Energy Efficiency: public hearings Day 1

Energy

04 September 2012
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The South African National Energy Development Institute opened with a presentation on the measurement and verification processes involving energy efficiency. The Institute emphasised that energy efficiency covered a far broader spectrum than simply electricity efficiency but that LPG gas and other forms of power generation were all part of the mix.

In South Africa, Eskom had received R5.4billion of rate payer’s money for energy efficiency and Demand Side Management Implementation through the MYPD2 allocation from the National Energy Regulator of South Africa. The funding window was over a 3 year period and was required to deliver 1037MW in demand savings and 4055MW of energy savings. The M&V function to ensure these targets were met however resided with Eskom and was seen as a dire conflict of interest.

Representatives from George municipality in the Southern Cape Karoo provided information on the successes achieved in the area by implementing energy efficiency programming which included retrofitting street lamps and solar powered geysers and their plans for the immediate future. From 2009-2012 savings in terms of kWh per month had increased from 1.46million to 3.4million kWh. Thus proving that energy efficiency combined with load management and renewable energy generation was the best way to solve power shortages in South Africa. Members hoped that the successes of George could be implemented on a national level across all municipalities.

During the presentation from Saint-Gobain (a construction products company; thermal insulation) it was emphasised that New Building Regulations would go far in achieving energy savings in building stock and it was strongly suggested that a retrofitting program should be implemented immediately which would create jobs and improve the health of residents.

Mr Dani Coetzee, a farmer from Northern Cape and appearing before the committee as a private citizen expressed a need for more energy generation capacity in South Africa. He noted three potential choices which included coal- but had the consequence of global warming, nuclear power – which could lead to a nuclear disaster, and finally renewables- however they came at a high cost.

Possible solutions to the current energy crunch in the country were solar powered cars for short distances of up to 100km per day, home solar systems, and in the farming community instead of biofuel using solar powered tractors was also suggested.

The final presentation by Pert Industrials focussed on the need for greater education and workshops at schools while emphasising that teachers were facing more and more challenges at school, with large class sizes, and little time to teach subjects which were not in the curriculum. Dealing with South Africa’s energy crisis would be achieved through more activities in schools on energy storage and distribution, efficiency and renewables. It was strongly expressed that work done in primary schools to teach school children about energy would trickle down to parents at home and make a difference in communities.

Members were united in calling for greater efforts in promotion of energy efficiency as it had direct ramifications for the national economy and related to issues of poverty and unemployment. It was raised as a matter of concern that more had to be done to increase public awareness and make energy efficiency relevant to not only the middle class but also to the poor.

Meeting report

Opening Remarks
The Chairperson stated that these public hearings would be part of the roadmap to engage with the Department of Energy (DoE) and make recommendations so that the Department’s revised strategy on energy would be amended accordingly. This was necessary as the DoE remained far from reaching the targets it had set across all sectors. It was equally Important that the Committee facilitated the move towards energy efficiency which could not be only paper based but needed to involve real on the ground policies.

South African National Energy Development Institute (SANEDI) submission
Mr Barry Bredenkamp, Senior Manager on Energy Efficiency, SANEDI, opened with a presentation on the measurement and verification processes involving energy efficiency (EE). It was emphasised that EE covered a far broader spectrum than simply electricity efficiency but that Liquid Petroleum Gas (LPG) gas and other forms of power generation were all part of the mix.

Achieving success in this area was necessary across all resources and especially so in the face of energy shortages which since 2008 had resulted in rolling load sharing where many South Africans did not have access to electricity. The presentation asked how energy efficient South Africa was. And in that regard how much energy had South Africa saved since 2008 through interventions? There was in fact no real answer to these questions as there was no existing platform to consolidate these types of results. In order to get a real result one would need to contact all involved parties such as commercial bank funded projects, 12-I Industrial Tax Incentives, IDC/DBSA-funded projects, and National Energy Regulator of South Africa (NERSA)/Eskom funded projects to get an overview of the current situation.

From this year building regulations had changed to include energy efficient measures including enhanced glazing on doors and windows, more specifically where 15% or more than 100m2 of your building was glass it would then be necessary to have double glazing on windows which amounted to large savings in energy consumption. This had however led to a lot of burden on the building authorities. Furthermore while these measures were 10 years in development the impacts of the regulations were not being measured in any meaningful way. A Big drive to make all public buildings energy efficient was also in the offing.

There now existed an approved national standard on how to report and measure energy savings which was known as SANS 50 010 and was the blueprint guideline. However there were not enough professionals in South Africa to cope with the demand for measurement as only seven universities nationwide were dealing with this area. Measurement and verification (M&V) were often seen as rocket science but in fact it was not the case and it was recommended that more institutions be involved in providing certification in this respect.

