South African National Energy Development Institute briefing on its performance and projects

NCOP Economic and Business Development

19 August 2013
Chairperson: Mr F Adams (Western Cape, ANC)
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Meeting Summary

The Committee began by noting the apology it had received from the Central Energy Fund for their previous presentation, which was deemed poor. The delegation from the South African National Energy Development Institute (SANEDI) began by stating that the purpose of their presentation was to give the Committee an idea about their scope and the projects they had been working on. A brief history of SANEDI was given and the organization informed the Committee that it wished to achieve greater energy efficiency and wanted to serve as a catalyst for innovation. Clean energy was a priority for SANEDI and they supported a transition to a low carbon energy system for South Africa. The organisation intended to achieve its goals through applied energy research and investment in education in green energy sectors.

SANEDI also implemented the Working for Energy programme, which sought to bring renewable energy to low-income communities via the natural resources at hand. These projects revolved around using the bio waste that accrued and creating gas to power household functions. SANEDI also spoke on installing smart meters in rural communities and with that technology enabling e-learning. The intent was to make all these products in South Africa in order to spur the local economy and provide a self-sufficient system.

The Green Transport Programme was also a focus of SANEDI as they aimed to provide strategic vision and technology development for a more energy efficient transport sector. A programme had commenced with Minibus Taxis in which they are given the technology to become hybrid vehicles and decrease their dependence on fossil fuels; the drivers who had implemented such changes gave SANEDI positive feedback. Buses in Gauteng had been retrofitted for fuel efficiency and more plans were being made for further retrofitting. SANEDI also noted their funding issues and the subsequent partnerships with international organizations for funding.

Members noted their satisfaction with SANEDI’s presentation and that the organisation’s budget issues were of great concern. Without a large enough operational budget how would they continue the work they had laid out for themselves? What had become of the Optimal Energy Joule car that had been researched and developed? The reliance on foreign investors was also questioned, as was why South Africa’s wave power potential had not been unlocked. Members also wanted to know why more LED light bulbs were not being installed around the country and why they relied on old less efficient technologies. It was also asked whether SANEDI complied to regulations in regards to employment of those with disabilities.
 
The Committee believed that the presentation of SANEDI was part of a bigger energy debate in South Africa and that alternative sources must be discussed at all levels. South Africa had established itself as an investment opportunity in the alternative energy field and that is why there was such international interest in working with SANEDI. But without the proper funding from within South Africa it would be very difficult for SANEDI to work to their full potential. With this the Committee decided to engage with the National Treasury to ask for a reconsideration of SANEDI’s budget.
 

Meeting report

Opening Statement
The Chairperson began the meeting late, as the Committee could no longer wait for the hard copies of the presentation as Members had time constraints. He stated that an apology from the Central Energy Fund was received for their last presentation, which was deemed to be substandard. He then asked for the presentation to start.

Briefing by the South African National Energy Development Institute on the progress of their projects
Mr Kadri Nassiep, CEO, South African National Energy Development Institute (SANEDI) began by introducing the delegation and giving a brief history of SANEDI. SANEDI was an independent state agency created under the Energy Act of 2008. The South African National Energy Research Institute (SANERI) had evolved into SANEDI in order to operationalise SANERI’s work, and was a subsidiary company of the Central Energy Fund (CEF). SANEDI was under the supervision of the Minister of Energy and the Minster of Science and Technology and the key areas in which they focused were human capital development and research and development. Building capacity in South African universities was a method of addressing their key areas, as it would involve South African people and products. An issue for SANEDI was how they could get the technology developed in South Africa into local markets when international products were dominating.

SANEDI had a high performance rate of over 80% and had used their Bursary Support Programme to help over 70 postgraduates along with 191 undergraduates through the Energy Efficiency Hub. They also found success in the incubation of the Green Transport Programme, which was showcased during the FIFA World Cup. Programmes such as the Working for Energy program (WFE) and wind mapping initiatives had proven to be successes for SANEDI. 

Mr Nassiep stated that SANEDI was established due to the decline in national energy research and development as well as the recognition of a link between research and development and global competitiveness in the energy sector. South Africa also had to ease its reliance on old methods of energy supply and diversify their methods of obtaining energy. SANEDI operated under the legislative mandates of the National Energy Act of 2008, the White Paper on Energy Policy of 1998, the South African Constitution and the Strategic Plan of the Department of Energy. SANEDI also operated under the guidelines of the National Energy Efficiency Strategy of 2005, Energy Security Master Plan for Liquid Fuels, Integrated Resource Plan for Energy. There were many diverse initiatives directed towards achieving greater energy efficiency but they were disjointed and difficult to track. A database of such initiatives was suggested to aid SANEDI.

