National Energy Efficiency Strategy: Departmental briefing

Energy

03 February 2014
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The Department of Energy (DoE) presented the National Energy Efficiency Strategy (NEES) to the Portfolio Committee on Energy.

The NEES was approved by Cabinet and released in 2005 to explore the potential for improved energy utilisation through reducing the nation’s energy intensity, thus reducing greenhouse gas emissions, and decoupling economic growth from energy demand. The NEES outlines how an overall energy intensity reduction target of 12% by 2015 could be achieved with the following sectoral energy efficiency improvement targets:industry and mining (15%), commercial and public buildings (15%), residential (10%), and transport (9%). Implementation plans were drawn up for each of the sectors with forecast targets of energy use reductions based upon assumptions about energy demand over the next 10 years. Since the release of the 2005 NEES, several legislative frameworks had to be developed or put in place to support the implementation of the Strategy. The objectives of the NEES included enhancing energy security by making better use of existing and new generation capacity; improving South Africa’s global competitiveness through reduced energy input cost; decoupling growth in energy consumption (and GHG emissions) from growth in GDP; and improving global competitiveness which in turn will contribute to job creation.

In a view to assessing energy efficiency trends and to accelerate implementation of the NEES, the DoE in collaboration with its local and international partnersembarked on a process of developing the National Energy Efficiency Action Plan (NEEAP). The NEEAP was a three year plan and every effort has been made to accurately reflect the level at which such actions and measures will take place. One of the ultimate objectives of the action plan was to determine adjusted sector or subsector baselines from those developed in the year 2000 and this was in preparation for the post 2015 NEES targets.

Members had numerous questions arising from the DoE presentation. Some of the questions raised by Members included: how long did it take the DoE to collect baseline information and was the first baseline information the one generated in 2000? To what extent were the various stakeholders agreeable to the baseline information generated? What themes did the DoE formulate to look at issues of policy and legislation? When would these targets be revised? After 2015 would the next Strategy also be a 10 year Strategy? What role did the National Energy Efficiency Leadership Network play in the NEES process? What plans did the DoE have in place to maximise their reach concerning these workshops? What plans did the DoE have for reaching out to provinces? How far was the DoE in bringing the final Strategy to the Committee? Why was the process of finalising the NEES taking so long? What legislative mechanisms had been put in place to create a permanent change in the lives of people? How has the NEES contributed positively to the lives of South Africans since the process began in 2005? Members strongly felt that the NEES process was taking too long and the DoE was argued to provide better insight into the ground work done by the DoE through the NEES since its inception in 2005; what programmes for energy efficiency were in place and how would these be evaluated? How many jobs were created through the implementation of the NEES?

The Committee agreed that in the next presentation on the NEES, other relevant departments and stakeholders such as the South African Local Government Association (SALGA) and SANEDI should be brought in to present with the DoE so that a more comprehensive picture on the NEES and the progress made at various levels could be better articulated. With regard to the Energy Efficiency Monitoring System’s methodology, Members asked how the DoE intended to analyse changes in total energy consumption. The reduction of input cost, job creation and improved health were some of the main factors which the Committee wanted feedback on with regard to the work done by DoE and its NEES.
 

Meeting report

Opening Remarks by Chairperson
The Chairperson welcomed the delegation from the Department of Energy (DoE). The majority of the Members were unable to attend the meeting as they were occupied with commitments in other committees.  The Committee closed 2013 with a couple of changes to its membership list as Prof S Mayathula (ANC) had moved to the Portfolio Committee on International Relations while Mr K Moloto (ANC) had moved to the Standing Committee on the Auditor-General. Replacements for these Members would be secured in due time. The Committee however started 2014 on a very high note as Members went on an oversight visit to Kwa-Zulu Natal on Solar Water Heating systems. Members also paid a visit to the Solar Water Project in Dimsdale. Unlike the DoE’s feedback on the project; Members found that the project had not started with any generation. This was why oversight visits were so important to the work of Parliamentary Committees. Over and above the oversight work, the Committee also met with beneficiaries and service providers.