The current situation in South Africa was that Eskom had received R5.4billion of tax payer’s money for energy efficiency and Demand Side Management Implementation (EEDSM) through the MYPD2 allocation from NERSA. The funding window was over a 3 year period and was required to deliver 1037MW in demand savings and 4055MW of energy savings. The M&V function to ensure these targets were met however resided with Eskom and was seen as a dire conflict of interest.

The gaps in the current context did not take the national picture into consideration; e.g. solar water heaters (SWH) 1 million target had progressed to 200 000 in specific areas. However although it was said these would provide free hot water, in poorer areas they had always lived without hot water but now with a 150L SWH there was a need to tell people that water was an expensive resource and the cost goes up as consumption increases.

There was also a focus on electrical energy which excluded the socio-economic impacts on sectoral jobs, job creation, and environmental impacts. The basic example of changing a light bulb was given since with newer EE bulbs which had a longer life span there was no longer a need to change bulbs and therefore manual jobs would be lost as a consequence of better technology.

In 2008 with rolling black outs in Cape Town free two plate LPG gas stoves were issued if you traded in your electric powered stove, however this led to a gas shortage but at least with load sharing you still received four hours of electricity per day to cook a meal. Measures like this simply moved the problem from one resource to the other and were not long term solutions.

Further it was strongly emphasised that no penalties had been levied on any non-compliant projects to date this meant that you put at risk national planning for energy efficiency as a resource, since no one was looking at a consolidated picture potentially measurements could be 100% off the mark.

Proposed solutions to these issues included the consolidation of the measurement and verification function for all energy efficiency initiatives into one common portal with a central repository of auditable and value adding data such as electrical energy and demand savings, fuel switching impacts, economic sectoral impacts and jobs created.

SANEDI made a request for feedback so that if these proposals had merit a more detailed feasibility study and a transitional action plan could be undertaken towards future implementation. In this regard the committee’s assistance in lobbying this approach with other stakeholders would be critically important as it would play an intergovernmental role in which cooperation was duly needed.

Energy Efficiency in the cities of the Southern Cape Karoo by George Municipality
Mr Kevin Grunewaldt, City Energy Support Unit Manager, George Municipality, said that George would like to be energy self-sufficient by 2030 and was in talks with Eskom to put up a 500Kw energy station in Gwaing. From 2006 the so-called Western Cape problem had emerged which brought about load sharing in those years and since then municipalities had looked at demand side management systems with the city energy support group in particular being supported by the British Government in that regard.

The implementation of energy efficiency had arisen out of the 2008 national electricity crisis which had led resulted in the 9 of June 2009 new EE technology being implemented and municipalities had begun looking at new sources of energy generation. Since then five municipalities had submitted EE informed business plans for the past three years. On September 3 2012 new business plans were submitted for the current year.

The Eskom grid at the Mossel Bay Proteus 400-132Kv substation could save nearly 100MW with huge room for maximum demand and energy efficient measures.

The Western Cape total base load of 5200MW had to be transported by transmission lines coming down from the De Aar main transmission system. Weekly there was 180MW generated with a total base load average of 320MW so that it becomes necessary to try and develop through energy efficiency a smoothing out of the graph so that there was no need to run expensive peaking plants to make up for peak periods. There were various ways to control this which included for example cutting off geysers in households in the George municipality, and currently municipalities were doing this on their own. This meant that a peak at Proteus at 7pm, would be possible due to a peak at George that could happen at 8pm and was necessary to smooth out growth and decrease demands on the system.

In the Southern Cape Karoo, 50% of the load was coming from residential customers and there were two ways to solve this: one was to employ a more aggressive demand side management approach, while the other would create a time of use tariff on domestic customers to penalise people effectively shifting the load from peak to off peak periods.

Over 4-5 years energy usage in George municipality decreased by 38 000 MW proving beyond a reasonable doubt that energy efficiency combined with load management and future renewable energy generation was the best way to solve power shortages in South Africa. Likewise, total maximum demand had decreased from 85MW in 2009 to 78MW in 2012. South Africa still had a winter peak of 2000MW and a summer peak of 100MW that could be saved with the national energy policy.

Energy efficiency was the cheapest way to defer building of power stations and with embedded renewables even more savings could be realised. Every local municipality must have at least 5MW of renewable energy generation through solar, wind, or biomass. It was also emphasised that local municipalities were the best service delivery mechanism for energy efficiency and renewable power generation.

Local municipalities have proven without a doubt that allowed the space to lead their own energy efficiency programmes savings were inevitable.

