Energy Strategic Integrated Projects (SIPs); National Energy Efficiency Strategy; South African National Energy Development Institute as Energy Efficiency Champion

Meeting report

Energy Related Strategic Integrated Projects (SIPs): DoE presentation
Dr Wolsey Barnard, DoE Deputy Director General: Energy Programmes and Projects, spoke about the Presidential Infrastructure Coordinating Commission (PICC), the relationship between the DoE and the PICC, the link between energy and SIPs, together with the DoE’s reporting on all such matters.

He said the Presidential Infrastructure Coordinating Commission (PICC) had been established to integrate and coordinate the long term infrastructure build programmes (National Infrastructure Plan) over all three spheres of Government. Currently eighteen Strategic Integrated Projects had been developed and approved to provide support to economic development and to address service delivery in the poorest of provinces. The SIPs covered a range of economic and social infrastructure projects. The focus of each SIP covered:
- Localization
- Job creation/ skills development
- Research and technology development
- Stimulating the Green economy
- Empowerment improvement.

The 18 SIPs were divided into six clusters:
• Geographical SIPs (1, 2, 3, 4, 5)
• Spatial SIPs (6, 7, 11, 18) such as SIP 6 (Integrated Municipal Infrastructure).
• Energy SIPs (8, 9, 10): These included SIP 8 (Green Energy in support of the South African economy), SIP 9 (Electricity generation to support socio-economic development) and SIP 10 (Electricity transmission and distribution) were all working together in the coordination and implementation of Energy SIPs.
• Social SIPs (12, 13, 14)
• Knowledge SIPs (15, 16)
•Regional Integration SIP (17).

Dr Barnard explained that a needs analysis was done for the entire South African population with regard to access to electricity per municipality. The Northern Cape and the northern parts of KwaZulu Natal were highlighted as the areas with the largest electrification backlogs. The needs analysis indicated bulk infrastructure requirements such as electricity, water, transport, and town planning.

He noted that the DoE had become part of the Presidential Infrastructure Coordinating Commission (PICC) and Secretariat as early as February 2012. A small unit within the DoE was established to look after PICC related support. There were regular feedback meetings between the PICC Secretariat and the DoE to strengthen the working relationship. The DoE through the Programme Management Unit (PMU) was forwarding monthly information to the PICC Secretariat, plus consolidated quarterly reports on SIP projects.

Ms Angelique Kilian, DoE Director: Energy Programmes and Projects, DoE said SIP 6 (Integrated Municipal Infrastructure), SIP 8 (Green Energy in support of the South African economy), SIP 9 (Electricity generation to support socio-economic development) and SIP 10 (Electricity transmission and distribution) were all working together in the coordination and implementation of Energy SIPs. These SIPs were working together with various national departments such as the Department of Public Enterprises, the Department of Trade and Industry, the Department of Rural Development and Land Reform and the Department of Human Settlements. At local government level, the SIPs worked together with the South African Local Government Association (SALGA) and various municipalities, metros and districts.

On SIP 6 (Integrated Municipal Infrastructure) she said the Development Bank of Southern Africa (DBSA) was appointed as the implementing agent responsible for developing a business plan for the management of SIP 6 projects. However there was still no clear indication of who was responsible for SIP 6 activities. In addition, the DBSA requested R 45 million for the SIP 6 unit from National Treasury to set up the unit and the request was denied. The objective of SIP 6 was to raise the quality of life in the least resourced municipalities through integrated action by National Departments in critical service delivery. The SIP would address maintenance backlogs and upgrades required in water, electricity and sanitation bulk infrastructure in at least 23 municipalities, covering around 17 million people. She added that the Industrial Development Corporation (IDC) was appointed by PICC as the implementation agent for SIP 8 (Green Energy) while Eskom was appointed as the implementing agent responsible for developing the business plan and managing SIP 10 (Electricity transmission and distribution).

