SANERI ANNUAL REPORT 2009/10
PAGE 1
COMPANY INFORMATION Country of incorporation South Africa
PAGE 2
SANERI ANNUAL REPORT 2009/10
Nature of business and principal activities To undertake research and technology development in order to exploit and utilise the energy resources of the Republic of South Africa and the Southern African region.
Directors Mr M Damane Dr C Cooper Mr J Marriot Dr M Pyoos Ms N Mlonzi Mr K Nassiep Mr T Maqubela Mr D Mahuma (Alternate to Mr T Maqubela) Mr I Patel (Alternate to Dr M Pyoos)
Registered Office CEF House, Block C, Upper Grayston Office Park,152 Ann Crescent, Strathavon, Sandton, 2031, Johannesburg. Business Address CEF House, Block C, Upper Grayston Office Park,152 Ann Crescent, Strathavon, Sandton, 2031, Johannesburg. Postal Address P O Box 786141, Sandton, 2146
Holding Company CEF (Pty) Ltd incorporated in South Africa Auditors Auditor-General Company Secretary CEF (Proprietary) Limited Company Registration 2005/017430/07
CREATING NEW OPPORTUNITIES‌ EVERY DAY
SANERI ANNUAL REPORT 2009/10
PAGE 3
BOARD OF DIRECTORS
Mr M Damane Chairman
Mr K Nassiep CEO
Dr C Cooper Non-executive
Ms N Mlonzi
Mr T Maqubela
Mr J Marriot
PAGE 4
SANERI ANNUAL REPORT 2009/10
Dr M Pyoos
Mr M B Damane Chairman SANERI (Pty) Ltd CIS Other Boards: SFF, iGAS Mr K Nassiep CEO SANERI (Pty) Ltd BSc (CHB), BSc (Honours), MSC Engineering (Mech)* *current Other Boards: CEF (Pty) Ltd Dr C Cooper Non-executive DPHIL (Energy) Other Boards: South African National Energy Association
Ms N Mlonzi BProc, LLB, Hons. in Business Management and Administration Other Boards: SA Civil Aviation Authority, WOESA, ECON Oil, Worthytrade, Fort Cox College, Uvimba Finance Mr T Maqubela BSc (Hons) Chemistry Wits Management Advancement Programme (MAP) Mr J Marriot BSc Chemical Engineering Other Boards: Energy Frontiers, International South African National Science and Technology Forum Dr M Pyoos Doctorate: Technology Management BSc Economics Other Boards: Tshumisano Trust, South African National Biodiversity Institute
SANERI ANNUAL REPORT 2009/10
PAGE 5
CHAIRPERSON’S REPORT PAGE 6
SANERI ANNUAL REPORT 2009/10
The South African National Energy Research Institute is now in its fourth year of operation and supports energy themes ranging from fossil fuels, through transport and electricity to renewables. Still operating on a minimum staff complement, it has attained many significant achievements that are addressed in this Annual Report. Of particular note are the formations of Centres of Expertise; namely the Centre for Green Transport and the Centre for Carbon Capture and Storage. A business plan for a Centre of Renewable Energy has also been completed. Moreover, the South African Energy Research Institute has introduced the concept of “smart grid” by highlighting the benefits and the importance of this technology as being a key enabler for South Africa to ensure efficient and sustainable electricity provision. These Centres will facilitate focused and concentrated efforts to address matters of national concern. Although most of the research has been commissioned from outside researchers, the Centres function as a national “point-of-entry” in these fields. Security of energy provision requires a multi-technology approach. To this end, South Africa is addressing a number of supply side options as well as the efficiency with which such energy is used. The transition from one form of energy to another needs to be properly researched and applied as well as developing smooth transition measures in order to ensure that South Africa’s primary focus of poverty alleviation and development is achieved. To this end, the South African National Energy Research Institute (SANERI) was formed. With the passing of the National Energy Act (2008), and the forthcoming formation of the South African National Development Institute (SANEDI), we can see that South Africa is strengthening its resolve to ensure that the secure supply of appropriate energy will be available as an essential component of existence and development. SANERI, and in its new form, SANEDI, will continue its ground-breaking work to ensure secure, affordable and environmentally acceptable energy supply and usage that will facilitate the prosperous development of our country.
Mr M Damane
SANERI ANNUAL REPORT 2009/10
PAGE 7
CEO’S REPORT Much has been written regarding the state of health of the economy in South Africa in the aftermath of the global recession that resulted from the declaration of bankruptcy by Lehman Brothers Inc in September 2008. South Africa has not been immune to the downscaling of staff numbers by larger multinational companies based in South Africa. This was particularly the case in the manufacturing sector, where the industry shrunk by 20% in the period May to August 2009. The automotive sector remains the most vulnerable, following the global slump in car sales during the first half of 2009. It was perhaps no surprise that the banking sector precipitated the global economic meltdown. It was therefore with some relief that one notes the efficacy of measures, such as the National Credit Act, in moderating the mechanism by which banks in SA borrowed money to cash strapped consumers. In the aftermath of the clamp down on banks and with the housing price bubble still relatively intact, it has become more and more difficult for prospective first time home owners to secure a bond.
PAGE 8
SANERI ANNUAL REPORT 2009/10
Coupled to the difficulties in securing
a core element of this initiative. Technology
finance for the purchase of fixed assets is
transfer into SA can and should only be
the associated electricity cost for running
considered in cases where a framework
This was in response to the pending
a household, business or industry. South
exists for developing the associated local
operationalisation of SANEDI, the new public
African consumers are facing the prospect
skills to support the technology.
entity that would incorporate both SANERI
of three successive electricity price hikes
function.
and the National Energy Efficiency Agency.
of about 25% per annum. This will see
There are numerous housing programmes
SANEDI will reside under the administrative
a doubling of prices over this period.
running in the country, mainly targeting low
control of the Department of Energy and is
Consumers in the lower LSM groups will be
income housing. SANERI believes strongly
expected to be listed as a new public entity
the worst affected by these increases. If one
that the focus for any energy efficient or
by mid-year 2010.
considers the backlog for housing standing
self sufficient housing programme should
at about 2,2 million and an electrification
start with the more affluent consumers.
The DST would continue to focus on energy
backlog of about 3,3 million households,
This will create an aspiration on the part
research guided by the Ten Year Innovation
then it becomes clear that a different solution
of lower income groupings who have
Plan, in line with its Strategic Management
is required to address the pressing needs of
traditionally
energy
Framework for Research undertaken with
impoverished citizens of this country.
solutions as pro poor technology. In addition,
State funding. Since SANEDI would largely
viewed
alternative
it is also important that a manufacturing
be responsible for the development of
It is against this backdrop that SANERI has
approach be taken to housing, instead of
energy industries and where necessary,
elected to develop specific programmes to
the more traditional construction methods.
undertake applied research, there is a need
address the above needs.
Manufacturing provides a skills base that
to ensure synergy with DST programmes.
can be readily redeployed to focus on other SANERI has, as one of its thematic areas,
products, such as automotive components
The majority of the year was therefore spent
the upliftment of society through the
and furniture. Manufacturing will also
on identifying programmes within SANERI
productive use of energy. SANERI therefore
provide the necessary throughput of houses,
that should be transferred back to DST, as
developed the designs in the year for an
at the required quality levels, to assist in
well as programmes within DST that ought
energy self sufficient house, manufactured
achieving a meaningful reduction in the
to be managed by SANERI. I am delighted
using energy efficient building materials. An
current housing and electrification backlogs.
to confirm that both the DST and SANERI
important aspect of this programme is the
have reached an agreement on an equitable
focus on manufacturing. With the decline
The DST made clear to SANERI that based
sharing of responsibility in this area, with
in manufacturing capacity in SA, coupled
on the RD&I value chain and departmental
every prospect of continuing the mutually
with job losses in the manufacturing sector,
mandates certain programmes (with HCD
beneficial relationship that has defined our
it is vital that an energy-focused industry be
component) will have to be migrated back
relationship thus far.
developed with manufacturing capacity as
to the DST. This implies that funds follow
SANERI ANNUAL REPORT 2009/10
PAGE 9
Notwithstanding the funding difficulties
Public Works Programme. Working for
The Renewable Energy and Energy Efficiency
experienced in the first half of 2009/10, the
Energy was introduced formally by former
Partnership (REEEP) continues to provide
staff and associated academics of SANERI
Minister of Finance, Trevor Manuel, in his
value to the Southern African region.
were able to perform their duties almost
2008/9 Budget Vote. The initial budget
SANERI, as hosts of the secretariat for the
on a business as usual basis. This was
allocation for Working for Energy has been
SADC region, has been instrumental in
largely due to timing of expenditure within
R5 million in 2009/10, R15 million in 2010/11
the development of projects and proposals
SANERI and initiatives such as Working for
and R25 million in 2011/12. While modest in
that target the removal of barriers to the
Energy commencing. With foresight and
sum, this budget represents an intention on
uptake of renewable energy and energy
prudent financial management, SANERI
the part of government to start catalysing
efficiency in the region. As a consequence
was able to maintain the momentum on
energy industry development in this country.
of the endeavours of the secretariat team,
its key programmes, even though the
While specific projects under Working for
the REEEP governing body has seen fit to
universities that support SANERI’s various
Energy focus on supply side options as well
increase both the budget and duration of
research programmes and projects were
as demand side management initiatives, it is
the contract with SANERI.
under severe financial pressure. Thanks
imperative that the enabling environment,
largely to the granting of credit facilities
in terms of the supporting industrial and
Locally, the Green Transport Centre has
by commercial banks to certain universities
human capital be developed.
thrived under the leadership of Dr Titus
(underwritten by SANERI), we were able to
Mathe and his team. Despite funding
ensure that students were supported and
There are a few international and local
constraints during the year, the team were
that the research programmes at universities
partnerships that have continued to flourish
able to complete the upgrading of the facility
continued.
during the year. In particular, the Centre for
in Midrand, as well as securing Eskom’s fleet
Carbon Capture and Storage has grown
of electric vehicles. The centre now boasts
Working for Energy promises to be a most
from strength to strength and funds totalling
several vehicles that are either electric or are
significant programme within SANERI and
R30 million have been raised to cover the
set to be converted to run on Compressed
thereafter SANEDI. The programme follows
initial research studies in anticipation of the
Natural Gas or Liquefied Petroleum Gas,
on the success of the Working for Water,
planned commercial demonstration project
in addition to running on petrol as well.
Working for Fire and Working for Forestry
in 2020. This project will most likely focus
An electric motor, charger and controller
programmes.
on capture of the carbon dioxide stream
has also been developed with Stellenbosch
from a Sasol plant, where the percentage
University and fitted into a Corsa Lite
carbon dioxide is close to 95% pure. The
vehicle. The vehicle is set to be exhibited and
job
carbon storage atlas that will identify
demonstrated at the Green Transport Centre
opportunities in the country. Most of the job
suitable storage sites within stable geological
in June 2010, to coincide with the launch of
opportunities have arisen from the Expanded
formations is almost complete.
the 2010 FIFA World Cup™ at that time.
These
programmes
successful
PAGE 10
in
have
creating
been
hugely
sustainable
SANERI ANNUAL REPORT 2009/10
CEO’S REPORT (CONTINUED)
The Greening of Robben Island is an important flagship project for SANERI. Besides the high profile of the island, it is also representative of small remote communities in the country. With the participation of the Robben Island Museum and relevant government departments, it is anticipated that Robben Island will become an example of Green Leadership for communities in SA. This project is also part of Working for Energy, as an integral feature of the project is to train community members, on and around the island, to be able to install, monitor and maintain the technology deployed on the island. SANERI’s performance in the year is reflective of the commitment and efforts of the staff. The high company rating of 93.1 is indicative of the calibre of staff in the organisation. SANERI was able to meet its objectives as stipulated in its key performance indicators and in the case of the Green Transport Centre, was able to far exceed all expectations in
terms of deliverables. A complete overview of the performance against objectives is provided in this report. On the human resources side, the overall employment equity profile for the organisation is healthy. The management and staff profile indicates staff members by gender and race. SANERI has performed exceptionally well in the case of Black Female staff members, despite the loss of two Black Females who were invaluable to the organisation. In conclusion, it has been a difficult year from a funding perspective but a largely rewarding one in terms of industry support and commitment of staff members. With the support of the Department of Energy it is clear that the transition to SANEDI will not be as arduous and uncertain as previously anticipated. The strong socio-economic drivers that led to the establishment of SANEDI will result in the development of
key programmes and projects that benefit ordinary citizens in the short to medium term. It remains to be seen how quickly South Africa’s economy recovers after the recent recession but one thing is clear: when the economy is back on a moderate to high growth trajectory, the country had better have the energy resources to meet the anticipated demand. With the demand for housing also set to pick up, it places SANERI’s key programmes in the spotlight. SANERI will be expected to provide solutions to an energy starved nation as well as ensuring that all its citizens have access to affordable and energy efficient housing.
Mr KM Nassiep
SANERI ANNUAL REPORT 2009/10
PAGE 11
ABOUT SANERI
Management and Staff Profile WF WM
RESEARCH ASSISTANT
IF
SENIOR MANAGEMENT
IM
MANAGER: ADMINISTRATION /FINANCE
SENIOR MANAGEMENT
CF CM CM
PERSONAL ASSISTANT
BF
PUBLIC AWARENESS OFFICER
PAGE 12
SENIOR MANAGEMENT
BF
SYSTEM ADMINISTRATOR
SANERI ANNUAL REPORT 2009/10
BF
BF
RESEARCH ASSISTANT
EXECUTIVE MANAGEMENT
BM BM
SENIOR MANAGEMENT
PROJECT MANAGER
The South African National Energy Research Institute (SANERI) became operational during the year 2006 through the joint efforts of the Department of Minerals and Energy and the Department of Science and Technology. Following a Cabinet decision, SANERI was established under a Ministerial Directive. Its objectives are: • To increase energy research and development in South Africa.
• To increase human capacity in energy research.
•
SANERI was established as a company in the CEF Group. The CEO, Mr Kadri Nassiep was appointed in August 2006 and Senior Managers were appointed in December of the same year. The organisation has since recruited the staff essential to the day-to-day functioning of the organisation.
of an agreement between SANERI and the Department of Science and Technology, that the Green Transport Technology Programme will be housed and managed within SANERI. The aim of the programme is to showcase South Africa’s capabilities regarding the use of alternative fuels and technologies for transport.
areas, which were identified in the 10th order Draft National Energy R&D Strategy. The above mentioned strategy was developed by industrial experts, government and academia, under the auspices of the Department of Science and Technology.
This Annual Report highlights SANERI’s activities for the 2009/10 financial year. By the end of the financial year, SANERI was operating with a staff consisting of 13 members.
Transforming the composition of energy researcher groups to more adequately represent the demographic profile of the country in terms of gender and race.
The priorities of SANERI are to: • Undertake energy research (primary function). • Develop human capacity within this field.
The exciting Green Transport Technology Programme has been operating successfully within SANERI following the conclusion
The above mentioned is carried out with due cognisance of SANERI’s nine thematic
SANERI ANNUAL REPORT 2009/10
PAGE 13
SANERI’S THEMATIC AREAS Although the draft National Energy R&D Strategy of South Africa (2006) has not yet been approved by Cabinet, it clearly spells out objectives and priorities for SANERI to focus on. The priority areas are as follows: • Energy Infrastructure Optimisation. • Energy Efficiency and Demand Side Management. • Impact of Energy Environment.
Use
on
the
• Use of Energy to Stimulate SocioEconomic Development. • Cleaner Fossil Fuel Use (including clean coal). • Renewable Energy. • Alternative Energy Sources (including fuel cells and hydrogen). • Energy Planning and Modelling. • Energy Policy Research. The highlights of some of the research themes are elaborated on in the pages to follow.
PAGE 14
SANERI ANNUAL REPORT 2009/10
SANERI ANNUAL REPORT 2009/10
PAGE 15
RESEARCH HIGHLIGHTS ADVANCED FOSSIL FUEL USAGE The human species clings tenuously to life on the finite planet on which it exists. We, as a species, believe that we are at the top of the “food-chain” and that our technology will keep us there. This perception is reinforced by the development advances made possible by research and application. However, we are from time to time reminded, by nature, the limitations our advances. A recent example is the volcanic eruption that effectively closed down most of the European air-space with consequent considerable disruptions to economies and arrangements of travellers and to some extent South African businesses. Our technology was insufficient to overcome an event that is common in the natural order of the universe. This clearly illustrates that although research and development has brought us thus far, there is still much to do.
PAGE 16
SANERI ANNUAL REPORT 2009/10
Conversely, the human species has an impact on natural systems. For centuries, human advancement has been fired by the use of fossil fuels – a correct choice at the time. However, we now understand better the negative impacts of sourcing our primary energy from such a source. Notwithstanding the less than generally expected outputs from the Copenhagen meeting of the United Nations Framework Convention on Climate Change, the biggest challenge to energy provision and usage is climate change. The world in general, and South Africa in particular, needs to wean itself from fossil fuels. Not only for climate change reasons, but also because of the finiteness of fossil fuels. The movement to nuclear and renewable energy’s needs to be properly researched and applied as well as developing smooth transitionary measures in order to ensure that South Africa’s primary focus of poverty alleviation and development is achieved.
SANERI ANNUAL REPORT 2009/10
PAGE 17
South African Centre for Carbon Capture and Storage A major effort of the year was addressing carbon capture and storage as a mechanism to mitigate greenhouse gas emissions.
The week was billed as the formal start of carbon capture and storage activities and included:
The South African Centre for Carbon Capture and Storage was established in March 2009 and operationalised during the year 2009 and new members welcomed. The members as at March 2010 now comprise: SANERI, Sasol, British High Commission, Norwegian Embassy, Eskom, Agence Française de Développement, Anglo Coal, Exxaro, PetroSA, Schlumberger, Total Coal, Xstrata.
• Introductory Course for Carbon Capture and Storage presented by the Australian CO2CRC. • Carbon Capture and Storage Conference – 60% of the presenters were international. • Official Opening Dinner of the Centre for Carbon Capture and Storage by the Honourable Ms Dipuo Peters, Minister of Energy. • International experts review of South Africa’s draft Work Plan for Carbon Capture and Storage. • International experts review of the progress of the South African Carbon Dioxide Geological Storage Atlas. • Workshop on Legal/Regulatory Framework for Carbon Capture and Storage – organised by the Department of Energy and utilising the international experts. • International Energy Agency Carbon Capture and Storage Road Map – South African Consultation. • Advanced Training Course for Geological Storage of Carbon Dioxide – presented by the British Geological Survey.
SANERI also participated in international carbon capture and storage events: • International Energy Agency Greenhouse
The major event for the year was the Carbon Capture and Storage Week as held 28 September to 2 October 2009.