The chairperson asked for more information from other municipalities and possible gaps. He wished to know about best practises across municipalities with a stated need for greater participation from SALGA.

Saint-Gobain submission
Mr Bruce Murray, National Sales Executive, Saint-Gobain, said that Saint-Gobain was a construction products company with 5 divisions which included gyproc, isover (insulation products), weber (mortars), PAM (cast iron pipes), and Norton (abrasives).

He noted that DoE energy research report (OR13554) stated that before any building standard could be made mandatory it had to be demonstrated that it would not be inflationary. The report had been commissioned to investigate if the interventions in SANS 204 complied with this criterion. This intervention had demonstrated a positive life cycle cost and revealed that insulated walls and ceilings were an energy efficient intervention with relatively short pay-back periods.

This could be achieved via a retrofitting plan for existing buildings and through assisting the DOE in their strategy of energy savings in commercial and residential buildings. Possible interventions included installing wall and ceiling insulation in government subsidised housing projects.

Health concerns brought forth in the Nedlac report (2003) where R2.3billion was spent on healthcare due to respiratory diseases caused by poor indoor air quality from the burning of wood, paraffin and other fossil fuels for heat and cooking showed a need for better EE standards in homes. Health advantages derived from interventions included increased energy efficiency would lead to better comfort, decreased driver for burning fossil fuels and better health outcomes with decreased costs.

In terms of job creation, in countries with similar programmes in place measurements show that jobs created by retrofitting outpace those derived from generating energy. Further jobs would result from onsite trainings and new training programmes.

To conclude it was emphasised that New Building Regulations would go far in achieving energy savings in building stock and it was strongly suggested that a retrofitting program should be implemented immediately which would create jobs and improve the health of residents.

Discussion
Ms N Mathibela (ANC) asked if it was expensive to retrofit older houses with new insulation.

Mr E Lucas (IFP) said everyone was on the same page over these issues. It was noted there was so much daylight in South Africa which should be utilised for power generation. He asked if the country could not alternate peak hours in Cape Town and Johannesburg to counteract and balance-off power consumption.

Furthermore, Mr Lucas asked what had happened with regards to thermal insulation in summer. He also commended George Municipality for doing a good job and wondered if this trend could not be spread nationwide. Energy efficiency was easy to measure in George but there was a need to go national.

Mr L Greyling (ID) asked about George Municipality saying that a lot of municipalities’ revenues come from electricity sales. Did this not act as a disincentive against energy efficiency? In Cape Town it acted as a major threat to the city’s revenue base with people putting solar panels on their roofs and selling power back to the grid.

He saw the issue of time of use as a Gordian knot that needed to break, noting that there were 26 different tariffs charged in Cape Town, with a single tariff to residential customers. Could time of use meters not be used to charge a differential tariff?

On Saint-Gobain he mentioned that the Committee had done a tour to the site of one intervention in Cape Town to put thermal insulation in the ceiling of dwellings. This had led to a huge energy savings in the long run, which had been included in Division of Revenue Act (DORA funds), but what was the cost of putting a ceiling in? And what kind of energy savings would transpire from that project? Would retrofitting houses with new technology create new jobs? Lastly he said that most builders did not even know about current EE regulations and asked if there was a need for far greater education in the marketplace.

Mr S Radebe (ANC) said that the George Municipality presentation was too technical and asked on the issue of tariffs, what their view was in terms of the rest of the Cape?

To Saint-Gobain he asked how S-G houses differed from Atlantis houses. When they get energy from the sun what happened in summer? He noted that they might suit the weather and environment of Cape Town but what happened in different climates like Limpopo?

To SANEDI, Mr Radebe sought clarity on energy efficient tax incentives and where they come from.

Mr Mayathula (ANC) said to SANEDI that on the issue of double glazing he was pleasantly surprised on a trip to Germany as there was no need to switch on lights as there were so many windows in office buildings. He asked why not consider a system similar to overseas hotels where a single key card shut off all lights and power to a hotel room upon exit?

Mr J Smalle (DA) said in response to the George municipality presentation and its target to be self-sufficient by 2030, how did the energy mix come into its planning? Would it involve using renewables which would be a more expensive than conventional energy mix? If so, how would this be subsidised? He also asked for details on Independent Power Producers. He asked about frustrations into funding municipal building plans noting that only so much money was available from National Treasury and DOE so that in reality this type of build programme could not really be rolled out to all 280 municipalities and was thus not an overnight situation to roll out on all regulations.