Some of the projects which the SIPs participated in were the:
Unblocking of the Northern Mineral Belt with the Waterberg as the catalyst (SIP 1)
Unlocking the economic opportunities in North West province (SIP 4)
Saldanha-Northern Cape development coordinator for gas (SIP 5)
Higher education infrastructure (SIP 14)
Regional integration for African cooperation and development (SIP 17)

Dr Barnard concluded that the Infrastructure Plan was a bold effort to transform the economy, laying the basis for growth and job creation. The plan was aimed to promote:
• Re-industrialisation through manufacturing on inputs, components and machinery
• Skills development aimed at critical challenges
• Greening the economy
• Empowerment.

On a monthly basis, the DoE provided information to the PICC Secretariat while consolidating quarterly reports on projects for every energy related SIPs. The DoE made sure that there was economic growth through various types of implementation mechanisms.

Discussion
The Chairperson said it would have been more helpful to the Committee if the geographical location of all the SIPs had been indicated in the presentation. He asked about the role which the DoE played in promoting the use of solar energy in certain areas.

Mr L Greyling (ID) asked whether the National Planning Commission (NPC) was involved in the work of the DoE with regard to SIPs. There seemed to be contested approaches about how the DoE was dealing with issues; seeing that a lot of the issues presented should be done at local government level. How were these tensions handled? How were the SIPs funded?

Ms N Mathibela (ANC) asked for clarity on the maps in the presentation document. She asked that the DoE provide a list of all the provinces in which the DoE was not participating on SIPs. What particular role was the DoE playing in SIP 4?

The Chairperson also referred to the maps and said the work of the DoE highlighted that they excluded the border between South Africa and Mozambique where there was the highest non-electrification. He asked whether the Minister was part of SIP 8. He referred to the work of the DoE pertaining to the expansion of electricity grids; how did this work link up with the DoE’s ADAM (Approach to Distribution Assets Management) programme? On SIP 6, he noted that the work was still at a planning stage. He asked to what extent the DoE was working with the Department of Public Works; seeing that the clinics and hospitals under the SIPs revitalization programme were government property. How was energy efficiency integrated in the revitalization of these clinics and hospitals? On the development of “Green cities” such as Liphalale; how was the DoE looking to make them more energy efficient? On SIP 5 and the gas development work being done in Saldanha Bay; he asked whether there were other areas where gas development was taking place other than in Saldanha. He said there was a huge gap in gas infrastructure.

Prof S Mayathula (ANC) referred to SIP 13 and asked how the schools were being electrified through the national school build programme.

Mr Greyling said it was worrying to see little progress in the African region on gas infrastructure and regional integration. There was still a huge gap for the development of a regional policy for energy. He argued that other sources of energy within the African region needed to be explored. He asked about Coal 3, and the plans which the DoE had to get Eskom heavily involved in the programme.  

The Chairperson asked at what stage the Committee would get the contents of the business plans for SIPs. What were the skills requirements, and how was the DoE going to encourage coal generation? How much progress had been made with all the SIPs? How many were still in the conceptual phase and how many had progressed into the implementation phase?

Dr Barnard replied there were currently 645 SIPs projects at PICC level, therefore mapping of these geographically could be done, but it would prove to be a challenge. DoE was not the one leading the process, and they did not have access to the documents. The DoE was only fed information through the PICC. The focus in the Northern Cape was more than just about solar energy. Road infrastructure and the integration of Telkom were other elements which needed a lot of focus. All this work was situated in different SIPs. On NPC involvement, he said the PICC was built from inputs from different structures; and part of this information came from structures such as the NPC and the National Development Plan. On funded expenses, he said none of the entities received additional funding for management purposes; funding was only made available for project development. On gas integration, he said SIP 17 focused on regional integration, and so a business plan for regional policy development would be developed at the right time. However the plans currently focused only on specific projects.

