Archive for the ‘Greencon Local Energy Update’ Category
April 14th, 2010 | 
Author: We are by far the highest carbon emitter per capita in Africa, in fact companies like SASOL are the most polluting operation to be found in the world, but paradoxically it is these companies (ESKOM) that are subsidising the implementation of Green Tech, like the solar geyser rebate system.
The installation of flue gas desulphurisation (FGD) technology at the Medupi coal-fired power station, the construction of which will be part funded by a $3,75-billion loan from the World Bank, has been confirmed as a loan-package condition.
The technology, which will reduce sulphur-dioxide emissions, would have to be retrofitted, owing to the fact that it had not been included in the plant’s original design. This would add to the project’s capital cost, and its water consumption.
The bank published its ‘Project Appraisal’ document for the controversial loan on Tuesday, which shows that Eskom will need to develop, adopt and thereafter implement a FGD programme across each of the plant’s six power generation units by no later than June 30, 2013.
It is also stipulated that FGD equipment for the first generation unit must commence on the later of either the sixth anniversary of the commissioning date, or by March 31, 2018. The FGD equipment for all six generation units would need to be installed and be fully operational by no later than December 31, 2021.
The FGD installation between 2018 and 2021 will be aligned to the scheduled operational maintenance programme of the Medupi units, which would be taken off-line for routine maintenance after six years of operation.
The bank notes that the sulphur content of the coal to be used at Medupi, which is calculated at 1,4% by weight, together with the large scale of the plant, some 4 800 MW, meant that sulphur-dioxide emissions could have a “significant adverse environmental impact”.
Therefore, sulphur-dioxide emissions would have to be removed using a “wet FGD” solution, or a gypsum process, using limestone located at Kraalhoek and Dwaalboom, some 180 km from the Lephalale site.
The process would increase the plant’s water consumption and the World Bank has, thus, flagged for possible concern the fact that sufficient water might not be available in time for the commissioning of the last three units or the FGD equipment.
“Progress on the project to supply the required amount of water is on schedule. Nevertheless, the Bank has requested evidence from the Department of Water Affairs to Eskom, committing to timely water supply,” the document states.
The water allocation is dependent on the availability of water from the Mokolo and Crocodile Water Augmentation project, which is not expected to become available until 2014 at the earliest.
The FGD system is expected to add at least $150/kW to the final capital cost, while yearly water consumption, including FGD, will rise to 12-million m3.
The total cost of Medupi is estimated at about $12,1-billion.
Posted in 
Uncertainty over a global treaty to cut carbon emissions has slowed investment in clean energy in South Africa, where only a handful of such projects have started compared to other emerging markets.
A senior official from South Africa’s agency for assessing domestic clean-energy projects told an African conference on biofuels on Monday the country, the continent’s worst emitter, has lagged global trends in launching such projects.
Under the Kyoto protocol’s Clean Development Mechanism (CDM), countries are required to cut carbon emissions by 5,2% by 2012.
“One of the barriers to CDM projects in South Africa is the uncertainty around the post-2012 regime, on whether the accord will continue or not,” Ndiafhi Tuwani, the official at South Africa’s Designated National Authority (DNA) said.
“Some of the potential project developers are reluctant because of that …there is need for a new protocol or a new accord. The previous Copenhagen accord did not come up with a new protocol (beyond) 2012.”
According to Tuwani, South Africa has 17 CDM projects registered to date, of which only four have been issued with CERs. The top two nations in the scheme, according to UN figures, are China with 787 projects and India with 498.
The CDM is part of the Kyoto protocol climate pact whose first phase ends in 2012 and there is no decision yet to extend it or agree on a separate climate treaty.
Under the agreement, rich nations that invest in clean-energy projects in developing countries earn certified emissions reductions (CERs) that can in return be sold for profit or used by polluting firms to meet their mandatory emissions targets.
A UN meeting in Bonn, Germany on Sunday agreed to revive talks on a new deal to slow global warming after December’s Copenhagen summit fell short of a binding deal.
CDM Africa Technical Manager Marco Lotz was optimistic projects aimed at cutting emissions would continue beyond 2012.
“Protocols come and go but it is not the end of the world if the Kyoto (protocol) expires. There is a whole industry that has evolved,” said Lotz.
Reuters
Article from Creamer Media:
The South African government indicated on Wednesday that the proposed $3,75-billion World Bank loan for Eskom was a component of a larger $6-billion “funding window” with the bank, and that an additional $1,25-billion could flow to the State-owned power utility specifically for emission-reduction projects. This funding would be over and above the initial Eskom package, which was due to be voted upon in Washington DC on Thursday.
In a briefing note issued the day before the vote, the National Treasury reiterated that the Eskom application had been premised on the “fundamental belief that developing countries must be allowed to develop their energy security” in the “most cost effective and sustainable matter”.