Response from Saint-Gobain

Regarding the cost of insulation, with a glass roofing structure 10 400 XA requires that you cannot have more than 15% of glass in 100m2 anything in excess of this amount would need to be double glazed. Failing this you would create a lot of heat in the house which could be controlled by opening windows, in the mornings on a summer day to let fresh air circulate inside the house and then curtains or reflective blinds would be needed to manage heat during the midday. Despite the initial cost factor it was strongly put forth that thermal insulation especially in the cape region would provide a massive benefit to the consumer.

Skylights were not the best way to go about heating unless you had other measures to move heat in the house such as fans or air conditioners.

In response to the question about summer versus winter months, in the summer months thermal resistance values were higher as there was the higher the thermal resistance the cooler your house would be. In the Cape the resistance value for most homes was 3.7, with less air coming in and less cool air leaving the house. In the winter months with thermal insulation simply having people living in a home would make houses warmer because of body heat.

Response from George Municipality
A case in point was before COP17 in Durban, while consulting to KZN and South African Local Government Association (SALGA) on energy efficiency the idea of retrofitting streetlights from the airport to the ICC was mooted but the problem was paying for the project. The municipality distanced itself but said if you could find a way to fund it by all means, so they engaged suppliers but there was too little time to make a real effort to complete the project on time despite a fully-fledged proposal that would have worked.

Incentives for household to remind them to switch off lights were also required but you needed something to incentivise the household to do this without impacting on their pockets. In the townships the residents were more prone to think of immediate savings as opposed to savings accrued over time and it was necessary to alter this habit.

This EE programme involving 5 municipalities in the Southern Cape Karoo was added as an afterthought as it was believed they were too small to do anything concrete. Part of this agreement was that you had to have an M&V agency come and do measurements independently. In rolling out this programme with the rest of the country, we can learn from other bigger utilities as good projection was just not coordinated and the process was ongoing having only started off in 2009-10. The programme must continue for the next six years as there would be problems with energy shortages in the interim.

On municipalities’ unwillingness to implement energy efficiency, these programmes ended up being municipal assets so nothing was lost. On renewable energy, in particular Solar PV systems George was looking at deriving a tariff approved by NERSA and although some income would be lost they were looking forward to the increase from 2.5cent to 3.5cent levied by Eskom. This increase must be plowed back into the system as if you are saving so many KW hours they must be able to refund this sum from the fiscus. Currently, the 3.5cent so far was used for a railway down to a substation, but this must be used as a mechanism so that the municipality will remain revenue neutral.

If you looked at the energy mix you were talking about the full Southern Cape which included two main transmission systems, the Proteus substation at Mossel Bay, and another at Beaufort West, with 450 load MW coming from the two. In the future at least 50% must be from a renewable base load, 225MW was likely to come from Petrol SA and at this stage they were generating 125MW for themselves, and looking at generating another 200MW so they would have no need of Eskom and 100MW that they could sell back to the grid. A further 200MW was not unattainable, with four wind farms hoping to connect to Proteus. CVW was a part of the rebid process and it was not a pipe dream to say this level of power generation was impossible.

Smart meters were meant to be implemented from January 1 2012 for those consuming over 1000MW. At present the uptake from customers was not very high, and there was a need for increased educational programming. This would be aided by a time of use domestic tariff and then both the municipality and customer must save energy but once the consumer changes habits both parties would win.

Long transmission lines were necessary in coastal areas as 80% of the country’s energy was generated in the north in Limpopo and thus subsidised costs were pooled tariffs with the cost as a reflective tariff for each customer group being impossible. This created a situation where sometimes you won and sometimes you lost.

Response from SANEDI
Two tax incentives had been made available from DTI and National Treasury (NT) to attract Foreign Direct Investment. For instance all smelters in the north of KZN were originally gross energy consumers because resources were cheap and abundant but now there was a requirement that customers who required foreign investment be energy efficient and thus projects like smelters were avoided. There was now a point system allocated to potential projects with a total of 8 points however if you didn’t have 2 points for EE the project could not be above R200million. Over a 5 year period on R20billion of expenditure, the actual burden on the fiscus was R8billion, with every KW/hr being rebated 53 cents directly from NT and 12-I tax incentives. Internationally tax incentives seemed to be the way to go as they were binding if people defaulted.

Banks were now getting onboard with low cost options, and banks financial criteria had relaxed to 2% below the prime lending rate with a 2-year grace period of no interest and 10 years to pay back the loan. If a company or individual wanted to do a medium size EE project they could then go to the banks and get funding from the SASFUN bank which was providing funding for small and emerging projects.

Regulator requires R5.4billion is recouped from customers but must be verified use masters and grad students to do metering and submitted to NERSA so that it is comfortable with expenditure, DSM funding programme should be run by Eskom but to determine if money is spent wisely but should not be within Eskom environment, believe SANEDI has a home for that role.