On Coal 3, he replied that there was a water shortage as a result of the growth in cities. Water infrastructure networks therefore needed to be designed. A pre-study on Coal 3 had already been done by Eskom. On the maps, he apologised for going through them quickly. He explained that the dark areas on the maps indicated the Northern Cape and northern parts of KwaZulu Natal where there were no transition networks and there were huge electricity backlogs. Getting networks to these areas was therefore a huge challenge. SIPs were province and project specific; therefore because certain provinces needed specific aid, specific SIPSs would be developed to meet that particular need in a province. ADAM was therefore part of this process. On the revitalization of clinics and hospitals, the process was indeed a government process and a good understanding of SIP 6 and SIP 8 were necessary. On “Green cities” there was still much more which still needed to be done, and SIP 7 was a key element in this regard. On gas development, SIP 5 and SIP 3 both made provision for gas development. On the question about business plans, he suggested that the Committee invite the PICC to give an overview of the SIPs business plans and the skills requirements. However, some of the fundamental pillars of these plans were around empowerment, localisation and skills and economic development.

Ms Kilian replied to the question on SIP 4 and said the DoE was very involved in unlocking economic opportunities in the Northern Province. The identified projects have been done with the PICC together with other departments. On the question on schools development, the DoE has an observer status and was not really part of the process. The DoE could only bring up the topic of energy efficiency when they were invited to the meetings. PICC coordinated all projects for a long term view. The PICC then reported back to the DoE on all progress made. Currently, some SIPs were at more advanced stages than others; and a detailed report would be given to the DoE on this.

The Chairperson said the progress report would also come in handy for the Committee. New innovations on energy provisions were necessary.

Ms Kilian said reporting was a very high level process. The PICC was responsible for seeing through all the projects. The DoE was responsible for relaying information on where progress had been made, the funding needs of the project, jobs created as well as information on the localisation aspect on the project. The Industrial Development Corporation (IDC) takes all the information and collates it. The IDC then presents this information to the PICC and the DoE had no say in what information should be highlighted to the PICC in these presentations; most of the time the information was discussed in the presence of the Minister. The DoE has however requested an update on the progress made in all SIPs.

The Chairperson asked whether the DoE had plans to tap into the BRICS development bank for regional integration. A common portal for all 654 SIPs projects on energy would be a great initiative, especially for information sharing.

Dr Barnard replied and said the PICC was working on a system where their members would have an information hub. He suggested again that the Committee invite the PICC to brief the Committee on its mandate and all progress made.

The Chairperson asked if permanent skills would be deployed to the SIPs such as project managers.

Dr Barnard replied that the main skills which the DoE needed for SIPs were project management and technical skills. There was a shortage of these skills within the DoE and national departments did not necessarily make provision for project management training.

Ms Kilian agreed that project management skills were needed in all SIPs. SIP 1 was already taking off and the intensity of the project was growing. Strategic meetings were taking place once every week. She added that SIP 6 however would require much in terms of skills and time from the DoE..

The Chairperson agreed that the infrastructure build programme was going to demand a lot from the DoE and the demands of each SIPs would be different. He reiterated that the idea of an information sharing hub should be raised as it would be useful in many forms and would help raise early warnings signs. The PICC secretariat therefore needed to look into the idea, even though the practical side might not be too ideal. The Committee was keen to know more about the infrastructure build programme and what role the DoE played. He thanked the DoE for the presentation.

Energy Efficiency Strategy, Regulations and Monitoring: DoE presentation
Mr Daniel Modise, DoE Deputy Director General: Energy Efficiency, provided an outline of the presentation. The White Paper on Energy Policy (1998) gave a mandate to the Department of Energy (DoE) to pursue an Energy Efficiency programme which was one of the lowest cost options for reducing energy consumption. The National Energy Efficiency Strategy (NEES) was approved by Cabinet in 2005, and released in the same year.

