Energy Efficiency and Energy Savings: briefing by Department of Energy

Energy

10 August 2011
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The Department of Energy briefed the Committee on the progress made in the implementation of various energy efficiency and energy savings programmes.  The briefing included detailed status reports on the Energy Efficiency Demand Side Management programme, the Industrial Energy Efficiency project, the Energy Efficiency Target Monitoring project, the Appliance Standard and Labeling programme and the Energy Efficiency Communication Strategy programme.

The challenges faced by the Department included insufficient funding of the Solar Water Heater Rebate programme, the lack of capacity and skills within municipalities, the lack of data to monitor and evaluate the extent of energy efficiency achievements, the lack of suitable municipal infrastructure, the need for cooperation between stakeholders and the lack of skills within electricity services companies.  The conflict of interest between the national Government’s objectives to increase energy efficiency and the negative impact of reduced energy consumption on the revenue generated by local Government authorities was highlighted.  The Department planned to introduce a system of incentives and penalties to encourage all sectors of society to participate in increasing energy efficiency.

Members asked questions about the efficacy of switching geysers on and off; the reasons for the low numbers of Solar Water Heater units in certain provinces; the extent of the education and awareness campaigns; the support provided to encourage the construction of ‘green’ buildings; the utilisation of alternative sources of energy; the responsibility for installing Solar Water Heater units; the role played by the Department in facilitating skills development; the reduction in the electricity supply to the mining industry; the encouragement of the local manufacturing industry to produce units of acceptable quality; the implementation of the national standards developed by the South Africa Bureau of Standards; the inclusion of specific sectoral targets in the medium to long term; the promulgation of new regulations; the involvement of the insurance industry and the responsibility for ongoing maintenance of Solar Water Heater units.

Meeting report

Briefing by the Department of Energy (DOE)
Mr Ompi Aphane, Acting Deputy Director-General, DOE, explained that the Integrated Resource Plan, finalised by the Department in 2011, aimed to balance the supply and demand for energy.  Increasing energy efficiency was considered to be the cheapest and quickest alternative.  The Department had developed a number of initiatives to mobilise all South Africans to save electricity.

Ms Mokgadi Mathekgana, Chief Director, DOE, presented the briefing on energy efficiency and energy savings to the Committee (see attached document).

The Energy Efficiency and Demand Side Management (EEDSM) programme included the retrofitting of energy efficient street and traffic lights and the Solar Water Heating (SWH) programme, which aimed to install 1 million solar geysers by 2014.  The SWH programme provided rebates to homeowners who installed solar geysers.  Details were provided of the number of installations in each province during the period April 2010 to June 2011.  The diminishing Rebates Fund had prompted Eskom to review the rebate programme in April 2011.  A progress report was provided on the status of the SWH programmes in the Tswane, Naledi and Sol Plaatjie municipalities.  The programme in Naledi was halted due to the unsuitability of the hard water supply in the region. The programme in Tswane had been completed and the programme in Sol Plaatjie was scheduled for completion in September 2011.  A detailed progress report on the EEDSM programme was provided.  The completion date of the programme was March 2012.

The Industrial Energy Efficiency (IEE) project focused on reducing the demand for energy in the transport, residential, industry and building sectors.  The target was to reduce demand by 15% by 2015.  The briefing included a detailed progress report on the IEE project, which was scheduled for completion by March 2014.

The Energy Efficiency Target Monitoring (EETM) project was a collaboration between the DOE, the Department of Trade and Industry (DATI), the Department of Public Works (DPW), the South African Local Government Association (SALGA) and the Swiss Development Corporation.  Pilot projects would be implemented in five municipalities.  A detailed progress report on the EETM project was provided, which was scheduled for completion by March 2014.

The Appliance Standard and Labeling (ASL) programme focused on the development and implementation of national standards by the South African Bureau of Standards (SABS).  The progress report included details of the standards that were currently under development.  The target date for completion of the ASL programme was March 2012.