The strategic overview of SANEDI included their vision to serve as a catalyst for the sustainable energy innovation, transformation and technology diffusion in support of South Africa’s sustainable development.  Their mission was to advance the innovation of clean energy solutions and rational energy use to coincide with South Africa’s national energy objectives. SANEDI supported a transition to a low carbon energy system for South Africa. The three strategic outcome orientated goals of SANEDI were:

Enable well-informed and high confidence energy planning, decision-making and policy development through technological integration and databases.
Support the accelerated transformation from a less energy and carbon intensive economy.
Foster a culture of greater efficiency and more rational use of energy.

These goals would be obtained through applied energy-research and demonstration and the prioritisation of energy efficiency programmes.

SANEDI had also partnered with the South African Centre for Carbon Capture and Storage (SACCCS), which were funded through a number of sponsors and partners, including Sasol, the Norwegian Embassy and Eskom. The South African Government was contributing R69 million in 2013/14, R103 million in 2014/2015 and R35 million in 2015/2016 through the Department of Energy. SACCCS was also accessing the 25 million pound fund that the UK Government had place in the World Bank Carbon Capture and Storage Trust Fund. SACCCS had achieved much progress with Carbon Capture and Storage Feasibility development, the first international review of potential storage sites had been completed and the stakeholder engagement plan had been approved and initiated. SACCCS had successfully increased its capacity by providing bursaries to students, which had produced five masters’ graduates. SACCCS placed clean fossil fuels technology at the forefront of their work and had made significant progress in all their projects, this included research and development on oil and gas and a new project on shale gas.

The Working for Energy programme was implemented by SANEDI with the goal of bringing renewable energy to low-income communities. SANEDI intended to use the resources that communities had, such as animal waste, to create green energy as well as job growth. The programme intended to develop and demonstrate the sustainability of clean energy to rural communities and to provide economic and social benefits to low-income persons.

Smart grid technologies were discussed as the next step in modernising South Africa’s energy systems. SANEDI first had to assess the current state of the system and form a business and implementation plan.  This plan would be aligned with smart grid industry guidelines. Implementing smart grids would increase the consumer awareness of energy use. Smart metering was a plan SANEDI was looking to implement as well, smart meter installation would benefit communities and would be integrated with tablets to monitor consumption. These tablets would be used for e-learning, which would contain web based classes and downloadable material. All these technologies were to be made in South Africa.

The Green Transport Programme was developed with the goal of providing a strategic vision and technology development plan for an energy efficient transport sector. SANEDI intended to develop a technology development incubation centre to offer “soft start” facilities to companies and technology partners. An example of this was the Minibus Taxis that were given upgrades to become hybrid vehicles with less reliance on fossil fuels, great feedback had been received from the owners in regards to the changes made. Retrofitted buses had also been introduced in Gauteng. SANEDI also sought to develop a substantive public advocacy programme to create market acceptability for alternative fuels and propulsion systems. SANEDI sought to learn from partners abroad in order to create better practices at home, including the International Energy Agency (IEA) which South Africa was not a part of but were allowed to participate in knowledge sharing.

Mr Nassiep noted their vast links with other organisations including members of the European Union, the IEA, the FP7 frameworks set out by the European Commission and many national and international universities. These relationships provide funding, human resource aid, and clarification for all energy efficiency mandates. Funding for SANEDI still remained a crucial aspect as they covered all of the energy sector (except nuclear) and had a vast array of projects, a shortage in their Human Resources department had developed on account of funding. Many key programmes still remained unfunded such as the continuation of the Green Transport Programme (the Department of Transport had verbally committed R10 million, but written confirmation had yet to arrive).

Discussion
The Chairperson thanked SANEDI for their presentation and asked Members for their questions.

Mr K Sinclair (Northern Cape, COPE) began by stating that it seemed as though SANEDI had much work to do and that their biggest challenge would be their operating budget. Were there any other bodies in the Department of Energy that could help SANEDI lighten their load? In the financial environment of the day it would be difficult to obtain the funds they needed. He also asked why the Optimal Energy Joule Car project had been shelved. He believed that South Africa was the right place for this. Could support have been found elsewhere for this project?

Ms E van Lingen (Eastern Cape, DA) noted that the work that SANEDI did was impressive considering the small staff they operated with. Wave power technology is something that had been asked about a lot and she asked whether the technology was not available, and if not how expensive would it be? Did SANEDI have a share in the gas and petroleum project that SASSSL had built? She expressed concern that the bio waste projects for rural areas were too cumbersome and not practical for poorer areas. How would SANEDI address poor communities that did not have resources? She noted that Port Elizabeth had been operating within a smart grid system. How many other cities were approaching using the smart grid and were municipalities to follow? Was there a way to measure which departments were using the most electricity? She noted that the efficiency of LED light bulbs was negated by their high cost to the public, why was this the case?

Ms B Abrahams (Gauteng, DA) wanted to know what the provincial span of the jobs created would be.  Which provinces would e-learning and school greening projects take place? She asked whether people with disabilities were considered in their plans and whether SANEDI had hired any.