PAGE 18
SANERI ANNUAL REPORT 2009/10
Gas Programme – SANERI is South Africa’s contractual member of this organisation. • Global Carbon Capture and Storage Institute – SANERI became a Founding Member of the GCCSI. The GCCSI was the major sponsor of the Carbon Capture and Storage Week. • Carbon Sequestration Leadership Forum – at the request of the Department of Energy, SANERI became the Co-Chair of the CSLF Technical Group. • IPAC-CO2 – SANERI is the southern African
Node
of
the
International
Performance Assessment Centre. • European
Commission
FP7
project
[COCATE] – SANERI is one of the contractual partners of the COCATE project
lead
by
the
Institute
de
France Petroleum with regard to the transportation of CO2. • Norway High Level CCS Conference –
presented
an
invited
paper
on
South Africa CCS to the High level Conference in Bergen, May 2009.
ADVANCED FOSSIL FUEL USAGE (CONTINUED)
• European Policy Summit – presented invited paper on South African CCS to the Summit, Brussels during June 2009. • World Bank – Invited speaker and chair to the World Bank Workshop on Carbon Capture and Storage, Washington, September 2009. • SACCCS/SANERI hosted the UK Secretary of State for Energy and Climate Change, Mr Ed Milliband, at CEF House on 6 August 2009. • ECN (Netherlands) has obtained funding for the CCS Africa CCS Workshops scheduled to be held in neighbouring countries. The first organisation meeting was held 9 November 2009 in Johannesburg with ECN and Botswana and SANERI.
As part of the local outreach for carbon capture and storage, SANERI presented the following: • Comment Visions Euronews – January 2009. • Side Event CCS at the Climate Change Summit – 3 to 6 March 2009. • FFF Clean Coal Technologies Indaba – 11 to 12 March 2009. • World Bank Pretoria – 20 March 2009. • JP Morgan – 25 March 2009. • GeoScience Wits – 26 March 2009. • Coal Ash Association – 1 April 2009. • ETV Morning Show – 6 April 2009. • SRK – 8 April 2009. • MEETI – 13 May 2009. • Fighting Climate Change with CCS, Bergen – 27 to 28 May 2009. • SANEA Action for Energy – 4 to 5 June 2009. • Geological Society South Africa Symposium – 5 June 2009. • Petro.t.ex Africa 2009 – 9 to 10 June 2009. • Industrial and Commercial Use of Energy Conference – 9 to 12 June 2009.
• European Policy Summit, Brussels – 23 to 24 June 2009. • Carbon Trade Africa Conference 22 to 24 July 2009. • Pretoria Writers Circle – 1 August 2009. • Radio 702 Jenny Crwys-Williams Show – 17 August 2009. • Energy Efficiency 2009 Conference – 17 to 20 August 2009. • SANEA Business Breakfast – 27 August 2009. • Greenhouse Gas Emission Reduction Strategies Conference, 26 October 2009, Johannesburg. • Keynote Paper: International Conference on Coal Science and Technology – 28 October 2009, Cape Town. • SACEPA – 27 January 2010. Other ad hoc radio and printed medium interviews have been done as well. Three bursaries were awarded by the Centre for students to study for a post-graduate degree in carbon capture and storage.
SANERI ANNUAL REPORT 2009/10
PAGE 19
Carbon Dioxide Geological Storage Atlas A previous study undertaken by the CSIR for the Department of Minerals and Energy indicated that geological storage of carbon dioxide was feasible in South Africa – there being capturable emissions and potential storage sites. During 2008, a start was made on a multi-year development of an Atlas to locate and characterise potential geological storage sites commenced. That project is jointly financed by PetroSA, Anglocoal, Eskom, Sasol and SANERI. The Atlas has been completed and publication and launch is scheduled for July 2010.
PAGE 20
SANERI ANNUAL REPORT 2009/10
ADVANCED FOSSIL FUEL USAGE (CONTINUED)
Other Clean Coal Technology Developments Other clean coal projects currently underway are: • High pressure spray injector to test fuels and injection is operational and students are already undertaking research. • Production of liquid fuels direct from coal is in progress. • Adsorption of carbon dioxide onto coal is being undertaken as an option for carbon capture and storage. • Determination of sulphur and trace elements in coal. • Investigation into the gasification of coal has been completed. • Speciation of heavy metals in coal is underway.
SANERI ANNUAL REPORT 2009/10
PAGE 21
END USE AND INFRASTRUCTURE PAGE 22
SANERI ANNUAL REPORT 2009/10
A Process Synthesis Approach to Improving the Efficiency of Comminution
Looking at Ways of Improving the Efficiency of Comminution Processes
SANERI and the Centre of Material and Process Synthesis (COMPS), a research and engineering solutions group which focuses on the design of energy efficient processes and equipment, have been involved in a three year collaborative research programme looking at ways of improving the efficiency of comminution processes. COMPS, with its
internationally recognised team of engineers and scientists is located at the University of the Witwatersrand, and has been set up with the objective of enhancing scientific expertise in the fields of chemical engineering and mineral processing. This research group has developed integrated process synthesis tools for the analysis and design of efficient
processes that support sustainable industrial practice. The group aims at the transfer of expertise and “know how” to industry and the public sector through fundamental research initiatives, by providing consulting expertise and “know-how”, through training and industrial process development.
SANERI ANNUAL REPORT 2009/10
PAGE 23
END USE AND INFRASTRUCTURE (CONTINUED) COMPS currently has a full time staff complement of 15 academic specialists and consultants, eight technicians and administrative staff and over 40 postgraduate researchers actively engaged in fundamental and applied research work in the areas of process synthesis, reactor network synthesis, catalysis research, distillation synthesis, and biotechnology, Attainable Regions analysis, comminution and minerals processing research. These researchers have developed and extended the concept of the Attainable Region, which is the set of outputs from all possible reactors for a given feed and set of kinetics, to comminution systems. This technique allows one to optimise both reactor and comminution systems and to answer questions such as: what is the minimum energy required to achieve
PAGE 24
SANERI ANNUAL REPORT 2009/10
a particle size distribution, or what is the maximum amount of a selected size class that can be produced for a given feed? Not only are comminution processes of considerable importance to the South African economy, but breaking rock is very energy intensive and of the large amount of energy that is consumed by mills in a mining process, very little actually gets used for breaking rock. The funded SANERI research project has used the tools of Attainable Region analysis for the design of optimal process networks as well as the application of Discrete Element analysis to improve the design and scale-up of Autogenous and Semi-autogenous mills.
A typical Attainable Region profile showing the effect of proportionally mixing products from two parallel unit structures with different residence times (Source: Khumalo, N., et al. The Application of Attainable Region Analysis to Comminution. Chem. Eng. Sci.,61 2006). This research has included, among other things, an extensive programme in which milling tests have been carried out on silica, coal and platinum ore. The project has looked at ways of finding milling strategies to minimise the energy required to achieve a particular size distribution, the types of processes that favour certain particle size distributions, and finding the best way of achieving particle size distributions in desired size ranges.
0.7
0.6 A
Optimum answer for the objective function to maximise the mass fraction in size class 2
0.5
MASS TRAC IN SIZE CLASS 2
f unit 2 m2 m Mixing line 2
0.4
unit 1 m1
m1
Trajectory of breakage products for specific energy fixed at 2 J/g,
0.3 Mixing line 1
0.2
into each unit
m1 Unit 2
Unit 1
0.1
f 0
0
0.2
0.3
0.4
0.5
0.6
MASS TRAC IN SIZE CLASS 1
FIGURE 1: A TYPICAL ATTAINABLE REGION PROFILE SHOWING THE EFFECT OF PROPORTIONALLY MIXING PRODUCTS FROM TWO PARALLEL UNIT STRUCTURES WITH DIFFERENT RESIDENCE TIMES (SOURCE: KHUMALO, N., ET AL. THE APPLICATION OF ATTAINABLE REGION ANALYSIS TO COMMINUTION. CHEM. ENG. SCI.,61 2006)
SANERI ANNUAL REPORT 2009/10
PAGE 25
END USE AND INFRASTRUCTURE (CONTINUED) Optimisation of Design, Construction and Operation of Buildings for Energy Efficiency
The choice and incorporation of best practices in design, construction processes and building operations with energy conservation consciousness can significantly contribute to energy efficiency in buildings. The purpose of the study was to optimise principles of design, construction processes and building operation for maximum energy efficiency in buildings as one way of mitigating global warming and contributing to measures that can reduce energy demand in South Africa. The study considered the value of the factors in design, construction and operation against the life cycle cost implications and energy efficiency in public buildings. The findings of the study can now be revealed. The study identified nine factors and 40 subfactors that can potentially benefit energy efficiency in buildings during design and construction. These include orientation, form and shape, wind protection, renewable energy usage, cooling systems, lighting systems, warming systems, thermal mass storage, insulation and ventilation. Applying value engineering to identify the factors that
PAGE 26
SANERI ANNUAL REPORT 2009/10
add value to energy efficiency in buildings, it is observed that the minimum number of design factors that could significantly improve energy efficient buildings is 4.228 when applied to at least 2.755 building elements. There is a strong positive linear correlation between design factors, the number of building elements in which they are used and the level of energy efficiency.
knowledge on use of the installed systems, lack of accountability in the context of the personnel responsible for energy efficiency/ energy programme, lack of budgetary requirements for energy consumption, non-existence of energy conservation programmes in buildings, unplanned maintenance and lack of consistent metering of electricity consumption in buildings.
Poor site management prominently contributes to inefficient energy use accentuated by the lack of energy conservation measures on site, ignorance, plant inefficiencies and lack of skilled plant operators. Transportation activities account significantly to energy use on site, in addition to hoisting, concreting, excavation and demolitions in that order of merit. Electricity and fossil fuels are the most used accounting for over 80% of the entire energy forms utilised on site.
The study is testing the hypothesis that a minimum life cycle cost of a permutation of design factors in different building elements can produce maximum energy efficiency in buildings and therefore investment in energy efficient systems make economic sense. The study has benefitted young South Africans from disadvantaged backgrounds in which two students have graduated with Masters and four with Honours. More importantly the study has sensitised a couple of future professionals to be energy efficiency conscious in building design and management. The study direction is to apply this to low cost housing and model buildings for their carbon signature.
In building operations the design, installation, commissioning and maintenance of HVAC systems are largely energy inefficient. Factors contributing to the energy inefficiency were found to be mostly related to poor
100 90 80 70 60
100 90 80
50
70
40
60
30
50 40
20
30
15
20
10
15 10
5
5
0
0
BUILDINGS WITHOUT ENERGY CONSUMPTION METERS/MONITORING SYSTEM
BUILDINGS WITH ENERGY CONSUMPTION METERS/MONITORING SYSTEM
FIGURE 2: ENERGY MEASUREMENT SYSTEM
SANERI ANNUAL REPORT 2009/10
PAGE 27
CLEAN ENERGY SOLUTIONS (CONTINUED)
As ocean energy technologies develop, the nascent ocean energy industry is finding synergies and opportunities with other marine, electrical and engineering activities, such as engineering for oil or gas platforms, floating offshore wind, offshore aquaculture and others. Exploring these synergies can be a valuable contribution to accelerate the deployment of ocean energy. It is with this intent that South Africa joined the International Energy Agency (IEA) Ocean Energy Systems 窶的mplementation Agreement (OES-IA) on 19 January 2010 after being an observer for two years. The IEA provides a framework for more than 40 collaborative programmes, known as Implementing Agreements, in the areas of renewable energy, hydrogen, fossil fuels, fusion power, end use and cross-cutting activities for technology research, development, demonstration and deployment. The Implementing Agreement on Ocean Energy Systems (OES-IA) is one
of ten IEA Implementing Agreements within the renewable energy domain (Figure 3). The Ocean Energy Systems Implementing Agreement (OES-IA) is a collaborative venture among various member countries and the European Commission. As of April 2010, those members are Portugal, Denmark, United Kingdom, Japan, Ireland, the European Commission, Canada, the United States of America, Belgium, Germany, Norway, Mexico, Spain, Italy, New Zealand, Sweden, Australia, South Africa and Republic of Korea, ordered by sequence of joining the Agreement. Established in October 2001, the OES-IA is now in its second five year term. The OES-IA programmes bring together countries to advance research, development and demonstration of conversion technologies to harness energy from all forms of ocean renewable resources, such as tides, waves, currents, temperature gradient
(ocean thermal energy conversion and submarine geothermal energy) and salinity gradient for electricity generation as well as for other uses, such as desalination, through international cooperation and information exchange (Figure 4 on the following spread). The OES-IA covers all forms of energy generation, in which sea water forms the motive power, through its physical and chemical properties. It does not presently cover offshore wind generation, since sea water is not the motive power. Its mission is to facilitate and co-ordinate ocean energy research, development and demonstration through international co-operation and information exchange, leading to the deployment and commercialisation of sustainable, efficient, reliable, cost competitive and environmentally sound ocean energy technologies.
South Africa joins the IEA Ocean Energy Systems Implementation Agreement PAGE 28
SANERI ANNUAL REPORT 2009/10
PA
OCEAN ENERGY SYSTEMS GEOTHERMAL SOLAR HEATING AND COOLING
BIOENERGY
RENEWABLE ENERGY TECHNOLOGY DEVELOPMENT
HYDROPOWER
SOLARPACES
PHOTOVOLTAIC POWER SYSTEMS
I
M
EE
NG
Y
REN EW AB L
OLOGIES WO RKI
RT
N
HN C E YT G ER
WIND ENERGY SYSTEMS
PL
HYDROGEN
A TING EN EM
GREEMENT S
Figure 3. Renewable energy Implementation Agreements in the IEA
SANERI ANNUAL REPORT 2009/10
PAGE 29
CLEAN ENERGY SOLUTIONS (CONTINUED)
OCEAN ENERGY
TIDES
TIDAL CURRENTS
Figure 4. Principal forms of Ocean Energy
PAGE 30
SANERI ANNUAL REPORT 2009/10
WAVES
SALINITY GRADIENT
THERMAL GRADIENT
During the first South African workshop on Ocean Energy with a focus on Wave and Ocean Current Energy which was held in the Western Cape on 21 February 2008, hosted by the Centre for Renewable and Sustainable Energy Studies on behalf of the South African National Energy Research Institute (SANERI), the consensus was that the potential resource of wave power along the South African coast could contribute between 8 000 and 10 000 MW of South Africa’s future electricity supply. Most of this will be along the west and south coast of the country.
Many studies have been done on wave and ocean capacity along our shores – the verdict is that the latent power that is available is promising. The main challenge is cost and finding the right technology. This potential could go a long way in contributing to the Department of Minerals and Energy’s Renewable Energy target of 10 000 GWh to be supplied by 2013. It was estimated that by 2013 up to 24 MW of wave power could be installed contributing 84 GWh of the overall target.
Seeing that there is no commercial wave device to harness wave energy at present and that there is an increasing amount of research being undertaken in the field by different countries with not much activity currently in South Africa; the benefit of joining the OES-IA therefore would be to monitor the landscape, share in their learning to avoid duplicating effort and errors and be part of the network of researchers and collaborate on projects of mutual interest.
SANERI ANNUAL REPORT 2009/10
PAGE 31
Energy Technology Data Exchange The Energy Technology Data Exchange (ETDE) is an international energy information exchange agreement formed in 1987 under the International Energy Agency (IEA). The ETDE’s mission is “To provide governments, industry and the research community in the member countries with access to the widest range of information on energy research, science and technology and to increase dissemination of this information to developing countries.” The ETDE World Energy Base or the ETDEWEB is the internet tool for disseminating the energy research and technology information that is collected and exchanged. It includes a federated search engine for one stop searching of related science sites. Users in member countries and many developing countries have access privileges to ETDE’s information.
PAGE 32
SANERI ANNUAL REPORT 2009/10
The benefits of participating in this Implementing Agreement are: • Staying abreast of recent developments in various research areas (including some basic science sites). • Avoiding duplication of research effort and learning from expected and unexpected results. • Jump- starting research at a point further along than anticipated. • Identifying which countries and people are involved in particular research areas. • Promoting international cooperation in energy research and development. • Understanding how countries deal with energy related environmental and climate change. • Finding approaches to energy use including policy and economic factors, alternative and renewable energy sources and conversion aspects. • Finding a historical perspective on historical issues.
The 31st ETDE EXCO meeting was held in Mexico at the end of September 2009. South Africa was welcomed as this was the first official meeting that was attended. It was a year since South Africa had joined the ETDE Implementing Agreement. A formal cake cutting ceremony was held to celebrate South Africa’s membership. At the meeting the host country acknowledged the value that this information exchange has had in helping them achieve their goals as they seem to be focusing more on renewable energy sources. Sharing information and technology advances through the ETDEWEB is to the mutual benefit of all members and in recent years this has been having a positive impact on the developing world. The ETDEWEB database is major resource of research and proven technologies and is one of the most visited sites in the host country.
ENERGY DATA AND KNOWLEDGE MANAGEMENT Centre for Energy Systems Analysis and Research Centre for Energy Systems Analysis and Research (CESAR) aims to be the authority in the field of Energy Data for Modelling and Planning. CESAR has the following objectives: • To prepare and promote the use of research data in ensuring Energy Security for the South African Economy. • To ensure that the energy data collected is used effectively in establishing Policy and Planning Frameworks. • To provide access to reliable and credible data for use in Modelling and Planning Energy usage patterns.
• To develop country skills in energy research, economic research, climate change and poverty development and alleviation. • To promote the effective use of modelling and planning skills for the development of the energy sector. • To actively apply activities at CESAR so that we become more reliant on renewable energy sources. • To engage Stakeholders in ensuring programmes funded through CESAR are designed in alignment with strategic goals and objectives.
• To establish new and leverage on existing partnerships to advance activities of CESAR. • To raise funds at CESAR so that current research activities will eventually become economically viable. • To develop the CESAR corporate image and branding.
SANERI ANNUAL REPORT 2009/10
PAGE 33
GREEN TRANSPORT PROGRAMME PAGE 34
SANERI ANNUAL REPORT 2009/10
SANERI is hosting the Green Transport Programme. The programme is aimed at showcasing green transport technology options during the 2010 FIFA World Cup™ and beyond. During the last financial period, the Green Transport Programme completed the following activities: • Setting up of the Green Transport Centre in Midrand. • Developed work streams for activities at the Green Transport Centre. • Transferred Electric Vehicles from Eskom to the centre. • Received a vehicle donated by a car manufacturer (to be converted to electric). • Signed several MoU’s with private sector companies to jointly initiate, develop and promote use of Compressed Natural Gas (CNG) and Biodiesel in the transport sector. • Started an education and awareness campaign at the Green Transport Centre.
