Programme director
Honourable Ministers
Executive Mayor
Senior government officials
People of South Africa
Distinguished guest
Colleagues
Ladies and gentlemen
It is a great pleasure and honour for me to be hosting the Renewable Energy
Summit today. We have come a long way since the Renewable Energy White
Paper was submitted to Cabinet in 2003 for approval. The White Paper sets a target of 10 000 GWh of renewable energy contribution to final energy consumption by 2013. This target is to be met by energy produced mainly from biomass, wind, solar and small-scale hydro.
We have convened the Summit today as part of our commitment to the Cabinet and the public that we will conduct a mid-term review of the progress towards the achievement of the target, objectives and deliverables of the policy. We are also intending to identify actions, plans and programmes that could be implemented in order to ensure that we successfully build a sustainable and stronger renewable energy industry as envisaged in the White Paper. It is also imperative that we should also commence with the process of developing a policy framework that will go beyond the year 2013.
Programme director, allow me to highlight for the benefit of everyone that for Government to meet its commitment to promoting renewables, there are four strategic areas of focus that have been identified, namely, financial and legal instruments, technology development and information dissemination through awareness raising, capacity building and education. These focus areas are instrumental in facilitating the development of an enabling framework for renewable energy development.
The department in conjunction with other institutions such the National
Energy Regulator of South Africa (NERSA), National Treasury, Eskom, the
Department of Public Enterprise, Department of Water Affairs and Forestry,
Independent Power Producers (IPPs) and others have done commendable work to address the strategic areas flagged in the policy, some of which has been completed while work is still in progress on other areas.
In 2005, the department established the Renewable Energy Finance and
Subsidy Office (REFSO), whose mandate includes the management of renewable energy subsidies and offering advice to developers and other stakeholders on renewable energy finance and subsidies. We take pride in saying that over the past three years we have successfully provided financial aid to the value of R15 million, leveraging investments of more than R300 million from the private sector and creating more than 160 jobs even though some of these were temporary. Additional capacity of 24 MW was added into the electricity network.
We fully acknowledge that the financial assistance we are providing through this office is modest. However, I can assure you that we are working closely with the National Treasury to beef up the office with specific emphasis on smaller projects, and we are already seeing positive results of our efforts.
When the office started back in 2005, our subsidy rate for grid connected projects was R250 per kilowatt. We have managed to increase this rate to R1 000 per kilowatt. In 2007, the National Treasury announced a 0.2c/kwh levy on non-renewable energy generation. We are developing a comprehensive business case with the aim of benefiting the renewable energy sector from this levy.
Programme director, it has been proven internationally that in order to create and sustain the renewable energy industry; a long-term finance mechanism is required to create certainty to the market. This is the price that we have to pay as a society for neglecting the development of the renewable energy technologies over the years. South Africa has proudly developed and perfected the coal to liquid fuels technology that we can now sell to other countries.
Despite the load shedding experience in recent months, through the national utility, Eskom, we have a well established electricity industry with a well developed electricity network. South Africa is also among the few countries that have well run nuclear power plants, so we can only ask ourselves as a nation, why should we lag behind when it comes to the development of renewable energy technologies? I believe that if we work together, whatever challenges we are currently facing with regards to these technologies are not insurmountable. Our own history attests to this.
I am happy to report that to date we have set up dedicated programmes to support specific industries as identified in the White Paper on Renewable Energy. In 2008, the Department set up a Renewable Energy Market Transformation (REMT) Implementation Support Unit at the Development Bank of Southern Africa (DBSA) to offer technical and financial assistance to renewable energy projects up to 2012. This programme, which has received substantial funding from the Global Environmental Facility (GEF), aims to accelerate the development process of bankable projects. It will provide performance grants for bulk solar water heating and matching grants for grid connected projects. The aim of this programme is to help government accelerate implementation.
The South African Wind Energy Programme (SAWEP) is another GEF funded programme which we introduced at the beginning of 2008 to provide dedicated support for wind energy development in our country. A Programme Management Unit located in our department is driving the process of updating South Africa’s wind atlas which will be publicly available to prospective wind energy developers. In addition to this, there is a strong focus on capacity building targeted at research and development institutions, the revival of the South African Wind Energy Association and the implementation of the green funding guarantee scheme for the Darling National Demonstration Wind Farm. The first phase of the SAWEP runs over a two year period.
Progress on the SAWEP programme includes; a successful workshop with stakeholders interested in wind energy development, implementation of the City of Cape Town Green Power Guarantee Scheme in line with their agreement to purchase premium power from the Darling National Demonstration Wind Farm, the successful appointment of a diverse team comprising of professionals from the South African National Energy Research Institute (SANERI), RISO in, University of Cape Town, the Centre for Scientific and Industrial Research (CSIR) and the South African Weather Services to update the wind energy atlas of South Africa.
This collaboration provides an opportunity for skill and technology transfer between RISO and the South African organisations that I have listed.
The SAWEP has also managed to raise additional funding from the Royal
Danish Embassy to strengthen its financial support to other core areas within the renewable energy portfolio that may impact on the development of the wind energy sector specifically. Some of this additional funding facilitated the appointment of consultants to update the Financial and Macro Economic
Modelling Study that was done in 2004, to reflect the current economic and financial costs.