The Energy Efficiency Communications Strategy and Campaign programme aimed to increase awareness at all levels of Government, business, industry and civil society.  The campaign was scheduled for completion by March 2012.

The briefing was concluded with an overview of the challenges faced by the Department with the roll-out of the EEDSM programme and certain recommendations to the Committee.  Major challenges included limited funding, poor municipal infrastructure, capacity and expertise and a lack of skills within energy services companies.

Mr Aphane highlighted the disparity between the interests of the national and local Government authorities.  Although increased energy efficiency was a national priority, this represented a reduction in municipal revenues. Increased energy efficiency was the cheapest and quickest option and had the potential to create a lot of jobs. The Department favoured a ‘carrot and stick’ approach, whereby incentives were provided to encourage energy efficiency measures and punitive tariffs were applied for high energy consumption levels.  The Energy Conservation Scheme was currently being formalised. He stressed the importance of raising awareness of energy efficiency at all levels of society. The programme included the application of energy efficiency measures in Government buildings.

Discussion
Ms N Mathibela (ANC) wanted to know if the practice of switching geysers on and off resulted in saving electricity.  She asked what the reasons were for the low number of SWH installations in the Mpumalanga, Limpopo, Northern Cape and North West provinces.  She asked how the education and awareness programmes were managed in the burgeoning informal settlements in the country.

Mr K Molotu (ANC) asked what support was available to encourage the design of ‘green’ buildings.  Energy efficiency went beyond the installation of SWH units and there were other aspects to increasing the energy efficiency of buildings.  He asked if low pressure SWH units were installed in the houses provided by Government.

Mr D Ross (DA) remarked that the presentation would have been enhanced by the inclusion of specific targets, for example the targets for SWH installations in each province.  He requested more information on the challenge of inadequate capacity in municipalities.  He asked if Eskom or the municipal authority was responsible for the implementation of the programmes.  He asked if the interventions included inter-departmental monitoring and if the energy services companies operated nationally.  He understood that there were no agreements in place with the mining sector to shut down the electricity supply to mines.

Mr E Lucas (IFP) also wanted to know the reason for the low installation figures in certain provinces.  He noted that there was no difference in the rebates granted for locally manufactured and imported SWH units.  He felt that the local industry should be encouraged.  He asked if the solar powered traffic lights were effective.  He considered the development of skills to be crucial as this would allow unemployed persons to take advantage of job opportunities.  He felt that there should be a greater emphasis on the quality of solar panels and that there needed to be more suppliers of panels in South Africa.  He acknowledged that the loss of revenue to municipalities conflicted with Government’s aim to reduce electricity consumption and that it was difficult to align the interests of local and national Government.  He expressed support for the energy efficiency programme of the Department.  He applauded the establishment of the national standards by the SABS but the Department had to ensure that the standards were actually implemented.

Mr L Greyling (ID) was of the opinion that not enough progress had been made in increasing energy efficiency.  Relatively low targets had been set to date and he suggested that the Department specified the targets for reduced energy consumption in the medium and long term.  He understood that the industrial sector consumed 65% of the national electricity supply and suggested that compulsory targets were set for each sector of the economy.  The Minister had announced that new regulations would be published in September 2011 and he wanted to know how the regulations would be implemented.  The issue of the funding of the SWH rebate was creating uncertainty in the market.  Eskom had reduced the rebate and had indicated that the scheme might be abandoned.  There was pressure on the Committee to ensure that the NERSA tariff included provision for the SWH rebate.  The application of the Department of Public Enterprises to train 10,000 people had been turned down and he asked what action had been taken by the DOE to ensure that funding was made available for training purposes.  The insurance industry was the largest procurer of geysers and he asked what interaction took place between the DOE and the insurance industry.  He was aware that a number of SWH units had been installed in Uitenhage, in the Nelson Mandela Bay municipality but homeowners had complained that the units were of poor quality and that leaks had resulted in damage to the homes.  He asked who was responsible for repairs to the SWH units.

