RENEWABLE ENERGY

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energy

SANEDI: IRP 2019 LACKS FOCUS ON EFFICIENCY

Government’s Integrated Resource Plan (IRP) 2019 – 2030 introduced in October 2019 sets out nine policy interventions to ensure the security of the country’s energy supply, with a prominent focus on renewable energy, which was welcomed by SANEDI.

But SANEDI adds a note of caution. While IRP 2019 has set realistic and achievable targets and offers a comprehensive framework for renewable energy technologies, the plan underestimates the importance of energy efficiency.

According to SANEDI, first to be considered should be what can be saved, followed by what must be generated. The rising costs of electricity and various other incentives has encouraged organisations and individuals to become more energy-efficient. Unfortunately the new IRP has not taken this into account.

Technologies that allow for energy efficiency and the effect of energy efficiency on the country’s efforts to become less coal-dependent, as well as smart technology, which can provide real-time linkage between demand, should have been included in IRP 2019.

As an energy-intensive country, much of South Africa’s industrial production designs were developed inefficiently due to the very low cost of electricity. With the recent sustained tariff increases, the financial viability of these operations has been called into question resulting in some businesses closing. Eskom annual sales 208 TWh (2019) reflect a sustained year-on-year decline, which can be attributed to the increased tariff effects, as well as the impact of the energy efficiency drive. If energy efficiency is given due attention, it could potentially avoid the need to build additional capacity – which will always be the cheaper option.

SANEDI believes the country will organically start moving off the grid to overcome current energy provision challenges and already businesses that can afford to move, have started the transition. These organisations are some of the most significant users and paying customers of electricity which means in the future, power will be supplied to a sector of the economy that might not be able to afford it.

As the landscape changes organically, government will be forced to follow and could miss an opportunity to put policies, regulations and incentives in place to support and benefit from this change.

SANEDI does recognise IRP 2019 as a positive indicator for the energy security of supply and the renewable sector. The report states that wind, solar PV, distributed and/or co-generation as well as landfill gas and storage, present an opportunity to diversify the electricity mix, to possibly lead towards distributed generation and offgrid electricity. Renewable technologies also present potential to develop new industries and lead to skills and job creation as well as localisation across the value chain.

12L

ENERGY SAVING TAX INCENTIVE EXTENDED TO 2022

A highlight in 2019 was the announcement by government of an extension of the energy efficiency savings tax incentive (Section 12L) for businesses, through to end 2022. SANEDI, which is responsible for implementing and overseeing the application process for Section 12L, welcomed the extension and renewed its call to industry to take full advantage of it.

Section 12L was promulgated in 2013 and was due to end in January 2020, but will now continue through to 31 December 2022, giving businesses a larger window of opportunity to save energy and reap multiple benefits, including reduced energy bills, rebates on tax returns, assisting to reduce demand on South Africa’s scarce energy resources, and improving their carbon footprint. The announcement was made by Minister of Finance, Tito Mboweni, in his Budget Vote Speech to Parliament in February 2019, at a time of real need to reduce energy consumption nationally.

The energy efficiency savings allow for a tax deduction of 95c/kWh saved on energy consumption across all energy carriers, including gas, coal, liquid fuels or any energy carrier (excluding renewable energy). In this way customers can save up to 30% on their energy bill and also receive a rebate on their tax return to bolster the appeal.

The 12L tax incentive’s objective is to encourage energy saving in a constrained capacity environment and to assist in meeting the country’s commitments set out in various international agreements to reduce carbon emissions over the next few years.

Many local businesses, including several South African blue-chip companies, have benefited over the six years since the incentive was introduced. The initial 200 applications received were expected to double in response to the three-year extension on the incentive period.

energy savings

To claim the deduction, measurements must be kWh equivalent. The verified and measured energy efficiency saving must be over a period of 12 consecutive months, known as the implementation/ assessment period, which is compared with the prior 12 months of baseline measurement. The baseline measurement and savings are verified and measured by a South African National Accreditation Systems (SANAS) accredited Measurement and Verification (M&V) Body, which assigns an M&V professional to the project.

To apply for the incentive, a company appoints an accredited (M&V) professional to do an assessment of its business, regardless of whether it is a plant, a hotel or normal office premises. (Residential households are excluded from applying for this incentive). The assessor submits all the information to SANEDI and from there it proceeds with an evaluation to ascertain whether the claim is in line with the appropriate regulations and standards, and can be approved.

SARS action SARS has updated the section on qualifying activities in its Interpretation Notes to include activities generating energy from combined heat and power, as well as any activity that results in energy efficiency savings, on condition all other requirements are met and limitations do not apply.

National Treasury also announced that it will review the design and administration of the energy efficiency savings tax incentive to make it even easier for smaller businesses to access.

A calculator on SANEDI’s website allows companies to check the feasibility of applying for the incentive and gives an indication of what benefits can be expected.