It also indicated that it had not yet decided whether it would draw on the remaining $1-billion of the $6-billion on offer, saying only that this capital could be directed towards large infrastructure developments in the country.
The South African government would, however, resubmit a $250-million application to the World Bank-administered Clean Technology Fund (CTF) to help kick-start renewable energy programmes in the country.
The immediate focus, however, was on securing the International Bank for Reconstruction and Development (IBRD) loan for Eskom, which had drawn opposition from some environmental groups and politicians.
It was far from clear on Wednesday, whether some governments, including the US and the UK, would vote in favour of the Eskom loan, owing to the fact that the bulk of the proceeds ($3,05-billion) would flow to the 4 800-MW Medupi coal-fired power project, which is being developed in Limpopo province.
World Bank President Robert Zoellick defended the loan package in a letter to a group of US lawmakers who raised questions about the bank’s support for the coal project.
US Congressman Barney Frank and US Senators John Kerry and Patrick Leahy have reportedly sought assurances from the bank that Eskom will extend electricity to the poor; that the use of renewable energy will be increased; and that Eskom will retrofit its facilities with additional environmental safeguards.
In its note, the National Treasury insisted that Medupi had already been factored into its Copenhagen Accord commitments, while the project was employing “supercritical technology” that was akin to what would be pursued in developed economies. It also indicated that renewable energy would be pursued under the country’s long-term integrated resource plan and that government was still targeting to achieve universal electrification by 2014. Poor households, the National Treasury pointed out, already received free basic electricity of 50 kWh a month.
“Coal is still the least-cost, most viable, and technically feasible option for meeting the base-load power needs required by Africa’s largest economy,” Zoellick said in his letter, adding that the bank was balancing the development benefits of project with other environmental objectives.
“South Africa represents one-third of sub-Saharan Africa’s economy, so slowdowns precipitated by lack of energy will ripple throughout the continent,” Zoellick wrote.
A New York Times article indicated that international public financial institutions have invested $37-billion to help finance 88 coal plants over the past 15 years, many in Asia, quoting a 2009 report by the Environmental Defense Fund (EDF).
The EDF calculated that future annual carbon dioxide (CO2) emissions from the financing of ongoing coal-generating capacity and additions would be some 791-million tons yearly – the equivalent to the emissions of France, the Netherlands, Belgium, Switzerland and Ireland combined, or 90% of the annual emissions of Germany, the European Union’s single largest source of CO2.
WHAT ABOUT CHANCELLOR HOUSE?
The National Treasury also partly addressed concerns raised by South African opposition parties about the fact that some of the proceeds of the loan could flow directly into the coffers of the governing African National Congress (ANC), owing to the fact that Chancellor House (an ANC company) had a shareholding in Hitachi Africa, which is supplying Medupi with boilers.
“Regarding the Chancellor House-Hitachi contract, government is mindful of some of the concerns raised in this regard.
“Government is, and will continue to engage with all concerned stakeholders on this important question with a view to having a constructive dialogue.
“We will ensure that we have a transparent framework to deal with matters such as these,” the National Treasury said in its note.
Earlier, Energy Minister Dipuo Peters said that all enquiries with regard to Chancellor House, and whether it should be invested in Hitachi, should be directed to the Treasurer-General of the ANC, Mathews Phosa. However, she, like government, did not see the shareholding as an impediment to the granting of the World Bank loan.
But a report by Sake24 indicated that the World Bank, which supported the loan, was also sensitive to the matter. It quoted senior spokesperson Sarwat Hussain as saying that the planned loan would not be awarded to any contract in which Hitachi was involved.
The World Bank’s own review of the proposed loan and the underlying project indicated that some $3,05-billion would be directed to the Medupi project for the supply and installation of civil construction contracts for “the power plant and associated transmission lines”.
A further $260-million of the IBRD loan would be directed towards supporting the development and the 100-MW Sere wind farm and the 100-MW Upington concentrating solar power project, while $440-million would directed towards the Majuba Rail project.
In just days, the World Bank will vote on a proposed R29 billion loan to Eskom to build the fourth-largest coal plant in the world — a climate disaster. At the same time, Eskom plans to effectively double electricity rates over the next three years. Big polluters are getting cut-rate electricity while ratepayers would be left to pay back this disastrous loan.
But the loan is not a done deal. Some creditors are having second thoughts, with the US expected to abstain and several European delegates reportedly on the fence. And we can tip the balance — we just need one “no” vote to table the proposal since the Bank rarely proceeds with divisive votes!