SANERI ANNUAL REPORT 2009/10
PAGE 35
GREEN TRANSPORT PROGRAMME (CONTINUED)
Picture 1. Nissan NP200 currently being converted at the Centre to full electric
Picture 2. Compression Station and Dispensing, Langlaagte
Electric Vehicles Projects
LPG Projects
Building up to and during the 2010 FIFA World Cup™, SANERI would like to demonstrate electric vehicle technologies and show off to the public the operation and benefits that this innovative technology could bring to South Africa. SANERI approached Eskom and proposed the use of their vehicles and related technologies as well as the services of Peter Langley who was involved in the conversion and care of the vehicles in the demonstration project.
SANERI and CMH are jointly promoting the use of LPG in South Africa. Negotiations are currently taking place to formalise the working relationship. CMH has access to a Sasol LPG refuelling infrastructure (picture 3). Vehicles converted by CMH are already refuelling at this station (picture 4).
Eskom has in the past converted a number of electric vehicles to electric propulsion and has accumulated experience and knowledge on electric vehicle technologies. SANERI secured a donation of electric vehicles from
PAGE 36
SANERI ANNUAL REPORT 2009/10
Eskom which were transferred to the centre mid 2009. Using Eskom’s “know-how” and resources, the Green Transport Centre is currently converting a Nissan NP200 (seen above) to full electric. A full electric vehicle workshop is currently being set up to accommodate the anticipated conversions. It is also planned to erect a Solar Carport for use in recharging demonstration vehicles at the Green Transport Centre.
Picture 3. Sasol’s LPG Refuelling tanks in Isando
Picture 4. Sasol’s LPG dispenser and a vehicle belonging to CMH refuelling in Isando
Picture 5. Biodiesel Manufacturing facility to be installed at the Green Transport Centre
CNG Projects SANERI and NGV Gas is jointly developing various pilot projects whereby CNG will be utilised as an alternative fuel to diesel and petrol for vehicle operators. NGV Gas (Pty) Ltd specialises in the provision of gas filling stations for both private and public transport. A CNG depot is under construction in Langlaagte (currently funded by CNG Holdings), where natural gas will be compressed and transported to industry via Virtual Pipeline®. This site is next to Egoli Gas and at Sasol’s main supply point to Egoli’s gas network. Industrial customers can start receiving gas by early April 2010. At the Compression (Mother) Station dispensers will be available to supply gas for vehicles to various end users from mid April 2010. A conceptual layout of this site is shown in picture 2 above.
The CNG dispensers at the Langlaagte site will be used as an interim measure, prior to the establishment of a filling station. The following vehicles will be operating as part of the pilot project, utilising the dispensers: five minibus taxis, one Volkswagen 63 seater DG-Flex bus, three to four passenger vehicles/ LDVs.
Picture 6. Biodiesel storage tank
Biodiesel Projects SANERI and the Biodiesel Centre are currently in the process of concluding an MoU to jointly demonstrate the manufacturing, refuelling and testing of Biodiesel at the Green Transport Centre. It has already being agreed that the equipment will be transferred from Cape Town to Midrand the first week of May 2010. The equipment that will be transferred from Biodiesel Centre is shown in pictures five and six.
SANERI ANNUAL REPORT 2009/10
PAGE 37
Education and Public Awareness Update
The Public Awareness Project is aimed at educating, training and creating awareness about alternative fuels and propulsion systems. It is targeting entrepreneurs, government officials, policy makers, decision makers, the youth and the general public. The project has identified five focus areas, namely, quarterly newsletters, promotional and educational material, training and workshops, exhibitions and demonstrations. Funding constraints limited activities of this project to date.
PAGE 38
SANERI ANNUAL REPORT 2009/10
Nevertheless, the following were achieved during this period April 2009 to March 2010: • Promotional and educational material developed and piloted. • Branding concepts for the centre and vehicles developed. • Website content developed. • Two workshops held to discuss promotion of biodiesel from waste vegetable oil. • Exhibiting at Sasol TechnoX (August 2009). • Exhibiting at the International Solar Energy Society (ISES) held in Sandton from 11-14 October 2009. • Exhibiting at the South African Energy Efficiency Convention held in Emperors Palace from 12-13 November 2009. • Hosting of the several visitors such as Automotive Industry Development Centre and NUMSA officials at the Green Transport Centre. • The centre continues to receive key stakeholders on a weekly basis. It is planned to officially launch the centre during 2010.
GREEN TRANSPORT PROGRAMME (CONTINUED)
SANERI ANNUAL REPORT 2009/10
PAGE 39
NATIONAL WORKING FOR ENERGY PROGRAMME
PAGE 40
SANERI ANNUAL REPORT 2009/10
With South Africa’s demand for energy and more specifically electricity, growing faster than supply capability, the generation reserve margin often under threat, the ability of supply threatening economic growth, compromising trade competitiveness, and worsening the plight of the poor, as well as damaging our environment and negatively affecting public confidence, a renewable energy solution was eagerly sought. Coupled with this the efforts to improve efficiency of use or energy affordance have not been overly successful, fragmented and inadequate, further threatening the nation’s energy security, and often perpetuating the notion of wastefulness and the erroneous notion of an indefinite supply of electricity and so a more rigorous approach to Demand Side Management, Energy Use Avoidance and Renewable Energy technology needed to be fostered and given high priority and capital funding from all revenue streams and government institutions. In addition, alternate energy systems and cogeneration projects need to be up-scaled to meet demand as well as empowering local businesses, people, and communities to bring about an energy-secure future through self-reliance and the Renewable Energy Sector and Demand Side Management hold huge potential for job creation, local economic growth and sustainable development across all sectors of society and can bridge the sustainable energy gap in the rural communities. Climate change, reduction of green house gas emission, job creation and local economic development are key focus areas of Government and National programmes, and policy guidelines have been developed to give effect to strategies and project implementation which will form a vital component in bringing such focus to reality through this national initiative, Working for Energy.
The purpose of the Programme is to develop in South Africa both human capacity and practical project implementation of labour intensive Energy Efficiency and Renewable Energy projects and in turn address fundamental issues pertaining to: • Job creation and poverty alleviation. • Skills development and enterprise development. • Reducing electricity demand and overall energy utilisation. • Developing
and
enhancing
As the programme gains momentum, the initial Focus Areas are: • Biomass from invasive alien plants and bush encroachment. • Biomass from other waste streams or primary processes. • Charcoal derived from invasive alien • •
co-
generation projects and developing new energy sources and efficiency enhancements.
• • •
• Enhancing existing infrastructures. • Developing new green field projects for low cost housing electrification and
•
Energy Efficiency. • Reducing environmental impact and green house gas emissions. • Furthering
the
development
and
•
implementation of the Green Building Code. It is envisaged that through the various project outputs a considerable amount of MWh will be generated from the renewable energy options which in turn assist in reducing the demand from conventional coal fired power stations. Similarly, the Energy Management sector will also further reduce the burden on the national grid through the energy savings that will be directly attributable to the Programme. The WFE Programme has two major focus areas, namely the provision of renewable energy and energy management. Both focus areas place emphasis on labour-intensive options, targeting employment opportunities by all relevant stakeholders with emphasis on rural communities or suitable energy islands.
•
plants and grasses. Biofuels development and implementation in rural applications. Mini-Grid Hybrid and Smart Grid Systems. Solar power (Concentrated PV). Micro hydro systems. Framework for energy audits and energy management planning for schools, homes and businesses. Framework for the development and installation of Biomass ceiling materials for installation as EE improvements for poor or rural households. Framework for provision of energy and water saving technologies for both retro-fitting and new works. Framework for the development and implementation of Measurement and Verification protocols for DSM projects incorporated under the programme.
Unfortunately the programme initiation took longer than was initially intended, due to institutional arrangements and funding delays, but we are happy to report that all the challenges initially experienced have been resolved and the programme is gaining momentum, and despite the delays tremendous work was done on formatting programme policy and identification of key projects which will be flagship initiatives to demonstrate the kind of successes that will be achieved through small scale renewable energy generation.
SANERI ANNUAL REPORT 2009/10
PAGE 41
Greening Robben Island Of note, the “Greening Robben Island� project, which encompasses most of the programme focus areas, has been initiated and we plan to use a combination of technologies to provide a total renewable energy solution for the island coupled and controlled through a smart grid management system, which will also link to a virtual 3D web site that will enable the real time viewing of the total energy generation, supply and utilisation on the island, and demonstrate renewable energy sustainability.
This programme also provides a facilitation, coordination and collaborative opportunity for the many initiatives already underway through other agencies and private sector involvement, whereby the enabling environment stimulates growth, synergy and efficient resource utilisation, which is hoped will shorten development time lines and increase output efficiencies and common learning practice.
The purpose of the Programme is to develop in South Africa both human capacity and practical project implementation of labour intensive Energy Efficiency and Renewable Energy projects
PAGE 42
SANERI ANNUAL REPORT 2009/10
The programme holds a positive future and will become a legacy base plate onto which renewable energy development will continue to build over the coming years and as projects come on line, the massive backlogs in energy supply will decrease and our national carbon footprint will diminish.
NATIONAL WORKING FOR ENERGY PROGRAMME (CONTINUED)
SOS Children’s Village Energy Efficiency through Carbon off-set Institutionally SANERI developed a carbon reduction strategy as an integral part of the 2009/2010 business model, where key deliverables and targets were set for the year to begin a journey towards carbon neutrality. The off-set of the carbon strategy was to be realised in the revenue equivalent and used on a social development project where energy efficiency was the key objective. As a beneficiary, the SOS Children’s Village in Ennerdale, west of Johannesburg, was the preferred recipient. To raise additional
revenue or in-kind contributions, for this worthy cause, SANERI arranged a golf day at the Johannesburg Country Club at Woodmead. The day was a great success and many of the participant companies taking part also pledged donations to the project.
reduced significantly and such savings were then available to be used for other needs the children may have. A small contribution, but a huge boost to collaborative partnership and social development and community participation.
All the money raised, as well as the carbon revenue equivalent was then donated to the SOS Children’s Village to enable them to install energy efficiency technology to ensure that their monthly consumption was
SANERI ANNUAL REPORT 2009/10
PAGE 43
HUMAN CAPITAL DEVELOPMENT Clean Energy Solutions vs. Human Capital Development SANERI Students enter the Renewable Energy Market The SANERI Associate Chair: Bio-fuels and Other Clean Alternative Fuels reside within the School of Chemical and Minerals Engineering within the Faculty of Engineering at the North-West University. The Faculty has adopted a Bachelor of Science and a Master of Science in Engineering Sciences in Chemical Engineering to enable student’s with a BSc background that do not have access to the Baccalaureus in Engineering degree to gain some training in chemical engineering. The first Master’s students entered the SANERI Associate Chair programme at the beginning of 2008. The student intake consisted of three students (two black females and one black male student) with a BSc (Hons) in biochemistry and microbiology and one student (white male) with a B.Eng degree. All four students have finished their degrees within the allowed two years. Three of the students have started careers in the energy sector of South Africa and one student has opted to continue with a PhD within the Associate Chair programme.
PAGE 44
SANERI ANNUAL REPORT 2009/10
Nombongo Mabentsela and Tando Mquma completed their Master’s degrees in 2009 and 2010 respectively and are now working as graduate trainees at the Coega Development Corporation (CDC). Nombongo is involved, among other things, with the CDC’s peak power project while Tando is actively involved in renewable energy projects, such as wind, solar, biogas and bioethanol plants. Both students believe that without doing their Master’s study in Engineering Science in the Associate Chair programme, they would not have been able to enter the energy sector workforce. Arno Barnard completed his Master’s degree in chemical engineering in 2009 and is now an active member of SASOL’s biofuels division. The success of these students in entering the energy sector as valuable and knowledgeable members of teams working in both conventional and renewable energy technologies emphasises the fact that South Africa’s energy work force can be positively supplemented by students from nontraditional engineering background that
has the vision and drive to make a success of their post-graduate studies and careers. On the occasion of the launch of the Electrawinds’ Wind Farm at Coega on the 12 May 2010, which is the first wind farm to be built in the Coega Industrial Development Zone, Dr Mali caught up with Tando Mquma and Nombongo Mabentsela. The CEO of the Coega Development Corporation, Mr Pepi Silinga commended SANERI on the good work it is doing in developing young scientists and engineers and implored the Minister of Energy, Ms Dipuo Peters to increase support for the institute. The young trainees have so inspired the CEO that the company has initiated a bursary scheme for young people like themselves to study Honours and Masters in energy studies.
Arno Barnard is presently employed by SASOL at Sastech R&D as an Environmental Engineer working on water treatment and biofuels.
Left to right: Ms Nombongo Mabentsela; Hon Ms Dipuo Peters, Minister of Energy; Ms Tando Mquma; and Dr Thembakazi Mali, Senior Manager: Clean Energy Solutions, SANERI.
Left to right: Ms Belinda Vabaza, ECDC official; Ms Tando Mquma; Ms Nombongo Mabentsela; Ms Mokgadi Mathegana, Chief Director: Clean Energy Directorate, DoE; and Dr Thembakazi Mali, SANERI.
SANERI ANNUAL REPORT 2009/10
PAGE 45
HUMAN CAPITAL DEVELOPMENT:
National Hub for Energy Efficiency and Demand Side Management
With the existing structure of the Centre of New Energy Systems (CNES) in the Faculty of Engineering, Built Environment and Information Technology, the University of Pretoria is awarded, by the South African National Energy Research Institute (SANERI), to host the National Hub for the Postgraduate Programme in Energy Efficiency and Demand Side Management (EEDSM) within the period 2008/9–2012/3 to further strengthen energy related researches, human capacity development, market transformation and enterprise development initiatives.
PAGE 46
SANERI ANNUAL REPORT 2009/10
The training programme of the Hub consists of coursework based and research based Master’s and PhD degrees in EEDSM related research topics from Electrical Engineering, Mechanical Engineering, Chemical Engineering, Civil Engineering and Architecture. Six short courses in EEDSM are also developed for industrial engineers and managers.
A number of research projects were carried out. These projects cover topics from industrial and residential energy optimisation, renewable energy, power systems, heat transfer, fuel efficiency, motor and transport efficiency, and energy efficient architecture and housing. There are 33 journal paper publications, conference presentations and technical reports from the research output of the Hub by October 2009.
Degree Programmes and Student Registration in 2009 The postgraduate research programmes aim at attracting a large number of qualifying undergraduates both nationally and internationally. To this end, the University of Pretoria is putting together a postgraduate programme on energy efficiency and demand side management. The programme is available for students from universities with typically four-year Bachelors or Honour’s degrees, in engineering or other recognised field of study. Both coursework
based Honour’s and Master’s degrees and research based Masters and doctors degrees are offered. The information on the corresponding modules for the different degrees specialised in energy efficiency and demand side management (EEDSM) can be found below. The following policies apply for students to be enrolled in the EEDSM programme:
• The admission requirements are the same as other postgraduate programmes. • The degree requirements are the same as other postgraduate programmes. • Students will possibly obtain bursary support from the Hub. • Students must select at least three quarters modules from one degree, and a quarter modules from other EEDSM modules in other degrees.
Student Registration in 2009 The statistics of student registration in the following core modules in electrical engineering in 2009 is:
Module
Code
No. of students registered
Energy Optimisation
ENO 732
19
Energy Management
EES 732
17
Power Distribution Engineering
EEV 732
11
Advanced Topics in Energy Research
ERT 732
8
SANERI ANNUAL REPORT 2009/10
PAGE 47
HUMAN CAPITAL DEVELOPMENT: EEDSM (CONTINUED)
Short Courses and Bursaries
There are six short training courses developed for 2009 by the EEDSM Hub with the cooperation of Continuing Education at the University of Pretoria.
Power Distribution Engineering Marketing conditions are exerting stronger conditions on the design engineer. The structure of electrical utilities is changing or under review in a number of countries, and increasing national or international legislation is adding further constraints. While many of the techniques of earlier decades are still in use, the increasing penetration of computers has affected the manner in which distribution networks are being designed and operated. This course presents the theoretical and practical aspects which the presenters consider particularly relevant in designing distribution networks. The lecturer is Dr R Naidoo.
systems in terms of time-of-use tariff and/or maximum demand charge are covered. The lecturer is Dr J Zhang.
set-ups in various types of heat exchangers. The lecturers are Prof JP Meyer and Prof L Liebenberg.
Energy Efficient Electric Drives
Process Integration for Energy Efficiency Improvement
The aim of this course is to introduce various types of energy efficient electric drives that are currently available. Principles of drive control strategies as well as some analytical techniques to determine energy efficiency will be covered. The lecturer is Prof M Gitau.
Energy Efficient and Solid State Lighting This short course provides introduction to photometry, colorimetry and visibility, light source and luminaries, lighting design, measurements and instrumentation, life cycle costing, etc. The lecturer is Prof FW Leuschner.
Industrial Applications of Energy
Heat Transfer
Optimisation in this module, a brief introduction about energy systems, energy system modelling and optimisation, and Matlab applications in energy optimisation problems are given. Practical industrial (as well as residential) energy management problems such as the load shifting for geysers, conveyor belts and pumping
The objective of this course is to provide the participants with today’s detailed knowledge on heat transfer mechanisms, with an emphasis on heat conduction and convection. The course work is based on recent research results and the most updated methods for the prediction of heat transfer during single-phase and two-phase flow
PAGE 48
SANERI ANNUAL REPORT 2009/10
The course covers various topics, which are focused on Energy Efficiency Improvement Using Process Integration: Introduction to pinch technology principles and applications, with emphasis on heat integration; Introduction to mathematical (process) optimisation techniques; Batch process integration, with exposure to scheduling, design and heat integration. The lecturer is Prof T Majozi.
Bursaries at the Hub at EE and DSM Bursaries are available for both Master’s and PhD. programmes, and only citizens of South Africa are eligible for the Hub funded bursaries. To align with the bursaries of the general SANERI programmes, the management board has approved the following full bursary levels for deserving full-time students: • R80 000 per year for a maximum period of two years (Master’s degree). • R100 000 per year for a maximum period of three years (Doctoral degrees).
It was also decided that part-time students are also eligible for the EEDSM bursary, up to 50% of the full bursary levels. Bursaries outside the EEDSM programme will need to be formulated. • Bursaries must be re-applied after every academic year. A successful renewal of the bursary is based on a satisfactory performance. 25 MEng and one PhD, of which eight are females (31%), 16 whites (61.5%), six blacks (23.5%), four asians (15%).
• Statistics of students in the EEDSM Postgraduate Programme (include all students with and without bursary support): o In 2008: 27 students in all, with four females (15%), ten blacks (37%), two asians (7%), 15 whites (56%). o In 2009: 60 students in all, ten females (17%), 23 blacks (38%), six asians (10%), 31 whites (52%). o Compared with 2008, the total number of students has increased
Females - 31%
Females - 15%
Males - 69%
Males - 85%
122% in 2009, and the percentage of white people has decreased 4% while the percentage of female has increased 2%.
