficiency improvement opportunities.

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ENERGY MANAGEMENT SERVICES APPROACH

The foundation of the BCX Industrial Solutions Energy Services proposition is its total systems orientation.
Most energy efficiency improvement approaches deals with improving the energy efficiency performance of
one component of an energy system, for example, fitting a VSD to a compressed air plant motor.

Rarely is this compressed air plant approached from a systems perspective that includes, for example:

• The distribution network of the compressed air utility,

• Quality of ambient air,
• End-use of the compressed air utility,
• Power quality condition of the compressed air plant,
• Sizing of plant to requirements,
• Operating hours of the compressed air plant,
• Quality of compressed air required at end use,
• Potential for heat recovery, etc.

Where the efficiency of only the motor can be improved by, say 5% with the retrofitting of a VSD, the energy
efficiency of the entire compressed air plant can be improved by, say 50%, when considering all the factors
and avenues of energy efficiency improvement within a total systems framework.

Within BCX Industrial Solutions, the basis of its Energy Services operation uses system engineering methods
applied to energy use within a specific area or process. As a practice, systems engineering focuses on defining
stakeholder`s needs and required system functionality early in the development cycle, documenting system
requirements, and then proceeding with system design while considering the entire system.

Application of a systems approach to manufacturing energy efficiency directs the focus toward total plant
performance rather than individual process, area, or component efficiency.

With that approach, it is necessary to:

1. Understand energy point of use as it supports critical plant production functions,

2. Identify energy utility end-use and its level of input into production processes,
3. Correct existing under-performing applications and those that upset/affect overall system operations,
4. Identify all sources of energy waste, inefficiencies, losses, and inappropriate use,
5. Establish and maintain a careful balance between energy utility demand and supply, as informed by
the linear relationship between energy consumption and production volumes, and
6. Optimize energy sourcing, procurement, consumption, and end-use as an important factor of
production.

The key to effectively optimizing overall industrial system performance is the application of dedicated
processes and procedures. With firm procedures, the chances of a successful outcome of any specific activity
are significantly increased.

The same principle holds for the system approach, where the systems engineering process is an iterative
process of requirements definition, opportunity assessments, implementation of recommended alternatives,
and evaluation of outcomes and results.

This iterative, continuous improvement process is a fluid activity whereby outcomes and results may achieve
clearly defined goals, or may result in new or revised requirements definition, if so required.

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For energy efficiency improvements, the systems engineering process can be described as follows:

1. Identify what needs to be accomplished,

2. Identify what need to be evaluated as part of the objective/goal/target.
3. Define the present system from a holistic energy use perspective.
4. State system specific energy efficiency improvement goals, objectives, and targets,
5. Conduct the system energy use assessment, with the focus on identifying all sources of energy loss,
waste, and inefficiency.
6. Identify cost-effective, practical measures to resolve identified energy inefficiencies in a holistic
manner.
7. Implement approved energy efficiency improvement measures without negatively affecting overall
system performance or functionality.
8. Report on energy improvement performance post-installation.

There are many system integration factors where decision related to one component or sub-system impact other
components or sub-systems. This requires that energy efficiency improvement alternatives should be carefully
evaluated before final decisions are made, and that such decisions be made within a much bigger picture.

Another factor that necessitates the need for a systems approach to energy efficiency improvements is to
naturally medium- to long-term nature of total energy efficiency improvements. It will be virtually impossible
to identify, address, and resolve the energy efficiency challenges in all energy use areas in the typical industrial
operation in one fell swoop.

Complete energy efficiency improvements is a continued, iterative improvement process, where the necessary
care should also be taken to avoid the reversal of any energy efficiency gains made in previous iterations.

Such is the BCX Industrial Solutions approach to energy management, where it is not just comprehensive
within an overall systems context, but also cognisant of the fact that energy performance should be
measurable and sustainable over the long-term.

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ENERGY MANAGEMENT SERVICES METHODOLOGY
Historically many industrial facilities and the processes occurring within these facilities were not designed and
constructed to yield optimal energy performance. As a result, many energy inefficient industrial facilities,
processes and equipment are still in operation, and only recently have there been a change in the status quo
as a result of increasingly expensive energy sources.

A number of processes for energy transformation are used in the food processing industry, as well as
processes in which energy is used directly as raw material for the production of new added value. The
processes involved in food manufacturing present a demand side for the factory energy system, therefore
production processes set the requirement for energy quantity and quality.

This is a fact very well understood by BCX Industrial Solutions, and the realization was that the only real way to
view energy efficiency improvements is against the food processing production volume versus energy
consumption curve.

It is also this fact that informs the methodology used by BCX Industrial Solutions in its Energy
Management Services activities: Optimized Energy Consumption.

Optimised Energy Consumption is very simple in concept: Every facility, process, or piece of equipment has an
optimal energy requirement. At the same time, every facility, process, or piece of equipment currently uses
significantly more energy than required for optimal operation.

The variance between required energy and actual energy consumption is the energy savings potential of that
particular area.

It thus follows that a number of principles informs Optimised Energy Consumption:

OEC integrates energy consumption with the actual production process, where there is a linear relationship
between such and energy consumption and production volumes/process output.

It is based on a systems approach where the focus is on the actual operational process, energy consumption in
the production process, the various activities that enables the process, and the influencing factors that affects
energy consumption in the process.

The intention is not to get the process to consume the lowest possible amount of energy, as this is impossible.
The intention is more to use the energy resource optimally, maintaining the linear relationship after the
process have reached international standards of energy intensity for that specific product.