The Chairperson said the Committee had been urging DoE to come and share their Revised National Energy Efficiency Strategy with the Committee but this had proved to be a long drag. The Committee was therefore shocked to find out that the strategy had in fact been presented at the Cape Town International Convention Centre a while ago. He called on the officials from the DoE to make their presentation.

DoE Presentation on National Energy Efficiency Strategy
Ms Mokgadi Modise, Chief Director: Clean Energy, DoE, thanked the Committee for the invitation. She explained that the 2005 NEES set an overall energy intensity reduction target of 12% by 2015. This target was further disaggregated into sectoral targets as follows: industry and mining (15%), commercial and public buildings (15%), residential (10%) and transport (9%). Implementation plans were drawn up for each of the sectors with forecast targets of energy use reductions based upon assumptions about energy demand over the next 10 years, that was 2005 – 2015 using 2000 year baselines. This included the associated drivers, such as the economic development and population growth.

Since the release of the 2005 NEES, several legislative frameworks had to be developed or put in place to support the implementation of the Strategy. The objectives of the NEES included:

•Enhancing energy security by making better use of existing and new generation capacity;
•Improving South Africa’s global competitiveness through reduced energy input cost;
•Decoupling growth in energy consumption (and GHG emissions) from growth in GDP; and
•Improving global competitiveness which in turn will contribute to job creation.

Ms Modise explained that the first review of the 2005 NEES was done in 2008. A revised document was then issued for public comment. However, the comments received were not favourable and requested a more radical alteration including clear definition of energy efficiency, monitoring system and baseline information that considered the fact that companies were at different levels of achievements of the targets. The second review of the NEES started in 2011, with public and private sector workshops to discuss the scope and elements of the NEES that needed review. Focused engagements were also held on the development of regulations, that is Income Tax Allowance on EE Savings, and standards interlinked to the NEES.

The DoE also continued to engage robustly with other government departments such as National Treasury (NT), Department of Environmental Affairs (DEA), Department of Trade and Industry (the DTI)and Department of Mineral Resources (DMR).  State agencies such as the National Regulator for Compulsory Specifications (NRCS), the South African National Energy Development Institute (SANEDI) and the South African Bureau of Standards (SABS) were also engaged.

Ms Modise explained that Cabinet approved the publication of the draft second NEES review document for public comment, which was then published through the government gazette on 29November 2012. During this period, more than 30 comments were received, and the comments were grouped into a variety of themes. Three workshops were held to discuss comments that were received. These workshops were held with private and public sector representatives in March 2013. All comments were analysed and responses provided and this resulted in an adjusted NEES document. Although the 2011 NEES review had been completed, the targets were not revised because the current cycle of the Strategy is ending in 2015. The review process of the strategy had been finalized and the final strategy document required to be approved by Cabinet to enable its Gazetting. A Cabinet memorandum was being processed in this regard.

Ms Modise said in a view to assessing energy efficiency trends and to accelerate implementation of the NEES, the DoE in collaboration with its local and international partners through the support of German Society for International Cooperation (GIZ) embarked on a process of developing the National Energy Efficiency Action Plan (NEEAP). The action plan was aimed at assisting and providing guidance to all stakeholders on the actions required either through voluntary or mandatory nature to enable the achievement of the energy efficiency objectives. The action plan had been designed taking into account international best practices to guide implementation of the identified activities

The NEEAP was a three year plan and every effort had been made to accurately reflect the level at which such actions and measures will take place. One of the ultimate objectives of the action plan was to determine adjusted sector or subsector baselines from those developed in the year 2000 and this was in preparation for the post 2015 NEES targets. The Energy Efficiency Monitoring System was a project implemented by DoE together with the South African Local Government Association (SALGA) and South African National Energy Development Institute (SANEDI). The project management wasdone through a Project Steering Committee (PSC) with representatives from other government departments. The following sectors were covered and analyzed; industrial, commercial, public and residential areas, and the transport industry.

In terms of progress to date, the Energy Efficiency Target Monitoring Methodology Handbook developed in 2005 was updated and indicators were agreed with representatives of all the sectors, a pilot project was conducted between January and April 2013 to test mainly the data collection methodology and the system and this was successfully done.