Females - 17%
Males - 83%
61.5% 56% 52%
Whites
37%
Whites
38% Whites
23.5%
Blacks
Blacks 15%
Blacks Asians
7% Asians
Figure 5. Bursaries awarded to PhD students by gender and race group
Figure 6. 2008 Bursaries awarded to EEDSM Postgraduate Students
10% Asians
Figure 7. 2009 Bursaries awarded to EEDSM Postgraduate Students
SANERI ANNUAL REPORT 2009/10
PAGE 49
HUMAN CAPITAL DEVELOPMENT
Renewable Energy Hub and Spokes
The main objective of the Renewable Energy Hub and Spokes is to build human resource capacity, create and disseminate knowledge, and finally by stimulate innovation and enterprise in the field of renewable and sustainable energy. The primary objective of the Postgraduate Programme in Renewable and Sustainable Energy Studies at the University remains the training of scientists and engineers with the required technical expertise to unlock the country’s renewable energy in a sustainable manner on the other. In the 2009 academic year eight postgraduate modules were presented, staring with general modules on renewable energy technology and policies
PAGE 50
SANERI ANNUAL REPORT 2009/10
and specialised modules on solar and bioenergy as well as a module on biomass production. At total of forty-five students received bursaries from SANERI via the Programme while studying at seven different universities in South Africa in 2009.
Student and Bursaries In 2009 SANERI made an amount of R2.6 million available for postgraduate bursaries. In addition the Centre made R300 000 of the SANERI Core Grant and R340 000 from the reserves available so that the total available support for students came to R3 240 000.
• In total 45 students at seven different universities in South Africa of whom 14 (30%) are black and 11 (24%) female received bursaries from the Centre in 2009. • Most students progressed well and a 11 Masters’ students graduated in December 2009 with another 11 Masters and one doctoral student expected to graduate in March/April 2010. • An amount of R140 000 was paid to new bursary students to acquire laptop computers. • A post-doctoral researcher was partially supported by the Centre to supplement a grant of R150 000 from SANERI.
Projects completed in 2009 Project Description
Client
Amount
Feasibility study to use biomass to power 1 200 houses
Spier
R 80 0000
Feasibility study of RE in Free State agriculture
Free State Provincial Government
R 400 000
Feasibility study for new housing project using RE
BCRDA (Somerset East)
R 274 000
Facilitating wind farm development
Windlab Systems
R 25 000
Various smaller projects
Various
R 50 000
Major projects started in 2008 or 2009 and continued into 2010 Project Description
Client
Amount
Solar and wind resource mapping and training
UNEP
SWH testing and training
Austrian Development Agency
MeerKAT and SKA Solar Energy Study (with Hatch Africa)
DST and SKA Project Office
Solar energy study, roadmap and business plan
CSIR (DST)
R200 000
Assessment of wave energy converted
WAG
R171 000
Solar resource measurements
Exxaro
R575 000
R1 550 000 R850 000 R1 300 000
The Three Spokes are as follows: • Photovoltaic Research and Teaching from NMMU and University of Fort Hare. • Solar Thermal Power Generation from Stellenbosch University and University of Pretoria. • Technologies for Wind Energy from University of Cape Town and Stellenbosch University. The relationships with spokes are well established and remain healthy. If sufficient funding for the spokes will become available they will be able to contribute to RSE research.
SANERI ANNUAL REPORT 2009/10
PAGE 51
HUMAN CAPITAL DEVELOPMENT: RE HUB AND SPOKES (CONTINUED)
Spokes Programme
Solar Thermal Power Generation at University of Pretoria and Stellenbosch University In the 2009/10 year, amounted to R600 000.
funds
received
Stellenbosch University The first phase of TRNSYS modelling was completed during the year. Students attended the TREE Seminar on Concentrated Solar Power in Johannesburg. Tom Fluri presented talk on Solar Resource Mapping at CRSES discussion forum. The following articles were submitted for publication or resubmitted after corrections were made: • MScEng. Theses: Heyns, J.A., Performance characteristics of an aircooled steam condenser incorporating a hybrid (dry/wet) dephlegmator, U.S., March 2009. This work is relevant to the cooling of solar power plants especially where the water supply is limited. Papers included the following: • Fluri, TP (2008), The potential of concentrating solar power in South Africa. Submitted to Solar Energy, 2009. • Heyns, JA and Kröger, DG, Experimental investigation into the thermal-flow performance characteristics of an evaporative cooler. Submitted to ATE, 2009.
PAGE 52
SANERI ANNUAL REPORT 2009/10
Reports included the following: • Fluri, TP, Meyer, AJ, Swanepoel, R (2009) Solar Energy. In: District sustainability agriculture renewable energy audit for the Free State Province, BID/CONTRACT No. DoA/RFT 07/2008, Free State Department of Agriculture. • Fluri, TP, Gariseb, G, Meyer, AJ, Palmer, D, Van Niekerk, JL (2009) Enhancing information for renewable energy technology deployment in Brazil, China, and South Africa – Output for South Africa for Activity 1. Centre for Renewable and Sustainable Energy Studies. University of Pretoria A literature study has been completed. All experimental set-ups have been developed and designed. Structures of all CFD codes have been developed. The transitional work has been completed by the PhD student (J Olivier). Second draft of thesis is being evaluated. The work on the heat transfer and pressure drop coefficients in condensing systems has been completed. The following articles were submitted for publication or resubmitted after corrections were made:
1. SULIMAN R, LIEBENBERG L and MEYER JP; Improved flow pattern map for accurate prediction of the heat transfer coefficients during condensation of R-134a in smooth horizontal tubes and within the low-mass flux range, International Journal of Heat and Mass Transfer, Manuscript number: R-B 08 030, 5 April 2008. 2. BELLO-OCHENDE T, MEYER JP and DIRKER J; Three-dimensional multiscale plate assembly for maximum heat transfer rate density, International Journal of Heat and Mass Transfer, Manuscript number R/B08036, 31 April 2008. 3. OLIVIER JA, MEYER JP and LIEBENBERG L; Single-phase heat transfer and pressure drop inside smooth tubes for transitional flow with different inlet geometries (RP-1280), HVAC&R Research, Manuscript number RSCH-00195-2008, 11 March 2008. 4. VAN ROOYEN E, CHRISTIANS-LUPI M, LIEBENBERG L and MEYER JP; Probabilistic flow-pattern-based heat transfer correlation for condensing intermittent flow of refrigerants in smooth horizontal tubes, International Journal of Heat and Mass Transfer, Manuscript number R-B 09 017, 17 March 2009.
Solar Photovoltaic at Nelson Mandela Metropolitan University and the University of Fort Hare In the 2009/10 year, funds received amounted to R600 000. The following major outputs were completed during the year under review: • PV materials and solar cell and PV module characterisation. • PV systems evaluation and monitoring. • Concentrator Photovoltaics (CPV) cell characterisation and module design. • CPV system evaluation and monitoring. • PV outdoor characterisation. • Building Integrated Photovoltaics – BIPV. • All these activities are central to PV R&D, training and deployment of the technology.
SANERI ANNUAL REPORT 2009/10
PAGE 53
Wind Spoke at University of Cape Town and Stellenbosch University In the 2009/10 year, amounted to R600 000.
funds
received
Only a small amount of funding was used for high priority projects at the SU. The post graduate research projects completed or partly completed included axial-flux PM generator direct battery charging systems, wind-electric water pumping and radialflux air-cored wind generator technology. As explained under finances, no research assistances, or engineers or administration people have been appointed as part of the planned establishment of the Wind Spoke. There were, however, good linking and collaboration with SA industries in 2008 on wind energy projects. Of these the design and testing of a 300 kW wind generator system is an example and a highlight, on which two reports have been compiled for industry. Two Master students graduated in March 2009 on wind energy projects at the SU. One international and two national conference papers appeared on these projects. At UCT the laboratory-based wind turbine emulation system is fully operational. Wind generator performance can be fully tested with an actual wind turbine characteristic programmed into the emulator. This research was disseminated in a SAUPEC paper in January 2009.
PAGE 54
SANERI ANNUAL REPORT 2009/10
Two low cost steel-cored axial-flux PM wind generators were designed and prototyped. The generators have identical laminations stacked to form the stator teeth, which are then clamped to the stator housing. The overall cost of the machine is reduced in this manner. Performance testing is currently in progress. A small PM wind generator was successfully designed and prototyped from scrap material. A challenge relating to the course pf magnets for the machine was overcome by using magnets from scrap computer hard drives. One BSc Eng students graduated successfully and a paper on this project was presented at SAUPEC 2009. A hybrid wind/PV electric water pumping system was designed and its constituent parts were prototyped. Three BSc Eng students graduated successfully through involvement in this project. The converter topologies for this system require a more thorough investigation, which will be carried out in 2009 Appointment of engineers/research assistants in the Wind Spoke. These engineers/ assistants will run R&D projects within the Wind Spoke and will be in general responsible for collaboration and contact. Use limiting funding for high priority projects. Expansion of collaboration with SA industries, and collaboration if possible
with South African and foreign universities. Postgraduate training of engineers was also one of the outputs for the year. Research projects in wind energy at both institutions will include (not necessarily funded by the spoke): • Extension of the wind turbine emulation system to include advanced aerodynamic issues associated with a real wind turbine (furling, tower shadow and inertial energy storage, etc) and to conduct research on a maximum efficiency control strategy for PM wind generators. • Converters for the hybrid wind/PV electric water pumping system. • Fault diagnosis on wind generator systems; in particular, broken magnet and winding interturn faults will be diagnosed by means of advanced signal processing techniques. • Development and testing of a radial flux air-cored PM wind generator. • Development of a 15 kW PM gridconnected wind generator system The research topics are relevant since they address problems.
HUMAN CAPITAL DEVELOPMENT: RE HUB AND SPOKES (CONTINUED)
Chairs Programme Clean Coal Technologies at Wits University In the 2009/10 year, funds received amounted to R2 577 050. Short course/ module was developed with publications including 15 local conferences and three international conferences. International collaboration between the Chair and nine universities and organisations has introduced the latest advances and standards in clean coal technologies to South Africa. PhD and MSc post graduate programmes, Industry Continuing Education Programme, taught MSc and Graduate Diploma Engineering programmes were established during the period under review. Six research PhDs and 19 Research MSc trained with one PhD and two MSc already graduated, whilst 64% of students are previously disadvantaged individuals and of those, 43% are female.
SANERI ANNUAL REPORT 2009/10
PAGE 55
Bio-fuels Chair at Stellenbosch In the 2009/10 year, funds received amounted to R2 392 520. A partial sequence of the α-amylase was isolated from the selected Aspergillus strain by Mr. Viktor and used to optimise primers for the isolation of the complete sequence of the α-amylase. Recent results have indicated the presence of a complete α-amylase with 97% homology towards a closely related strain, which constitute a breakthrough. Current work involves the cloning of the intact gene from genomic DNA. Dr Saayman performed liquid assays to determine the activity of the Thermomyces lanuginosus glucoamylase. Preliminary results showed a temperature optimum of 70ºC at pH 5.5. Although still low, the activity levels were higher than was obtained for the Aspergillus glucoamylase. Assays performed on whole cells showed that the enzyme was indeed secreted. However, the levels of activity obtained were relatively low compared to the activity observed with the plate assays. It was observed that the α-amylase from Saccharomycopsis fibuligera had a significantly higher activity than the Lipomyces kononenkoae α-amylase. Fifty transformants of A. niger D15[LipA] and fifty of A. niger D15[LipB] has been purified by Dr Rose on plates, followed by the harvesting of spores for storage under cryo-conditions. The one hundred
transformants were cultivated for four days in rich medium for optimal lipase production. The supernatant of all transformants were lyophilised and five micrograms used for separation by SDS-PAGE. Protein species were visualised with silver staining, but did not reveal a prominent lipase species in any of the transformants tested. Similar work had recently been attempted in Aspergillus oryzae with a Rhizomucor lipase. The yield in general was also very low, with activity levels of only 2.5U/ml. [Wang, B., L. Pan, Y. Guo. 2009. Construction of heterologous gene expression system for filamentous Aspergillus oryzae. Journal of South China University of Technology (Natural Science) 37(6): 84-90]. In support of the development of new yeast strains for improved ethanol production, Mrs Trudy Jansen screened the Nietvoorbij yeast culture collection for suitable strains and identified 62 Saccharomyces cerevisiae strains with good sporulation ability for future cross-breeding. The strains exhibited similar temperature tolerance (up to 40°C) and ethanol tolerance (up to 15%), with 21 of the 62 strains showing superior fermentation vigour. Assays were performed to monitor cell growth in the presence of inhibitors. Five strains had the ability to ferment glucose in the presence of an inhibitor concentration of 25% with none of the strains showing the ability to ferment
glucose in inhibitor concentrations higher than 25%. All the strains were able to grow in a butanol concentrationof 1%. Only six of the strains where not able to grow in the presence of butanol concentrations ranging from 2 to 5%. The results obtained after screening all the strains for various characteristics will be used to select strains for mating experiments. The initial project on pyrolysis of sugarcane bagasse was successfully completed and the student has submitted the first draft of his MScEng thesis. This study looked at benchscale fast, slow and vacuum pyrolysis1. A new pyrolysis project investigating the pyrolysis of Eucalyptus grandis started in 2010. Aspen models for process modelling of biorefineries, including gasification-FT processes, together with the economic comparisons, have been completed and the first PhD as well as a MScEng. have been awarded2. Further batches of triticale and sorghum samples from the PlantBio project as well as sugarcane bagasse samples from the SASRI project were received and chemical analyses are in progress. Pretreatment work is in progress and will continue into 2010.
1. Hugo TJ, Pyrolysis of Sugarcane Bagasse, First draft of MScEng thesis submitted, Study-Leaders: Prof JH Knoetze and JF Görgens. 2. Leibbrandt NH, Techno-economic study for Sugarcane Bagasse to Liquid Biofuels in South Africa: A Comparison between Biological and Thermochemical Process Routes, PhD Dissertation, Department of Process Engineering, University of Stellenbosch, March 2010, Promoters: Prof JH Knoetze and JF Görgens. Van der Merwe AB, Evaluation of Different Process Designs for Biobutanol Production from Sugarcane Molasse, MScEng Thesis, Department of Process Engineering, University of Stellenbosch, March 2010, Study-Leaders: Prof JH Knoetze and JF Görgens.
PAGE 56
SANERI ANNUAL REPORT 2009/10
HUMAN CAPITAL DEVELOPMENT: RE HUB AND SPOKES (CONTINUED)
Pulping and xylan extraction of bamboo, Eucalyptus grandis and bagasse: Continuing with experimental work until July 2010. Statistical design of experiments is applied. A manuscript on dilute acid extraction of hemicelluloses prior to pulping of bamboo has been submitted for publication. Revisited and improved for journal publication the paper presented at the fourth International Life Cycle Management conference showing that waste-based
second generation fuel ethanol produced from sugarcane bagasse would not have the expected GHG mitigation benefits if not accompanied by energy efficiency gains.
database project, funded by Seco, the Swiss international development agency, running in BASIC countries. Completed a study of bio-methane potentials for 15 types of organic waste in the City of Cape Town.
Acted as external examiner for biofuels related PhD theses of N. Leibbrandt (Stellenbosch) and L. Luo (Leiden, NL). Noted several avenues for future work. Hosted a one week training course aimed at gearing up the E&PSE group at UCT to anchor a four year national Life Cycle inventories
Started one new Masters student (Ilhaam Dalwai) on her literature review for the project to compare merits of bio-ethanol and bio-methane from non-recyclable paper waste.
The following students bursaries were extended for 2010. Names
Degree - 2009 Race
Phumla Vena Anathi Njokweni Marlin Mert Marko Viktor
PhD (Chem Eng) III MSc (Microbiology) I MSc (Microbiology) I MSc (Microbiology) II
PDI status Gender
B B B W
F F M M
Supervisor(s)
SANERI support
JF Gรถrgens WH van Zyl, M Bloom WH van Zyl, M Bloom M Bloom, WH van Zyl
2007-2010 2009-2010 2009-2010 2009-2010 TOTAL
2010 support R 100 000 R 80 000 R 80 000 R 80 000 R 340 000
The following new candidates have been nominated and recommended by SANERI for 2010, with final confirmation from DST pending. Merit Order
Names
1 2 3 4 5
Abdul Petersen Heinrich Kroukamp Eunice Zwane Ilhaam Dalwai Paul MacIntosh
Race B W B B W
PDI status Gender M M F F M
Degree applied for
Supervisor(s)
MSc (Chem Ing) MSc (Micro) PhD (Micro) MSc (Chem. Eng), UCT MSc (Chem Ing)
JFG WHvZ, MB WHvZ HvB JHK / JFG
SANERI Bursary
TOTAL
R 80 000 R 80 000 R100 000 R 80 000 R 80 000 R420 000
Professor van Zyl Professor van Zyl participated in the SABA business meeting of 29 January 2010 at DBSA, Midrand. Prof van Zyl was nominated to the Board to constitute an Advisory Scientific Council for SABA.
A short interview (7 min) on Monitor on 22 March 2010 on the outcomes of the African Bioenergy Convention and drafting an Africa Bioenergy Resolution Biofuels, RSG was compiled.
Together with Prof Bloom, arranged the Continental African Bioenergy Convention at Stellenbosch 17-19 March 2010 as first phase of the GSB project.
Professor van Zyl is a member of Organising Committee for the Cape Biotech Forum Conference that took place 24-24 March 2010 at the Lord Charles Hotel, Somerset
West and is a member of the CHEC (Cape Higher Education Consortium) Forum for Biotechnology. At the meeting of 7 April 2010, it was decided that the committee will be reconstituted to become the Western Cape Biotechnology Forum that represent the larger Biotechnology community in the Western Cape.
SANERI ANNUAL REPORT 2009/10
PAGE 57
HUMAN CAPITAL DEVELOPMENT: RE HUB AND SPOKES (CONTINUED)
Publications • Van Wyk, N., R. den Haan and W.H. van Zyl. 2010. Heterologous production of NpCel6A from Neocallimastix patriciarum in Saccharomyces cerevisiae. Enzyme Microbial Technology (In Press). [not funded by SANERI]. • Du Plessis, L., S.H. Rose and W.H. van Zyl 2010. Exploring improved endoglucanase expression in Saccharomyces cerevisiae strains. Applied Microbiology and Biotechnology [10.1007/s00253-009-2403-z] [not funded by SANERI]. • C Nissing and H von Blottnitz. 2010. Renewable Energy for Sustainable Urban Development: Redefining the Concept of Energisation. Energy Policy, 38, pp.2179-2187. • C Nissing and H von Blottnitz. 2010. An Economic Model for Energisation and its integration into the Urban Energy Planning Process. Energy Policy, 38,pp. 2370-2378. • Stephenson, AL, H. von Blottnitz, A.C. Brent, J.S. Dennis, S.A. Scott. 2010.”The Global Warming Potential and Fossil Energy Requirements of Biodiesel Production Scenarios in South Africa”; Biomass and Bioenergy, in print.