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It wants to emphasize the idea that the energy resource should be viewed and treated in exactly the same way
as those resources that enables profitable production: Capital, Labour, Equipment, and Raw Materials.

In the same way that no enterprise will invest in excess capital, equipment, labour, or raw materials, so should
that enterprise not have to procure more energy than is necessary for the process to operate at optimal levels.

The difference is also where raw material, labour, and equipment are somewhat fixed in terms of cost, the
energy resource can be a variable expense, dictated by production processes and output volumes.

In other words, when there is a perfect balance between production volumes and energy consumption, such
relationship will be Optimised Energy Consumption, and it will mean a process in which there is no undue
energy waste, losses, or inefficiencies, that needlessly inflates energy intensity.

In the context of Optimized Energy Efficiency, an optimized, efficient process is one that does not create any
unintentional work, nor does it contain any non-value adding work of activities within it. In other words, there
is no wastage.

With Optimised Energy Consumption, there should be a linear relationship between energy consumption and
production volumes, where not more energy is consumed for the production of a given unit of production.

When conducting an Energy Efficiency Review, which is one of the first steps toward the achievement of
optimized energy consumption, the following levels of energy consumption and requirement generally gets
determined as well:

Current average energy consumption – This is the current energy consumption of the facility, process, or
equipment.

State of the art energy consumption – This is the lowest possible energy consumption in current practice. This sets an
absolute lower boundary on what is possible today with technology that is already in industrial use, even if only on a
limited basis. Companies at this level of energy management performance have moved through the practical
minimum energy use level and have adopted active energy management as a priority operational activity. Only the
really exceptional companies with innovative, pro-active management will aspire to this level.

Practical minimum energy requirement – This represents the lowest possible practical energy consumption
possible if all waste, inefficiencies, and losses are identified and eliminated. This is with the application of
widely available technology already in industrial use. This is what most companies should aspire to.

Theoretical minimum energy requirement- This is a baseline energy use value that assumes no energy loss
during a process. It is no reality in actual operation as this will mean equipment and processes switched on but
with no load or activity. It is a value measure though as it provides a certain level of insight into exactly how
much energy is consumed in actual processes and how much energy is lost.

As such, the OEC methodology has a few very important components:

1. Minimum Energy Requirement: Every single energy using device, process, or area has a minimum
energy requirement. This will generally be indicated on the rating tag of the device, and for the
process or facility the MER will be the sum of the rating of the various energy devices. The MER is an
ideal, but is almost never possible as a number of factors influence the energy consumption of a
specific energy device.
2. Actual Energy Consumption: The actual energy consumption will be the product of the device when
operating at full load under normal operational conditions. The actual energy consumption of the
device includes all the energy losses experienced during distribution of energy into the device, energy

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 conversion in the device, and distribution and use of the output of the device. The intention is to
reduce the actual energy consumption of the device, process and facility.
3. Optimised Energy Consumption: This is the goal of the BCX Energy Services Methodology, and the
basic definition of the term is that optimal energy consumption point between Actual Energy
Consumption and Minimum Energy Requirement. Optimised Energy Consumption is when the
operational energy requirement has been determined, factoring in various variables like production
schedules, production volumes, maximum efficiency of the energy device, etc. At the conclusion of
the Energy Efficiency Improvement Project, the facility should be at Optimised Energy Consumption.

The actual activities involved in getting to OEC include:

1. Planning, Organizing, and Developing a strategic OEC plan that will achieve maximum production
output at optimal energy input without loss of production volumes or product quality.
2. Identifying energy efficiency improvement solutions, processes, reporting systems, and operating
methods to enhance facility-wide energy efficiency, process productivity, operational performance,
and financial profitability.
3. Determine the key parameters and performance indicators for managing and controlling energy
efficiency as an important strategic imperative.
4. Understand the impact of new technologies, operating procedures, production processes on energy
efficiency.
5. Perform formal, professional cost-benefit analysis on various energy efficiency improvement
possibilities to properly build the energy efficiency business case.
6. Design and commission the relevant interventions that will eliminate/minimise energy losses and
inefficiencies, thus boosting resource productivity and gross profit margins.

The primary goal with the Optimised Energy Consumption is to improve the energy efficiency in industrial and
commercial processes in order to minimise total operating and investment, without sacrificing product quality
or operational volumes.

The primary benefit of the OEC approach is, because it is based on the actual process parameters of the
facility, the chances of significantly reducing the energy input cost of a unit of production is vastly improved.

When there is a perfect balance between production volumes and energy consumption, and when practical
minimum energy requirement is similar to actual energy consumption, at that point would Optimised Energy
Consumption have been achieved.

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ABC FOODS ENERGY EFFICIENCY SOLUTIONS DEVELOPMENT SCOPE
Energy represents a significant operating cost in the Southern African food processing industry, and is typically
used throughout the food processing facility to power motors, conveyors, compressed air systems, pumps, and
process heating and cooling systems.

Many opportunities exist within the typical food processing facility to reduce energy consumption whilst
maintaining or even improving productivity and overall resource efficiency.

Ideally, energy efficiency opportunities in the food processing plant should be pursued in a coordinated,
systematic manner at multiple levels of operation and personnel function:

• At the component and equipment level, energy efficiency can be improved through regular
preventive maintenance, proper loading and operation, and replacement of older components and
equipment with higher efficiency models, for example, higher efficiency motors, whenever feasible.

• At the process level, process control and optimization options can be pursued to ensure that
production operations are running at optimal efficiency.

• At the facility level, the efficiency of space heating, lighting, and cooling can be improved through
load management, retrofitting, use behaviour, and replacements, where feasible.