Mr J Selau (ANC) queried the need for the energy efficiency programmes.  There was little incentive for those who had an electricity supply to reduce their consumption.  SWH units were not the only means of saving electricity but the briefing had made no mention of alternative sources of energy, such as wind, gas and hydro.  The briefing had concentrated on the roll-out of one million SWH units.  The programme involved other role players and he wanted to know what coordination took place between the Department, Eskom, SALGA and other stakeholders.  He understood the conflict of interest between the local Government authorities and the national Government as many municipalities purchased electricity in bulk from Eskom and sold it on to users at a profit.  He asked what Eskom’s position was as a lower rate of electricity consumption would impact on the electricity provider’s revenue as well.  There appeared to be continued reliance on imported SWH units and he wanted to know what had been done to encourage the development of the local industry.

Mr Aphane agreed that support for the local SWH manufacturing industry was a fundamental issue.  The Department planned to phase out the need to import units but had recently realised that the local industry required more incentives to produce units of acceptable quality.  The standard offer framework required that locally produced products were given preference.  The issue was under discussion with the Departments of Trade and Industry and Economic Development.  There was no alternative to increased energy efficiency programmes.  Energy efficiency was a cheap option that can be implemented within a short period of time and had the potential to create a large number of jobs.  Energy efficiency programmes were not limited to SWH but included initiatives to reduce consumption in the industrial and commercial sectors as well.  The residential sector represented 17% of total electricity supply and was considered to be ‘low-hanging fruit’ that was easier to influence to change attitudes.  Electricity in South Africa was no longer cheap and it was necessary to change attitudes and to divert to other sources of energy.  An integrated approach was necessary and the required infrastructure needed to be in place to support alternative sources of energy.

Mr Aphane explained that the failure of a geyser often resulted in damage to the structure of a house and the insurance industry had to pay out for more than the cost of replacing the geyser.  Public hearings had been held on the standard offer policy framework but the major issue was the rebate funding element in the electricity tariff.  Once the rebate funding issue had been resolved, the uncertainty in the industry concerning SWH units would be addressed.  Energy savings targets were included in the Integrated Resource Plan but energy efficiency must be considered to be an ongoing process as the country could never save enough energy.  An energy efficiency accord had been entered into with certain companies.  The Department had found that some companies were serious about saving energy and were more effective than others.  It was unfair that only certain sectors carried the cost and the energy conservation scheme was intended to involve all the key energy consumers, starting with the major consumers such as mines.

Mr Aphane explained that the regulations due to be promulgated by the DTI applied to new buildings (including houses) and would not be retrospective.  The challenge was to make the existing structures more energy efficient.  The buildings in the Parliamentary precinct were reasonably energy efficient.  Energy efficiency differed from what was considered to be a ‘green’ building.  There were few ‘green’ buildings in South Africa and the focus was on making buildings more energy efficient.  The Department had entered into a memorandum of understanding with the DPW on the approximately 110,000 Government-owned buildings in the country.  The major challenge was in the collection of data for monitoring and evaluation purposes.  The EETM project would address the issue to a certain extent.  The new regulations were issued in terms of the Energy Act.  In general, progress was being made to improve energy efficiency.

Mr Aphane explained that a geyser would use the same amount of energy to heat water after it had been switched off.  It was beneficial to switch off a geyser during peak periods.  A total of R300 million was made available for the SWH rebate.  To date, 150,000 SWH units had been installed but the available funds were not sufficient to cover the rebate for the number installations planned.  The bulk of the funding was derived from a portion of the electricity tariff.  The SWH rebate programme was successful but more funding was required to meet the demand.  The objectives of the energy efficiency programmes were to create jobs and to provide energy security.  The problems experienced in Uitenhage were caused by the absence of water supply and electricity supply connections.  The SWH units installed in Uitenhage conformed to the minimum quality standards.  He conceded that not enough progress had been made in areas with high consumption levels.  Solar geysers were expensive and the homeowner had to fund the substantial gap between the cost of the geyser and the rebate.  The local industry could produce SWH units at lower cost than imported units.  An increase in demand for high pressure units was anticipated.