While Eskom trumpets the plan, we can tell World Bank directors how we feel about coal. Let the Word Bank know that we don’t want its dirty loan – click below to sign the petition today:
http://www.avaaz.org/en/no_eskom_coal_loan/?vl
The Bank is right to recognize South Africa’s energy needs, but this loan would be putting money in the wrong place. Instead of dirty coal, South Africa needs energy efficiency and clean, renewable sources of power that people who most need it can actually afford. If this loan is approved, South Africans will pay for it several-fold — in meteoric electricity rates, missed clean energy investments, polluted air, destroyed land, and the warming earth on which we live.
Dozens of South African environmental, community, church, labour, academic and women’s organizations, representing a diverse, unified voice have mobilized to stop the loan. But every voice counts in these last days before the World Bank vote. Act now – sign the petition opposing the loan:
http://www.avaaz.org/en/no_eskom_coal_loan/?vl
With hope,
Ben, Paul, Graziela, David, Alice, Ricken, and the whole Avaaz team
More information –
NGO Response to the World Bank panel report and Fact Sheet
http://www.groundwork.org.za/Publications/EskomFinalDocs/ResponsetotheWorldBankpanelreportandFactSheet.pdf
Original World Bank Fact Sheet
http://www.groundwork.org.za/Publications/EskomFinalDocs/WBEskomloanfactsheet.pdf
Eskom Tariff Hikes Slammed
http://allafrica.com/stories/201002250561.html
World Bank to Consider $4 Billion Loan Application From Eskom
http://www.bloomberg.com/apps/news?pid=20601116&sid=aGkhG0hBKlrE
SAfrica grants Eskom 24.8 pct price rise for 2010/11
http://www.reuters.com/article/idUSWEB199720100224?type=marketsNews
Support the Avaaz community! We’re entirely funded by donations and receive no money from governments or corporations. Our dedicated team ensures even the smallest contributions go a long way – donate here.
Here in South Africa we are about 10 – 20years behind the international trends taking place in first world regions with regards to renewable energy implementation. That stated, it seems that even in advanced countries, the legality around actual installation seems to be the bottle neck in the system. Just look what is happening in the area of massive skills shortages here and you will realise where the future problems lie for South Africa and its extremely ambitious million solar geyser target 2014. We need to re-kindle the apprenticeship system of training while on the job to massively increase our capacity to skill labour.
Massachusetts, United States [RenewableEnergyWorld.com]
“We want to make sure that the consumer has full trust in what we are doing.”
– Chris Kilfoyle, Berkshire Photovoltaic Services
Last year a new ruling came down from the State Board of Electrical Examiners that stated only Massachusetts licensed electricians and registered apprentices can perform any and all aspects of installing solar energy. Seasoned solar installation veterans, some of whom had been putting solar energy on homes and businesses for more than 20 years, were literally forced off the roof as a result of the ruling. Now, one year later, a battle is brewing in Boston over who should be allowed to perform solar installations in the Commonwealth of Massachusetts.
In the past solar integrators and electricians shared installation jobs, with electricians pulling the wire permits and completing all of the hard wiring on solar jobs. Wiring represents about 10-20% of a solar installation, according to estimates.
Under the new ruling, electricians must be on the job from start to finish and must perform (or help to perform) all aspects of the install, including pouring concrete for ground-mounted systems or putting up racking on the roof.
It’s an important issue in Massachusetts because of Governor Patrick’s interest in aggressively expanding solar energy in the state. His Commonwealth Solar Program has attracted numerous solar energy companies to set up shop in Massachusetts and analysts are predicting that with the state’s newly created SREC market, it will start to rival New Jersey, the second largest solar market in the U.S.
Companies like Borrego Solar, Alteris Renewables and Nexamp have seen solar sales increasing in the state, and electricians see the burgeoning solar industry as an opportunity to create new work.
With so many Americans unemployed right now, and the Massachusetts construction industry experiencing up to 25% unemployment since the recession started in 2008, it’s not surprising that Massachusetts’s electricians are looking to the solar industry.
“We’ve lost jobs just like all the other trades,” said Martin Aikens, a Business Agent of International Brotherhood of Electrical Workers (IBEW) Local 103, in a conference session during the Northeast Sustainable Energy Association’s (NESEA) Building Energy 10 conference in Boston. The conference session was entitled, “The Great Solar Certification Divide,” and included a panel of solar integrators and electricians.
In the conference session, Aikens explained that the issue is safety. He said that electricians go to school for four years and put in 8,000 hours of training before becoming licensed. “If you’re not qualified to install then you’re going to die. This is what it’s all about — licenses,” he said.
Chris Kilfoyle of Berkshire Photovoltaic Services (BPVS), a solar firm based in Adams, Massachusetts, doesn’t think it’s that cut and dry. He said that more than 11 MW of PV have been installed safely and properly under the Commonwealth Solar Program, which requires inspection and proper licensure in order for rebates to be doled out. Kilfoyle is not aware of any safety issues having occurred in the past.