• Total facility energy balance improvements can be effected through activities like process redesign,
and renewable and on-site energy source integration.

Finally, at organizational level, company-specific energy management plans can be designed and implemented
to ensure a strong corporate framework exist for energy monitoring, target setting, employee engagement,
and continuous energy performance improvement.

The scope for energy efficiency improvements at the ABC Foods facility will be managed across the five levels
indicated earlier. The scope of energy management services will extend from sourcing and procuring the
energy resource, through to ensuring responsible energy use through behavioural improvements.

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When energy gets sources and procured, it rarely gets supplied to energy consuming equipment straight from
the utility. Instead, it goes through various intermediate points, which leaves more than enough room for
energy losses, waste, or inefficiencies.

This flow of energy in a typical facility is depicted in the previous diagram, and the quantity of energy that ends
up as useful work in relation to the quantity of energy procured depends on many variables.

These include:
• The status of the energy flow network,
• The efficiency of the operations process, and
• The condition of the various machinery using and transferring energy.

In combination, these factors can cause as much as 50% of the purchased energy to be lost along the various
nodes of the network.

BCX Industrial Solutions identify and implement energy efficiency improvements along the entire energy use
chain, which will typically include the following areas:

Process heating – This energy use area includes all process heating systems and differentiates between
indirect and direct heating end uses. Indirect heating refers to systems where an intermediate heat transfer
medium is used, such as steam or hot water. Direct heating systems do not have an intermediate heat transfer
medium and the end-use includes ovens, dryers, furnaces, and kilns.

Energy efficiency improvement opportunities possible in this energy use area includes Boiler right-sizing, Load
management, Blow-down heat recovery, Boiler combustion air pre-heat, Advanced boiler control, and Exhaust
gas heat recovery.

Process cooling - This energy use area includes all cooling and refrigeration systems, for example, cooling
towers, freezers, chillers, and associated refrigeration compressors.

Process cooling energy efficiency improvements includes optimizing the distribution system, installing
premium efficiency refrigeration control systems, improving insulation of refrigeration systems, making use of
free cooling, etc.

Motive Power – This energy use area all motive power equipment , and is sub-divided into compressed air
systems, pumps, fans/blowers/and all other motors.
Energy efficiency improvements in this area includes impeller trimming, optimized duct designs, use of
synchronous belts, improving efficiency control with VSDs, optimizing sizing of air receiver tanks, etc.

HVAC – This energy use area include comfort heating and cooling systems, together with all ventilation
systems. Ventilation systems that are included can be associated with a process, for example ventilation of air
in a production area to maintain adequate air quality levels.

Energy efficiency improvements in this area includes ventilation heat recovery, automated temperature
control, air curtains, reduced/increased temperature settings, air compressor heat recovery, etc.

Lighting - This is generally not a large energy user in the industrial, but which also has potential for energy
efficiency improvements. All indoor and outdoor lighting systems is included in this energy use area.

Energy efficiency improvements here includes day-light harvesting, retrofitting of higher efficiency lights and
ballasts, installing automated lighting controls, etc.

Process specific – These includes process-specific equipment that uses energy but are not included in the usual
process heating, cooling, motor-driven, and ventilation end-uses. These include a specific process that applies
laser technology, where the operation of such a process is very sensitive to, for example, voltage fluctuations
or excessive harmonics.

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Energy efficiency improvement in this area includes power quality improvements, UPS systems, and off-grid,
on-site power supply sources.

To indicate the extend of energy efficiency improvement investigation, qualification, implementation, with
specific reference to process heating, please find the following brief explanations of energy efficiency
improvement opportunities for this energy use area:

Boiler right-sizing – An over-sized boiler will turn on- and off more often than a boiler that has been properly
matched to demand, which may result in short-cycling losses.

Load management – By properly matching boiler utility to process needs can a scenario be avoided where the
boiler is in constant operations, but the utility only get used intermittently.

Blow-down heat recovery – Boiler blow-down wastes energy because the blow-down liquid is at about the
same temperature as the steam produced. Much of this heat can be recovered by routing the blow-down
liquid through a heat exchanges that pre-heats the boilers make-up water.

Boiler combustion air pre-heat – Combustion air pre-heaters are similar to economizers in that they transfer
energy from the flue gases back into the system, specifically the incoming combustion air.

Advanced boiler control – Modern burners are increasingly using servo-motors with parallel positioning to
independently control the quantities of fuel and air delivered to the burner head. Advanced boiler controls
allows for easier tune-ups and closer adjustments, providing consistent performance and repeatability as the
burner adjusts to different firing rates.

Exhaust gas heat recovery – Exhaust gas heat recovery increases energy conversion efficiency because it
extracts energy from the exhaust gases and recycles it back to the process. Significant energy efficiency
improvements can be made on furnaces, dryers and ovens, even if they are already operating with properly
tuned ratio and temperature controls.

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ENERGY EFFICIENCY IMPROVEMENT ROADMAP

The intention with the Energy Management Program is to reduce the excess energy consumption of a facility,
in line with our Optimised Energy Consumption methodology. Excess energy consumption inflates the monthly
electricity account, and can manifest in numerous areas of energy losses, waste, and inefficiency.

