Taking stock: do energy audits pay for themselves?

By Anjali Saini and Bernard Osawa

Kenyan businesses and industries are always among the first to complain about the ever-rising price of energy, but the high cost of supply is only part of the problem. Whilst energy costs are indeed high, surveys indicate that the potential for energy conservation and efficiency remains largely untapped in Kenya's industrial and commercial sectors, with achievable savings estimated at between 15% and 20% of current usage. Despite this significant potential, the actual energy savings realised by the Kenyan tourism industry have amounted to far less than this: energy management in the sector is surprisingly poor. Energy is rarely subjected to the tight controls that are applied, for example, to the management of human resources.

Hotels, tented camps and lodges are a good example. Energy costs represent a large percentage of hotel operation costs, which in turn affect the profitability of the tourism industry and put serious stress on Kenya’s environment and energy infrastructure. To provide hot water for tourists, for example, trees are felled around game parks, or electric water heaters suck power from the already overstretched national grid.

Many cost-effective and sustainable energy supply and end-use alternatives are already available for the Kenyan lodge, camp or hotel: better energy management, more efficient appliances, and renewable energy resources such as solar, wind, micro-hydro or sustainably harvested fuel wood. Although a section of the industry has embraced renewable sources, the majority still use energy inefficiently.

Whilst awareness about energy efficiency has increased substantially as a result of initiatives such as the GEF-KAM Industrial Energy Efficiency Project, the National Energy Management Award and a number of Ecotourism Kenya supported programmes, it is clear that there are still a number of barriers that are inhibiting companies to invest in energy efficiency projects in their facilities.

There are a number of ways that the barriers can be addressed and in reality it will always require a comprehensive approach through a mixture of Government support (for example through policy instruments and fiscal incentives) combined with voluntary initiative by the private sector. It also requires that companies and individuals "think outside the box" when reviewing the way in which they are using energy. In Japan recently, the Prime Minister promoted a half-sleeved business suit for use during summer to try and reduce air conditioning loads in office buildings. The initiative never caught on because the suits looked rather odd to the otherwise conservatively dressed Japanese executives (and indeed the rest of the world), but it certainly made a very widely-publicised point!

Energy auditing, a tool used to assess an organisation’s energy use, make it more efficient and reduce costs, is not a new concept in Kenya, but very few businesses make use of it. There are a number of reasons for this:

1. Most businesses don’t see the need to pay consultants for energy audits, preferring instead to deal with equipment manufacturers and suppliers who carry out audits in order to demonstrate the energy saving potential of their equipment. The perception here is that this is ‘free’ advice, and while such assessments may be useful, they are not independent, and may not take into account alternative energy options that could serve a particular need more efficiently.

2. Professional and independent advice is perceived to be expensive. The usual story: consultants or outside experts come into a company, write a report and send it to the MD - who yells a little and then files the report away in a dusty cabinet. An expensive waste of time? Done in this way, it is indeed. Paul Kirai, project manager of the KAM-GEF project on industrial energy efficiency, says that it has become increasingly apparent that a company may need some ‘hand-holding’ to implement the recommendations made in an energy audit report, to make sure that the recommended savings actually occur. It is also important to improve the quality of the energy audit to give confidence to the client. Many times audit recommendations are made from "an outsider's" perspective and fail to recognize the practical limitations at the enterprise level, (human, technical and financial) of the measures proposed. It is for this reason that there have been many energy audits in the past whose recommendations have never been implemented.

3. Implementing energy audit recommendations can be expensive. Significant energy savings can be realised through tighter monitoring (things financial controllers are good at) and “soft” management actions - increasing staff awareness and motivation about energy management and providing incentives for good practice, and are relatively inexpensive. In reality, however, as electricity is the most expensive energy source in Kenya today, equipment retrofits or substitution aimed at substantially reducing electrical loads are likely to achieve the highest energy savings. One example: using electricity to heat water for hotel bedrooms may take up to 15-20% of a hotel’s electricity bill. Using solar water heating panels with electrical boosters can reduce this to about 5%, but also requires purchasing new equipment - a prospect few hotels, lodges or camps can consider in these grim times or against competing requirements such as upgrading room decor or purchasing new kitchen equipment.

In order to address some of these problems, the Ecotourism Society of Kenya (ESOK), EcoForum and Energy Alternatives Africa (EAA) are working together on an innovative project to support better energy management in Kenya’s tourism industry by creating a model for cost-effective, environmentally-friendly and sustainable energy management, and publicising the benefits. EAA has conducted energy audits for two tourism facilities, chosen through a competitive process offered to members of the Ecotourism Society of Kenya, and is now following up the audits with technical support and monitoring visits over a six-month period. Updates and experiences from the project will be published in this magazine, and made widely available to the tourism industry through the Ecotourism Society of Kenya. The UK-based Staples Trust has provided a substantial subsidy for the cost of the audits and follow-up services to the hotels.