“Certainly nothing that was brought to the attention of the state board of electrical examiners or to the Commonwealth Solar Program,” he said.
Before the new ruling, said Kilfoyle, safety was maintained by all the various trades involved in solar installations. “So, if you’re a general contractor, your workers will have been OSHEA certified, they are wearing proper safety gear when they are working on a roof.”
Building contractors — who are responsible for pulling building permits — would ensure that panels were mounted correctly and look at issues such as properly attached mounts, using the right screws and sealing them properly.
“Those all come under the purview of the building code,” he said.
Integrators like Kilfoyle and John Abrams, President and CEO of South Mountain Company, maintain that the new ruling now requires electricians to do some of the tasks that they are not trained to do. “They can’t stand going up on the roof,” said Abrams, who’s design/build firm is located on Martha’s Vineyard. But now electricians are helping with those tasks because that’s what the ruling dictates.
In addition, Kilfoyle pointed out that NABCEP certification, the industry standard for solar installers, is voluntary in Massachusetts. “But if you examine who the 30 NABCEP-certified installers are, they are not electricians,” he said. “NABCEP is the only course of study and the only credential that really covers both the mechanical/structural work involved in PV systems as well as the nuances of electrical work,” he said.
But if electricians haven’t been pulled onto job sites to make them safer, then what is the rationale behind the ruling? Neither the State Board of Electrical Examiners nor the IBEW was available for comment, but Kilfoyle believes the issue comes down to the economy. “It’s really an issue of a downturn in construction jobs and this particular electrical union saying ‘gosh, look at all this money coming into the state for renewable energy, we want it all,’” he said.
Enter HR4180
New legislation has been introduced in Massachusetts that solar integrators hope will resolve the problem. HR4180 asks the state to create a new solar license classification that falls under a specialty construction supervisor license.
Under HR4180, solar licensees would have NABCEP expertise “for roof loading, snow loading, wind loading particular to Massachusetts, structural attachment and waterproofing,” said Kilfoyle. Job site organization, safety matters and issues related to system design, orientation, shading and production would also be required knowledge.
Supporters believe that HR4180 would send a clear signal to the organizers of green workforce training efforts underway at Massachusetts’s community colleges and technical schools, providing trainees with a career path they could pursue. While it might take someone 8,000 hours to become an electrician, pursuing a Solar PV license would be much faster, according to Kilfoyle.
If the legislation passes, Kilfoyle hopes the status quo in Massachusetts will be restored, with electricians pulling the wire permits and doing the hard wiring and solar integrators performing the remainder of the tasks. He said that integrators are prepared to keep focused on the issue should the bill fail.
In the meantime, some solar companies are becoming electrical contracting companies in order to comply with the ruling. Others are fighting it on a case-by-case basis.
Kilfoyle encourages solar companies in other states to stay on top of their local electrician boards and urges them to work toward PV licensure. Installing PV “is a specialty technical skill,” and requiring a solar license is in everyone’s best interest in order to ensure it’s done correctly, he said.
“We want to make sure that the consumer has full trust in what we are doing,” he said.
We have also done some innovative work for the Legacy Group, and although we didn’t win this tender, we still want to promote the hotels ground breaking move towards renewable energy.
Israeli Ambassador to South Africa Dov Sergev-Steinberg and Public Enterprises Deputy Minister Enoch Godongwana on Monday inaugurated the 117 flat panel collector solar water heating installation above the rooftop of the Hotel Da Vinci, in Sandton.
The hotel is the latest development of the Legacy Group, which is also the developer, contractor and owner of the Michelangelo, the Michelangelo Towers and the Raphael Penthouse suites in Sandton.
The company responsible for the solar installation is Kayema Energy Solutions, and the Kayema international solar experts worked together with Legacy’s architects and design engineers to implement the solution.
The project is complete and commissioning of the system will start in the next two to three weeks.
The solar water heating system is capable of preheating 30 000 litres of water before it enters the hotel’s electrical heating system, which is expected to reduce the electricity usage by about 60%.
Kayema also introduced a remote monitoring system, which monitors flow rates, temperatures and water pressure and will allow an instantaneous view of this system’s efficiency and performance from any computer desktop at any time.
It was estimated that 500 000 kWh/y of electricity would be saved, while some 210 t of carbon-dioxide emissions would be mitigated.
The installation consists of 117 2-kWh flat plate collectors, which use Israeli technology, and are said to be reliable, and easy to maintain.
Kayema Energy commercial projects manager Dovi Finger explained that the installation took about six months to complete, and two months of that was dedicated to the engineering and planning phase of the project, while installation took about three months.