We uncover those energy inefficiencies through a structured energy management roadmap as outlined in the
following diagram. The iterative, continuous improvement nature of the energy management process is that we will
constantly revisit the energy efficiency improvement cycle through the various energy consumption areas.
Energy Efficiency Improvement Lifecycle Illustration

Energy Management Needs Analysis

GOAL: To actively engage with customer management to determine current energy management needs, level
of energy management intention, and/or specific energy management focus area.
OUTPUT: A clear statement of the energy management need or requirement, and level of commitment and
intent with regards to energy management.
Strategic Management Engagement
GOAL: To obtain management commitment towards the rolling out of a comprehensive energy management
program.
OUTPUT: A formal agreement with management to acquire the energy management services of BCX Industrial
Solutions.
Energy Efficiency Diagnostic
GOAL: To determine the current level of energy efficiency in the facility, and develop the scope of the energy
management program.
OUTPUT: An energy services scoping document that contains the necessary information to identify priority
areas, and the full scope of the energy management project.
Detailed Energy Usage Assessment
GOAL: To identify all areas of energy losses, waste, and inefficiencies within a specific energy system/usage area.

OUTPUT: A comprehensive database of all possible energy efficiency improvement opportunities identified in
the area of assessment.

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Findings Report Drafting and Presentation
GOAL: To outline, motivate, and motivate the energy efficiency improvement opportunities identified in the
facility.
OUTPUT: A comprehensive, investment-grade energy efficiency improvement business case.
Energy Solution Action Plan Development
GOAL: To prioritise and action the implementation of the identified energy efficiency improvements.
OUTPUT: A detailed Energy Efficiency Improvement Action Plan with clear role definitions, task allocations,
timeframes, and budgets.
Project Implementation
GOAL: To source, install and commission the identified energy efficiency improvement interventions. This
stage can also include an ESKOM IDM component.
OUTPUT: A professionally management energy efficiency improvement project carried within the agreed upon
timeframes and budgets, delivering the results aimed for.
Energy Efficiency Solution Performance Measurement and Verification
GOAL: To verify and confirm actual results achieved from the energy efficiency intervention against results
projected in the findings report using an internationally accepted Measurement and Verification methodology.
OUTPUT: An independent Measurement and Verification Report.
Performance Maintenance
GOAL: To maintain the optimal operation and performance of the installed energy efficiency intervention/s for
sustainable energy savings
OUTPUT: A Service Level Agreement with management for a specified period.

ENERGY EFFICIENCY PROJECT REALIZATION

Project Phase Project Milestone/s Project Activities

Project • Feasibility study • Initial project scoping
Development • Energy assessment contract • Execute contract for energy assessment
• Energy assessment project scope • Evaluate facility and develop project scope
development • Nail down technical details of project
• Contract negotiation execution
• Financing source identification • Confirm sources of financing
Implementation • Installation of energy saving equipment • Final design and equipment purchasing
• Implementation of energy efficiency • Solution engineering and construction
improvement measures
Acceptance • Post-installation solution commissioning • Commission affected systems
and verification • Initiate energy savings verification
procedures
• Conduct staff training
Performance • On-going operations and maintenance • Proper operations and maintenance of
period • Periodic measurement and verification existing equipment
• Verify and quantify accrued energy savings
Project close-out • Project close-out • Financial obligations are confirmed and
settled.

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KEY ENERGY MANAGEMENT SERVICE ACTIVITIES

One of the key positions taken by BCX Industrial Solutions with the Strategic Energy Services Proposition is that
the proven systems integration model should be extended to this area.

In order to provide the customer with a full, integrated selection of energy management services and
solutions, the various energy management activities conducted are grouped as follows.

These broad categories of energy management services can be further broken down into additional activities, at this
level however, this combination of energy management services activities is geared to give the customer the peace
of mind that the complete cycle of realizing energy efficiency improvements is handled by one entity.

ASSESS - Energy Assessments: Identify and quantify energy efficiency opportunities through a systematic
approach

SOLVE - Energy Efficiency Solution Areas: Develop cost-effective energy efficiency solutions that delivers
sustainable energy savings

FINANCE - Project Financing: Identify alternative energy efficiency financing solutions that reduces capital risk
of the proposed energy efficiency solutions, incl. ESKOM IDM subsidies.

MANAGE - Project Management: Professionally manage the energy efficiency project to deliver energy
efficiency improvement performance within stipulated timeframes and cost parameters.

MEASURE - Measurement and Reporting Solutions: Implement energy and utility consumption measurement,
monitoring, and reporting solutions that enables greater insight and control over expensive resources.

Within a specific energy management program/energy efficiency improvement framework in the three key
areas of Energy Information Management, Energy Efficiency Improvements, and Energy Training and Education,
the general energy management activities can be indicated as follows:

1. Energy Efficiency Improvement Services

• Conduct energy use assessments, analysis, and feasibility studies.

• Develop energy efficiency improvement solutions with energy savings profiles.
• Engineer, design, and implement electrical, mechanical, control, and structural improvements that
will lead to energy cost savings.
• Specify and procure energy efficiency improvement measures.
• Supervise and manage energy efficiency improvement equipment construction and installation.
• Commission installed energy efficiency improvement equipment.
• Train facility personnel on installed energy efficiency measures where required.

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 • Arrange for professional Measurement and Verification of projected energy savings of installed
energy efficiency solutions.
• Provide on-going servicing and maintenance on installed energy efficiency improvement solutions.

2. Energy Metering And Information Management

• Evaluate current energy information management systems.

• Analyse any gaps/shortcomings in current energy information infrastructure against data centre
operations requirements.
• Identify, evaluate, and implement energy information solutions to fill identified gaps.
• Provide support on the specification, procurement, commissioning, and management of a
potential BMS solution.
• Conduct analysis on energy metering data for cost-effective energy use, management, and
application.
• Conduct load profile analysis as an energy consumption evaluation exercise.
• Provide assistance for upgrades, calibration, and maintenance of installed energy information
management solutions as required.

3. Energy Training

• Provide training on conscientious energy use behaviour.

