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MINERALS AND ENERGY PORTFOLIO COMMITTEE
29 August 2007
SOUTH AFRICAN NATIONAL ENERGY RESEARCH INSTITUTE (SANERI): BRIEFING
Chairperson: Mr EN Mthethwa (ANC)
Documents handed out:
PowerPoint presentation – Overview of SANERI
PowerPoint presentation – SANERI Performance 2006/07
The Chief Executive Officer of the South African National Energy Research Institute (Pty) Ltd gave an in-depth overview of the Company after its first year of operations. The presentation focused on the key strategic objectives and challenges in the energy research and development sector. Because of limited funding, no in-house research was conducted, an in-house laboratory could not be established and a moratorium was placed on filling vacancies. The Company focused on outsourcing research projects and developing future research capacity by sponsoring research chairs at universities and granting bursaries to post-graduate Masters and PhD students. The Company was directed by nine thematic areas identified by the National Research and Development Strategy of South Africa and supported research in these areas. Key focus areas included the development of clean coal technology and the more productive use of fossil fuel resources as well as the use of alternative and renewable energy resources.
Members were concerned by the loss of skills in the energy research and development sector and asked questions about the number of bursaries granted, the representation of women in the sector, the Company’s BEE procurement policies, the availability of natural gas, the positioning of the Company and its relationships with international organisations. Members were also interested in the future of fossil fuels versus renewable or alternative energy resources.
Briefing by the South African National Energy Research Institute (SANERI)
Mr Kadri Nassiep (CEO, SANERI) briefed the Committee on the South African National Energy Research Institute (Pty) Ltd (SANERI) (see attached document).
The Company was a wholly-owned subsidiary of Central Energy Fund (CEF) (Pty) Ltd and was established by Ministerial Directive in October 2004. It became operational in April 2006 and reported to both the Department of Minerals and Energy (DME) and the Department of Science and Technology (DST). Officials from the DME and the DST served on the CEF board.
SANERI was established to address Government’s concern over the loss to the country of energy research capacity. It was directed by the objectives of the Draft National Research and Development Strategy of South Africa, (currently in its tenth form.)
To date, SANERI received all it’s funding in the form of grants from the DST. A total of R70 million was received from Government since 2004/05 and a further R42 million was allocated for 2007/08. SANERI expected to remain dependent on Government funding but was mandated to supplement its income by exploiting intellectual property and obtaining donor funding for collaborative projects. However, income from these sources was not expected to be significant for the next three to four years. The current level of funding was insufficient to support in-house research and to establish a research laboratory. This resulted in the delay of planned projects because of a lack of infrastructure. A request for additional funding for the development of the necessary infrastructure was submitted to the DST.
SANERI was operating in a research management mode and did not currently conduct any in-house research. Research activity was limited to evaluating external proposals and supporting those where it was considered that an immediate impact would be made on the country’s economy. There were currently ten staff members employed and a moratorium was placed on filling the existing vacancies until sufficient funding was available.
Five key objectives were outlined:
- Increasing the energy research capacity in the country;
- Supporting Government’s goals of energy supply;
- Ensuring that the profile of scientists, academia and post-graduate students were more demographically representative;
- Contributing to socio-economic upliftment through the supply of affordable, clean energy; and
- Supporting Government’s ASGISA goals for economic growth through the development of flagship projects.
Key challenges faced by SANERI included:
- Low spending on Public Interest Energy research and development (R&D) – of the 0.8% of GDP spent on R&D as a whole, only 6% was on energy;
- Low contribution from Black scientists – only 8% of publications were from Black scientists;
- Low percentage of women in the energy R&D sector – only 26.5% in 2004;
- Increased demand for natural resources and energy as a result of economic growth and meeting the ASGISA goals;
- Lack of access to modern, clean and affordable energy for 30% of the population;
- Uncertainty of long-term funding and the budget allocation of R42 million for 2007/08 was inadequate for future research needs; and
- The ongoing loss of skills in the energy R&D sector, in particular the loss of skills in ESKOM.