It was described as a challenging project because of the shape of the roof. Also, the fact that the roof is used as a fire escape meant that the panels needed to be raised above head height to allow movement under the panels. This required structural steel platforms for the panels, as well as having to take into account wind factors
Story: Thanks to Engineering News
Latest SA Gov movement in “Greener Technologies”, this info is gained from Engineering News, a Creamer Media Division:
The South African government has given strong signals that the country’s energy intensity is no longer sustain-able and has started to outline its low-carbon-economy vision.
To be sure, the move has as much to do with the prevailing electricity imbalances as it does with any international trends or pressures relating to climate change, or aspirations to exploit the so-called ‘green job’ possibilities. In other words, the programme is, arguably, a policy attempt at making virtue of necessity.
That said, the Department of Trade and Industry (DTI) has taken “a serious first step towards the systematic promotion of green and energy efficient goods and services”, with the release of the second version of the Industrial Policy Action Plan (Ipap2), which outlines the direction in which the department wishes to push South Africa’s industrial capabilities.
“Increasing energy costs pose a major threat to manufacturing and render our historical capital- and energy-intensive resource-processing-based industrial path unviable in the future,” notes the DTI.
However, this is not viewed as entirely bad news, as the department also recognises that there are “significant opportunities to develop new ‘green’ and energy efficient industries and related services”.
Trade and Industry Minister Rob Davies explains that, through the Ipap2, government intends to develop proposals to enhance access to concessional industrial financing for investment in Ipap priorities and other productive sectors on terms comparable to those of our major trading partners.
Science and Technology Minister Naledi Pandor has also noted that government’s economic sectors and employment cluster, which has been mandated to grow the economy and create jobs, will finalise a ‘green economy’ plan and present it to Cabinet by July 2010.
“Green jobs will grow both directly and indirectly in the transport, energy, building, manufacturing, agriculture and forestry sectors. There will be employment in the manufacture, installation and operation of clean energy for people like wind turbine engineers, insulation installers, recycling sorters and photovoltaic cell salespeople,” says Pandor.
“Indirectly, there will be jobs in the greener-goods supply chain – from solar cell manufacturers to green building-materials retailers to wind farm maintenance firms to recycling haulers to energy auditors. And, most importantly, there will be battery manufacturers with distribution centres at home and on the road,” she adds.
Government is reportedly already supporting clean energy research at universities, as well as investing in an electric car, and will soon launch the prototype of an ebike.
A recent report by international research organisation the Global Climate Network on the job potential of low-carbon tech- nologies indicates that, directly, some 36 400 jobs and, indirectly, 109 100 jobs could be created in the renewable-energy sector in South Africa by 2020.
Deloitte tax director Duane Newman says that the firm expects to see the emergence of government grants to incentivise business moves towards a low-carbon economy in South Africa.
The first cluster of key sectors identified in the 2010/11 to 2012/13 Ipap2 comprises “qualitatively new areas of focus”, and this is where the green and energy-saving industries are found, and, along with that sector, metal fabrication, capital and transport equipment and agroprocessing also feature.
Good Start, But . . .
“It’s a good start,” says Mainstream Renewable Power South Africa director Davin Chownof the green focus of Ipap2, “but we need something really bold and progressive, given the resource base we have”. “This is a first step in the right direction, but we need something that shows more confidence in the renewable-energy sector,” he tellsEngineering News.
Ipap2 highlights that, in 2007/8, the global market value of the low-carbon green sector was estimated at some $5-trillion, and this figure is expected to rise in light of climate change imperatives.
“Increasing concerns [about] carbon emissions and climate change will have a profound impact on our economic landscape, introducing both threats and opportunities,” cautions the department.
The DTI also touches on the emergence of what is being called ‘eco-protectionism’ – coming from advanced industrial countries in the form of tariff and nontariff measures such as carbon taxes and restrictive standards.
Solar Water Heating
The most attention, under the green and energy-saving industries section of Ipap2, was given to solar water heating, and the DTI notes the Department of Energy’s (DoE’s) commitment to installing one-million solar water heaters (SWHs) by 2014, increasing this goal to 5,6-million SWHs by 2020. This initial commitment will be funded through a mechanism that is currently being developed by the DoE, and is expected to draw on electricity tariffs and funds, such as the World Bank’s Clean Technology Fund (CTF).
The prospect of sustainable demand was expected to attract entrepreneurs to invest in domestic supply capacity.
“The international market, and particularly the African market, should be seen as a source of long-run demand that will outlast any short-term mass roll-out strategy,” emphasises the department.
The Key Action Programme for solar water heating was the roll-out of a national SWH programme and manufacturing and install-ation capacity, through a phased approach to SWH production to increase the local market size and allow long enough lead times for manufacturers to upscale.