Conference participation • Van Zyl, W.H., J.F. Görgens, J.H. Knoetze, H. von Blottnitz and M. Bloom. Biomass potential of Sub-Sahara Africa and next generation technologies to maximise bioenergy usage, (11 - 14 October 2009), Sandton, South Africa. • E. Julius and H. von Blottnitz. 2009. “Small-scale production of biodiesel from used vegetable oil: what are the quality experiences?”, S.A. Chemical Engineering Congress, 20-23 September 2009, Somerset-West (ISBN: 978-1-920355-21-0). • Den Haan, R., *D.C. la Grange, J.F. Görgens and W.H. van Zyl. 2010. Production of industrially relevant heterologous proteins in yeasts and filamentous fungi. Cape Biotechnology Forum 2010. Lord Charles Hotel (24 - 26 Mar 2010), Somerset-West, South Africa. • Viktor, M., S.H. Rose, W.H. van Zyl and M. Bloom. 2010. The expression of fungal enzymes in Saccharomyces cerevisiae for raw starch degradation. Cape Biotechnology Forum 2010. Lord Charles Hotel (24 - 26 Mar 2010), Somerset-West, South Africa.
Dissertations and Theses • Leibbrandt NH, Techno-economic study for Sugarcane Bagasse to Liquid Biofuels in South Africa: A Comparison between Biological and Thermochemical Process Routes, PhD Dissertation, Department of Process Engineering, University of Stellenbosch, March 2010, Promoters: Prof JH Knoetze and JF Görgens. • Van der Merwe AB, Evaluation of Different Process Designs for Biobutanol Production from Sugarcane Molasse, MScEng Thesis, Department of Process Engineering, University of Stellenbosch, March 2010, Study-Leaders: Prof JH Knoetze and JF Görgens. • Hugo TJ, Pyrolysis of Sugarcane Bagasse, First draft of MScEng thesis submitted, Study-Leaders: Prof JH Knoetze and JF Görgens. • Van Wyk N, Expression and characterization of exoglucanases in Saccharomyces cerevisiae. PhD Dissertation, Department of Microbiology, University of Stellenbosch, March 2010, Promoters: Prof WH van Zyl and Dr R den Haan. • PhD dissertation in preparation: AF Chimphango. • MSc theses in preparation: T Mashile.
PAGE 58
SANERI ANNUAL REPORT 2009/10
Associate Bio-fuels chair at North West University Funds Received: R1 780 800.00 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Optimised process for the production of bioethanol from Cassava. Optimised process for the production of bioethanol from sugarbeet. Optimised process for the production of bioethanol from sweet sorghum. Pretreatment and hydrolysis strategy for fermentable sugar production from waste cellulose feedstock. Yields and conversion factors for bioethanol production from different feedstock. Rate data for kinetic study of the production processes. Three Master’s dissertations (MSc). SFS process for bioethanol production. Two Master’s dissertations (one MSc and one MEng (2011). Aspen simulation of an integrated biofuels plant that incorporated a heat, mass and water integration strategy. Predictive spreadsheet to predict the economic feasibility for production of ethanol and biodiesel in a specific season based on real yield and conversion data. One Master’s dissertation (MEng). Cellulose-based extraction procedure is available. Stable gelling agent from cacti is available for use and experimentation in work package 2.2. Production route for the recovery of process water from cacti is ready for use. A formula for producing a stable ethanol gel that is comparable to commercial gels. One Master’s dissertation (MSc). Cost effective process for removal of phospholipids from crude vegetable oil. Predictive tool for predicting the composition of an isopropanol-water-oil mixture. Process for extracting only oil components from oil seeds using an isopropanol-water mixture. Liquefaction process for the production of bio-oil from a variety of organic materials. Bio-oil that can possible be co-gasified with coal for the production of synthesis gas. One Master’s dissertation (MSc). One PhD thesis (Engineering) (2011). Pretreatment strategy for cleaning grease in preparation for biodiesel production. Process for the production of biodiesel from used industrial grease. Two Master’s dissertation (MEng) (2011). One PhD thesis (Engineering) (2011). Metathesis system for value added niche market. One Master’s dissertation (MEng) (2011). MSc theses in preparation: T Mashile.
SANERI ANNUAL REPORT 2009/10
PAGE 59
SANERI Bursary Support Programme The bursary support programme is one of the key activities of human capital development, which is an important factor for a developing country. The aim of the bursary support programme is to encourage research in the energy sector by providing assistance to students wishing to undertake post graduate level of studies in a energy related field. Preference is given to students who undertake research in line with the nine thematic areas and to research driven projects rather than course work dominated studies. Preference is also given where necessary to previously disadvantaged individuals and women.
PAGE 60
SANERI ANNUAL REPORT 2009/10
Since 2006, annually, an amount of R1.5m used to be made available for this key activity. An intake of students for the academic year of 2010 could not be facilitated due to the budgetary constraints. SANERI faced a challenging 2009/2010 financial year due to its budget being reduced by R7m. Existing students were, however, supported. The excellence of South African energy research as well as the ability to compete on the international level are dependent on fostering energy research training and career opportunities for the brightest and best researchers within the energy sector. SANERI’s bursary support programme plays an integral role in achieving this.
Full time Masters students receive a bursary of R80 000 per year over a two year period. Part time students receive a bursary of R48 000 per year over a period of three years. The amount awarded for a PhD level of study is R100 000 per year on a full time basis for a period of three years. Part time PhD students receive an amount of R62 000.00 per year over a four year period. Post-doctoral students receive bursaries of R150 000 per year over a two year period on a full time basis. To date 14 students have since graduated. Since the commencement of the awarding of bursaries to students for the 2007 academic year, the students listed on the table and graph on the next page have completed their studies.
HUMAN CAPITAL DEVELOPMENT (CONTINUED) List of students who have completed their studies Surnames Britten
Names Mark
University University of Cape Town
Davids Fredericks
Wafeeq Achmat
Harcharun Matthews
Ashwin Mark
Moetlediwa
Kegomoditswe
University of Western Cape Cape Penninsula University of Technology University of Kwazulu Natal Cape Penninsula University of Technology University of North West
O’ Connell
Daniel
Smith Goyns
Mia Phillip
Gxasheka
Andile
Mamphweli
Sampson
Mazomba Baloyi Catherine
Ntsikelelo Thabo Victor Shawn Quinton
Julius Letete Conradie
Leyland Craig Thapelo Clifford Phillipus
University of Fort Hare University of Witwatersrand Cape Penninsula University of Technology University of Cape Town University of Cape Town University of Stellenbosch
Kotsedi
Lebogang
University of Western Cape
Linganiso
Linda Zikhona
University of Witwatersrand
Radue
Chantelle
Thopil Sibonyoni Bode
George Alex Johannes Christiaan
Nelson Mandela Metropolitan University University of Pretoria University of Western Cape University of Witwatersrand
Botha Lombard
Alwyn Andre
University of Stellenbosch University of Stellenbosch
Fluri Radue
Thomas Chantelle
University of Stellenbosch Nelson Mandela Metropolitan University
Cape Penninsula University of Technology University of Johannesburg University of Johannesburg Nelson Mandela Metropolitan University University of Fort Hare
Area of Research Permanent Magnet Direct current motor control system for an electric car. Development of a technique for consolidated carbon nanotubes. Design of an electronic braking system and synchronous rectifier for implementation in wind generators. Mine ventilation fan system optimisation from an energy perspective. Development of a cost effective controller for electric bicycles. The impact of energy usage on the environment in rural North West Province of South Africa: A case study of Khaukhwe village in Taung Local Municipality. Design of a watt hour motor for alternative energy systems. The agricultural implications of biofuels production in South Africa. Road transport energy demand and emission in Johannesburg based on real world driving cycles. The optimal characterisation of PV devices using various laser beams scanning devices. Implementation, evaluation and performance monitoring of biomass gasifier. Optimisation of biodiesel and bio-ethanol production by biocatalyst. Synthesis and optimisation of the Wits Microbrewery. Effective Demand Side Management through Intelligent Home Automation. The risk of engine failure associated with using substandard biodiesel. Mathematical modelling of bioenergy supply systems. Investigating the effect of distorted inflow on the performance of axial flow fans. Fabrication of hydrogenated amorphous silicon solar cells from hot wire chemical vapour deposition using the aluminium induced crystallisation technique. Microwave induced solid state interactions for the synthesis of Fischer – Tropsch catalysts. Analysis of copper indium gallium diselenide (CIGS) photovoltaic device characteristics and service life. Externalities of energy in South Africa – An EXTERN – E approach. Nano – structured light weight hydrogen storage materials. A techno – economic feasibility study on the use of concentrating solar power generation in urban and industrial environments in Gauteng. An investigation into nano-structured photovoltaic cells. Design, implementation and testing of a low cost grid connected to a sub 10 Kw Micro Hydro Power System. Solar Thermal Power Generation. Analysis of degradation in thin forms photovoltaic modules.
42% 35% Females - 8%
Males - 92%
Whites Blacks 15% 8% Coloureds
Asians
Figure 8. STUDENTS WHO HAVE SUBMITTED THEIR THESES BASED ON GENDER AND RACE PROFILE SANERI ANNUAL REPORT 2009/10
PAGE 61
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2010
PAGE 62
SANERI ANNUAL REPORT 2009/10
INDEX The reports and statements set out below comprise the annual report presented to the shareholder:
Page
Report of the Independent Auditors
64 – 65
Statement on Corporate Governance
66 – 67
Performance against Objectives
68 – 70
Report of the Board Audit and Risk Management Committee
71
Directors’ Report
72 – 75
Materiality and Significant Framework
76
Statement of Financial Position
77
Statement of Comprehensive Income
78
Statement of Changes in Equity
79
Statement of Cash Flows
80
Accounting Policies
81 – 87
Notes to the Annual Financial Statement
88 – 102
The following supplementary information does not form part of the annual report and is unaudited: Detailed Income Statement
103
SANERI ANNUAL REPORT 2009/10
PAGE 63
REPORT ON THE FINANCIAL STATEMENTS Introduction I have audited the accompanying financial statements of the South African National Energy Research Institute (Proprietary) Limited, which comprise the statement of financial position as at 31 March 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 72 to 102.
Accounting authority’s responsibility for the financial statements The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and the Companies Act of South Africa, 1973 (Act No. 61 of 1973). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor-General’s responsibility As required by section 188 of the Constitution of South Africa and section 4 of the Public Audit Act of South Africa, my responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing and General Notice 1570 of 2009 issued in Government Gazette 32758 of 27 November 2009. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion In my opinion, these financial statements present fairly, in all material respects, the financial position of the South African National Energy Research Institute (Pty) Ltd as at 31 March 2010, and its financial performance and its cash flows for the year then ended, in accordance with the South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the PFMA and the Companies Act of South Africa.
Emphasis of matter We draw attention to the matter(s) below. Our opinion is not modified in respect of these matters:
Restatement of corresponding figures As disclosed in note 27 to the financial statements, the corresponding figures for 31 March 2009 have been restated as a result of errors discovered during 2010 in the financial statements of the South African National Energy Research Institute (Pty) Ltd at, and for the year ended, 31 March 2009.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In terms of the PAA of South Africa and General notice 1570 of 2009, issued in Government Gazette No. 32758 of 27 November 2009 we include below our findings on the report on predetermined objectives, compliance with the PFMA, Companies Act and financial management (internal control).
PAGE 64
SANERI ANNUAL REPORT 2009/10
Findings
Predetermined objectives • Usefulness of information
The following criteria were used to assess the usefulness of the planned and reported performance: • Consistency: Has the entity reported on its performance with regard to its objectives, indicators and targets in its approved corporate plan, ie. are the objectives, indicators and targets consistent between planning and reporting documents?
• Relevance: Is there a clear and logical link between the objectives, outcomes, outputs, indicators and performance targets?
• Measurability: Are objectives made measurable by means of indicators and targets? Are indicators well defined and verifiable, and are targets specific, measurable, and time bound?
The following audit findings relate to the above criteria:
Presentation of actual performance results in the quarterly reports and annual report Performance results, for the selected objectives, reported on in the quarterly reports and the annual report are not verifiable.
Compliance with laws and regulations No matters to report.
INTERNAL CONTROL We considered internal control relevant to our audit of the financial statements and the report on predetermined objectives and compliance with the PFMA and Companies Act but not for the purposes of expressing an opinion on the effectiveness of internal control. The matters reported below are limited to the deficiencies identified during the audit.
Financial and performance management Sufficient appropriate audit evidence with regard to the selected reported performance information could not be obtained, as the information system used for generating performance information was not appropriate to facilitate the preparation of accurate and complete actual performance information.
Pretoria 31 July 2010
REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION OF THE SOUTH AFRICAN NATIONAL ENERGY RESEARCH INSTITUTE (PROPRIETARY) LIMITED FOR THE YEAR ENDED 31 MARCH 2010 (continued) SANERI ANNUAL REPORT 2009/10
PAGE 65
1. INTRODUCTION South African National Energy Research Institute (Proprietary) Limited (SANERI) ensures that its processes and practices are reviewed on an ongoing basis in order to ensure adherence to good corporate governance practices, which are continually benchmarked against best market practices.
2. COMPLIANCE The board of directors believe that the entity endorses the principles as set out in the Protocol on Corporate Governance, and where applicable, the King Report on Corporate Governance for South Africa 2009 (King II) and have endeavoured to comply with the principles incorporated in the Code of Corporate Practices and Conduct and the Public Finance Management Act (PFMA). The entity has a formalised system of corporate governance as set out below.
3. GOVERNING BODIES Board of directors SANERI has a unitary board structure made up of executive and nonexecutive directors, appointed by the shareholder. The Board of directors (the Board) meets at least once every quarter, and executive managers attend by invitation. The board charges executive management with regard to the day-to-day running of business, with the Board addressing a range of key issues to ensure that it retains the strategic direction of, and proper control over, the entity. The nonexecutive directors are appointed on a fixed term. The offices of the Chairperson and Chief Executive Officer are separated. In accordance with the Public Finance Management Act (Act No 1 of 1999) the Board is the accounting authority of the entity. In keeping with the recommendations of the King Report, the Board adopted a board charter which sets out the role of the Board as follows. The Board’s primary responsibilities include the appointment of the Chief Executive Officer, determining the entity’s objectives and values and giving strategic direction to the entity, taking effective and appropriate steps to ensure that key risk areas and key performance indicators of the entity’s business are identified, monitoring the performance of the entity against agreed objectives, advising on significant financial matters and reviewing the performance of executive management against defined objectives and applicable industry standards, as well as: • Approving key policies, investments, risk management and relevant transactions that exceed managements’ levels of authority; • Reviewing and approving the entity’s strategy, objectives, and plans; • Considering and approving annual financial statements and submissions to the shareholder; • Ensuring adherence to good corporate governance and ethics; • Reviewing effectiveness of controls.
Company secretary The Company Secretary provides the board of directors with guidance and advice on matters of business ethics and good governance, as well as on the nature and extent of their duties and responsibilities and how such duties and responsibilities should be properly discharged. Each of the Directors has unrestricted access to the advise and services of the Company Secretary, entity information, and is entitled to seek independent professional advice, at the entity’s expense in pursuance of their duties as a director.
Board audit and risk management committee The board audit and risk management committee consists of Non-executive members appointed by the board of directors. The board audit and risk management committee meets at least four times per year and is chaired by an independent nonexecutive member who is not the Chairperson of the board. The Auditor General of South Africa, and Chief Audit Executive have unrestricted access to the committee and attend board audit and risk management committee meetings. Appropriate executive managers, including those responsible for finance and internal audit attend these meetings by invitation. The board audit and risk management committee reviews the adequacy and effectiveness of internal controls of the entity with special reference to the findings of both internal and external auditors. Other areas covered include the review of important accounting and control issues, material pending litigation, specific disclosures in the annual financial statements, and a review of the performance of the Internal Audit department.
STATEMENT ON CORPORATE GOVERNANCE PAGE 66
SANERI ANNUAL REPORT 2009/10
4. MATERIALITY AND SIGNIFICANT FRAMEWORK A materiality and significant framework is in place. Its purpose is to regulate disclosure of material facts to the Minister of Energy, disclosure in the entity annual financial statements and approval from the Minister of Energy for participation in certain transactions.
5. DIRECTORS’ RESPONSIBILITY FOR THE ANNUAL FINANCIAL STATEMENTS The directors of the entity are responsible for the entity’s annual financial statements and other information presented in the annual financial statements. The Auditor General of South Africa is responsible for performing an independent audit of the annual financial statements. The annual financial statements and notes thereto are prepared in accordance with South African Statements of Generally Accepted Accounting Practice (GAAP). Accounting policies are consistently applied except where otherwise stated, in which case full disclosure of changes is made. The directors believe that the entity will continue as a going concern in the year ahead.
6. INTERNAL AUDIT South African National Energy Research Institute (Proprietary) Limited use the service of the CEF Group internal audit function that has the support and cooperation of both the board and management. The internal audit function has a written terms of reference, approved by the board of directors annually. The internal audit function reports functionally to the board audit and risk management committee. The internal audit function carries out its work in terms of an approved internal work plan based on the risk framework of the company. The annual work plan is approved by the board audit and risk management committee. The Chief Audit Executive has full access to the chairpersons of the board of directors and of the board audit and risk management committee. The key responsibilities of internal audit is to the board, its committees, in discharging its governance responsibilities and to perform the following functions: • Evaluating the company’s governance processes including ethics; • Performing an objective assessment of the effectiveness of risk management and internal control framework; • Systematically analysing and evaluating business processes and associated controls; and • Providing a source of information, as appropriate, regarding instances of fraud, corruption, unethical behaviour and irregularities. The internal audit function adheres to the Institute of Internal Auditors’ standards for Professional Practice of Internal Auditing and Code of Ethics. The Chief Audit Executive has developed and maintained a quality assurance and improvement program. The internal audit function is subjected to an external quality review at least every five years, the last review was conducted during 2007 and the evaluation result was “general conformance”, which is the highest level of conformance. SANERI has developed a Risk Management and Fraud Prevention Plan to ensure strict compliance with PFMA and other legislative and regulatory instruments. Annual Risk Management and Fraud Prevention workshops serve to maintain awareness of possible risk areas to ensure corrective action is taken where required. A WhistleBlowers hotline is made available to all staff and is an effective means of reporting irregular or unlawful activity anonymously. While there have been no incidents reported via the WhisteBlowers number, the service is well publicised and staff are comfortable that they can use the service without fear of victimisation.
SANERI ANNUAL REPORT 2009/10
PAGE 67
Note
Objective
Target
Weight
Target
Achieved
SANERI funded research projects’ findings delivered at two local and two international conferences.