The 2005 NEES outlined the overall energy intensity reduction target of 12% by 2015 with sectoral energy efficiency improvement of industry and mining (15%), commercial and public buildings (15%), residential (10%) and transport (9%). As part of implementing the 2005 NEES, interventions were to be implemented by concentrating on no-cost and low payback options with a high impact. These were to be followed by medium to long-term higher investment interventions. The NEES objectives were to:
• Enhance energy security by making better use of existing and new generation capacity.
• Improve South Africa’s global competitiveness through reduced energy input cost.
• Decouple growth in energy consumption (and GHG emissions) from growth in GDP.
• Improve global competitiveness, in turn, contribute to job creation.

Parallel to the 2005 NEES review process, an EE Policy Mapping Study was conducted through the South African- German Energy Programme (SAGEN) in collaboration with SANEDI and GIZ (German International Cooperation). The first review of the 2005 NEES was done in 2008, a revised document was then issued for public comments. However the comments received were not favourable, and requested a more radical alterations including clear definition of energy efficiency, monitoring system and baseline information that considers the fact that companies are at different levels of target achievements. The second review of the National Energy Efficiency Strategy (NEES) started in 2011, with public and sector workshops to discuss the scope and elements of the NEES that needed review. Cabinet approved the publication of the draft second NEES review document for public comment, and it was then published through the government gazette on the 29 November 2012.

Mr Modise explained that there were five energy efficiency interventions in the DoE, and these took on a bottom-up approach:
- Awareness campaign
- Municipal Street-lighting Programme
- Public buildings programme
- Solar water heating programme
- Industrial Energy Efficiency Improvement programme.

He added that the Energy Efficiency Monitoring System was a project which was implemented by the South African National Energy Development Institute (Sanedi) together with the South African Local Government Association (SALGA).

On NEES implementation progress, Minimum Energy Performance Specifications (MEPS) of household electricity appliances were being developed including energy performance of buildings. And a mandatory provision of energy management plan was also being considered by stakeholders.

He concluded that there had been progress on the review of the 2005 National Energy Efficiency Strategy. An Income Tax Allowance on Energy Efficiency savings under section 12L of the Income Tax Act was also developed. On the development of the energy efficiency monitoring system to track energy efficiency improvements had been made since 2005, using the 2000 base year and baselines. The DoE was in the process of establishing a post-2015 National Energy Efficiency Strategy.

SANEDI presentation on its role as Energy Efficiency champion
Mr Barry Bredenkamp, SANEDI Senior Manager: Energy Efficiency, said there were many options about what SANEDI should focus on and how it should best fulfil its mandate. There were conflicting views with regard to the energy efficiency landscape and how it had become inefficient, especially in the field of awareness. There were also arguments that there was no central authority and/or measurement of the real impacts of energy efficiency in South Africa.

SANEDI however was best positioned for the hosting of the National Monitoring and Evaluation function, including tax incentives and awareness campaigns. SANEDI was an energy efficiency champion and was good at facilitating implementation and managing Knowledge Management/the Energy Efficiency data repository. SANEDI Energy Efficiency (EE) was mandated to focus on promoting energy efficiency in the country, in support of the Department of Energy (DoE) objectives. The exact mandate of SANEDI is stipulated in the Energy Act of 2008.

Some of the challenges identified pertained to:
▪ The high likelihood of duplication and fragmentation resulting in sub optimal efficiency impact.
▪ Not having a consolidated overview of role players, activities, solutions and offers in the market resulting in missed opportunities or a complex maze to be navigated by new market entrants.
▪ Identifying any areas requiring further support, research or promotion.

With regard to the optimisation of the utilisation of finite energy resources, electricity sector remains the primary focus of most initiatives. Priority should be given to broadening the efforts to incorporate all energy carriers. He concluded saying it was important to empower SANEDI to make a focused contribution to energy efficiency in South Africa. Some of the critical requirements for SANEDI to fulfill its role and contribute significantly to the energy efficiency objectives of the country included:
• Access to more technically skilled staff and financial resources
• Setting up and transitioning into the full functionality of its role would require planning, prioritization and a phased approach to building the required capacity to ensure the delivery of all benefits.