In conclusion, Ms Modiserecommended that the Committee should note the DoE’s progress with regard to the following:
Review of the National Energy Efficiency Strategy (NEES);
Development of standards and regulations on energy efficiency;
Development of the Regulation in terms of Section 12L of the Income Tax Act, 1962, on the allowance for energy efficiency savings; and
Development of the Energy Efficiency Target Monitoring System (EETMS) to track energy efficiency improvements since 2005 and using the 2000 base year and baselines.

Discussion
The Chairperson thanked DoE for the presentation. He said the de-segregation was very important as it looked at the targets which needed to be achieved. What percentage of the total power did industry and mining take, commercial and public buildings, residential areas together with transport? What where the “several legislative frameworks” which the DoE had developed concerning the NEES? He said it would be helpful to collate all DoE legislative frameworks and enabling tools so that a concise list could be made available to the Committee. The issue of energy efficiency was getting more and more attention from the Committee and this would continue to be the case. How long did it take the DoE to collect baseline information and was the first baseline information the one generated in 2000? To what extent were the various stakeholders agreeable to the baseline information generated? Energy efficiency thrived when various stakeholders were committed to achieving the overall objectives of DoE, and there was little which could be done to convince stakeholders who were not keen to participate.

The Chairperson said the way in which the DoE grouped themes for the NEES Review Process was very helpful as these themes would also be used to measure the end product. The DoE had only made mention of the National Development Plan in these themes. Did this mean that the Plan was adequate enough to cater for other national plans as well, such as the National Growth Path? What themes did the DoE formulate to look at issues of policy and legislation? According to the presentation, targets in the NEES Review Process “were not revised because the current cycle of the Strategy was ending in 2015.” When would these targets be revised? After 2015, would the next Strategy also be a 10 year Strategy? Was it then correct to assume that the final NEES Strategy would have new targets? According to the presentation, the reviewed strategy would be presented at the next Government Infrastructure Development Cluster. Was this the only cluster the DoE’s Strategy would be presented to or was it the most relevant and/or prominent cluster? What role did the National Energy Efficiency Leadership Network play in the NEES process? This was a very important tool as it was a Tax incentive tool.
 
The Chairperson applauded the DoE for having scheduled various awareness workshops. However, these needed to be continuously monitored. Small Medium Micro Enterprises (SMME’s) were also part of the energy global village because by them being efficient, energy costs were reduced and they had a bright future in trade. The DoE also needed to ensure that Intensive Energy Users were also part of these energy workshops. What plans did the DoE have in place to maximise their reach concerning these workshops? Where these workshops the DoE’s only form of an awareness campaign? The DoE’s work with the South African Local Government Association (SALGA) was commendable; what plans did the DoE have for reaching out to provinces? Every intensive energy user was located within a municipality; how was the DoE working with SALGA to drive energy efficiency objectives? What did DoE mean by “functional context-appropriate system” and “decomposition approach”? With regard to the Energy Efficiency Monitoring System’s methodology, how was the DoE intending to analyse changes in total energy consumption? How prepared was the DoE in championing energy efficiency? How far was the DoE in bringing the final Strategy to the Committee? How was DoE addressing fragmentation within the energy sector? How was campaigning being factored into the DoE’s strategy? People needed to be persuaded and convinced to support energy efficiency goals and objectives.

Mr S Selau (ANC) said the 2009 – 2014 Parliamentary term was nearing its end. In about 3 months’ time, South Africa will be embarking on the 2014 national elections. Was the NEES a product of legislation or was it developed to accurately influence the need for appropriate legislation? Why was the process of finalising the NEES taking so long? The process began in 2005, and it was now 2014 but the NEES was still being developed. He argued that the main purpose of Parliament was to improve the lives of ordinary South African’s through devising better legislation, and such long processes delayed the work of Parliament. Between 2009 and 2014, what was it that could be said to have changed in the energy legislative framework? What legislative mechanisms had been put in place to create a permanent change in the lives of people? He said as a Member of the Portfolio Committee on Trade and Industry, the Committee was busy with a process of evaluating all the legislation which had been passed since 2009 to date, together with evaluating the impact these pieces of legislation had on the lives of ordinary citizens. How had the NEES contributed positively to the lives of South Africans since the process began in 2005?

