SA National Energy Development Institute strategic plan 2012, South Africa Renewable Energy Initiative briefing

Energy

18 April 2012
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Meeting Summary

The South African Energy Development Institute (SANEDI) outlined its five-year Strategic Plan, but prior to that gave short presentations on each of the programmes for Working for Energy, Energy Mobility and Green Transport, Planning for a Smart Grid, Clean Energy Solutions, Advanced Fossil Fuel Use and Support Services. These presentations outlined what was included in the programmes, the desired outcomes, partnerships and funding, the jobs that could be created, how far the programmes had progressed, and any challenges. The strategic plan presentation noted that energy efficiency was an intrinsic part of SANEDI’s overall contribution towards energy development in South Africa. SANEDI’s strategic objectives included an energy efficiency tax incentive, promotion of energy efficiency awareness, finding an energy efficiency champion, promoting energy efficiency in public buildings, energy efficiency technologies, and the Energy Efficiency Research Innovation and Skills Development (EEDSM) Hub. Because of increasing problems with liquid fuels and other energy carriers, SANEDI had decided to focus on diversification and conservation within those areas over the next few years. In regard to increasing energy efficiency awareness levels in South Africa, SANEDI called for support from this Portfolio Committee in the form of advice on the demarcation of clearly identified roles and responsibilities, and the communications strategy, both political and non-political. Its project development and technical support and international collaboration were explained. Finally, it was emphasised that achieving greater energy efficiency would have major social, economic and environmental benefits.

Members commended SANEDI on its clearly articulated presentation. They noted, however, that the institutional barriers had to be properly identified, an Integrated Energy Plan was needed by the Committee, and noted some concerns about implementation was still a concern. Members asked for clarity about the use of second-hand fridges, asked whether smokeless stoves could still be used, wondered if it was possible to make arrangements for a larger staff complement, and if water would be contaminated if prospecting was done. They also requested more detail on the future operational sustainability, asked if there was a database of all SANEDI’s activities and if a broader forum would be constituted to deal with issues relating to a Smart Grid.

The Department of Energy then briefed the Committee on the South African Renewable Energy Initiative, noting that the chief objective of this initiative was to move South Africa to a green growth pathway, by building renewable generation and an associated industrial cluster. The Initiative aimed to access and promote public, private, domestic and international funding to scale up renewables.  The range of benefits associated with SARi included enhanced energy security, industrial development opportunity, and the achievement of Copenhagen commitments. Its financing strategy involved reducing the cost of capital for renewables and providing additional funding for the Renewable Energy Feed In Tariff (REFIT). Copenhagen commitments. Key operations had been mandated by Cabinet, and adopted as part of the Climate Response Strategy. The Department of Trade and Industry had handed over initiatives to the Minister of Energy in February 2012. Members concern about a lack of a sense of urgency regarding energy in South Africa, but were pleased to note the integrated approach being adopted. The commitment by the Department of Trade and Industry to finance the Secretariat was questioned and explained, as well as the National Treasury’s commitment to assist with funding. Members asked if appointments of the Secretariat placed further constraints upon the Department of Energy, which was already short of staff, and for an explanation of fleet procurement.

Meeting report

South African Energy Development Institute (SANEDI) briefing
Mr Kevin Nassiep, Chief Executive Officer, South African Energy Development Institute, noted that his introductory briefing would set the context for the presentations on the main thematic areas of the Institute (SANEDI), as outlined in its strategic plan. Internationally, there was recognition of the need to move to a lower carbon trajectory in the future, and the Climate Change Conference (COP17) in South Africa would bear witness to that. The key milestones for the years 2011 to 2040 were presented in terms of policies, legislation and strategies which contextualised the thinking on key energy deliverables (see attached presentation for full details). The various iterations of the Integrated Resource Plans (IRPs) had set the blueprint for capacity expansion in the electricity sector.  It was SANEDI’s role to enhance this thinking, by bringing in the new technologies which added value, particularly indigenous technologies developed in South Africa, and to ensure that they would be integrated into the IRPs. The Long Term Mitigation Scenarios (LTMS) milestone in 2024 had important points. Emissions were expected to plateau out until 2035, when they were expected to decline. The current platform being built by SANEDI was based on two important building blocks; the first to ensure that energy innovation happened in an environment conducive to deployment in terms of technologies, and the second, to conserve energy. The rationale was that more was achieved by saving than by constructing. Job creation was a critical component of achieving a sustainable energy future. It was SANEDI’s role to serve as a catalyst for sustainable energy innovation transformation in the country. 