Discussion
The Chairperson thanked SANEDI for the presentation and asked if this information had been shared with the DoE.

Ms Mathibela asked what plans SANEDI had for the creation of proper employment for young graduates in South Africa. It was a serious problem that young people were still struggling to find employment even though they had all the necessary qualifications. Fluorescent light bulbs were dangerous; what was SANEDI doing to address this?

Mr Greyling asked how many people were employed in the energy office. On the Integrated Resource Plan (IRP) the country had about 3200MW of energy efficiency for the next 20 years. However these predictions were not based on scientific specifications. What baseline studies had been conducted for new buildings and their energy use? What regulations had been followed for new buildings in terms of energy efficiency; and would this work form part of the updated IRP? He argued that energy usage was primarily higher in low income household usage. What plans did SANEDI have to develop a household energy strategy? Peak demand for energy was primary from household demands; how do we change the usage and increase energy efficiency at the same time? On net metering and time of use metering; the approaches did not seem to be coordinated. Who paid for the installation of these meters? On solar heaters, there seemed to be a struggle with transition to these heaters in the country. As a result, local capacity was being lost and this needed to be addressed. On skills the Department of Public Enterprises had come up with a plan to train around 10 000 artisans. However the plan was not implemented as no funding was received from National Treasury. What particular skills would SANEDI require and how could the Committee and the DoE be of assistance?

The Chairperson asked how far SANEDI was from implementing the 2005 commitments. South Africa needed to look to countries such as South Korea which was very good at reducing energy costs. He asked why the Electrical Demand-Side Management (EDSM) programme had an under-expenditure of R 21 million; what was the problem? What could be done to rectify the problem? What other projects were being coordinated for research and development? When would the National Energy Efficiency Strategy be presented to Cabinet? When would the high level report on the energy efficiency intervention be brought before the Committee? What mechanisms where in place for efficient data management, what reporting style was in place? On the awareness campaigns the Department of Public Works was the custodian of public property, the government therefore needed to champion energy efficiency. He asked whether incentives were tax-based and whether the country had a vision for energy efficiency. What progress had SANEDI made in educating South Africans on the benefits of energy efficiency? The behaviour of residents with regard to energy use needed to be changed. What role did NERSA play in the mandatory reporting of SANEDI? A landscape analysis of SANEDI did not paint a comprehensive picture on SANEDI’s partnerships with civil society organisations. He asked what the most appropriate tools were to drive energy efficiency and whether SANEDI had a national view on the matter. What were Further Education and Training (FET) colleges doing for energy technicians?

Mr Modise replied that the energy efficiency landscape has been volatile. In 2010, the DoE came up with an energy management plan for baseline determination and incentives. Measurement and verification standards had now been implemented. SANEDI would reflect on the DoE’s management plan and implementing standards and define what has been achieved and all challenges would also be identified. On skills, since the introduction of the strategy there had been misunderstanding on what was meant by “baseline”. An energy efficiency leadership network had taken place where agreement was reached on what the term meant, and a lot of data on the baseline had been collected. On the R21 million rollover request, the DoE was working with SALGA and 25 municipalities. Of these municipalities, 18 had submitted business plans. The rest of the municipalities did not receive any allocations and this was why the R21 million rollover was requested. Monitoring and evaluation would be implemented at municipal level and a bottom up approach to quantify the progress was in place. On partnerships with the Department of Public Works (DPW), the DoE had worked on 40 new buildings but did not have full access to these buildings unfortunately. Smart meters would be introduced to all new buildings working together with DPW and SALGA.