The DTI’s SWH milestones are:
• By the second quarter of the 2010/11 financial year (ending March 31, 2011), the DoE will introduce a subsidy programme covering one-million units by 2014.
• By the end of December 2010, the DTI and the National Regulator for Compulsory Specifications will publish amended national building regulations to make it compulsory for new buildings and upgrades to homes to install SWHs and other energy efficiency building requirements, from March 2011.
• By the end of September 2010, the DTI will ensure that legislation is enacted to make it compulsory to install a SWH when an existing geyser is replaced.
• Between 2010/11 and 2012/13, DTI incentives and Industrial Development Corporation (IDC) industrial financing will be leveraged to support investment and increasing manufacturing and installation capacity in the SWH value chain.
Sustainable Energy Society of South Africa SWH division head Dylan Tudor-Joneswelcomes the initiatives and looks forward to cooperating with authorities with relevant inputs where needed.
With regard to increasing manufacturing capability, Tudor-Jones warns against premature investment until the demand has been created to justify significant investment, but adds that once the demand is visible, he is “fully behind” incentives to increase manufacturing capability.
The programme hopes to increase SWH installation from 35 000 to 250 000 units a year over the next three years, and to increase manufacturing from 20 000 to 200 000 units a year.
The DTI also recognises that poor-quality products could give the entire industry a bad name, thus the requirement for clear standards for the industry, and the need to unblock the South African Bureau of Standards (SABS) testing bottlenecks is vital.
Concentrating Solar Thermal
Concentrating solar thermal (CST) power is viewed as “the most promising renewable- energy generation option in South Africa” and, therefore, should receive priority support, even though wind and biomass should also be explored and developed, says the DTI.
The department notes that the IDC is currently investing in a CST demonstration plant, near Upington, in the Northern Cape, which aims to leverage the renewable-energy feed-in-tariff. This requires that Eskom expedite its Power Purchase Agreement.
The successful demonstration of the viability of the pilot plant will contribute to a broader roll-out of this technology and associated manufacturing opportunities. As CST is a new technology in South Africa, it requires demonstration of commercial viability and broader economic linkages.
In its most recent tariff increase application, State-owned utility Eskom said that it was in advanced discussion with the World Bank to secure a $3,7-billion loan for its capital programmes, including $500-million for a CST project, which would also draw on funds from the CTF extended to South Africa by the World Bank.
“Eskom and [the IDC] have been engaging to find mutually beneficial areas of cooperation, and the solar project is one of a number of possibilities. Our forecast is that there will still be a funding gap after the World Bank funding, and the IDC will be well positioned to close that funding gap,” IDC head of Public Private Partnerships Lindi Toyitells Engineering News.
The IDC says it is “very keen to fund electricity generation” and, since the world is moving towards clean energy generation, solar is one of the IDC’s many clean electricity generation technologies of focus to deliver green jobs throughout the value chain.
With regard to wind technologies, biomass and waste management, Ipap2 merely notes that further work will be done to unpack the potential of these sectors. The DTI expects wind energy generation, biomass and recycling strategies and action plans to have been developed by the fourth quarter of the current financial year.
“From a wind point of view, it is very disappointing, because we have substantive evidence that there is a very strong wind resource – sufficient for a large-scale industry,” adds Chown.
Industrial Energy Efficiency
The DTI states that an industrial energy efficiency programme will be developed by the fourth quarter of the current financial year, including consideration of more attractive financing models and the scaling up of the National Cleaner Production Centre.
This will counteract higher energy prices and lower emissions targets, and create new goods and services. The major outcomes will be more attractive financing options for the introduction of industrial energy efficiency improvements.
A particular area that has been high- lighted as having the potential for significant increases in energy efficiency is the adjustment or replacement of industrial motors. This already falls under Eskom’s demand-side management programme.
Although much attention has been given to energy efficiency after the power crisis caused electricity blackouts in 2008, South Africa is also a water-scarce country, an issue that has also been receiving more attention of late.
Thus, the strengthening of standards related to water efficiency in building and industrial applications has been included in Ipap. This could also lead to industrial and service opportunities, such as the manufacturing and installation of rainwater collection tanks, notes the DTI.
The DTI seeks to strengthen building and commercial water efficiency standards and, to this end, the SABS has been tasked with reviewing and strengthening building and commercial water efficiency standards by the end of March 2011.
At this stage, the DTI will also scope and identify economic opportunities associated with improved water efficiency.
Energy Efficient Vehicles
Initiatives to commercialise a domestically developed electric car, which forms part of the automotive sector intervention in the Ipap2 second cluster, will have broader spillover effects, such as the creation of a legislative and regulatory environment to enable the operation of electric vehicles, relevant testing infrastructure for electric vehicles, local manufacturing for domestic and global markets, initiation of charging infrastructure and electric vehicle educational campaigns.