Mr D Gamede (KwaZulu-Natal) inquired as to why there was such a reliance on foreign investors. Why was there no internal investment? With so many international investors it made the issue of ownership blurry.

Mr Nassiep began his responses by noting the government is always changing which means the over time SANEDI had to change strategies and adjust proposals. SANEDI was not meeting their funding needs, which is why their goals had to be prioritised. He noted that if SANEDI was unable to get their solar energy products into the marketplace their work would be considered a failure, which is why they had made it more affordable. Many staff members of SANEDI were on five-year contracts

The Joule electric car was shelved because of production issues they encounter. As time went by technology progressed rapidly and the cost of production increased greatly, these increased cost made investors sceptical and the European market became more and more difficult to infiltrate. Mr Nassiep quipped that you could sell the Joule in South Africa if it was called the Mandela but that model would not work in Europe. It was admitted that a partnership with BMW or Mercedes should have been formed from the beginning.

Ms Mokgade Modise, Chief Director: Clean Energy, Department of Energy, addressed the budget and said that the Department was engaging with the National Treasury and the Department of Energy. Cuts had to be made across the board as all sectors of government were feeling the effects. 

Mr Nassiep then addressed the potential use of tidal technology as an energy source. South Africa had vast resources in this regard and they could translate into increased energy being obtained from wave power and ocean currents. Wave power was being extensively researched but the technologies were not mature enough commercially to be established.  It was noted that Robben Island could be used as a test ground.  CEF and SASSSL had also been working with SANEDI in improving gas access for hospitals. 

Mr David Mahuma, Senior Manager, SANEDI, gave a brief explanation of some of SANEDI’s projects in small communities, such as solar projects and the biomass initiatives. The biomass projects were initiated in homes with livestock as they supplied the biomass used.  These projects allowed the home owners to be self sufficient as the biomass projects provided enough gas to do their cooking, heating and other household needs.  The projects were very environmentally friendly as they did not use fresh water and were natural.  There were plastic, concrete and brick versions of the biogas installations with brick being the preferred builder in small communities.

Mr Nassiep then addressed smart grids in saying that a well thought approach must be taken in implementation. One issue was that there were gaps that existed between areas, as some such as Port Elizabeth were more advanced than others. SANEDI intended on working with the cities to implement smart grids. Energy efficient streetlight was also discussed and it was stated that meeting lighting standard could be quite difficult. They were in the process of considering retrofitting high mass lighting. It was noted that LED lights were not made in South Africa because the chips were imported and the bulbs were subsequently assembled in South Africa. SANEDI took issue with imported lights, as they did not provide consistency, they argued that if lights were made in South Africa they would be more expensive but they would guarantee usage hours. More energy efficient product production in South Africa would also aid the economy and increase employment rates.

The e-learning mentioned in the presentation was slated to be introduced whenever further smart meter initiatives were launched and SANEDI was waiting for advice from the Department of Energy on where they should commence launching.  Mr Nassiep also took time to mention some further green initiatives such as the implementation of car free zones in cities as well as the project started to create a green community around Ellis Park in Johannesburg, this was being accomplished via the installation of energy efficient lights and improved efficiency all around.

Mr Nassiep noted that at the moment SANEDI did not employ anyone with disabilities but that they subscribed to the disability quota of CEF. They did strive to work with those with disabilities in communities, including children who had been disabled by energy related fires. He acknowledged that they should do more in terms of direct employment of disabled persons but also stated that he believed their charitable works were not to be ignored.

Mr Sinclair believed that the presentation of SANEDI was part of a bigger debate that must be had, in which the future of alternative energy in South Africa must be discussed. South Africa had established itself as a lucrative investment opportunity in the alternative energy field and that is why SANEDI had such international interest. Many of the initiatives of SANEDI had not been addressed by the current political agenda, research and development and localization being of primary concern. The government had given SANEDI a limited budget, which was not allowing them to be the innovative body they wished to be. The Committee must engage the Treasury to get them to review the budget of SANEDI.

The Chairperson agreed and suggested inviting International Relations along to engage the Treasury, not just on SANEDI but on the energy sector as a whole as there was not enough finances being poured into research and development. He continued in stating that the Committee had visited Spain and that the Spanish energy sector had invested with success in the local people and this had not happened in South Africa. Having South African made products would be superior to imports, as they would account for the South African environment and the challenges it contains.

Mr Nassiep stated that SANEDI would greatly appreciate the intervention to the Treasury from the Committee. He then returned to the issue of High Mass light installation and refurbishment in stating that the initial cost would be R19 billion, but further implementation would be cheaper. SANEDI agreed with the Committee in stating that more money had to be spent on research and development if South Africa was going to remain relevant in the energy sector. He thanked them for their time and patience.

The Chairperson raised no further concerns and the meeting was adjourned.
 

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