Working for Energy and Working for Water briefings
Mr David Mahuna, Working for Energy Programme Group, SANEDI, outlined the objectives of the Working for Energy Programme. Key areas included energy to be provided from a diversity of renewable energy sources, outlined skills development in the new and renewable energy space, and research into sustainable new and renewable energy options. The strategic outputs of the programme were  a demonstrated increase in employment levels within participating communities, rural clean energy production and provision, and demonstrated energy management opportunities.

Mr Mahuna then outlined the Working for Water Programme. This programme aimed to create jobs and skills through localised projects, but was still in the phase of systems and technology proofing. The programme’s current focal point was the provision of renewable energy through Biomass waste. A key benefit of the project was sustainable job creation and poverty eradication in rural areas, and a decrease in the urge for urbanisation.

The key achievements of the Bio-waste to Piped Biogas and Electricity (Bela-Bela Project) were described as: energy generation, job creation, and skills development, as project team members acquired high skill levels in the design and development of biogas generators.

The Working for Energy (WFE) Bio-Energy Cluster Project in Phillipi, Bulungula, Fort Cox and the University of Fort Hare, were aimed at demonstrating that the rural application of biomass could create jobs, transfer skills and create local economic empowerment.

Mr Mahuna said that the Working for Energy Programme had made positive contributions towards the development of the Green Economy, focusing on rural and urban low income communities, and towards rural job creation and rural skills development.

Energy Mobility and Green Transport briefing
Mr Derek Batte, Senior Manager, SANEDI, said that a new business development unit had been set up and SANEDI had developed a strong partnership with the Industrial Development Corporation (IDC). A contract with the Korean Institute of Development Strategy was in place, to help with the funding of the knowledge transfer. Some of projects did not reach their full potential and this put the finances at risk. R18.5 billion was spent per year on the import of petroleum products and new refineries were expected by 2016/17. Sufficient oil resources were in place for the period up to 2030.

Mr Batte said that SANEDI’s role included supporting the New Growth Path (NGP) through the creation of sustainable green jobs in the energy sector, supporting the implementation of cleaner energy technologies as part of South Africa’s commitment to lower carbon in the future, and ensuring the diversification of energy supply through implementation of programmes targeting decentralised energy systems. (See attached document for more detail)

Planning for Smart(er) Grid briefing
Mr Willie de Beer, Specialist Advisor, SANEDI, explained that an opportunity existed for South Africa to improve service delivery and address the performance and electricity distribution related infrastructure backlogs of the 174 municipalities and Eskom Distribution, in a standardised and holistic manner. The reasons for investing in a Smart Grid were explained. Mr de Beer clarified that a Smarter Grid was the integration of two infrastructures, the electrical infrastructure, and the information and the telecommunications infrastructure.

The key traditional grid challenges were in the areas of operations transformation, participatory network, passive persistance and constrained choice. The secondary benefits of the Smarter Grid included better budgeting, expenditure and cash-flow management of municipalities, and better electricity prices over the long term. The barriers to the development of a Smart(er) Grid were outlined as including the regulatory and legislative background, culture and communication, the fact that no single business owned or operated the grid, industrial barriers and technical barriers. A Smart Grid industry forum had been established to deal with a number of issues, including integration and co-ordination of the initiatives in the electricity supply industry, and to direct the move towards an intelligent grid. Decisions were needed in establishment of an inter-department Smart Grid Task Group. One municipality was needed to undertake the end to end demonstration, and there was a need for a funding allocation to position the South African Grid to be able to enhance service delivery, as well as dealing with sponsorship of the South African Intelligent Grid. (See attached document for more detail)

The Chairperson asked if this had been presented to the Department of Energy.