Mr Aphane said that Eskom was responsible for the installation of SWH units in Naledi.  The project was suspended as a result of the quality of the water supply in the area.  The hard water caused calcification of the pipes.  The assistance of the Department of Water Affairs was requested and the SWH programme would resume as soon as the problem had been solved.  The programme was limited by the lack of an articulated water supply system in certain areas.

Mr Aphane explained that the EETM project addressed the challenge of monitoring and measuring energy efficiency.  The measurement of electricity usage was eased by meter readings but non-grid energy usage was difficult to measure.  The Department had developed protocols in accordance with international criteria, which would be implemented in due course.  Alternative energy sources were linked to the IRP but it was necessary to determine the demand and supply of alternative energy resources.  Targets had been set to improve energy efficiency.  The targets were to reduce electricity usage by 15% by 2015 and to install one million SWH units.  There was no limit on energy savings.  Certain industry sectors had participated well in the programme, for example, the cement industry had already achieved its target.  Adherence to an energy efficiency accord should be compulsory, rather than voluntary.  The country was more vulnerable to black-outs soon after winter as Eskom used the period when there was less demand for electricity to carry out maintenance on power plants.  An unexpected cold snap during this period would result in demand exceeding supply.

Ms Mathekgana explained that the reason for the low number of SWH installations in certain provinces was mainly financial.  Homeowners had to pay for the units and there was not enough awareness.  The DOE collaborated with the Departments of Trade and Industry and Public Enterprises to develop a skills development programme.  A number of different skills was required, mainly plumbers and electricians.  The Department also worked closely with the relevant associations.  The Department’s proposal for job creation had focused on youth development and the need for ongoing maintenance of SWH units.

Mr Aphane said that the Department was aware that rising electricity costs were unaffordable by the poor sector of society.  Initiatives such as lower tariffs and free electricity units for low consumption users were intended to relieve the burden of high electricity prices on the poor.  He agreed that communication and education on efficient use of electricity and pre-paid meters was essential.  The awareness campaign involved many stakeholders, each with its own communication strategy.  The role of the DOE was to influence industry by introducing incentives and penalties to encourage increased energy efficiency.  The project in the Nelson Mandela Bay municipality was the first large-scale SWH installation undertaken and had been a learning experience.  The problems concerning the quality of the units were noted.

The Chairperson advised that the Industrial Development Corporation (IDC) was scheduled to brief the Committee on the ‘green’ industry.  The IDC would be requested to include input on its role in promoting energy efficiency.  He thanked the DOE for the briefing to the Committee and asked Members to consider the issues that were raised during the forthcoming process of approving the Department’s budget.  He noted the ongoing awareness programme but was not convinced that adequate consultation with local communities on energy efficiency programmes had taken place.  The challenges concerning skills capacity, the use of alternative energy resources and the conflict of interest between national and local Government objectives were noted.  He agreed that the public sector had to set a good example.  The benefits of improving energy efficiency would be seen in the longer term.  He wondered what would happen if the information arising from the public hearings conflicted with the new regulations.  It was necessary to reconsider the funding model for the SWH rebate programme and to involve the municipal authorities in the process.  More information on the support to the local manufacturing industry was required.  The briefing could have been contextualised and the role played in the bigger picture could have been explained more clearly to the Committee.  The energy efficiency strategy should include sectoral targets and attention should be paid to economic and environmental sustainability and the need to improve industrial competitiveness.  Denmark had proved that it was possible to improve energy efficiency despite an increase in the demand for electricity.  A number of stakeholders were involved in improving energy efficiency and it was necessary to ensure that the activities of all the affected entities were coordinated.  Government had to ensure that the energy efficiency strategy was properly implemented and that adequate funding was made available.  He suggested that community radio stations and the South African Broadcasting Corporation (SABC) were involved in the information and awareness campaigns.  He suggested that more engagement with affected communities took place.

The meeting was adjourned.


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