The two successful applicants were both coastal resorts. Energy costs tend to be high for such facilities, which cater for longer stays, are usually connected to the national grid and use substantial amounts of electricity for air conditioning, cooking, pumping, water heating and laundry services. The Voyager Beach Resort is a 232-bed hotel seven kilometres north of Mombasa, catering primarily to the charter tourism market. Hemingway’s in Watamu is a Small Luxury Resort of the World catering to the high-end tourism market, with 75 bedrooms. Audits have been carried out at both hotels; the next step will be for the hotels to agree upon action plans with specified targets and schedules.

The preliminary results

Both resorts use a similar mix of energy sources: grid electricity, liquid petroleum gas for cooking, diesel for generators and/or boilers, and charcoal for cooking (charcoal is used mainly for “speciality cooking” eg bbq on a theme night. In terms of overall cost the amount of charcoal used by a hotel is not too significant, but in aggregate the coast tourism market exerts significant charcoal demand – good market for legitimate suppliers of charcoal, but since it’s not legal, how are they being supplied?). Both resorts demonstrated a high degree of energy management awareness, although this awareness was confined to the maintenance department of Voyager Beach Resort, and to the senior management at Hemingway’s Resort. In order to achieve significant savings with minimum cost, all staff must be aware of and involved in the energy management programme. While management recognises this, there had been no formal policy, cost accounting procedures, training or team building with respect to energy management. These are all activities that help to build awareness over time. It must be realised that there are no quick fixes, and that energy awareness and management needs to be a continual process, built into a hotel’s regular activities and programmes.

Some management measures do require a low to medium level of investment. There are essentially two principles in operation here: first, you can’t manage what you don’t measure; and second, always try to eliminate scope for human error in control systems. In the first case, strategically installing meters throughout a hotel will enable better accounting of energy to specific cost centres. This may help certain decisions to be made. For example, a better idea of the true costs of a laundry operation has encouraged some hotels in Kenya to completely outsource their laundry service at substantial savings. Metering also helps with establishing energy improvement targets, and monitoring against these targets. Simple spreadsheets may be used to input data and generate management reports showing performance and highlighting any problem areas. In the second case, the installation of timer switches can ensure that appliances are not left on longer than they need to be. Typical examples are swimming pool and fountain pumps, or outdoor feature lighting, which do not need to be left on all night. Amazing as it may sound, this is a common practice in hotels and resorts in Kenya. In one interesting case, the level of potential savings could have justified the creation of a new dedicated "energy manager" position at the hotel with plenty of change to spare.

Ideally, energy efficiency systems are planned before the hotel is built, ranging from provision of hot water through to appropriate types of lighting. Hemingway’s, for example, incorporated the use of solar energy to heat water for bedrooms in its original design, and thus saved a great deal of money from the outset. While water heating for rooms takes up approximately 19% of the electricity bill at Voyager, only 6% of Hemingway’s bill goes to heat water.

Poorly designed, inefficient systems have high operational costs, and will require retrofits later on. In the current economic climate, few hotels can afford the high capital costs of these retrofits, and so make do with existing, expensive systems. Either way, profitability suffers.

Telling this to an operational hotel may seem a bit like crying over spilt milk, but all good hotels have regular refurbishment programmes, and these represent good opportunities for including changes to more efficient systems. For example, by implementing changes to air conditioning and water heating in the recent refurbishment programme of an entire block of bedrooms, Voyager Beach Resort has managed to reduce costs per room by 10% and 30% respectively. Carrying out a phased approach to investment in better energy systems is more likely to build the argument for capital investment needs to the hotel’s owners and senior management. Where possible, trials should be carried out in a sample area, and performance monitored. A good start is in the replacement of ordinary light bulbs with energy efficient lamps, which last longer and are up to 75% more efficient. Lights that are left on all night for safety and security purposes should be the first to be replaced. Financing is always a problem, but senior management know that investment in energy improvements can be considered as investment in a profit centre: every shilling saved is a shilling added to the bottom line.

Recommendations to both Voyager Beach Resort and Hemingway’s Resort incorporated no-cost, low-medium cost, and high cost measures. The project initially focused on the no- and low-cost measures, setting the stage for investment in medium and high cost measures by proving their potential for substantial energy savings.

This article is adapted from versions that appeared in Ecoforum Magazine, Vol 26 No. 2, Long Rains Edition, 2002 and an updated version in Ecotourism Kenya's Special Edition 10th Anniversary newsletter, October 2006.