Ms Modise replied that the DoE was still finalizing the report with regard to Energy Efficiency and Monitoring Systems and the report would be issued in April 2014. The report would then give the Committee and indication of the work of the NEES to date. She said there was a lot of work which had been done concerning energy efficiency.  One example was a Carbon Disclosure Report had been issued where a lot of information was collected and confirmed concerning energy efficiency savings. A pilot was also conducted in this regard. Credit concerning the work which had been done concerning energy efficiency and monitoring would not only be going to the DoE but also to a joint effort between the private and public sector. The private sector looked at National Business Initiative members who were also part of the process. She said the DoE had paid attention to items which the Committee had highlighted as not being included in the presentation and the next presentation would be a more detailed one.

Ms Modise said one of the matters which would be touched on in the next presentation was that of the programmes rolled out and solar water heating. Energy Efficiency Demand Side Management programmes which were rolled out had not been highlighted in the presentation but 30 municipalities had been participating in the programme.  Upon receiving this detailed information, the Committee would then be able to assess the strategy with the programmes which had been rolled out.
Ms Modise also explained that not all legislative frameworks were in place. For example, the regulations were developed by the Minister of Finance in consultation with the Minister of Energy and the Minister of Trade and Industry. The Act was from 1962 but it was only recently that the regulations were passed to implement parts of the Income Tax Act. She argued that energy efficiency could not be looked at in isolation of the country’s other commitments. In addition, the National Planet’s Response Policy was passed by DoE in response to the country’s carbon footprint. In addition to public consultation, the DoE needed to have direct interaction with other national departments and this was a process on its own. In order to ensure that companies implemented national energy efficiency strategies they needed standards to comply to and these standards were developed by the National Bureau of Standards. In the next presentation, the DoE would put together all this information as deliverables which the Committee would be able to measure the DoE’s NEES on. The DoE’s was committed to passing on all information on its work since the inception of the NEES in 2005 to the Committee for review and discussion.

One issue which was a point of contention regarding baselines was which dates the DoE needed to begin looking from. The lack of uniformity in the systems within the sector was also highlighted as a serious concern. Ms Modise said each sector had a different target set for it because energy use and consumption were not the same across various industries. For example, a 15% target was set for the mining industry and this was unique from the targets of other sectors such as the trade industry. The DoE agreed that energy efficiency thrived when various stakeholders where fully committed to the cause. The DoE engaged with all stakeholders during the NEES consultation process. There were a whole lot of programmes being implemented in the Integrated Demand Management (IDM) sector. The DoE was not the only department which was driving the implementation of energy efficiency initiatives.

The DoE had partnered with Eskom for the launch of the “49 Million campaign” which was launched by government and Eskom. The campaign was therefore a joint effort between various government departments. In addition, the rollout of solar water heaters was also done jointly by Eskom and the DoE. Valuable inputs were given by the private sector and a committee was set up which was made up of members of DoE and other private business stakeholders. The task of the Committee was to deal with the practical aspect of implementing the regulations. SANEDI played a big role in implementing these regulations. The regulations were based on the Income Tax Act. Therefore SARS was also a part of these collective efforts. The regulations focused on all categories of energy usersso the focus was not only on high-end users.

With regard to the role played by the Energy Efficiency Leadership Network on Section 12L regulation, the network had various focus groups which focused on monitoring the sectors. All energy efficiency programmes were therefore presented in all these workshops. DoE’s energy efficiency programmes were also brought to the public through existing programmes within the industry.

Ms Modise explained that the DoE’s focus on the National Development Plan was a result of the comments received from public consultation. This, however, was not the only platform for reviewing the Strategy as Carbon Tax discussions were also engaged during the process. Most comments received were taking the Strategy towards alignment with the National Development Plan. The Energy Efficiency Action Plan made provision for a 3 year short-term plan, which was why the NEES would be finalised for 2015. DoE had not revised the targets for 2015 because the department did not want to shift the goal post and risk moving the finalization date further away.  DoE’s energy efficiency focus was across all sectors. She explained that the role of SALGA in monitoring the implementation of the NEES was to ensure that policy was translated into tangible and measurable targets by linking municipal systems into monitoring systems. Therefore the systems which would be presented to Parliament would be in light of the national policy which was translated at local government level, through municipalities. Eight municipalities were used for a pilot study. The DoE was also busy with appliance labelling at residential areas for the 12 main household appliances such as stoves and other big household appliances.  Residence households were therefore being encouraged to move away from inefficient household appliance use towards more energy efficient appliances. DoE would come back to present on the progress made in this regard.