5
100
100
Four publications of SANERI funded projects published in international peer reviewed academic journals.
5
100
100
Complete draft carbon storage atlas submitted to the project steering committee.
3
100
100
Centre for Carbon Capture and Storage operationalised.
2
100
100
A framework for the development of R&D gaps in the South African Coal Roadmap developed.
2
100
100
50% of wind atlas developed.
3
100
75
Construction and commissioning of the pyrolysis reactor.
2
100
100
A multifeed stock reactor for biofuels designed and constructed.
2
100
75
Solid state transformer 50% developed.
3
100
100
Jointly funded research projects with industry or international organisations.
24 million rand external funding for SANERI flagship projects secured from international organisations.
10
100
100
Informational repository for energy research outputs.
SANERI’s information management system operational.
5
100
80
Facilitation and coordination of the demonstration for SA’s hydrogen and Green Transport Programmes.
This activity removed due to instruction from DST, approved by CEF Board 3 December 2009.
0
100
100
To develop human capacity and invest in relevant energy Research and Development Indicator Increase South Africa’s research outputs.
Contribution of SANERI’s flagship projects to knowledge in the energy sector.
1
2
3
PERFORMANCE AGAINST OBJECTIVES PAGE 68
SANERI ANNUAL REPORT 2009/10
Note
Objective
Target
Weight
Target
Achieved
Oversight and governance of Chairs, Centres and Hubs of Energy Research.
All Chairs, Centres and Hubs to have management committees in place.
10
100
100
Bursaries awarded.
>75% of Budget for bursaries allocated.
10
100
100
Strengthening of alliances with other Public Interest Energy Research & Development centres.
At least two new research and demonstration projects initiated with another Public Interest Energy Research & Development centre.
5
100
100
Contribution of SANERI’s flagship projects to knowledge in the energy sector.
Development of the Energy Data and Modelling System for Johannesburg, Ekurhuleni and Tshwane completed.
3
100
100
Percentage overheads/administration out of total funds required.
Overheads = 20% of budget.
10
100
54
Percentage BEE procurement (capital equipment, consumables and nonuniversity research contractors).
Minimum of 25% of nonresearch services, consumables budget spent on entities with > 75% BBBEE status.
5
100
100
Staffing of the Institute.
> 75% Approved and budgeted posts for 2009/10 filled.
5
100
100
Funds spent according to approved budget guidelines.
> 90% Funds used according to approved budget.
10
100
100
To manage the energy business for the benefit of all South Africans Indicator 4
SANERI ANNUAL REPORT 2009/10
PAGE 69
Reasons for variances: 1. Target:50% of Wind Atlas Developed. Delays were experienced in the construction of the mast as the EIA’s were yet to be approved. All ten sites are now approved and construction is underway. As soon as they are operational, the models can be verified with measured data . 2. Target: A multifeed stock reactor for Biofuels designed and constructed. The steamgun is being installed and commissioned. The pace of progress on the development of this component means that it is unlikely that substantial progress will be made in the next twelve to eighteen months, due to the lack of capacity and funding. 3. Target: SANERI’s information management system operational. The RIMS system is complete and installed but the system has not been tested by senior managers and signed off for audit purposes. The system was complete and installed according to specifications given to the suppliers. There are, however, enhancements that were requested but due to a decrease in SANERI funding by R7 million, it could not be carried out, hence the 100% target was not achieved. The enhancements are scheduled to be completed in the 2010/2011 financial year. 4. Target: Overheads = 20% of budget. This target has its origins in the Department of Science and Technology and was put in place when SANERI was operationalised. In the first year of SANERI’s operations it was possible to achieve this target. It has since then become impossible to achieve for the following reasons: • SANERI has filled all funded and approved posts. • Employee costs as well as the costs of goods and services increased from the last period. • Employee costs for the Working for Energy programme were incurred by SANERI. • SANERI incurred travel and refreshment costs on behalf of NEEA as they did not have a budget. • Costs for the Green Transport Programme were also incurred as the DST withdrew their funding.
PERFORMANCE AGAINST OBJECTIVES (continued) PAGE 70
SANERI ANNUAL REPORT 2009/10
1. REPORT OF THE BOARD AUDIT AND RISK MANAGEMENT COMMITTEE We are pleased to present our report for the financial year ended 31 March 2010.
2. BOARD AUDIT AND RISK MANAGEMENT COMMITTEE MEMBERS AND ATTENDANCE The committee consists of the members listed hereunder and should meet at least four times per annum as per its approved terms of reference. During the current year five meetings were held: Name of member Mr VG Magan Mr D Hensman Ms A Thomani Ms M Nyathi
Number of meetings attended 5 4 3 5
3. BOARD AUDIT AND RISK MANAGEMENT COMMITTEE RESPONSIBILITY The committee reports that it has complied with its responsibilities arising from section 38 (1)(a) of the Public Finance Management Act (PFMA) and Treasury Regulation 3.1. The committee also reports that it has adopted appropriate formal terms of reference as its charter, has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.
4. THE EFFECTIVENESS OF INTERNAL CONTROL The system of controls is designed to provide cost effective assurance that assets are safeguarded and that liabilities and working capital are efficiently managed. In line with the PFMA and the King II report on Corporate Governance requirements, internal audit provides the committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested enhancements to the controls and processes. From the various reports of the internal audit department, the audit report on the annual financial statements both any qualification and/or the emphasis of matter, and the management letter of the Auditor-General of South Africa, it was noted that no significant or material non compliance with prescribed policies and procedures have been reported. Accordingly, we can report that the system of internal control for the period under review was efficient and effective.
5. THE QUALITY OF YEAR IN MANAGEMENT AND QUARTERLY REPORTS SUBMITTED IN TERMS OF THE PFMA The committee is satisfied with the content and quality of monthly and quarterly reports prepared and issued by the Chief Executive Officer during the year under review.
6. EVALUATION OF ANNUAL FINANCIAL STATEMENTS The committee has: • Reviewed and discussed the audited annual financial statements to be included in the annual report, with the Auditor General of South Africa and the Chief Executive Officer; • Reviewed the Auditor-General of South Africa’s management letter and management’s response thereto; • Reviewed changes in accounting policies and procedures • Reviewed significant adjustments resulting from the audit. The committee concurs and accepts the Auditor-General of South Africa’s conclusions on the annual financial statements, and is of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General of South Africa.
Mr VG Magan Chairperson of the Board Audit and Risk Management Committee 23 June 2010 Board Audit Committee members: Mr D Hensman Ms M Nyathi Ms A Thomani
REPORT OF THE BOARD AUDIT AND RISK MANAGEMENT COMMITTEE SANERI ANNUAL REPORT 2009/10
PAGE 71
The directors present their Directors’ Report that forms part of the audited annual financial statements for the entity for the year ended 31 March 2010. South African National Energy Research Institute (Proprietary) Limited is incorporated as a private entity in South Africa in terms of the Companies Act, 1973, as amended, and is listed as a national public entity in schedule 2 of the Public Finance Management Act, 1999, as amended. The board of directors acts as the accounting authority in terms of the PFMA.
1. DIRECTORS The directors of the company during the year and to the date of this report are as follows: Name
Appointed
Mr MB Damane
1 April 2006
Ms N Magubane
1 April 2006
Dr C Cooper
1 April 2006
Mr J Marriott
1 April 2006
Ms M Pyoos
1 April 2006
Mr K Nassiep
1 April 2006
Mr D Mahuma (Alternate to Mr T Maqubela)
1 July 2009
Mr I Patel (Alternate to Ms M Pyoos)
25 October 2006
Ms N Mlonzi Mr T Maqubela
1 April 2006
Resigned 1 July 2009
Attendance at meetings
2009/04/24
2009/06/30
2009/10/15
2010/01/28
Mr MB Damane
N
Y
Y
Y
Ms N Magubane
N
N
N/A
N/A
Dr C Cooper
Y
Y
Y
Y
Ms N Mlonzi
N
N
Y
Y
Mr J Marriott
Y
Y
Y
Y
Ms M Pyoos
N
N
N
N
Mr K Nassiep
Y
Y
Y
Y
Mr I Patel (Alternate to Ms M Pyoos)
N
N
N
N
Mr D Mahuma
N/A
N/A
Y
Y
Y
=
Attended meeting
DIRECTORS’ REPORT PAGE 72
SANERI ANNUAL REPORT 2009/10
Board audit and risk management committee The sub-committee consists of the following Non-executive members: Name
Appointed
Mr VG Magan
Non-executive Chairperson
1 January 2008
Mr D Hensman
Non-executive
1 January 2008
Ms A Thomani
Non-executive
1 January 2008
Ms M Nyathi
Non-executive
1 January 2008
Attendance at meetings
2009/04/21
2009/06/25
2009/10/07
2010/01/25
2010/01/27
Mr VG Magan
Y
Y
Y
Y
Y
Mr D Hensman
Y
N
Y
Y
Y
Ms A Thomani
N
Y
Y
Y
N
Ms M Nyathi
Y
Y
Y
Y
Y
Y N
= =
Attended meeting Apology received
All of these members are independent Non-executive members. N = Apology received N/A = Not a member at the date of meeting The board audit and risk management committee meets a minimum of four occasions per annum. The Chief Audit Executive, the external auditors and such members of management as are deemed necessary also attend these meetings. The board audit and risk management committee is responsible for the internal controls and risk management of the entity delegated to it by the board of directors. In order to meet its requirements it reviews the findings of both internal and external auditors. In addition it reviews important accounting issues, material pending litigation if applicable, entity insurance, risk management and disclosure requirements in the annual financial statements. The responsibilities of this subcommittee of the board of directors are set out in the report of the board audit and risk management committee which forms part of these annual financial statements.
2. COMPANY SECRETARY The secretary of the company is CEF (Proprietary) Limited and the business and postal addresses are as follows: Business address Block C, Upper Grayston Office Park 152 Ann Crescent Strathavon Sandton 2199 Postal address P O Box 786141 Sandton 2146
3. NATURE OF BUSINESS Main business and operations The current and future business of SANERI is to accomplish the following through research and development: • Cost effective and efficient energy generation, transformation, transport, end use and decision support technologies • Energy technology innovation;
SANERI ANNUAL REPORT 2009/10
PAGE 73
• Sustainable energy development and utilisation of energy resources; • Improvement of the quality of life of the people of South Africa; • Promotion of knowledge development and training of researchers • Commercialisation of energy technologies resulting from its research, development and innovation programmes.
Principal activities of the entity The principal activity of SANERI are as outlined below: • undertake research and technology development; • register patents and intellectual property in its name resulting from its activities; • issue licenses to other persons to use its patents and intellectual property; • utilise its technological expertise in its possession or make such expertise specifically or generally available • provide bursaries and educational loans for the development of knowledge in the energy sector; • commission energy related research, development and innovation programmes in any other research institutions; • establish facilities for the collection and dissemination of information in connection with research, development and innovation; • establish and control facilities in those fields of research that the Board may from time to time approve; • promote cooperation between South Africa and other countries in matters relating to energy research, development and innovation; • undertake any other technology development related activity as directed by the Minister of Minerals and Energy in concurrence with the Minister of Science and Technology.
4. REVIEW OF FINANCIAL POSITION The entity’s business and operations and the results thereof are clearly reflected in the attached financial statements. No material fact or circumstance has occurred between the accounting date and the date of this report. The grants decreased by R15 million as a result of the decline in budget allocations across the wide spectrum of government. This impacted on the operations for the year. Further details are listed in note 11. The was no major change in the nature of the business. There was no significant increase in property, plant and equipment during the financial year ended 31 March 2010.
5. AUTHORISED AND ISSUED SHARE CAPITAL There were no changes in the authorised or issued share capital of the entity during the year under review.
6. DIVIDENDS No dividends were declared or paid to the shareholders during the year.
7. GOING CONCERN The company incurred a net loss for the year ended 31 March 2010 of R4,8 million (2009: R7,9 million) and as of that date the company’s total liabilities exceeded its total assets by R10,0 million (2009: R5,2 million). The entity continues to enjoy the support of the holding company, CEF (Proprietary) Limited. Accordingly, the financial statements do not include any adjustments, relating to the recoverability and classification of assets or to the amounts and classification of liabilities that might be necessary if the entity is unable to continue as a going concern. The directors believe that the entity will continue as a going concern in the year ahead.
8. REVIEW OF OPERATIONS SANERI has five main research and human capital development programmes being: • The SANERI Bursary Support Programme • The SANERI Energy Research Programme • The Hub and Spokes Programme • The Chairs of Energy Research Programme
PAGE 74
SANERI ANNUAL REPORT 2009/10
• The Green Transport Programme Under these programmes, the highlights are: • No new students were supported in the 2009/10 financial year due to financial constraints. For the past three years since bursaries have been awarded to post graduate students, a total of eighty five (85) students have been supported. Forty seven (47) Masters students, twenty seven (27) PhD students and two (2) post doctoral students received bursaries. The bursary amount for Masters students is R80 000 per year whilst PhD students receive an amount of R100 000 per year. Post doctoral students receive a bursary of R150 000 per year. To date, fourteen (14) students have graduated. • With the approval of the SANERI Board, SANERI established the Centre for Carbon Capture and Storage. The establishment of the Centre is aimed at reducing South Africa’s greenhouse gas emissions. The Centre is a private /international/public partnership financed from local industry, SANERI, Government and international sources. A Charter has been signed by several parties who have pledged their support to the research and development that will be conducted by the Centre for the next four years. • The Renewable Energy and Energy Efficiency Partnership (REEEP) is an international NGO with an objective to reduce policy, regulatory and financial barriers for the uptake of renewable energy and energy efficiency technologies. The REEEP head office is in Vienna. REEEP objectives and programmes are run through networks coordinated by the international office together with eight regional secretariats and two local focal points. In September 2008, SANERI was awarded the bid to host the South African Regional Office with effect from 1 October 2008 to 31 May 2009. The award may be renewed for a full year thereafter. The host function entailed that SANERI coordinate the REEEP activities in South Africa, Botswana, Lesotho, Malawi, Mozambique, Swaziland and Angola. REEEP provided 35 000 euros for the regional REEEP activities. • The Renewable Energy and Energy Efficiency Partnership (REEEP) is an international NGO with an objective to reduce policy, regulatory and financial barriers for the uptake of renewable energy and energy efficiency technologies. The REEEP head office is situated in Vienna. REEEP objectives and programmes are run through networks coordinated by the international office together with eight regional secretariats and two local focal points. REEEPSA has embarked on a RE awareness raising projects considering the lack of knowledge on RE and its potential contribution to economies in SADC amongst legislators, policymakers and regulators. • With the approval of the SANERI Board, SANERI established the Green Transport Centre which is situated in Midrand. The objectives behind the establishment of this centre include: 1. Being an agent of change and pioneering introduction of alternative fuels into the South African transport sector 2. Being a one stop facility for: • information sharing related to alternative fuels involving technology vendors, vehicle manufacturers, researchers and policy developers • The public to get firsthand experience of the use of alternatives, see refuelling, experience and “feel” driving, understand operational and learn about the benefits. 3. Facilitation of partnerships 4. Providing access to reliable data 5. Facilitating access to local funders/international donors/funders
9. POST BALANCE SHEET EVENTS The directors are not aware of any matters or circumstances arising since the end of the financial year, which significantly affect the financial position of the entity or the results of the operations. SANERI will most likely be absorbed into a new Public Entity, SANEDI, in the course of the 2010/11 year. Since the new entity will be a Schedule 3A Entity under the PFMA, SANERI will be deregistered as a company. SANERI will be retained as a division of SANEDI but will have no legal status as an entity.
10. SHAREHOLDER The entity is a wholly owned subsidiary of CEF (Proprietary) Limited. The annual report set out on pages 72 - 102, which have been prepared on the going concern basis, were approved by the board of directors on 29 June 2010 and were signed on its behalf by:
Mr MB Damane (Chairman)
Mr K Nassiep (CEO) Sandton 29 June 2010
DIRECTORS’ REPORT (continued) SANERI ANNUAL REPORT 2009/10
PAGE 75
MATERIALITY AND SIGNIFICANT FRAMEWORK For purposes of materiality (as per PFMA sections 50(1) and 55 (2) and significant as per PFMA sections 54(2) framework the following acceptable levels were agreed with the Executive Authority in consultation with the Auditor General: • Section 50(1) Material facts to be disclosed to the Minister of Energy are considered to be facts that may influence the decisions or actions of the Stakeholders of the Public Entity or the Group of companies. • Section 55(2) Disclosure of material losses in the annual financial statements will be for all losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the year. • Section 54(2) The criteria to determine the level of significance was based upon the guiding principles as set out in the “Practice Note on applications under Section 54 of the PFMA no.1 of 1999 (as amended) by Public Entities” as published by National Treasury during 2006 subject to adjustments for any Section 54(4) exemptions. The significant Rand level was determined as being 2% of Total Assets as follows:
APPROVAL LEVELS IN TERMS OF SECTION 54 SANERI’s board approval levels
< R0,5 million
Approval level of the CEF Board in terms of subsidiary companies
> R0,5 million and < R640 million
Obtain DME approval and inform National Treasury via the top-most holding company
> R640 million
MATERIALITY AND SIGNIFICANT FRAMEWORK PAGE 76
SANERI ANNUAL REPORT 2009/10
Note(s)
2010 R ‘000
2009 R ‘000
323 495 – 818
296 310 201 807
579 2 413 21 302 24 294 25 112
579 2 202 29 952 32 733 33
– – (9 974) (9 974)
– – (5 207) (5 207)
12 479 17 871 3 636 1 100 35 086 25 112
16 379 19 827 1 143 1 398 38 747 33 540
Assets Non-current assets Property, plant and equipment 2 Intangible assets 3 Deferred tax 4
Current assets Current tax receivable 5 Trade and other receivables 6 Cash and cash equivalents 7 Total assets 540 Equity and liabilities Equity Share capital 8 Reserves Accumulated loss Liabilities Current liabilities Third party funds 9 Trade and other payables 10 Deferred income 11 Provisions 12 Total equity and liabilities
STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2010 SANERI ANNUAL REPORT 2009/10
PAGE 77
Note(s)
2010 R ‘000
2009 R ‘000
32 500 (37 523)
31 077 (41 504)
13 15 16
(5 023) 1 853 (1 224)
(10 427) 2 847
(Loss) before taxation Taxation 5
(4 394) (373)
(7 865) –
(Loss) for the year Other comprehensive income Total comprehensive (loss)
(4 767) – (4 767)
(7 865) – (7 865)
Grant income 13 Operating expenses Operating loss Investment income Finance costs
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH PAGE 78
SANERI ANNUAL REPORT 2009/10
(285)
Share capital R ‘000
Accumulated loss R ‘000
Total equity R ‘000
Balance at 1 April 2008 Changes in equity Total comprehensive loss for the year
–
2 658
2 658
–
(7 865)
Total changes
–
(7 865)
(7 865)
Balance at 1 April 2009 Changes in equity Total comprehensive loss for the year
–
(5 207)
(5 207)
–
(4 767)
(4767)
Total changes Balance at 31 March 2010 Note(s)
– – 8
(4 767) (9 974)
(9974)
(7865)
(4 767)
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH SANERI ANNUAL REPORT 2009/10
PAGE 79
Note(s)
2010 R ‘000
2009 R ‘000
17 18
32 289 (36 738)
28 639 (37 620)
Cash utilised by operations 19 Interest income Finance costs Tax paid 20 Net cash from operating activities
(4 449) 1 853 (1 224) (172) (3 992)
(8 981) 2 847 (285) (1 437) (7 856)
Purchase of property, plant and equipment 2 Sale of property, plant and equipment 2 Purchase of other intangible assets 3 Net cash from investing activities Cash flows from financing activities
(220) – (539) (759)
(86) 16 (63)
Repayment of third party funds Net cash from financing activities
(3 899) (3 899)
16 379 16 379
Cash and cash equivalents movement for the year Cash and cash equivalents at the beginning of the year Cash and cash equivalents at end of the year 7
(8 650) 29 952 21 302
8 390 21 562 29952
Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees
Cash flows from investing activities
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 2010 PAGE 80
SANERI ANNUAL REPORT 2009/10
(133)
1. PRESENTATION OF ANNUAL REPORT 1.1 Basis of preparation Accounting Framework The annual financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice, and the Companies Act of South Africa. The annual financial statements are prepared on the historical cost basis. This annual financial statements are presented in South African Rands. Rounding is to the nearest Rand in thousands.