PLATFORM FOR

INDUSTRY IDEAS

SANEDI has established a platform for stakeholders to discuss the often-controversial energy issues in South Africa, and to exchange news and research around new energy innovations and technologies with the aim to grow and sustain the economy.

SANEDI has a critical role to play in ensuring that South Africa will have the necessary information and planning support regarding emerging technologies, innovative practices, alternate energy solutions, advanced infrastructure, and energy data to plan for a sustainable and secure energy future that will also satisfy the country’s economic, social and environmental needs. The Institute is ideally positioned to lead the debate on energy and educate on the various energy options available.

The first SANEDI Energy forum was themed, ‘Navigating SA mining’s energy transition together’. The forum recognised that the rapid advance of the Fourth Industrial Revolution means that industry and associated stakeholders need to move with speed to intensify the deployment of smart grids.

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ENERGY’S DECADE OF REFORM AND GROWTH

The National Energy Act was promulgated in November 2008 enabling the mandatory provision of energy data by suppliers.

In its 2009 Digest of South African Energy Statistics, the Department of Energy released data on the energy sector which indicated that renewable energy had contributed approximately 8% of South Africa’s primary energy supply in 2006, mostly centred on the concept of biomass fuel.

A decade of intensive research and development by SANEDI and other key players in the renewables energy sector has seen massive change. The use of wind, solar and other renewable resources has grown and today the sight of windmills or solar panels is no longer a point of interest, so ingrained has it become in the minds of the public.

REIPPP gains The Renewable Energy Independent Power Producer Procurement (REIPPP) programme began in 2011. Its purpose was to contribute to the alleviation of the electrical energy shortfall in South Africa, contribute towards socio-economic and environmentally sustainable growth, and to start and stimulate the renewable energy industry in South Africa. Technologies that were considered as qualifying for selection under the programme included onshore wind, concentrated solar thermal, solar photovoltaic (PV), biomass solid, biogas, landfill gas and small hydro schemes.

By 2014, 2 127.66 MW of bids had been received, predominantly in the PV and wind sectors, and of these, 28 bids were accepted. By May 2019, 102 Independent Power Producer projects had arisen from four bidding round windows, with the procurement of 6 422 MW of renewable energy, out of which 3 876 MW have come online. The REIPPP programme’s contribution to the environment reduced South Africa’s carbon emissions by about 33.2 million tons of carbon dioxide and saved 39.2 million kilolitres of water, as at 31 December 2018. In the past eight years, REIPPP attracted R209.4 billion in committed private sector investment (24% of which was foreign direct investment) and provided much-needed jobs and local investment.

The publication of the government’s Integrated Resource Plan 2019 has included sustainable options in its energy mix for the future, taking lowcost electricity options into account. By 2030, South Africa will aim for additional capacity of 14.4 GW wind power, 6 GW solar, 3 GW of gas, 2.5 GW hydro power, 2.088 GW storage, and finally 1.5 GW of coal.

Winds of change In a joint project with the Department of Mineral Resources and Energy and various funding agencies, SANEDI has supported the Wind Atlas for South Africa (WASA) project, which utilises the information gained from wind measurement masts.

September 2010 saw the erection of nine wind measurement masts covering the Western Cape, some parts of the Eastern Cape and the Northern Cape. Five wind measurement masts, covering the remaining areas of the Eastern Cape, KwaZulu-Natal and Free State became operational in November 2015, and four wind measurement

masts covered the remaining parts of the Northern Cape in December 2018. The 18 wind measurement masts now cover 75% of South Africa’s land area.

The Wind Atlas depicts local surface wind climate, such as mean wind speed or mean wind power density that a wind turbine or wind farm would operate in. Its statistics enable predictions, such as annual energy production (AEP) of a wind turbine and expected capacity factor. This information allows the identification of specific areas in South Africa that have the capacity to enable large or small-scale exploitation of wind energy.

International solar recognition In 2019, thanks to two major solar thermal projects, South Africa rose from relative obscurity into the global top 20 of such installations, driven by the Southern African Solar Thermal Training and Demonstration Initiative (SOLTRAIN), a SANEDI partner.

Funded by the Austrian Development Agency and co-funded by the OPEC Fund for International Development, SOLTRAIN is a regional initiative on capacity building and demonstration of solar thermal systems in the SADC region.

The next ten years SANEDI envisages a country that will move from the current 8.7% of renewable energy to a much higher percentage of alternatives to coalbased energy, which will improve climate change statistics and develop a new local economy of renewables manufacturing.

with SANDF SANEDI’S RECORD

One of SANEDI’s roles is to facilitate and coordinate renewable energy research, development and demonstration through local and international cooperation, technology transfer and information exchange, leading to the deployment and commercialisation of sustainable, efficient, reliable, cost-competitive and environmentally sound renewable energy technologies.

To accelerate the research path to market-viable alternatives and grow the country’s pool of energy scientists, SANEDI has established Centres of Research and Development (CORDs), which includes the Renewable Energy Centre of Research and Development (RECORD).