Southern Sun Hotels were rolling out hotel key cards to turn off room power and motion sensor technology was being installed in offices. The Green Building Council was promoting this technology as an easy and low cost opportunity to save on energy consumption. A non-mechanical way to optimise light and heat within a home was by planting trees in front of windows, which was a very simple, common sense solution to energy issues.

Daylight savings time which involved changing clocks in summer and winter was assessed in the 1960s by a study and proven not to be feasible for South Africa. However in 2008 Kulula, the discount airline had a big drive to re-implement daylight savings, as there were scientifically proven benefits but there were problems for other sectors, and as such some countries had stopped daylight savings. With roughly 50% in favour and 50% against it was not a clear cut issue.

The chairperson said there was a need to have a global picture of energy efficiency. He asked to what extent was retrofitting of homes happening for the poor and suggested this process at present was more appropriate for middle income earners. RRPs were still being rolled out to the poor and to put it modestly it was still early for poor on EE but it would be helpful to have data from the Nedlac Report on how much the country spent on victims of disease, road accidents and the like.

There was also a serious lack of information on public participation across all the presentations. Without changing people’s habits there would be no effect on the use of energy and no positive progress forward.

General responses
Mr Grunewaldt said that George municipality had received good support from Eskom on energy efficiency and demand side management and that it was working hand in hand with Eskom to look at those places and customers that could be helped further with very good results.

Public participation on EE was a space that should have been opened beyond education, although the education element not being pursued as well as it should have been. There was a stated need for specialisation as this was inherently a local rather than a national issue however this was not being done. It was suggest space should be allowed for people to provide employment to Bachelor of Commerce grads, to take care of the monitoring and education aspects, by for example taking 100 graduates, training them and then deploying them into the community to create a sustainable programme, this had however always been a cost factor.

Mr Murray from Saint-Gobain had no statistics on retrofits but would get back to the committee with more information. It was however seen as a very big market.

Mr Bredenkamp from SANEDI said that smart credits with right measuring was a match made in heaven, but the present mismatch was that smart credits were a medium to long term plan while measuring should have been done yesterday although this was still the way to go.

Public participation in this process was important as for instance the recent hike in the petrol price had led many people to queue at petrol stations. He said that energy efficiency campaigns run to create broader public awareness were confusing as they were run independently by different levels of government and the private sector, when one resource efficiency campaign was needed across the board. Changing energy habits would cascade into changing habits on water usage and other resources.

Mr Danie Coetzee submission

Mr Coetzee, a farmer from Northern Cape and appearing before the committee as a private citizen expressed a need for more energy generation capacity in South Africa. He noted three potential choices which included coal- but had the consequence of global warming, nuclear power – which could lead to a nuclear disaster, and finally renewables- however they came at a high cost.

He demonstrated via graphs that there was a high demand for electricity by households from 7-11pm and emphasised that more energy efficient technology, such as solar irrigation systems were not popular but could provide an interesting solution for the future of energy consumption.

Noting the energy potential of solar power in South Africa due to the amount of annual sunlight, the benefits of home power generation with Photo Voltaic solar power were that the capital costs were lower than capacity costs, and they did not require large areas of usable land. One million homes he said could generate as much power as two power stations.

Possible solutions to the current energy crunch in the country were solar powered cars for short distances of up to 100km per day, home solar systems, and in the farming community instead of biofuel using solar powered tractors was also suggested.

Pert Industrials submission

Mr Peter Horszowski, a sales representative with Pert Industrials and also appearing in a private capacity before the Committee, began by saying that Pert had been manufacturing technical and scientific educational materials since 1967. The company was located in Johannesburg and had 20 staff members including engineers and educators.

In an effort to show the committee that there were variable ways to generate power he noted the effectiveness of the thermo-electric converter which with one leg in hot water and one in cool could generate power through energy conversion from heat to electricity. This tool was related to a stirling engine which worked with temperature differences to generate power in a more applicable way although the thermo-electric converter was usable as an educational tool it was not for commercial production of power.

As Pert was also involved in education and workshops at schools it was emphasised that teachers were facing more and more challenges at school, with large class sizes, and little time to teach subjects which were not in the curriculum. Some possible solutions to dealing with South Africa’s energy crisis would be more activities in schools on energy storage and distribution, and efficiency and renewables. Two examples of this would be solar shading and energy loading.

It was strongly expressed that work done in primary schools to teach school children about energy would trickle down to parents at home and make a difference in communities. If children were talking about it parents would then have a strong incentive to become involved.

The meeting was adjourned.

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