ArcelorMittal Cuts Power Use Through Shared Savings
A two-year shared-savings contract has delivered energy efficiency gains at ArcelorMittal South Africa, with panellists discussing the model in Cape Town.
Updated on Nov. 4, 2026 in Energy
ArcelorMittal South Africa has achieved two years of energy efficiency savings under a shared-savings contract. The cumulative result includes 890GWh from variable speed drives and 38GWh from LED lighting.
Why it matters
The company's electricity bill of R3.4 billion made energy efficiency a financial priority for the business. The shared-savings model, involving energy service companies and financiers, shows one way South African industry can fund efficiency projects.
Cumulative savings over two years total 890GWh from variable speed drives and 38GWh from LED lighting, set against an electricity bill of R3.4 billion. The source does not state what share of total consumption these savings represent.
The players
ArcelorMittal South Africa
The steel producer's South African operation, which implemented the shared-savings energy efficiency contract.
AEE Africa
The African chapter of the Association of Energy Engineers, which hosted the conference panel on energy performance contracting.
UNIDO
The United Nations Industrial Development Organization, which ran programmes that delivered early efficiency progress.
The details
Programmes with UNIDO and NCPC delivered early progress before the shared-savings model was applied. Capital remains the main constraint, as efficiency projects compete with environmental, safety and maintenance priorities for the same budget.
Timeline
Two years of savings were recorded under the shared-savings contract.
A panel on energy performance contracting was scheduled for 28 October 2026 at the AEE Africa conference in Cape Town.
Big Picture
The savings are rewarded under South Africa's Section 12L energy efficiency tax incentive, which pays out for verified reductions in consumption. The case shows that shared-savings contracts can operate alongside that existing tax framework in heavy industry.
Industrial electricity users in South Africa can cut costs through shared-savings contracts without funding upfront capital themselves. Every kilowatt-hour saved avoids about 1 kg of CO2, according to the source.
The takeaway
Efficiency projects are more likely to proceed when they deliver several benefits at once, with one study finding a 2.5 times higher likelihood of proceeding with multiple benefits. Industrial managers facing high power bills can use shared-savings models to fund upgrades.
Further reading
For broader context on power and efficiency, explore our Energy coverage.
Source note: This article includes information reported by ESI-Africa.