• Provide training on installed energy management measures to relevant personnel.
• Develop and provide a special training program to operations management on Industrial Energy
Management, as required.
• Develop, implement and manage the facility staff energy awareness program.

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ENERGY MANAGEMENT SERVICES ENGAGEMENT MODEL
Plant management is generally more aware of the need for energy efficiency investments, however, such
investments will almost always be evaluated by Finance against the context of: Do we have the ability and/or
willingness to self-finance or borrow money to invest, and are we willing to spend it on the most energy
efficient measures?

This decision will get taken against the following considerations:

• The availability of internal sources of funding.
• Access to sources of financing, i.e., borrowing from a bank and the bank`s willingness to lend for
these investments.
• Financial viability of the energy efficiency projects ( and other identified benefits, such as improved
product quality, process efficiency and productivity).
• Priority of the energy efficient investment over other projects/investments that are competing for the
company`s financial resources.
• Amount of investment necessary and whether it can be financed from the operating budget or as a
capital expense.

The Shared Savings Model takes care of most of these considerations, in that the primary and only capital
investment focus is for energy efficiency improvements. As such, the obligation is on BCX Industrial Solutions
to ensure that any potential energy efficiency investment is properly identified, qualified, quantified, and
motivated.

With the Shared Savings model BCX Industrial Solutions guarantees the energy efficiency performance of the
recommended energy efficiency interventions, and is thus willing to share in both the capital cost of the
investments, as well as the energy cost savings (as positive cash flow) that will be generated by these measures.

A prior step to actually investing in energy efficiency improvement measures is determining whether there is
actually any energy efficiency improvements available, and whether any solutions are available on the market
to realize these energy efficiency improvement opportunities.

The energy use assessment takes care of this. To explore and identify the fullest energy efficiency potential of
a specific energy use area, for example, a compressed air plant, a detailed energy use assessment would need
to get carried out.

The energy use assessment specifies the range measures, including energy management, plant operations and
investments needed, from low to higher cost. The findings from detailed energy assessments will include
sufficient information that will enable company management to make an investment decision.

These should include both the technical and project financing components:
• Details of proposed energy efficiency measures.
• Financial analysis of estimated savings and breakdown of costs.
• Applicability of energy efficiency improvement interventions to relevant standards,
• Potential financing options and cash flows,
• Implementation plan with maintenance procedures, and
• Monitoring of energy use post-installation and verification of projected energy savings.

As a full-service Energy Services Company, BCX Industrial Solutions offers varying degrees of energy use
assessments. The customer thus have the complete peace-of-mind that everything to do with improving the
energy efficiency of a specific facility is handled by one entity, where such entity is willing to assume some of
the risk of implementing capital energy efficiency improvement investments.

BCX Industrial Solutions have the expertise and infrastructure to supply all required services to implement and
sustain energy cost savings within a Shared Savings Energy Engagement Model. The client can therefore deal

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with one party to achieve energy cost savings, and the four major parts and/or services supplied by BCX
Industrial Solutions can include the following services:

Energy Services
BCX Industrial Services will perform preliminary and detailed energy audits to quantify the potential for energy
savings in the selected facilities. All viable options will be presented to the client for implementation.

Design Services
BCX Industrial Solutions will design and draw up all required specifications to implement the approved energy
savings strategies in the facilities. The consultant will further be responsible for construction supervision and
quality assurance during the installation phase.

BCX Industrial Solutions will also assist the client in appointing the contractor and will manage the contractor
throughout the installation phase.

Construction Services

The contractor appointed will install and construct, to specification, all the required systems to improve energy
efficiency in the selected facilities. The contractor will guarantee the operation of the installed equipment for
at least one year.

Maintenance Services
BCX Industrial Solutions will ensure that all installed energy savings equipment are professionally and
adequately maintained, as specified, for the duration of the contract term.

Shared Savings Contracting

Principles

This performance type of contracting is a shared risk, good reward option designed to enable the
implementation of energy efficiency improvements with limited capital available.

The savings achieved are shared between BCX Industrial Solutions and ABC Foods, where part of the cost of
the energy efficiency improvement project is financed by BCX Industrial Solutions, and the invested capital is
recovered from BCX Industrial Solutions`s portion of the savings resulting from the improvements.

The principles of the contract are summarised as follows:

• Shared savings contracts replace the conventional collection of solicitations and contracts with a
single proposal covering all aspects of a comprehensive energy management project and one energy
management services contract with BCX Industrial Solutions.

• The first step is where the client prepares a Request for Proposal for Energy Management Services.
The formal proposal to be submitted to the client will be for the provision of energy efficiency
services, solutions, and equipment and services to the client.

• After receipt of the proposal, and upon discussion and confirmation of the required energy
management services, the client will engage BCX Industrial Solutions for the initiation of an Energy
Efficiency Review under a Letter of Understanding. The Energy Efficiency Review, as explained
elsewhere in this document, will provide the information necessary to draw up a comprehensive
energy management services agreement between the client and BCX Industrial Solutions.

• The Energy Management Services Contract between client and BCX Industrial Solutions will
specifically addresses contractual issues like compensation, liability, the accountability of services,
and a high-level estimation of savings at the facility.

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 • From the Energy Management Services Agreement, one of the first activities will be the initiation of a
comprehensive energy study of energy efficiency opportunities at the facility within a specific energy
use area as prioritised from the Energy Efficiency Review.

• At conclusion of the Detailed Energy Assessment and after presentation of the Energy Assessment
Findings Report, upon receiving the notice to proceed with the recommended energy efficiency
improvement measures, BCX Industrial Solutions will furnish, install, and commission the efficiency
improvements and begins performing maintenance and repairs that continue for the duration of the
contract term.