Mr de Beer replied that discussions with the Department were in progress.

Clean Energy Solutions briefing
Ms Thembakaki Mali, Senior Manager: Clean Energy, SANEDI, outlined the case for renewables, the drivers for the use of Renewable Energy and the characteristics of Renewable Energy Technologies. She noted, in terms of Renewable Energy resources, that South Africa had a reasonable wind energy resource, which was quite well geographically dispersed, which allowed for security of supply. In addition, the country had a world-class wave energy resource, and one of the best solar regimes in the world. Its biomass and hydro energy resources were restricted, due to limited water, but energy from waste was more readily available and exploitable.

Ms Mali explained that the Renewable Energy Technology/Industry involved the following: wind energy as a mature technology, Concentrated Solar Power (CSP); Photovoltaic (PV) systems and wave energy converters. The core activities of the Renewable Energy Centre of Research and Demonstration were to co-ordinate Renewable Energy (RE) research in South Africa, to facilitate RE research collaboration and participation, to contribute to RE skills development, to support RE business development and RE awareness creation. The support to the Solar Park involved a test facility, as well as research and development (R&D) and training. (See attached document for more detail).

Advanced Fossil Fuel Use briefing
Mr Tony Surredge, Senior Manager: Fossil Fuels, SANEDI, said that South Africa was 70% reliant on Fossil Fuels and the principles behind the operation were to extract Carbon Dioxide (CO2) from Fossil Fuel use and inject CO2 back into geological formations. The coal road map, which was a joint venture with the Department of Minerals and Energy, looked at coal usage over the next three decades. Carbon capture storage and the reason for it were explained. The four stages of Carbon capture from the source were the CO2 capture and separation plant, CO2 compression unit, CO2 transport and CO2 injection. The permanency stages of trapped CO2 were structural trapping; residual trapping, solubility trapping and mineral trapping.

The outlay of the time scale for Carbon Capture and Storage (CSS) in South Africa was set out. The CCS potential was assessed from 2004. The Carbon Atlas was launched by the Minister in October 2010. In 2016 it was planned to undergo the test injection, 2020 would be earmarked for the Integrated Demonstration Plan and 2025 for Commercial Operation.

The potential for carbon dioxide storage in South Africa involved the Atlas, indicating a storage potential of 150 Giga tons at an effective level at 98% off-shore. There was a need for four Giga tons to store 40 million tons for 100 years.

Mr Surredge concluded by saying that there had been a paradigm change from low cost and low liability to high cost and high liability. (See attached document for more detail)

SANEDI Strategic 5-year plan Energy Efficiency briefing
Mr Barry Breedenkamp, Senior Manager, SANEDI, said that energy efficiency was an intrinsic part of SANEDI’s overall contribution towards energy development in South Africa. SANEDI believed it could add value to this process by addressing a number of strategic objectives. These included an energy efficiency tax incentive, promotion of energy efficiency awareness, finding an energy efficiency champion, promoting energy efficiency in public buildings, energy efficiency technologies, and the Energy Efficiency Research Innovation and Skills Development (EEDSM) Hub. There were increasing problems with liquid fuels and other energy carriers, and for this reason SANEDI had decided to focus on diversification and conservation within those areas.

Mr Breedenkamp said that SANEDI offered a significant contribution to the goal of radically increasing energy efficiency awareness levels in South Africa. Support was required from this Portfolio Committee in the form of advice on the demarcation of clearly identified roles and responsibilities for this core activity. This would include internal and external communications and political and non-political messaging. Specific targets for public advocacy, measurement and verification, demand-side energy diversification, Ad hoc project development and technical support and international collaboration were explained (see attached document for more detail). If afforded the opportunity, SANEDi could play a meaningful role and have a significant impact on the drive to transform South Africa towards a more energy efficient society, with potentially large social, economic and environmental benefits.