1.2 Property, plant and equipment Property, plant and equipment represents tangible items that are held for use in the production or supply of goods or services, or for administrative purposes and are expected to be used during more than one period. Carrying amounts All property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost Cost includes all costs directly attributable to bringing the assets to working condition for their intended use. Improvements are capitalised. Maintenance, repairs and renewals which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Disposals Gains or losses on disposal of property, plant and equipment are determined by reference to their carrying amount. On disposal of revalued assets, amounts in the revaluation reserve relating to that asset are transferred to retained earnings Depreciation Depreciation is charged so as to write off the depreciable amount of the assets over their estimated useful lives to estimated residual values, using the straight line method to write off the cost of each asset that reflects the pattern in which the assetâ&#x20AC;&#x2122;s future economic benefits are expected to be consumed by the entity. Where significant parts of an item have different useful lives to the item itself, these parts are depreciated over their estimated useful lives. The useful life of the assets are reviewed annually. The following methods and rates were used during the year to depreciate property, plant and equipment to estimated residual values: Item Average useful life Furniture, fittings and communication equipment 5-10 years Computer equipment 3 years Improvements to leased premises are written off over the period of the lease. The methods of depreciation, useful lives and residual values are reviewed annually.
ACCOUNTING POLICIES SANERI ANNUAL REPORT 2009/10
PAGE 81
1.3 Comparative figures Comparative figures are restated in the event of a change in accounting policy or prior period error.
1.4 Intangible assets The amortisation period and the amortisation method for intangible assets are reviewed annually. An intangible asset is an identifiable nonmonetary asset without physical substance. Intangible assets are initially recognised at cost if acquired separately or internally generated or at fair value if acquired as part of a business combination. If assessed as having an indefinite useful life, the intangible asset is not amortised but tested for impairment annually and impaired if necessary. If assessed as having a finite useful life, it is amortised over its useful life using a straight line basis and tested for impairment if there is an indication that it may be impaired. Research costs are recognised in profit or loss when incurred. Development costs are capitalised only if they result in an asset that can be identified, it is probable that the asset will generate future economic benefits and the development cost can be reliably measured. Otherwise it is recognised in profit or loss. Amortisation shall begin when the asset is available for use and shall cease at the earlier of the date that the asset is classified as held for sale or the date that the asset is derecognised. An intangible asset shall be derecognised: â&#x20AC;˘ On disposal; or â&#x20AC;˘ When no future economic benefits are expected from its use or disposal. The gain or loss arising from derecognition from an intangible asset shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset. It shall be recognised in profit or loss when the asset is derecognised. Gains shall not be classified as revenue. Amortisation is recognised in profit and loss, on a straight line basis, to their residual values as follows: Item Useful life Computer software 2 years
1.5 Post-balance sheet events Recognised amounts in the annual financial statements are adjusted to reflect events arising after the balance sheet date that provide evidence of conditions that existed at the balance sheet date. Events after the balance sheet that are indicative of conditions that arose after the balance sheet date are dealt with by way of a note.
1.6 Leases Classification Leases are classified as operating leases at the inception of the lease. The entity does not have any finance leases. Operating lease Operating lease payments are recognised in profit or loss on a straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern of the userâ&#x20AC;&#x2122;s benefit. Contingent rentals are recognised in profit or loss as they accrue.
PAGE 82
SANERI ANNUAL REPORT 2009/10
1.7 Tax Current tax assets and liabilities The charge for current tax is based on the results for the year as adjusted for income that is exempt and expenses that are not deductible using tax rates that are applicable to the taxable income. Deferred tax is recognised for all temporary differences, unless specifically exempt, at the tax rates that have been enacted or substantially enacted at the balance sheet date.
1.8 Financial instruments Categories of financial assets and financial liabilities The carrying amounts of each of the following categories presented either on the face of the balance sheet or in the notes: • Financial assets at fair value through profit or loss • Loans and receivables • Financial liabilities measured at amortised cost Initial recognition and measurement Financial instruments are recognised initially when the company becomes a party to the contractual provisions of the instruments. The company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which are measured at cost and are classified as available for sale financial assets. For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument. Regular way purchases of financial assets are accounted for at trade date. • The assets or liabilities are managed, evaluated and reported internally on a fair value basis; • The designation eliminates or significantly reduces an accounting mismatch which would otherwise arise; • The assets or liabilities contain an embedded derivative that significantly modifies the cash flows that would otherwise be required under the contract and has to be separately disclosed and fair-valued through profit or loss. All of the entity’s financial instruments designated as fair value through profit or loss were designated as such, as it is believed that the designation significantly reduces an accounting mismatch which would otherwise arise. Financial assets and financial liabilities are recognised on the entity’s balance sheet when the entity becomes a party to the contractual provisions of the instrument. Financial assets and liabilities as a result of firm commitments are only recognised when one of the parties has performed under the contract. Financial instruments recognised on the balance sheet include cash and cash equivalents, trade receivables, investments, trade payables, and borrowings. Measurement Financial assets and liabilities are initially measured at fair value, plus transaction costs. However transaction costs of financial assets and liabilities classified as fair value through profit or loss are expensed. Subsequent measurement will depend on the classification of the financial instrument as detailed below.
ACCOUNTING POLICIES (continued) SANERI ANNUAL REPORT 2009/10
PAGE 83
Financial assets The entityâ&#x20AC;&#x2122;s principal financial assets are investments, accounts receivable and cash and cash equivalents. Trade and other receivables Trade and other receivables, are classified as receivables and are subsequently measured at amortised cost less provision for doubtful debts. Write down of these assets are expensed in profit or loss. Trade and other receivables are classified as loans and receivables and are subsequently measured at amortised cost, less an allowance for any uncollectable amounts. An estimate for impairment is made when objective evidence is available that indicates the collection of any amount outstanding is no longer probable. Bad debts are written off when identified. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise of cash on hand, deposits held on call, and investments in money market instruments, net of bank overdrafts, all of which are available for use by entity unless otherwise stated. The carrying amount of these assets approximate their fair value. For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts, all of which are available for use by the entity unless otherwise stated. Cash and cash equivalents comprise cash at bank and on hand and instruments which are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value. Financial liabilities The companyâ&#x20AC;&#x2122;s principal financial liabilities are interest bearing borrowings and accounts payable. Trade and other payables All financial liabilities are measured at amortised cost, comprising original debt less principal payments and amortisationâ&#x20AC;&#x2122;s. Impairment and uncollectability of financial assets An assessment is made at each balance sheet date to determine whether there is objective evidence that a financial asset or entity of financial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and an impairment loss is recognised for the difference between the recoverable amount and the carrying amount as follows: For financial assets held at either cost or amortised cost the carrying amount of the asset is reduced to its undiscounted estimated recoverable amount either directly or through the use of an allowance account and the amount of the loss is recognised in the income statement for the period; and For financial assets at fair value where a loss has been recognised directly in equity as a result of the write down of the asset to recoverable amount, the cumulative net loss recognised in equity is transferred to the income statement for the period. Derecognition Financial assets or parts thereof are derecognised when the contractual rights to receive cash flows have been transferred or have expired or if substantially all the risks and rewards of ownership have passed. Where all the risks and rewards of ownership have not been transferred or retained, the financial assets are derecognised if they are no longer controlled. However, if control in this situation is retained, the financial assets are recognised only to the extent of the continuing involvement in those assets. All other assets are derecognised on disposal or when no future economic benefits are expected from their use or on disposal. Financial liabilities are derecognised when the relevant obligation has either been discharged or cancelled, or has expired. On derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and the amount paid for it is included in net profit or loss for the period.
ACCOUNTING POLICIES (continued) PAGE 84
SANERI ANNUAL REPORT 2009/10
A financial asset or part thereof is derecognised when the entity realises the contractual rights to the benefits specified in the contract, the rights expire, the entity surrenders those rights or otherwise loses control of the contractual rights that comprise the financial asset. On derecognition, the difference between the carrying amount of the financial asset and the sum of the proceeds receivable and any prior adjustment to reflect the fair value of the asset that had been reported in equity is included in net profit or loss for the period. A financial liability or a part thereof is derecognised when the obligation specified in the contract is discharged, cancelled, or expires. On derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and the amount paid for it is included in net profit or loss for the period. Fair value considerations The fair values at which financial instruments are carried at the balance sheet date have been determined using available market prices. Where market values are not available, fair values have been calculated by discounting expected future cash flows at prevailing interest rates. The fair values have been estimated using available market information and appropriate valuation methodologies. The carrying amounts of financial assets and financial liabilities with a maturity of less than one year are assumed to approximate their fair values due to the short-term trading cycle of these items. Offsetting Financial assets and financial liabilities are offset if there is an intention to either net the asset and liability or to realise the asset and settle the liability simultaneously and a legally enforceable right to set off exists.
1.9 Income recognition When the conditions attaching to government grants have been met and have been received, they are recognised in profit or loss on a systematic basis over the periods necessary to match them with the related costs. When they are for expenses or losses already incurred, they are recognised in profit or loss immediately. The unrecognised portion at the balance sheet date is presented as deferred income. No value is recognised for government assistance.
1.10 Irregular and fruitless and wasteful expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable legislation, including â&#x20AC;˘ the PFMA, or â&#x20AC;˘ Any provisional legislation providing for procurement procedures in that provincial government. Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonable care been exercised. Any irregular and fruitless and wasteful expenditure is charged against income in the period in which it is incurred.
1.11 Key assumptions made by management in applying accounting policies In preparing the annual report, management is required to make estimates and assumptions that affect the amounts represented in the annual report and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual report. Significant judgements include: Going concern Management considers key financial metrics and loan covenant compliance in its approved medium term budgets, together with its existing term facilities, to conclude that the going concern assumption used in the compiling of its annual financial statements, is relevant. Evaluation of the useful life of assets. On an annual basis, management evaluate the useful life of all assets. In carrying out this exercise, experience of assetâ&#x20AC;&#x2122;s historical performance and the medium term business plan are taken into consideration.
SANERI ANNUAL REPORT 2009/10
PAGE 85
Contingent liabilities Management considers the existence of possible obligations which may arise from legal action as well as the possible noncompliance of the requirements of completion guarantees and other guarantees provided. The estimation of the amount disclosed is based on the expected possible outflow of economic benefits should there be a present obligation. Impairment testing Impairment tests are performed when there is an indication of impairment of assets or reversal of previous impairments of assets. Management therefore has implemented certain impairment indicators and these include movements in exchange rates, commodity prices and the economic environment its businesses operate in. Estimates are made in determining the recoverable amount of assets which include the estimation of cash flows and discount rates used. In estimating the cash flows, management base cash flow projections on reasonable and supportable assumptions that represent managements’ best estimate of the range of economic conditions that will exist over the remaining useful life of the assets, based on publicly available information. The discount rates used are pretax rates that reflect the current market assessment of the time value of money and the risks specific to the assets for which the future cash flow estimates have not been adjusted. Capital Management Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the group treasury. Group treasury invests surplus cash in money market investments, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined.
1.12 Related parties The services received or rendered from or to related parties arise mainly from service transactions, including management fees for services performed on behalf of the company. The receivables from related parties arise mainly from service transactions and are due one month after the date of services. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties. The payables to related parties arise mainly from service transactions, including management fees and are due one month after the date of purchase. The payables bear no interest. The loans to or from related parties arise from loan agreements entered into for the year under review. Key management includes directors (executive and nonexecutive), members of the board audit and risk management committee and members of the Executive Committee.
1.13 Adoption of South African Accounting Standards The entity has adopted the following new and amended IFRSs as of 1 January 2009: IFRS 5 (amendment), ‘Measurement of noncurrent assets (or disposal groups) classified as held-for-sale’. The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of noncurrent assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve fair presentation) and paragraph 125 sources of estimation uncertainty) of IAS 1. IFRS 7 ‘Financial instruments – Disclosures’ (amendment) – effective 1 January 2009. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.
PAGE 86
SANERI ANNUAL REPORT 2009/10
IAS 1 (revised). ‘Presentation of financial statements’ – effective 1 January 2009. The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the entity presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. Comparative information has been represented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share. IAS 7 – Statement of Cash Flows – effective 1 January 2010. The amendments (part of Improvements to IFRSs (2009)) specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. Consequently, cash flows in respect of development costs that do not meet the criteria in IAS 38 Intangible Assets for capitalisation as part of an internally generated intangible asset (and, therefore, are recognised in profit or loss as incurred) have been reclassified from investing to operating activities in the statement of cash flows. Prior year amounts have been restated for consistent presentation. Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures regarding reclassifications of financial assets IAS 8.28(c),(d) The amendments to IAS 39 permit an entity to reclassify non-derivative financial assets out of the ‘fair value through profit or loss’ (FVTPL) and ‘available-for-sale’ (AFS) categories in very limited circumstances. Such reclassifications are permitted from 1 July 2008. Reclassifications of financial assets made in periods beginning on or after 1 November 2008 take effect only from the date when the reclassification is made. IAS 8.28(b),(d). The following standards and amendments to existing standards have been published and are mandatory for the entity’s accounting periods beginning on or after 1 January 2010 or later periods, but the entity has not early adopted them: IAS 27 (revised), ‘Consolidated and separate financial statements’ effective from 1 July 2009. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value, and a gain or loss is recognised in profit or loss. The group will apply IAS 27 (revised) prospectively to transactions with non-controlling interests from 1 January 2010. IFRS 3 (revised), ‘Business combinations’ effective from 1 July 2009. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition related costs should be expensed. The group will apply IFRS 3 (revised) prospectively to all business combinations from 1 April 2010. IAS 38 (amendment), ‘Intangible Assets’. The amendment is part of the IASB’s annual improvements project published in April 2009 and the company will apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The amendment will not result in a material impact on the company’s financial statements.
ACCOUNTING POLICIES (continued) SANERI ANNUAL REPORT 2009/10
PAGE 87
2010
Accumulated Cost depreciation
2009 Carrying value
Accumulated Cost depreciation
Carrying value
2. Property, plant and equipment
Furniture and fixtures Computer equipment Total
415 484 899
Reconciliation of property, plant and equipment – 2010 Reconciliation of property, plant and equipment – 2010
(201) (375) (576)
Furniture and fixtures Computer equipment Reconciliation of property, plant and equipment – 2009
Furniture and fixtures Computer equipment
291 388 679
3. Intangible assets Software
1 263
158 138 296
158 138 296
124 96 220
(68) (125) (193)
Total 214 109 323
Opening balance Additions Disposal Depreciation 559 33 (275) (159) 226 53 (13) (128) 785
Accumulated Cost amortisation
(133) (250) (383)
Opening balance Additions Depreciation
86
(288)
2010
214 109 323
(768)
(287)
Total 158 138 296
2009 Carrying value
495
Accumulated Cost amortisation
725
Carrying value
(415)
310
Opening Additions Amortisation Total 310 539 (354)
495
Reconciliation of intangible assets – 2010
Reconciliation of intangible assets – 2010 balance Software
Reconciliation of intangible assets – 2009Reconciliation of intangible assets – 2009 Software 582
63
(335)
NOTES TO THE ANNUAL FINANCIAL STATEMENT PAGE 88
SANERI ANNUAL REPORT 2009/10
310
2010 R ‘000
2009 R ‘000
4. Deferred tax
Deferred tax asset Recognised in other comprehensive income
–
201
Reconciliation of deferred tax assetReconciliation of deferred tax asset At beginning of the year Charged to profit and loss Balance at end of year
201 (201) –
– 201 201
5. Taxation
Major components of the tax expense
Current Local income tax current period
172
201
Deferred Originating and reversing temporary differences
201 373
(201) –
Reconciliation of the tax expense Reconciliation of tax expense Reconciliation between accounting profit and tax expense.
Accounting loss
(4 394)
–
Tax at the applicable tax rate of 28% (2009: 28%)
–
–
150 22 201 373
– – – –
Tax effect of adjustments on taxable incomeTax effect of adjustments on taxable income Prior year under provision Interest on late payment Temporary differences SARS for income tax SARS for income tax Opening balance Payment made Balance due to/(from) SARS
(579) – (579)
657 (1 236) (579)
Taxation summary as per the statement of financial positionTaxati Tax receivable
(579) (579)
(579) (579)
SANERI ANNUAL REPORT 2009/10
PAGE 89
2010 R ‘000
2009 R ‘000
6. Trade and other receivables Trade receivables Prepayments National Energy Efficiency Agency
1 986 7 420 2 413
2 136 66 – 2 202
21 302 21 302
29 952 29 952
7. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and balances with banks and investments in money market instruments. Cash and cash equivalents included in the balance sheet comprise the following: Short term investments in money market and cash on hand 8. Share capital
Authorised 1000 Ordinary par value shares of R1 each
1
1
Issued 100 Ordinary par value shares of R1 each
–
–
12 479
16 379
12 479
16 379
9. Third party funds Total Funding received in respect of the following projects: – SA Carbon Capture and Storage – Carbon Storage Atlas – Biofuels – Seventh Framework Programme – SOS Childrens Village – Norway CCS Capacity Building – European Union Project COCATE
The money can only be used for the specific projects once the project has been commissioned.