• BCX Industrial Solutions will take responsibility for sourcing a portion of the capital cost of the selected
interventions, where the solutions cost presented by BCX Industrial Solutions will include maintenance and
servicing of the installed equipment to ensure optimal operation and sustained energy savings.

• BCX Industrial Solutions acquires a share of the energy cost generated by the installed energy
efficiency measures to recover the provided capital. BCX Industrial Solutions will guarantee the
energy cost savings projected in the Findings Report, and although BCX Industrial takes full
responsibility for the mechanical and technical performance of the installed equipment, the financial
risks are shared between BCX Industrial Solutions and the client.

• The client therefore receives therefore a percentage of the energy cost savings generated, having
taken a commensurate measure of financial risk and almost no technical risk.

Responsibilities

Client

• The client is defined as the Government Department responsible for paying the energy bills of the
facility. In the case of the South African Government the client is currently the regional DPWs and will
be the Line Departments in the near future.

• The client will select and appoint an engineering consultant (rotated from a consultant roster) to
manage the tender process, manage the appointed ESCO and verify the monthly savings. The
engineering consultant will be a professional engineer registered with SAACE or ECSA with experience
in Energy Service Contracting.

• With the assistance of the consultant, the client will select and appoint a qualified ESCO through a
thorough tender process, to supply and manage energy efficiency in the selected facilities. The ESCO
will be a registered company with expertise and experience in Energy Contracting.

• The Client will provide monthly energy accounts to the consultant and ESCO to calculate the savings
achieved.

Consultant

• The consultant will have the task to prepare all tender documentation, issue tender documentation,
manage tender process and assist the client in appointing the ESCO.

• The consultant will obtain the energy accounts of all the selected facilities and calculate baselines for
energy savings calculations. The baselines of each facility will be verified by the appointed ESCO and
approved by the client.

• The consultant will verify the monthly energy savings (issue payment certificates) before any
payments are made to the ESCO.

• The consultant will manage the ESCO throughout the duration of the contract through regular
progress meetings and site inspections.
• The consultant will review all the proposed energy savings strategies and approve them before
implementation.

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ESCO
• The ESCO appointed will perform preliminary and detailed audits to quantify the potential for energy
savings in the selected facilities. All viable options will be presented to the client for implementation.

• The ESCO will design and draw up all required specifications to implement the approved energy
savings strategies in the facilities. The ESCO will further be responsible for construction supervision
and quality assurance during the installation phase.
• The ESCO will present all the energy savings strategies to the facility personnel prior to implementation.
• The ESCO will appoint and manage all sub-contractors required to implement energy savings strategies.

• Maintenance and management of all the installed strategies will be the responsibility of the ESCO for
the duration of the contract term.

• Every month the ESCO will invoice the client, including a comprehensible calculation of the achieved
savings.

Sub-Contractor

If the ESCO does not have the in-house ability to implement the strategies, registered sub-contractors will be
appointed to install and construct the required systems to improve energy efficiency in the selected facilities.
The sub-contractor will guarantee the operation of the installed equipment for at least one year.

Financing

Funding mechanisms will have to be in place to finance the two contracts required to achieve and sustain
energy cost savings.

ESCO

The ESCO will be responsible for financing the energy audits, the development of implementation specifications,
installation of equipment and maintenance for the duration of the contract term. The ESCO will recover the
provided capital from their portion of the tendered savings resulting from energy efficiency improvements.

Client

The client will only be responsible for financing the consulting fees to initiate the project, Quality Assurance
(tender process) and to verify the monthly savings. This small amount will be recovered from the client’s share
of the tendered savings split resulting from the energy efficiency improvements.

Agreements

Two agreements for this scheme will have to be negotiated and put into place before the installation of any
energy savings measures.

Shared Savings Contract

The contract is based on the following main principles:

• The Client and ESCO share the savings achieved over the contract term. The ESCO will offer the client
a savings split in the tender document.

• The contract award will be based on the combination of the savings split between the client and the
ESCO, and a savings target offered by the ESCO.

• The ESCO will finance and provide all the services to realise the savings target for the duration of the
contract term. The services will include energy audits, design, installation and maintenance of all
energy savings equipment.

• Both parties will have the right to terminate the contract if the savings target is not achieved over
time. This evaluation will occur at the end of each contract year.

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 • All the equipment installed will belong to the ESCO for the duration of the contract. The client will
become the owner of the equipment after the completion of the contract term.

Advantages
The main advantages of this contract scheme are as follows:
• The entire project is financed by the ESCO.
• The ESCO receives a percentage of the savings as payment.
• The savings are the responsibility of the ESCO (no savings, no payment).
• Maintenance and operation of energy savings equipment are the responsibility of the ESCO.
• Both parties have the option to terminate the project if the savings target is not achieved.
• All the financial and technical risks are with the ESCO.

The following are the general elements of Performance Contracting, and includes:
i. Energy Assessments,
ii. Design Engineering,
iii. Installation and Commissioning,
iv. Arrangement of Financing,
v. Energy Savings Monitoring and Verification, and
vi. Operations and Maintenance.

In essence then, Performance Contracting is a turnkey service, which provides the customer with a
comprehensive set of energy efficiency measures. It is accompanied with a guarantee that the energy cost
savings produced by the interventions will be sufficient to finance the full cost of the project within the 3-5
year shared savings contract.