The National Research and Development Strategy of South Africa identified nine thematic areas to be addressed by SANERI:
- Optimisation of the energy infrastructure, including the liquid fuel and electricity supply in the country;
- Energy efficiency and Demand Site Management;
- Understanding the economic impact of energy use on the environment;
- Stimulating socio-economic development through the productive use of energy and creating a revenue stream;
- Cleaner fossil fuels, including clean coal technology;
- Renewable energy resources; and
- Alternative energy resources.
An R&D planning session with the DST was scheduled for September 2007, when the role played by SANERI in the energy R&D field and the nature of its support to the Department will be discussed.
The development of human capital and transformation in the energy R&D sector was one of the key strategic focus areas and included the establishment of energy research chairs at universities, the Renewable Energy and Sustainable Energy Hub at the University of Stellenbosch and a bursary support programme. SANERI was in the process of concluding memoranda of understanding with international energy R&D entities and four or five flagship projects were at an advanced planning stage. The second key focus area was governance, where SANERI was concerned with issues to ensure wider co-operation in the energy R&D sector through the development of joint projects.
To date, SANERI’s research policy was to outsource research projects but it was anticipated that the focus would change to conduct more in-house research from 2008/09. However, the loss of skills in the sector, the establishment of Centres of Excellence and additional research chairs at universities need to be taken into account. The type of research supported should be applied, incremental research (i.e. adapting technology to South African needs) with a small percentage devoted to fundamental research in order to develop intellectual property. BEE procurement and the increased participation of women were supported. SANERI intended to seek strategic alliances and to develop collaborative projects.
The 2010 Green Transportation programme was added from 2008/09 to the four basic areas that cover the nine thematic areas. The Green Transportation programme will be funded by the DST over the next five years. In the area of Advanced Fossil Fuel Use, SANERI was looking at ways of introducing new clean coal and natural gas technologies into the country, taking into consideration the challenges of environmental degradation, the lower grade of remaining coal reserves and the storage of carbon dioxide. SANERI was also involved with research into renewable energy sources (such as biomass, solar, wind, hydro and ocean wave and tidal energy) and alternative energy sources (e.g. hydrogen economy and fuel cells).
The drivers for conducting energy R&D included climate change (i.e. global warming and the need to reduce carbon dioxide emissions), the need to diversify the energy supply and meeting the national target to produce 10000 GWh by means of renewable energy resources by 2013. SANERI focused on research in the fields of biomass (e.g. biofuels and waste gasification), solar energy, renewable energy technology applied to buildings, wind energy, ocean wave and tidal energy, and other alternative energy sources (such as hydrogen).
SANERI was also concerned with collecting data to assist and support Government in energy planning and the development of energy policies and participated in other Government initiatives, such as the proposed National planning Institute and the development of models for the Integrated Energy Planning II. SANERI planned to conduct research on trends in energy statistics and to develop an energy research information system to make results available to interested parties.
In the electricity sector, SANERI was looking at new Demand Site Management technologies, mainly in support of ESKOM and the National Energy Efficiency Agency (NEEA). The focus in the transport sector was on energy efficient mass transport systems and SANERI provided information on the available alternative technology to the cities of Johannesburg and Cape Town and suggested various ways of encouraging people to make more use of public transport.
Adv H Schmidt (DA) asked why there was a loss of skills in the energy R&D field, both in ESKOM and in the sector as a whole. He wanted to know why SANERI was cautious about establishing an in-house research facility.
Ms N Mathibela (ANC) asked how many women were employed by the Company. She asked if gas was imported only from Mozambique and understood that gas was discovered in Limpopo Province.
Mr T Mahlaba (ANC) asked if all the funds allocated to SANERI were spent or whether any funds were rolled over from previous years. He asked how many bursaries were granted, whether the subjects and degrees the students were enrolled in were relevant and what the level of success was. He asked for further details of the Company’s BEE procurement policies.
Mr N Ngcobo (Chairperson, Portfolio Committee for Science and Technology) wanted to know the reasons for the vacancies in the Company. He asked why SANERI did not fall under the CSIR as CEF was not primarily a research institute. He asked why the Company’s name was changed from the original proposed name National Energy Research Institute (NERI) and how it fitted into the DST and DME. He asked if SANERI had any international relationships, for example with the Generation IV Initiative’s NERI programme in the United States of America. He mentioned the Energy Research Institute (ERI) at the University of Cape Town and asked if SANERI had any relationship with that Institute. He wanted to know what the future was for fossil fuels versus renewable energy resources.