Current liabilities Projects
PAGE 90
SANERI ANNUAL REPORT 2009/10
2010 R ‘000
2009 R ‘000
10. Trade and other payables Trade payables VAT Other payables
1 630 9 885 6 356 17 871
3 169 6 560 10 098 19 827
1 143 (30 574) (1 143) 34 210 – 3 636
1 811 (28 514) (1 999) 28 038 1 807 1 143
11. Deferred income Opening balance Costs incurred during the year Costs incurred during the year that relates to Green Transport Grants received from the Department of Science and Technology Grant for Green Transport
South African National Energy Research Institute (Proprietary) Limited received grants from the Department of Science and Technology to fund future related costs. 12. Provisions
Reconciliation of provisions – 2010
Provision for bonus
Opening Utilised during balance Additions the year 1 398 1 100 (1 398)
Total 1 100
Reconciliation of provisions – 2009
Provision for bonus
Opening balance Additions – 1 398
Total 1 398
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) SANERI ANNUAL REPORT 2009/10
PAGE 91
2010 R ‘000
2009 R ‘000
13. Operating loss
Operating loss for the year is stated after accounting for the following:
Grant income Grants received Operating lease charges Premises • Contractual amounts Equipment • Contractual amounts
Loss on sale of property, plant and equipment Amortisation on intangible assets Depreciation on property plant and equipment Employee costs Research and development
32 500
31 077
754
249
156 910
112 361
- 353 193 12 571 15 155
(272) 336 287 12 721 30 369
131
151
– 1 853 1 853
1 2 846 2 847
1 224
285
14. Auditors’ remuneration
Fees
15. Investment revenue
Interest revenue Bank Interest from funds held by holding company
16. Finance costs
Other interest paid
Interest capitalised on third party funds. These funds have been ring-fenced as they relate to specific borrowings for capital projects. Refer to note 9 for the composition of these funds.
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) PAGE 92
SANERI ANNUAL REPORT 2009/10
2010 R ‘000
2009 R ‘000
17. Cash receipts from customers Other revenue Profit and loss on sale of assets and liabilities Movement in trade and other receivables
32 500 – (211) 32 289
31 077 (272) (2 166) 28 639
18. Cash paid to suppliers and employees Operating costs Movement in trade and other payables Non-cash items adjusted
37 523 1 956 (2 741) 36 738
41 504 (1 988) (1 896) 37 620
(4 394)
(7 865)
193 – (1 853)
287 272 (2 847)
1 224 353 (298) –
285 336 – 1 397
(211) (1 956) 2 493 (4 449)
(2 166) 1 988 (668) (8 981)
579 (172) (579) (172)
(657) (201) (579) (1 437)
19. Cash used in operations Loss before taxation Adjustments for: Depreciation and amortisation Loss on sale of assets Interest received Finance costs Impairment loss Movements in provisions
Provisions
Changes in working capital: Trade and other receivables Trade and other payables Deferred income
20. Tax paid Balance at beginning of the year Current tax for the year recognised in profit or loss Balance at end of the year
SANERI ANNUAL REPORT 2009/10
PAGE 93
Bonuses and performance Salary payments Fees
Expense allowances Other
Total
21. Directors’ emoluments
SANERI Year ended 31 March 2010 Directors: Mr MB Damane* Mr J Marriot Ms N Mlonzi Dr C Cooper* Ms N Magubane* Dr M Pyoos* Mr K Nassiep Mr I Patel* Mr T Maqubela* Mr D Mahuma* Total Board audit and risk management committee : Mr D Hensman Mr VG Magan Mr A Thomani Ms N Nyathi Total
PAGE 94
SANERI ANNUAL REPORT 2009/10
– – – – – – 1 108 – – – 1 108
– – – – – – 223 – – – 223
– 91 63 – – – – – – – 154
– – – – – – – – – – –
– – – – – – 30 – – – 30
– 91 63 – – – 1 361 – – – 1515
– – – – –
– – – – –
30 53 21 35 139
– – – – –
– – – – –
30 53 21 35 139
Bonuses and performance Salary payments Fees
Expense allowances Other
Total
21. Directors’ emoluments (continued)
SANERI Year ended 31 March 2009
Board audit and risk management committee : Mr D Hensman Mr VG Magan Ms A Thomani Ms M Nyathi
Directors: Mr MB Damane* Mr J Marriot Ms N Mlonzi Dr C Cooper Ms N Magubane* Dr M Pyoos* Total
Total
– – – – – – –
– – – – – – –
– 70 70 49 – – 189
– – – – – – –
– – – – – – –
– 70 70 49 – – 189
– –
– –
27 33
– –
– –
27 33
– – –
– – –
16 16 92
– – –
– – –
16 16 92
Bonuses and performance Salary payments Fees
Executive Member: Mr K Nassiep
1 048
255
–
Expense allowances
Other contri- butions
Other
Total
–
–
30
1 333
* The directors are not remunerated in their personal capacity.
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) SANERI ANNUAL REPORT 2009/10
PAGE 95
2010 R ‘000
2009 R ‘000
22. Related parties
Related party transactions
Key management personnel refer to note 21.
The above transactions were carried out on commercial terms and conditions.
CEF (Pty) Ltd Interest received Amounts owed by related parties Services rendered from related parties Amounts owed to related parties
1 853 21 302 1 649 630
2 846 29 952 850 183
Department of Science and Technology Grants/Interest received
34 210
28 038
23. Financial instruments
Financial risk management The company’s corporate treasury function performed by CEF (Pty) Ltd, provides financial risk management services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the company through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including interest rate risk), credit risk and liquidity risk. The company’s objectives, policies and processes for measuring and managing these risks are detailed below. Compliance with policies and exposure limits is reviewed by the board audit and risk management committee annually, with the results being reported to this committee.
Fair values The company’s financial instruments consist mainly of cash and cash equivalents, trade receivables and trade payables. As at 31 March 2010 no financial asset was carried at an amount in excess of its fair value.
Credit risk Financial assets, which potentially subject the group to concentrations of credit risk, pertain principally to trade receivables and investments in the South African money market. Trade receivables are presented net of the allowance for doubtful debts.
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) PAGE 96
SANERI ANNUAL REPORT 2009/10
The exposure to credit risk with respect to trade receivables is not concentrated due to a large customer base. The group manages counterparty exposures arising from money market and derivative financial instruments by only dealing with well established financial institutions of a high credit rating. Losses are not expected as a result of nonperformance by these counter parties.
Credit limits with financial institutions are approved by the board.
Fair value The entityâ&#x20AC;&#x2122;s financial instruments consist mainly of cash and cash equivalents, trade receivables, investments and trade payables. As at 31 March 2010 no financial asset was carried at an amount in excess of its fair value.
The following methods and assumptions are used to determine the fair value of each class of financial instrument:
Cash and cash equivalents The carrying amounts of cash and cash equivalents approximates fair value due to the relatively short term maturity of these financial assets.
Trade receivables The carrying amounts of trade receivables net of provision for bad debt, approximates fair value due to the relatively short term maturity of this financial asset.
Investments The carrying amounts of short term investments approximates fair value due to the relatively short term maturity of these assets. The fair values of other long term investments are not materially different from the carrying amounts.
Trade payables The carrying amounts of trade payables approximates fair value due to the relatively short term maturity of these liabilities. Maturity profile At least half or more of long term finance, ie. more than three years (or less in more volatile environments) should be at fixed rates of interest, even though such long term rates are usually higher than the short term rates ruling at the time that the long term rates are negotiated. In mitigating the volatility risk, therefore, at least half of term finance is raised at fixed rates and other commitments will, if strong volatility threatens, be mitigated by the use of forward rate agreements, futures, interest rate options, interest rate swaps, caps, floors and collars.
SANERI ANNUAL REPORT 2009/10
PAGE 97
Less than 1 year
Between 1 and 5 Over years 5 years
Non– interest bearing
Total
23. Financial instruments (continued) The maturity profiles of financial assets and liabilities at balance sheet date are as follows:
At 31 March 2010
Assets
Cash Trade receivables Total financial assets
21 302 2 406 23 708
– – –
– – –
– – –
21 302 2 406 23 708
Liabilities Trade payables
7 986
–
–
–
7 986
At 31 March 2009
Assets
Cash Trade receivables Total financial assets
29 952 2 136 32 088
– – –
– – –
– – –
29 952 2 136 32 088
Liabilities Trade payables
13 267
–
–
–
13 267
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments classified as fixed rate is fixed until maturity of the instrument. The other financial instruments of the entity that are not included in the above tables are non-interest bearing and are therefore not subject to interest rate risk. Liquidity risk The entity manages liquidity risk through proper management of working capital, capital expenditure and actual vs. forecasted cash flows. Adequate reserves and liquid resources are also maintained. The entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash resources are available to meet cash commitments.
Interest rate risk Exposure to interest rate risk on liabilities and investments is monitored on a proactive basis. The financing of the group is structured on a combination of floating and fixed interest rates.
PAGE 98
SANERI ANNUAL REPORT 2009/10
Fair value Fair value Loans through through Held to Available and profit or loss – profit or loss – maturity for receivables held for trading designated investments sale
Total
24. Financial assets by category The accounting policies for financial instruments have been applied to the line items below:
2010
Trade and other receivables 2 406 Cash and cash equivalents 21 302
– – –
– – –
– – –
– – –
2 406 21 302 23 708
– – –
– – –
– – –
– – –
2 136 29 952 32 088
2009
Trade and other receivables 2 136 Cash and cash equivalents 29 952
Financial liabilities at amortised cost
Fair value through profit or loss – held for trading
Fair value through profit or loss – designated
Total
7 986
–
–
7 986
13 267
–
–
13 267
25. Financial liabilities by category The accounting policies for financial instruments have been applied to the line items below:
2010
Trade and other payables
2009
Trade and other payables
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) SANERI ANNUAL REPORT 2009/10
PAGE 99
2010 R ‘000
2009 R ‘000
26. Commitments
Operating lease commitments
Leases comprise the office space at 158 Jan Smuts Avenue, 4th floor, office 22, 23 & 28, 29 and 31 for a period of four years from Gensec Property Services Limited. The lease expired on 31 March 2010.
Future minimum rentals payable under operating leases are as follows as of 31 March 2010.
Operating lease as lessee – Within one year – In second to fifth year inclusive
594 3 033 3 627
212 – 212
Block C, Upper Grayston Office Park, 152 Ann Crescent, Strathavon, Sandton
The entity has leased Portion 13, remaining Extent of Erf 14, Portion 1 of Erf 14 Simba Township, together with the building erected thereon from CEF (Proprietary) Limited. The agreement commenced on 1 April 2009 and the rent payable shall annually, on the anniversary date, escalate by 10% or alternatively, shall escalate in accordance with the CPI, whichever is greater. Either party shall be entitled to terminate this lease on six months written notice to the other party.
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) PAGE 100
SANERI ANNUAL REPORT 2009/10
2010 R ‘000
2009 R ‘000
An adjustment to the provision for performance bonus in the previous financial year to operating expenses: Previously stated After adjusted new balance
– –
– 1 398
An adjustment to trade and other receivables for the inclusion of VAT receivable: Previously stated Increase in trade and other receivables
– –
– 12 864
– –
– (19 424)
Adjustment to operating expenses for provision for performance bonus provided for after year end: Increase in operating expenses
–
1 398
Adjustment to operating expenses for the inclusion of input VAT: Decrease in operating expenses
–
(12 864)
–
19 424
–
–
–
(314)
– –
– 220
SANERI ANNUAL REPORT 2009/10
PAGE 101
27. Prior period errors
Operating lease commitments
An adjustment to trade and other payables for the inclusion of VAT payable: Previously stated Increase in trade and other payables
Adjustment to grants received for the inclusion of output VAT: Decrease in grants received Adjustment to third party funds in the previous financial year to sundry income: Previously stated Increase in sundry income Adjustment to third party funds in the previous financial year to operating expenses: Previously stated Increase in operating expenses
2010 R ‘000
2009 R ‘000
28. Fruitless and wasteful expenditure SANERI has incurred interest as a result of late payments to SARS. This has been classified as fruitless and wasteful expenditure.
Reconciliation of fruitless and wasteful expenditure
Opening balance Fruitless and wasteful expenditure – relating to prior year Fruitless and wasteful expenditure – relating to current year Less: Interest earned on nonpayment of current year fruitless and wasteful expenditure
– – 22 –
– – – –
Fruitless and wasteful expenditure awaiting condonation
22
-
Analysis of awaiting condonation per economic classification
Current Capital Transfers and subsidies
22 – –
– – –
Total
22
–
NOTES TO THE ANNUAL FINANCIAL STATEMENT (continued) PAGE 102
SANERI ANNUAL REPORT 2009/10
(Notes)
2010 R ‘000
2009 R ‘000
Other income Interest received 15 Government grants
1 853 32 500 34 353
2 84 31 077 33 924
Operating expenses Administration and management fees Advertising Auditors remuneration 14 Bank charges Bursary support programme Conference expenses Consulting and professional fees Depreciation amortisation and impairments Donations Employee costs Entertainment General expenses Gifts Insurance Lease rentals on operating lease Legal expenses Liquid optimisation Loss on disposal of assets Postage Printing and stationery Renewable energy Repairs and maintenance Research and development costs Seminars Staff welfare Subscriptions Telephone and fax Training Transport and freight Travel – local Travel – overseas Utilities
(1 224) (634) (131) (11) (1 702) (98) (38) (546) (103) (12 571) (65) 849 (9) (27) (910) (27) (414) – (1) (95) (1 914) (6) (15 155) (141) (18) (5) (125) (69) (5) (576) (1 691) (61) (37 523)
(876) (196) (151) (4) 374 – (1 812) (623) (226) (12 721) (49) 12 443 (1) (42) (361) – – (272) – (94) (2 760) (18) (30 369) (39) (1) (669) (217) (94) – (525) (2 163) (38) (41 504)
Operating (loss) profit Finance costs 16
13(3 170) (1 224)
(7 580) (285)
(Loss) profit before taxation Taxation
(4 394) 5(373)
(7 865) –
(Loss) profit for the year
(4 767)
(7 865)
Detailed income statement
DETAILED INCOME STATEMENT PAGE103 103 SANERI ANNUAL REPORT 2009/10 PAGE
ANNUAL REPORT ACKNOWLEDGEMENTS The 2009/10 year has been the most challenging year since the inception of SANERI. Not only was the budget allocation of the entity slashed by R7 million due to the decrease in allocations across Government Departments but the Energy Act, (Act 34 of 2008) made provision for the establishment of SANEDI, a new entity. The creation of a new public entity is always associated with uncertainty. A considerable amount of time was spent engaging with the various government departments involved with the Energy Act to chart the way forward for the operationalisation of SANEDI. In particular, the Department of Energy, as the architects of the Act, have been instrumental in developing the business case that will define
PAGE 104
SANERI ANNUAL REPORT 2009/10
the future operational model to be employed by SANEDI. Despite funding and institutional challenges, SANERI was able to deliver on its promised targets and achieved a performance rating of 93.1%. Research into new energy technologies is a large focus area of SANERI and the highlights detailed in this Annual Report under research highlights bears testimony to the strategic contribution by SANERI to the energy space in South Africa. The establishment of SANERI has also positively contributed to the human capital development in South Africa through the Bursary Support Programme and other Human Capital interventions.
There is a direct correlation between these programmes and Governmentâ&#x20AC;&#x2122;s broader social and economic objectives. It goes without saying that SANERI could not have accomplished its objectives without the support and assistance from various individuals who need to be acknowledged: The Former Minister of Science and Technology, Mr Mosibudi Mangena, MP; the Current Minister of Science and Technology, Ms Naledi Pandor, MP; the former Minister of Minerals and Energy, Ms Sonjica Buyelwa, MP; the current Minister of Energy, Ms Dipuo Peters, MP; the former Director General of the Department of Minerals and Energy,
Advocate Sandile Nogxina; the current Director General of the Department of Energy, Ms Nelisiwe Magubane, whom we’d like to congratulate on her appointment; Chairman of the Board of Directors of SANERI, Mr Mputumi Damane The Board of Directors, SANERI; the Chairman and the Committee members of the Cluster Board Audit and Risk Committee. The supporting officials of the Departments of Science and Technology, of Energy and of CEF (Pty) Ltd; the universities/researchers/ students/other organisations including international organisations who have worked with SANERI – my heartfelt gratitude
goes out to you. Your contribution to the research environment has added to the body of knowledge in SA, thus empowering us all and creating a better life for all. Hard work, dedication, loyalty, accountability and transparency are some of the values that are required for the success of any company/ institution. SANERI prides itself in maintaining these values with the strong support from industry, donors and civil society. SANERI has been very fortunate that we have continued to receive the necessary support from these key stakeholders in the energy sector – thank you for contributing to SANERI’s growth. Last but not least, I wish to acknowledge my vibrant, energetic, colourful team who
display the greatest enthusiasm and team spirit. For me, this is the most important factor in building a great company. To all of you – thank you for your support, dedication and loyalty – together we can continue to build a sustainable future for all South Africans.
Thank you
Mr KM Nassiep
SANERI ANNUAL REPORT 2009/10
PAGE 105
KEY TO ABBREVIATIONS
PAGE 106
SANERI ANNUAL REPORT 2009/10
ABET CEF CEO CGS CNG CO2 CPIX CSIR CSC DDGS DEAT DME DSM DST EDC ETDE ERID GDP Gt GWh HySA IEA IP JSE LNG LPG LTMS MW MP Mt NAFU NBI NEEA NWU PDI R&D SANEDI SANERI UCT UJ US UKZN UNEP UNU UP UWC TB TUT WRI
Adult Basic Education and Training CEF group of companies formerly known as Central Energy Fund Chief Executive Officer Carbon Gas Storage Compressed Natural Gas Carbon Dioxide Consumer Price Index Council for Scientific Research Community Steering Committee Distillers Dried Grains with Solubles Department of Environmental Affairs and Tourism Department of Minerals and Energy Demand Side Management Department of Science and Technology Energy Development Corporation Energy Technology Data Exchange Eskom’s Research and Innovation Department Gross Domestic Profit Gigatonne Gigawatt Hour Hydrogen South Africa International Energy Agency Internet Protocol Johannesburg Stock Exchange Liquefied Natural Gas Liquefied Petroleum Gas Long Term Mitigation Scenarios for Climate Change Mega Watt Minister for Parliament Megatonne National African Farmers Union National Business Initiative National Energy Efficiency Agency North West University Previously Disadvantaged Individual Research and Development South African National Energy Development Institute South African National Energy Research Institute University of Cape Town University of Johannesburg United States of America University of Kwazulu–Natal United Nations Energy Planning United Nations University University of Pretoria University of the Western Cape Tuberculosis Tshwane University of Technology World Resource Institute
SANERI ANNUAL REPORT 2009/10
PAGE 107
PAGE 108
SANERI ANNUAL REPORT 2009/10