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ENERGY MANAGEMENT SERVICES FEE STRUCTURE

As a professional energy management services provider, BCX Industrial Solution charge a specific fee for the
various energy management services it offer.
These fees include the following elements:

a. Energy efficiency reviews,

b. Detailed energy assessment,
c. Solution Specification and Design,
d. Solution Sourcing and Engineering,
e. Solution Installation and Commission,
f. Equipment Decommissioning,
g. Operator Training and Handover,
h. Project Management, and
i. On-going Servicing and Maintenance

In turn, the fee structure of the Energy Management Services offered BCX Industrial Solutions can generally be
categorised into three broad areas:

1. Energy Assessment Fees – Which is an individual professional services fee levied for any of the energy
assessments offered by BCX Industrial Solutions.
2. Total Energy Solutions Fee – This the total solutions fee for energy efficiency improvements identified
during the energy assessment and recommended based on certain criteria. Such a fee will be for a
turnkey energy efficiency solution, and will include all design, engineering, installation, and
commissioning work involved in implementing a specific energy efficiency solution. The Total Energy
Solutions Fee will also include the requisite servicing and maintenance of the installed energy
efficiency solution for the first year from date of final handover.
3. Preventive Maintenance Fee – The nature of energy efficiency improvement measures is that these
are mostly mechanical in nature, and therefore require periodic maintenance to maintain
performance as specified. The maintenance fee presented to the customer towards the end of the
first year of installation depends on maintenance package chosen.

In addition, depending on final agreement between customer and BCX Industrial Services, a monthly energy
management services retainer can be negotiated based in a previously agreed upon Service Level Agreement.

For the purposes of ABC Foods, it will not be possible at this stage to offer any indication of potential energy
management services fees. In the same manner will it not be possible to offer an indication of potential costs
of specific energy efficiency improvement measures until after an energy assessment have been done.

One of the first steps in developing and implementing an energy performance improvement program is the
initiation of an energy efficiency review, and/or the installation of an energy information management system.

The objective of the energy efficiency review is to determine the potential scope of energy efficiency
improvements in the facility, as well as the key load split of energy users in the facility, inventory of energy
using equipment, and the level of energy information management in the facility.

The information from the Energy Efficiency Review will give BCX Industrial Solutions the ability to design a
comprehensive energy management program with clear targets, timeframes, and deliverables, as well as a
provide a representative cost for the assessment of specific energy usage areas within the facility.
The Detailed Energy Use Assessment will lay bare the energy efficiency opportunities of a specific energy use
area, the outcome of which will be compiled in a comprehensive energy systems efficiency improvement
business case.

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To provide a formal quotation for an Energy Efficiency Review for the ABC Foods Swaziland facility as initially
discussed, the following information will be required:

1. Installed capacity in KVA or kW.

2. Number of main incomers, sub-stations, transformers.
3. Nature of incoming power supply, i.e., bulk or general.
4. Average monthly energy consumption,
5. Size of facility – square metres, and
6. Exact location of facility.

Alternatively, a budget quote can be developed for a Power Quality Improvement Assessment at the facility
also based on the information required above. Power quality improvement is often quite a misunderstood
energy management activity, which, surprisingly, holds significant potential for energy efficiency
improvements and energy cost savings.

Power quality improvements is one of those energy use areas where there are opportunities for
improvements across the investment spectrum: Low-cost, No-cost, and Capital Cost.

NEXT STEPS

The next step in the progression of discussions between BCX Industrial Solutions and ABC Foods for
energy management services at the Swaziland facility would be the initiation of an Energy Efficiency
Review of the facility.

A cost will be levied for the service, and as indicated in the Engagement Model as explained earlier, should
ABC Foods appoint BCX Industrial Solutions as its dedicated energy management services provider through a
formal Energy Management Services Agreement, the Energy Efficiency Review fee will be waived.

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ANNEXURE 1 - ENERGY INFORMATION MANAGEMENT SYSTEMS OVERVIEW

What is an Energy Information Management System?

An energy information management system provides relevant information that makes energy performance
visible. This energy information can be used by key individuals and departments within a business to take
effective action to create financial value for the organization.

In practice, this means that an EIMS should:

• Gather information on energy consumption,
• Gather information on the useful outputs derived from the consumption of energy (e.g., production,
heating, utilities, etc.),
• Gather information on any other factors that may influence energy consumption (e.g., environmental
factors or operational factors.),
• Contain analysis routines to allow for a comparison between energy consumption and utility drivers,
and
• Build and display energy performance reports.

With effective management systems in place, these energy performance reports can:

• Act as a stimulus for investigation and identification of the root causes of both good and poor energy
performance;
• Promote operational best practices by eliminating the root causes of poor energy performance,
• Promoting energy use activities and behaviour that lead to good/improved energy performance;
• Provide the justification for energy savings projects by making visible the costs of current energy
performance,
• Provide a baseline against which energy performance improvement projects can be compared, and
• Demonstrate the success and/or benefits of implemented energy performance projects.

Figure 2: Graph Showing Cumulative Energy Savings Achieved Since an EIMS Was Installed

To deliver the energy performance improvements made in Figure 2, an energy information management
system generally should include the following key components:

1. Energy Account Centres against which energy usage will be measured and energy performance
monitored. These can be process lines, unit operations such as furnaces or driers, or energy use
systems such as air compressors or boilers.
2. Energy meters and/or sensors for the key environmental factors that influence energy performance
but over which operators have no control, for example temperature, relative humidity, etc.
3. Production meters, sensors or data input for operational factors as relating to energy consumption,
where applicable.
4. Data capture systems and historians to store this data, and
5. Data analysis and reporting systems.