The Chairperson said that SANEDI should outline with whom the championship was located to drive transformation in South Africa, in particular.

The Chairperson expressed particular thanks to the team who had given these presentations, noting that in his seven years in Parliament this was possibly the most clearly articulated presentation, and that all presentations had fully satisfied the requirements and requests from the Portfolio Committee.

Support Services briefing
Ms Deshnee Govender, Manager: Personnel and Administration, SANEDI, outlined the focus areas and the current human capital staffing of SANEDI. There were non-permanent staff members and 12 contract staff posts. All positions were to be evaluated in terms of the SANEDI mandate, existing skills had to be identified, new staff needed to be appointed and skills needed to be developed in terms of the training courses. The accommodation arrangements, proposed accommodation arrangements, refurbishments and other resources were set out (see attached document for full details).

Discussion
Mr L Greyling (ID) said that a lot of information had been presented and there was a need to allow some time for the Committee to go into all the details of the presentations. There was a struggle to ascertain what SANEDI’s role should be, as the concerns were not so much about the demonstration projects, but about the need to mainstream the technology. The institution and infrastructural barriers had to be properly identified, as these held back the deployment of renewable energy, particularly at the lower levels. The overarching strategy documents were needed, as well as a coherent strategy, as this was not evident. He asked that the review of the White Paper on Renewable Energy be done urgently. The Integrated Energy Plan was also required.  

Mr Nassiep replied that it was SANEDI’s role to mitigate risk, and the organisation had an understanding of what was required with regard to the technology value of new technologies, and was able to identify the institutional barriers.

Mr Nassiep continued that the Strategic Plans illustrated the technology developed value chain to overcome institutional barriers. There was a lot of expenditure by the public sector but more funding had to come from the private sector.

The Smart Grid involved smart metering, and he questioned the country’s receptivity to it. There were many issues involved here and stakeholder engagement was important.

Mr E Lucas (IFP) said that problems had been identified, but implementation was still a concern. Implementation had to be done jointly and this was why operations were more expensive. It was essential now to start acting, without being competitive. Everyone should work together for betterment of South Africa.

Mr Nassiep said that this point was well made.

Ms N Mathibela (ANC) asked for clarity about old fridges.

Mr Nassiep replied that second-hand fridges were less efficient than new fridges. The scrapping allowance had to be considered. Assistance was expected from Eskom in this regard.

Ms Mathibela asked if she could still use her smokeless stove.

Mr Surredge replied that it could still be used. It was actually called a low smoke stove as it used top-down lighting which produced less smoke. This was a good transitional measure.

Ms Mathibela asked if space was being created for a larger staff complement.

Mr Nassiep said that there was an understanding that younger people were prepared to take on more responsibility. There was capacity building to ensure institutional memory.

Ms Mathibela said that she had understood that smoke could be buried under rock, and asked whether the water would not be contaminated if prospecting was done there. She asked if there was not some other way to do this.

Mr Nassiep replied that there would be no contamination of ground water unless the association involved disclosed the chemicals used in fracking, to see the impact on ground water contamination. There were important developments required from a disclosure point of view.

The Chairperson again expressed gratitude to SANEDI for its voluminous presentation. The Committee listened, with concern, to the operational scenarios, particularly in regard to operational sustainability in the future. This begged the question whether there was room for some commercialisation to make up for gaps. He hoped and trusted that a risk analysis had been done. At some stage it might be necessary to arrange for a teleconference, since it was not always possible to bring all parties together in one venue to discuss common concerns.

The Chairperson asked, with regard to the training and development of staff, if a written submission could be made, especially to illustrate placement per unit or per section. SANEDI was also asked for a written submission on electricity generation, and to elaborate on issue of rural energy. In regard to the old appliances, he cited examples of how Mexico dealt with energy efficient household appliances.

Mr Nassiep said that the issue of Mexico and energy efficient household appliances would be followed up.

The Chairperson asked that the Department of Energy should provide more information about the Solar Park in Upington and how far it had developed.