On the structure of the Energy Efficiency unit, a new Chief Directorate had recently been employed and there were more than seven employees within the unit. On the 3200 MW stipulated in the IRP, the loophole strategy was for baseline determination. A 2000MW baseline was a company baseline. Any improvement by a company or an individual would contribute to the DoE’s 12% targets for 2015. The IRP was based on a scenario based approach not on quality data. The DoE was working on energy planning to inform the Integrated Energy Plan (IEP), the numbers in the IRP would be updated as the baselines changed. On the question on low income households; the focus of the DoE was once again on baselines and so post-2015 a new household strategy would be developed. On net metering, smart metering would be introduced to households and public entities.

The Chairperson said the Committee needed to see a comprehensive policy to assess the extent to which challenges identified had been addressed.

Mr Modise replied to the question on solar water heaters and said the DoE was in contact with the Department of Trade and Industry (dti) in order to try and better gather information and registration for understanding the market. On the question on skills within the DoE Energy Efficiency Unit, opportunities for energy management were opening up energy auditors within the company for measurement and verification was also needed. On the 12% progress, the team did not have the statistics readily available, however the preliminary results showed an improvement in mining of around 25%. The final report would be available in March 2014 as part of the Outcome 10 reports. He reminded Members that mandatory reporting was only introduced in 2011 and so it had not been fully established within the DoE. On EDSM interventions, the DoE would come back to the Committee with a report and present all the programme specifications. The industry however had shown to be very proactive in appointing measuring and evaluation management.

Mr Bredenkamp said the information shared with the Committee had also been shared with the DoE. SANEDI had met with the DoE’s senior management and an energy efficiency strategy was presented to the DoE. The strategy focused on measuring and verification. The study of the results were in line with the DoE and would be shared with the Committee in two weeks' time. On qualifications and the skills required, a database with all training candidates would be available. The information on the database would be published on a web-based system. The training courses would be accredited by the South African Qualifications Authority (SAQA). Energy management was therefore a career to pursue. On the compact fluorescent lamps, he agreed that they were problematic because they had lead in them. It was however difficult to track and manage the proper disposal of these light bulbs and this required a lot of awareness and the transition to LED bulbs was not a straightforward one.

On SANEDI’s Energy Efficiency staff, five people were permanently employed, and there were also two fulltime specialists. There were three interns, but as a whole SANEDI had about 50 employees. The Energy Efficiency hub produced about 130 graduates. On the energy efficiency standards, the challenge was that SANEDI was struggling to attain correct data, but they were working closely with the Council for Scientific and Industrial Research (CSIR). Building standards for energy efficiency were compulsory even though they were not policed. Regulation however was good and clear. On research and development, the energy efficiency information demand hub was funded by SANEDI and review of the hub was underway; review was every five years. The hub was located at the University of Pretoria, however recommendations had been put forward to create smaller hubs at all universities, and these would be fed back to the central hub. On the question on the incentive regime, SANEDI had developed different initiatives for the Energy Intensive User Group. A common vision for energy efficiency nationwide had also been agreed upon and a presentation would be made to the Committee soon. He replied to the question on the National Energy Regulator of South Africa (NERSA) and it role and said NERSA played a key role in Eskom funded incentives. NERSA approved the tariffs and insisted on their own reporting formula. The problem was that in terms of tax incentives; a requirement was that everyone needed to be accredited to create a level playground. Other incentives from donor agencies were not part of NERSA’s network.

Mr Xolile Mabusela, DoE Director: Energy Efficiency & Environment, said a memo on the revised strategy to government had been drafted and the revised document would be sent to Cabinet towards the end of October 2013.

The Chairperson thanked SANEDI and the DoE for their presentations. Other energy sources needed to be look into as energy efficiency was a key component which needed to be integrated into the Infrastructure Build Programme. Strong energy efficiency was necessary, and the starting point needed to be within government entities such as the DoE, DPW and SALGA to name a few. He thanked the DoE and SANEDI for their motivation towards reaching energy efficiency targets and acknowledged all the progress made.

The meeting was adjourned.