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 Figure 5 – Outline of a Comprehensive WAGES Utility Measurement and Reporting System

It should be remembered that an energy information management system does not exist in isolation, but is an
integral part of the facility energy management program.

Figure 3: Elements of an Energy Management Program – STRATEGIC LEVEL

An energy information management system is only one element of a comprehensive energy management
program, albeit a very important element of such a program without which the full benefits of energy
management will not be achieved or sustained.

Within this context, the specific deliverables of an EINMS are:

1. Early detection of poor energy and/or process performance.
2. Support for operations and strategic decision-making.
3. Effective energy and process performance reporting.
4. Detailed assessment of historical plant operations.
5. Identification and justification of energy projects.
6. Providing measured evidence of successes achieved.
7. Real-time support for energy budgeting and management accounting.
8. Supplying energy usage data to other operations systems, like SAP, MES, etc.

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ENERGY INFORMATION MANAGEMENT SYSTEMS AND ENERGY SAVINGS

Energy management is no longer a new activity and it have been proven over and over that the only viable,
effective approach to energy management is in a systematic, structured manner.

The purpose of installing an energy information management system is to provide information to stakeholders
that enable energy performance improving actions.

As such, the organizational context that drives the commissioning of an EIMS is paramount to its successful
utilization. Such a context is the confirmation that an energy information system in itself will not save the
company money.

By placing the EIMS within a broader energy management program where the objective is continuous
improvements in cost-effective energy consumption, the following activities will lead to energy savings:
• Productivity improvements through the progressive elimination of wasted energy resources,
• Using information gained on the behaviours that lead to reduced energy consumption, best practices
can quickly be identified and less efficient energy use behaviour be challenged.
• Continuous monitoring of energy performance means that when savings opportunities are
implemented, they are sustained over the long-term and deviations from best performance can be
quickly recognized and corrected.
• Reduced operational variability and re-affirmation of operational best practices. This is determined by
an operator`s ability to recognise when the process is operating well or poorly. Energy savings are
made by eliminating the root causes of poor performance and promoting activities that lead to good
energy performance.
• An investigation into the causes of poor performance and the identification of energy conservation
measures. Ideas for energy conservation measures may be developed as part of the process of
understanding the root causes of poor energy performance.
• Benchmarking of similar processes across organizations, or sites, or shifts. Why do the same production
processes have different energy performance characteristics at different sites or different shifts?
• At a strategic level, implementation of a pro-active energy management program supported by an EIMS
can help to reduce the business risk facing the organization as a result of volatility and/or uncertainty in
energy prices. By reducing both the amount of operational variability and encouraging investment in
energy efficiency improvement measures, energy performance becomes more predictable, making future
energy resource procurement easier and energy cost forecasting more accurate.

Energy savings with the support of an energy information management system is possible, but not as a direct
result of the system itself, but more because of the actions taken because of the information generated.

If done conscientiously such indirect energy cost savings can be anywhere between 2 and 8%.

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ANNEX 2 – THE IMPORTANCE OF ENNERGY ASSESSMENTS

Energy management is a permanent process in an organization where the aim is to optimize the amount of
energy consumed in buildings and its processes. In practice, this often means reducing current consumption
through changes in operational and maintenance-related activities by making investments in retrofits and new
technologies.

Energy efficiency improvements mostly require the investment of scarce capital, and it is essential that this
investment be made after appropriate investigation, analysis, and qualification.

As with all kinds of management, the general rule for energy management is that the current state of energy
use should be understood, and that begins with an understanding of how a facility uses energy.

To this effect are energy assessments possibly the most critical part of comprehensive energy performance
improvement, without no energy performance improvement measure can be quantified, evaluated, or verified
with any measure of accuracy.

In recognition of its importance, an energy assessment can be defined as an inspection, survey, and analysis of
energy flows in a chosen target like a building, process or system with the objective of understanding the
energy use dynamics of the target under investigation.

When the object of energy use investigation is an operational building with tight parameters like a food
processing facility, reducing energy consumption whilst maintaining critical infrastructural and operational
integrity is non-negotiable.

The time span of energy management strategies may vary as well, but both short- and long-term perspectives
can usually be distinguished:

• In the short-term, the existing building and its systems and equipment should be used as efficiently
as possible to get the most out of money invested and to minimise loads on the environment.
• In the longer term, technical and functional performance must be improved to match changing
operational requirements and external demands/developments.

Beyond simply identifying the sources of energy use, an energy use assessments seeks to prioritize the energy
uses from the most to least cost effective opportunities for energy savings within the indicated timeframes.

For example, when investigating energy efficiency in a comprehensive energy management projects, two types
of Energy Assessments gets conducted:
1. An Energy Efficiency Diagnostic, and
2. A Detailed Energy Use Assessment.

With the Energy Efficiency Diagnostic, two important questions get addressed: What is the current energy
efficiency status of the facility, and What is the quantified scope of and for energy efficiency improvements.

Out of this exercise an energy load split will get drawn up, which ranks the energy users from high to low, and
from this energy load split one energy user will get selected, and Detailed Energy Use Assessment will get
conducted on this energy user only. With the idea of identifying every single source of energy loss, waste, or
inefficiency around that single energy user, such system gets placed under a virtual microscope.

One of the many factors that sets BCX Industrial Solutions apart from many an energy services provider is that
we do not sell a specific energy efficiency improvement product, brand, or solutions. As such we are
completely independent and unbiased in our assessment of the energy use of the facility, process, or machine.

That gives us the freedom to indicate all possible energy efficiency solutions, and we always endeavour to
identify No-Cost, and Low-Cost Opportunities, in addition to the Capital Intensive alternatives for improving
the energy efficiency of a system.

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