The Chairperson asked if a database existed with all SANEDI’s activities. There was a need for an interdepartmental task group, to work around the Smart Grid, and the Chairperson asked when a broader forum would be constituted to ensure interaction between the different stakeholders involved with the Smart Grid.

Mr Nassiep replied that the National Research Foundation (NRF) had its own database. The University of Pretoria had also compiled a database on energy research. SANEDI had engagements with the CSIR and relationships with other stakeholders took place by default. SANEDI intended to open the Smart Grid issue into a wider stakeholder forum, and the Working for Energy project would gather information from lessons learnt, as SANEDI moved forward.

South African Renewable Energy Initiative (SARi): Department of Energy briefing
Ms Mokgadi Modise, Chief Director: Clean Energy, Department of Energy, explained that the objective of the South African Renewable Energy Initiative (SARi) was to catalyse South Africa toward a green growth pathway, through the building of both a renewable generation and an associated industrial cluster. The SARi aimed to unlock public, private, domestic and international funding to scale up renewables. The IRP renewable targets would impose incremental costs on the price of energy over and above coal.

The SARI’s financing strategy involved reducing the cost of capital for renewables and providing additional funding for the Renewable Energy Feed In Tariff (REFIT). The range of benefits associated with SARi included enhanced energy security, industrial development opportunity and the achievement of the Copenhagen commitments. The SARi’s progress to date occurred through international engagement and international co-operation. Some of the key areas of progress were: SARi were mandated by Cabinet and were adopted as part of the Climate Response Strategy. The Department of Energy (DoE) was working on the institutional architecture of SARi regarding funding of the structure and the employment of personnel. The Department of Trade and Industry (dti) had handed over the initiative to the Minister of Energy in February 2012. More details were in the attached document.

Discussion
Mr Greyling bemoaned the lack of a sense of urgency regarding energy in South Africa, and urged that this needed to be attended to with more speed.

Ms Modise reassured the Committee that government was committed to dealing with issues, with the necessary urgency, as outlined by Mr Greyling. Each of the countries partnering with South Africa came with their own conditions, and these conditions needed to be taken into account with regard to loans. In the next six to seven months, the DoE would be able to present the various models and share with the Committee what had come out of the comprehensive work that was being done now.  It may seem that processes were slow, but there were policy issues at play that needed alignment.

Mr J Selau (ANC) commended the integrated approach that was evident in this matter.

Ms Modise replied that a Cabinet decision taken in October 2011 ensured that an integrated approach was used.  

Mr Selau said that reference had been made to a commitment by the Department of Trade and Industry to finance secretariat services for six months. He asked for more information as to how far this consultation had progressed.

Ms Modise replied that the arrangement with the dti in terms of the current funding would hold until August. The commitment made with dti was in line with what would have happened even if the initiative was still under the administration of dti.

Mr Selau asked if there was a commitment by the National Treasury to provide funding for the SARi Secretariat.

Ms Modise replied that the National Treasury was very serious about the matter and had noted the fact that the handover happened at the time when the financial planning process for the current financial year would be completed. However, it was committed to assisting SARi, to make sure that it got funding as soon as possible.

Ms B Tinto (ANC) asked how far the appointment of the Secretariat had progressed, noting that the Department of Energy had been having problems with human resources for other projects, and this could be an added burden.

Ms Thandeka Zungu, Chief Operating Officer, Department of Energy, said that the entire Secretariat process was handled inside the Department, with people providing whatever extra time that they could squeeze from their busy schedules. A fixed Secretariat administrative unit did not exist at present. There was the hope that in the next six months, money from the dti would allow for the appointment of three persons.

The Chairperson asked what fleet procurement was.

Ms Modise said that this related to economies of scale, as procurement happened on a large scale and this would bring down the costs. 

The Chairperson asked if there was any creative space for SANEDI to tap into SARi.

Ms Modise said that it was too early to respond to this issue, because financial models had not been completed as yet.

The Chairperson expressed appreciation for the passion with which the two institutions had given their presentations, and their commitment to bringing about the desired result. An update was expected in September 2012.

The meeting was adjourned.

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