Ms Modise explained that the DoE was part of the Multi Year Price Determination (MYPD) consultation process with Eskom being the implementing agent. The DoE was moving away from fragmentation towards a more coordinated approach. Data collection for fragmentation was one area which the DoE had invested a lot of time in. The DoE was confident that coordination between various stakeholders with SANEDI being one of the key implementers.

The Chairperson said SANEDI was already part of the DoE team. The DoE therefore needed to pay more attention to partnering up with other structures which were outside of the energy sector.

Ms Selau said the DoE had in fact achieved quite a lot, especially concerning the rise in percentage of electrified households. Energy efficiency was about balancing the demand and supply of electricity within the country despite the challenges of growth. This information needed to be summarized across different branches of the DoE and presented to the Committee in a report form.

The Chairperson said reduction of input cost, job creation and improved health were some of the factors which the Committee wanted feedback on with regard to the work done by DoE and its NEES. The Committee was busy with finalising itsLegacy Report for the next Parliament.

Ms Modise said government had led the commitments towards energy efficiency objectives. Government had recently received R23 million to focus on energy efficiency in public buildings in order to lead by example. For the current building which DoE occupied, the DoE began an initiative where various energy efficiency measures were put in place on various floors of the building. The first and second floors were the pilot floors. These indicated a 30% reduction in energy consumption and contributed significantly in reducing the electricity bill of the DoE. A recommendation would be made that all government buildings follow the same guidelines. The Green Buildings Council was part of the reference groups which DoE had partnered with. There were, however, limitations to renovating old buildings.
She explained that some municipalities did not have systems in place to track all their energy efficiency work, capacity issues were also a concern in some municipalities. For example, Metropolitan municipalities were well equipped, unlike rural municipalities. There needed to be systems which would close these gaps. Street and traffic light programmes were currently being rolled out in various municipalities, and these were funded through fiscal allocation in the Division of Revenue Act. These street and traffic light programmes would be able to monitor the municipal carbon footprint. Functional targets were concerned with how all individual targets contributed to the national target. De-composition in the methodology was concerned with disaggregating data until it was translated into relevant data. This was therefore concerned with data collection and analysis.

Ms Modise reassured Members that all other matters which had not been covered in the presentation would be dealt with when the DoE presented its final strategy to the Committee.

The Chairperson thanked the DoE. He said the strategy needed to be finalised. He reminded the DoE that the presentation did not indicate whether the current strategy would still be relevant 10 years from now.

Ms Modise replied that the targets were left as they were on the basis that the DoE did not want to “shift the goal post” without understanding whether the targets had been achieved or not. The public would be consulted again after the 2015 targets. The revised document was based on the understanding of the first target and whether or not they had been achieved.

The Chairperson thanked Ms Modise for the clarification. A concern was raised about whether the Energy Efficiency Monitoring System would adequately provide an accurate impact assessment for the Committee. What constituted the NEES?Was it confined to the issues raised in the presentation? How comprehensive was the “efficiency” definition? How was NERSA being included in the strategy’s institutional arrangement? How many jobs would be created through the implementation of the strategy?

Ms Modise replied that the agenda did not include the programmes in the presentation. The main focus of the presentation was elaborate on the various impacts the strategy would have broadly. A detailed report for the various programmes would be presented to the Committee.

The Chairperson said in future, a briefing should also come from other relevant Departments so that the Committee could have a more comprehensive picture of energy efficiency and the roles played by various stakeholders and entities.

The meeting was adjourned.

Apologies: Mr J Smalle (DA), Ms B Tinto (ANC), Mr L Greyling (ID), Minister Dikobe Ben Martins, Deputy Minister Barbara Thompson and Director-General Ms NelisiweNgubane
 

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