The DTI notes that the automotive sector will be “profoundly affected” by the long-term shift from the internal combustion engine to cleaner technologies, such as electric vehicles.
By the end of December 2010, the DTI wants approval of investment support measures in place for the manufacture of the electric vehicle and components, as well as the development of a government position on the purchasing, demand stimulation and infrastructure for charging, testing facilities and public education regarding electric vehicles.
Roll-out of public education on electric vehicles is expected by the end of June 2011, while commissioning of the plant will take place in the second quarter. Development of testing facilities is expected by the third quarter, and start of plant construction in the fourth quarter.
By the end of the March 2014 financial year, production of the electric vehicle will start.
The DTI further states that an estimated 160 000 direct jobs will be created in the electric vehicle industry in the next ten years, while investment levels exceeding R20-billion are expected in the next four years, with a further R3-billion a year for the following six years. Greater localisation of componentry will also lead to an improvement in the trade balance.
Higher Targets Needed
“The general sentiment is positive,” says World Wide Fund for Nature living planet unit head Saliem Fakir of the green points of Ipap2. “However, the proof of the pudding is in the detail of how this will unfold. The industrial leg is very dependent on the demand, or push factors, that are driven through the energy complex,” he adds.
None of the green energy benefits, from an industrial point of view, will materialise without the energy complex, particularly the electricity sector driving demand and supply. The crucial issue is scale. Ipap2 needs to identify the scale that is necessary to catalyse investment, or justify investment of scale in the creation of industrial value chains, notes Fakir.
“With no clear long-term renewable- energy target, it is probably going to be hard for the Ministry and the DTI itself to develop an industry off the back of a 10 000-GWh target by 2013. You need a bold renewable- energy strategy and target and, off the back of that, your industrial plan will grow,” says Chown.
The DTI does note that industrial policy and Ipap2 form part of a larger set of interrelated policies and strategies to generate a new labour-intensive and value-adding growth path. Thus the need for a process – led by the Economic Development Department (which sits at provincial level) for stronger articulation and integration of a fuller range of policies to ensure coherence among them, notes the DTI.
Fakir states that many government programmes will have to be coordinated for the effects to translate into the creation of a new industrial base around the green sector.
A scale of demand in renewables and energy efficiency is critical in creating private-sector interest in the development of an industrial or manufacturing base. For instance, around wind, there probably needs to be a demand for between 2 GW and 3 GW of power to incentivise investment from original-equipment manufacturers.
And South Africa’s demand will enable an industrial base that can supply the region, notes Fakir.
The draft Taxation Laws Amendment Bill 2009, which was released for comment earlier this week by the Treasury, contains two incentives in support of the environment. Businesses will be able to cut their tax bill by reducing their carbon emissions.
Firstly, an income tax incentive is proposed for any business that takes part in a clean development mechanism project. The incentive applies to the disposal of carbon emission reductions. The disposal of these carbon reductions will be exempt from income tax.
The cleaning mechanism development initiative was set up under the Kyoto Protocol to allow industrialised countries to invest in projects to reduce carbon emissions. The reduction of carbon emissions is the elimination of harmful industrial by-products.
Emil Brincker, a tax director at commercial law firm Cliffe Dekker Hofmeyr, said yesterday there had been a limited uptake of cleaning development mechanism projects in SA. This was largely due to financial difficulties encountered by companies, he said. “The proposal to introduce tax incentives on the disposal of carbon emissions was in line with international norms,” Brincker said.
“The government recognised that climate change was becoming a top priority.”In December, petrochemicals group Sasol applied to register a clean development mechanism project with the United Nations Framework Convention on Climate Change, for the right to produce and sell carbon credits.
SA’s greenhouse-gas emissions rank in the top 20 in the world, contribute 1,8% to global emissions and are responsible for 42% of Africa’s emissions. Secondly, the amendment bill proposes that businesses will be able to obtain deductions from income tax for energy saved provided there is documentary proof of the resulting energy efficiencies certified by the Energy Efficiency Agency.Meanwhile the bill also contains a set of proposals on the conversion of secondary tax on companies to the new dividends tax. Brincker said the amendments would provide clarity for companies.
While the new system is better aligned with international practice, the government had recognised that it was more complicated as it now had to cover a wide range of shareholders, he said. The South African Revenue Service stood to lose a “few billions of rand” in the conversion process, he said.
Further, the bill contained amendments relating to the repeal of the deemed kilometre method for deducting travel expenses with effect from March 1 next year. Taxpayers who used their private vehicles for businesses purposes and who received a travel allowance would still be able to claim such expense by maintaining a logbook of business kilometres travelled. “Many taxpayers had abused the travelling allowance system in the past,” Brincker said.