In response to the questions on the loss of skills, Mr Nassiep explained that the semi-privatisation of ESKOM in the mid-1990’s and the emphasis on commercial project development resulted in the loss of skilled research capacity. The reorganisation of the CSIR led to researchers being re-assigned to other divisions and contributed to a further loss of skills. The focus changed from R&D in favour of purchasing off-the-shelf technological solutions. SANERI was approached by many discontented researchers but was not in a position to accommodate them at this stage.
In response to Adv Schmidt’s question, Mr Nassiep gave two reasons for SANERI’s cautious approach to establishing its own in-house research facility. The Company wished to avoid duplication of effort and being seen as wasting public funds. It did not want to be accused of poaching academic staff from the universities and creating a vacuum. It was more concerned with identifying the gaps and developing strategies in filling the gaps. SANERI saw post-graduates as a future resource and was prepared to risk losing them to other commercial companies in the energy sector.
In reply to Ms Mathibela’s question, Mr Nassiep said that 66% of the Company’s workforce was made up of women. 45% of the bursaries granted went to women and all the female applicants for bursaries were accepted. The Company did not receive many applications for the project research positions from women. SANERI encouraged the Universities to get more women involved in the programmes. He said that the research chair at the University of the Witwatersrand and the associate chair at the University of the North-West were held by women. He expected the number of women to increase in future.
Mr Nassiep was not aware of any natural gas in Limpopo but it was likely that there was coal bed methane gas from coal deposits in the Waterberg area. Botswana has lots of methane gas and there were gas deposits in Namibia. PetroSA was involved in off-shore explorations for Mossgas.
In reply to Mr Mahlaba’s questions, Mr Nassiep advised that 96% of the allocated funds from 2004 to 2006/07 were spent in the previous year. Overheads accounted for 8% of expenditure (against a target of 20%) and staff costs were 70% of the target.
Mr Nassiep said that between 50 and 60 applications for bursaries were received and 25 were granted. Fifteen were for PhD’s and ten for Masters students. Applicants had to consider the nine thematic areas when submitting their applications as well.
He said that there were no measurable BEE procurement results as yet and most of the procurement done was for office equipment and assets. Three BEE projects were submitted and are up and running. He added that there were a lot of research work being done by Black scientists at Universities but this was not counted for the scorecard.
In response to Mr Ngcobo’s questions, Mr Nassiep explained that in addition to the limited funding available, the Company was unable to fill all the vacancies because of a lack of space at its premises in Rosebank and the request of the DST to limit the amount spent on overheads. It was anticipated that the space problem would be solved when the Company relocated to new premises in Sandton early in 2008.
Mr Nassiep explained that SANERI fell under the CEF Group because the CEF Act made provision for research, therefore a legal mandate existed. Government considered placing SANERI under ESKOM and the CSIR but the CSIR had no capacity to sustain it and it was felt that ESKOM’s focus was too heavily towards electricity.
The Company name had to be registered as SANERI because the trade name NERI was not available. It was always intended to be a joint venture of the DME and DST. The Minister of Minerals and Energy played a significant role in the Regulations under the Energy Act and SANERI was one of the programmes funded by the DST.
Mr Nassiep said that no formal relationships were formed with institutions in the USA as suitable partners were not yet identified. Existing partners were mainly in Germany and the United Kingdom.
Mr Nassiep said that SANERI was assessing the ERI at the University of Cape Town as it was a possible research chair for SANERI.
In reply to Mr Ngcobo’s last question, Mr Nassiep said that the main issue was that carbon capture and storage technology was unknown as yet. All that was known was that provision must be made at power plants for storage. Storage options are limited in South Africa and the problem was what to do with the CO 2 once it was separated from the other gases. It was expected that fossil fuels (both gas and coal) will continue to be the major energy resources and that other fuels will supply a niche market of 10 to 15%. Although the demand was there, it was necessary to establish a regulatory framework and determine tariffs.
In his concluding remarks, Mr Mthethwa said that with its focus on R&D and the advancing of technology, it was a daunting task for SANERI to develop its capacity in energy R&D. It may need to reconsider its strategies to include nuclear energy as well.
The meeting was adjourned.
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