Recent contributions by RECORD include a five-year agreement with the SA National Defence Force (SANDF) in 2018 that has seen the initiation of pilot projects at a military base in Limpopo, in collaboration with the Solar Thermal Training and Demonstration Initiative (SOLTRAIN).

SOLTRAIN demonstrates ways to utilise solar potential

through solar thermal systems to significantly reduce

electricity demand and CO 2 emissions. Major adoption of these systems could lead to industry and associated

skills development, and job creation if local assembly or manufacturing is stimulated.

SOLTRAIN in South Africa is managed by the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University, and SANEDI, in partnership with AEE-Institute for Sustainable Technologies (AEE INTEC) from Austria.

Solar water heating at air force base SANEDI, SOLTRAIN and the SANDF collaborated in the implementation of the solar water heating system at the Air Force Base in Hoedspruit, which has improved energy efficiency and acted as a catalyst for upskilling SANDF personnel.

1500L hot water storage were installed at two buildings and operate through a well-insulated ring main unit which provides the added benefit of less water being wasted on waiting for a shower to heat up – hot water is almost instant in each of the 32 rooms once a tap is opened.

Cohabiting bush-life, including primates, as well climatic influences were part of the considerations in establishing the pumped solar thermal systems, designed to last up to 20 years with a reliability of supply.

To ensure ongoing operation and maintenance of the solar thermal systems, specialised training was provided by SANEDI and Stellenbosch University to produce 20 artisans who successfully completed a SOLTRAIN thermosiphon course and four who were intensively trained during system construction. These members were upskilled further and are transferring skills to other SANDF artisans, thus ensuring security of knowledge retention and a system maintenance autonomy for SANDF.

The solar water heating systems reduced the use of electricity and backup diesel and enabled the Defence Force to provide housing with functional hot water supplies.

To prepare SANDF members for the projects, RECORD created awareness about renewable energy, energy efficiency and, more specifically, solar water heating and biogas at military units across Limpopo through half-day awareness training seminars.

SANDF noted that the reduction in costs and the improvement in the reliability of its hot water infrastructure were major wins for the air force base, and that it was keen to learn more about other types of energy savings and reducing its impact on the environment due to emissions.

SANEDI is confident that given the number of government and parastatal entities that own housing, this model of co-funding and support can be replicated to assist them in refurbishing viable properties.

SUNREF II FUNDING FOR ‘GREEN’ PROJECTS IN SOUTH AFRICA

SANEDI, ever at the forefront of developing trends to enhance energy efficiency in the business industry sectors of South Africa, has highlighted the potential advantage for businesses to apply for finance for ‘green’ projects through the IDC’s SUNREF credit line, which uses funds from the French Development Agency (AFD). This funding has been linked to a credit line with the IDC for around $60 million to finance various energy efficiency and renewable energy projects.

South African businesses are continually striving to cope with increasing energy prices and improve environmental performance, especially in terms of reducing greenhouse gas emission. One of the key aspects of developing projects that support these aims is access to finance.

SUNREF funding makes it possible for South African businesses to develop renewable energy and energy efficiency projects in support of our country’s efforts towards a green transition.

SANEDI supports this initiative and hosts the SUNREF Technical Assistance Facility, which assists the IDC to access the SUNREF II funds.

SUNREF process SUNREF II in South Africa emphasises that funding applications can be made by any business in any sector that is considering energy efficiency or renewable projects in terms of its own internal processes or within its supply chain, as well as companies that provide manufacturing services or goods for the renewable energy and energy efficiency sectors.

The types of projects which would be considered for funding comprise solar rooftop PV, biogas projects, biomass energy projects and any industrial projects that lead to improved energy efficiency and reduced greenhouse gas emissions.

The IDC’s SUNREF credit line is a debt fund, offered at a concessionary rate. SUNREF II builds on SUNREF I, which was implemented from 2012 and 2015. Its success led to the development of the second credit line.

SUNREF I successes between SANEDI and three partner banks between 2012 and 2015 allowed for the financing of 120 small-scale green energy projects which resulted in CO₂ savings of 370 000 tons per year. Projects funded by SUNREF I and II include: • The replacing of heavy oil with biomass in a bakery for its heat requirements • Energy efficient lighting installations using LEDs • Steam produced using biomass for a dairy processing facility • Solar rooftop installation PV for a manufacturing facility

SANEDI emphasises that the time to invest in energy efficient projects is now. Escalating electricity costs, energy security concerns, and the recently implemented carbon tax, create a landscape that should see more businesses adopting clean energy projects to address these challenges.

SUNREF (Sustainable Use of Natural Resources and Energy Finance) is a green credit line developed for companies by France’s AFD (Agence Française de Développement). In developing countries, financing green growth, including energy management, sustainable natural resources management, and environmental protection, can be a challenge. AFD in partnership with IDC in South Africa offers solutions to this challenge.