Source: Business Day
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This was posted on Moneyweb today: COnfirming previous blogs on this site
The utility will have to increase tariffs by 90% if it fails to get funding for this years part of the project.
South Africa’s Eskom may have to form a public-private partnership to fund its new power generation programme without having to increase tariffs by 90 percent, a government official said on Thursday.
Eskom applied for a 34 percent increase in the tariffs last month, but said it might have to ask for more by the end of the year if it fails to source the money elsewhere.
The state-owned utility has launched a 385 billion rand expansion over five years to ease power shortages in Africa’s biggest economy, but has failed to raise all the capital in the face of the global financial crisis.
The country’s power regulator said last week Eskom would need a 90 percent increase in tariffs this year if it failed to get the funding required for this year’s part of the programme.
Nelisiwe Magubane, deputy director general at the country’s newly formed energy ministry, said the alternative option was for Eskom to partner with others, or the government to give Eskom another capital injection or supply further guarantees.
“Eskom can request government to get more guarantees, (can ask) government to do an injection or ask for a partnership so that the projects get done,” Magubane said.
She said no projects would be delayed given the necessity to increase power supply in the country.
Magubane said Eskom had not yet approached the government about a partnership possibility, but discussions on the proper funding model for the utility were ongoing.
She said the Kusile power plant project — one of two coal-fired 4,800 MW power stations Eskom is building as part of the expansion programme — could end up in a partnership deal.
She said the government was working to find a way forward for its nuclear programme which has stalled after Eskom cancelled a tender process last year citing financial woes.
Keep it Green
We have warned many customers about the future of power costs in SA. When asked “How long it will take, to pay back for my solar geyser?” the standard answer is four to five years depending on unit used and size of family/facility using the solar unit. When you factor in, increasing electricity costs, that repayment becomes sooner and sooner. Here is some scary news from Bloomberg Media:
May 28 (Bloomberg) — Eskom Holdings Ltd., South Africa’s state power company, may need to raise prices 90 percent to fund expansion plans, according to a regulatory official, increasing costs for business as the nation seeks to shake off a recession.
“At this stage I don’t know any other source other than the tariffs,” Thembani Bukula, a member of the National Energy Regulator of South Africa, told a Johannesburg conference today.
Eskom needs to spend 87 billion rand ($11 billion) in the year ending March 31, and 118 billion rand in the two years after that, as part of a five-year expansion, he said. Another option is to curb the program, originally aimed at preventing a repeat of 2008’s rolling blackouts and mine closures, he added. Eskom has asked for an “interim” 34 percent tariff increase.
The company, which generates 60 percent of the power used in Africa and 95 percent of South Africa’s supply, is building new plants, including the world’s fourth- and fifth-biggest coal-fired sites.
“Prices would be expected to increase by around 90 percent or over 90 percent for 2009-10,” Bukula said, and another 50 percent in the next year. Eskom’s funding options are limited by cuts in its credit rating and weak financial markets, he said.
Moody Investors Service last year reduced the utility’s foreign-currency rating by three levels to Baa2, the second- lowest investment grade.
‘Very Difficult’
Borrowing is “very difficult” as capital markets are tight and Eskom’s credit rating is under threat, Chief Executive Officer Jacob Maroga said at a conference on April 22.
Eskom will have to raise power prices “significantly” again this year to fund the expansion after increasing them 27.5 percent last year, Maroga said. The increase in 2008 helped push the nation’s inflation to a record 13.6 percent in August.
Even the company’s proposed interim price hike is one of the main “upside” risks to inflation, Reserve Bank Governor Tito Mboweni said in a speech in Pretoria today. Inflation slowed to an annual 8.4 percent in April, but was still above the central bank’s 3 percent to 6 percent target range.
Eskom should consider selling plants to fund its planned 385 billion-rand expansion, Westerouen van Meeteren, senior investment officer for Africa at Netherlands Development Finance Co., said at the April conference.
Inadequate power supply shut most mines in the country for five days in January last year as the national power system neared collapse. Demand has dropped since then as production of metals including ferrochrome declined amid a global recession.
Falling Into Recession
The utility has about 26 plants with total capacity of close to 40,000 megawatts. Thirteen are coal-fired and one is nuclear-powered. The biggest is the Majuba coal plant, with capacity of about 4,110 megawatts. Eskom is the world’s 11th- largest power utility in terms of generating capacity, and ninth-biggest in terms of sales, according to its Web site.
The country’s gross domestic product contracted in the first quarter, pushing Africa’s biggest economy into recession for the first time in 17 years, according to an official report released May 26. GDP fell an annualized 6.4 percent, the most since the third quarter of 1984, after declining 1.8 percent in the final quarter of 2008, Statistics South Africa said.
Keep it Green