The Department worked together with the National Treasury and the Royal Danish Embassy to provide oversight over the development of this Renewable Energy Business Case, the results of which will be provided during the course of this Summit. Findings from this study were also forwarded to the NERSA for consideration as input into the renewable energy feed-in tariff process. As part of strengthening the wind energy sector, SAWEP will continue in 2009 working with the Department of Trade and Industry on investigating the possibility of establishing a Wind Investment Industrial Development Programme.
We are currently implementing the Tradable Renewable Energy Certificates
(TRECs) system to provide an additional market based revenue stream to renewable energy project developers. The South African National Tradable Renewable Energy Certificates Team (SANTRECT) was formed to facilitate and co-ordinate the establishment of the Issuing Body as a Non-Profit Organisation (NPO). We have developed a constitution that will govern the operation of this Issuing Body, and soon we shall finalise the domain protocol and business plan, which will guide the operations of this Issuing Body.
Concerning legal instruments, the Electricity Regulation Act (2006) makes provision for new generation capacity using different energy sources. Again you will recall that in 2003, the Cabinet approved private sector participation in the electricity industry. It was decided that future power generation capacity will be divided between Eskom (70%), and IPPs (30%). Government projects that by 2026, the required capacity will be around 60 000 MW, effectively this means that 18 000 MW should be provided by IPPs. The Department is currently developing regulations on New Generation Capacity which will consolidate legislation governing the entry of IPPs into the electricity market.
Towards the end of 2008, we invited Expressions of Interest from interested project developers and the response we received was overwhelming. Project developers locally and abroad responded and received applications showed interest across all renewable energy technologies. It is evident that we have renewable energy IPPs who are ready to penetrate the electricity market. As a
department we are keen to support all technologies and are looking forward to the pending investments. We trust that once appropriate regulations are in place, the energy sector will see new entrance participating in this market and more capacity being introduced from other sources of energy.
The department recognises the huge energy saving potential that can be obtained through the promotion of solar water heating (SWH). Recognising this importance, the department, through its Renewable Energy Market Transformation (REMT) project, recently organized a National SWH Workshop. The workshop brought together all keys stakeholders in the SWH industry to audit the various fragmented initiatives in the industry and craft a roadmap to a successful SWH mass rollout programme. Key recommendations from this workshop pointed towards the need for a more aggressive coordinated approach and an appropriate policy and regulatory environment to scale up SWH installations. Let me reassure the market of our commitment to the creation of an enabling environment so that together we can surpass our 2013 renewable energy target of 10,000 GWh.
I am aware of the various initiatives through our state owned entities which will make this target realistic if we all work towards the same goal. For instance, in the next five years, the national utility, Eskom has a plan to roll out one million SWH; the CEF is targeting 300,000 and Joburg City Council is also looking at about 500,000. I know of a number of municipalities whose individual targets for the same period are in excess of 200,000 units. Given these and many other initiatives undertaken by the private sector, the SWH programme can easily contribute more than 3,633 GWh towards the renewable energy target. I am also aware that our target may not be that ambitious but it’s a starting point, it’s not the limit. I am also confident that if the planned installations take place, we can deliver more than 50% of the 10,000 GWh target from SWH alone.
On biofuels development, the government has decided to adopt a cautious approach, reducing the target from the initial 4,5% to a modest target of 2% which translates to 400 million litres per annum. The final strategy which was approved by the Cabinet in December 2007 adopted a short term focus of five years to achieve a 2% penetration level of biofuels into the national liquid fuel supply. In line with the focus on rural development and the provision of support to emerging farmers, the government proposed that only dual purpose crops should be used for the production of biofuels. Examples are sugar cane and sugar beet for bioethanol production and sunflower, canola, soya for biodiesel. Maize was taken out just before the final strategy was approved because of food security concerns that were raised by members of the public. Jatropha, which is not a dual purpose crop, was excluded in order to allow further research into its properties.
I need to emphasise that this downward revision of the biofuels target by no means reflects a changing attitude insofar as the objectives of the Strategy are concerned. Government, through the biofuels programme expects to make a visible impact on the rural economy through a specific focus on agricultural development. The emphasis of the biofuels strategy therefore, is whole value chain, from feedstock farming to biofuels manufacturing, processing and blending. As delegates here would know, the Government is still busy with a land reform programme and the Biofuels Industrial Strategy is designed to extend opportunities to emerging farmers by creating new markets for their farm produce.
In terms of progress, I can therefore summarise by saying that the department has an approved Biofuels Industrial Strategy and an implementation plan. Since the finalisation of the licensing criteria early in 2008, at least one license has been issued. Progress with license approvals is likely to be slow due to the emphasis on using locally grown feedstock. As a department we remain committed to monitoring the achievement of the policy objectives of the Biofuels Industrial Strategy particularly the contribution to job creation and rural development.
Continuous research and development is another important area particularly for this sector, both for technology and human capacity development. This is an area that we are working very close on with the Department of Science and Technology. Government R&D activities are carried out through institutions such as the SANERI, CSIR and other academic institutions. We are also benefiting through our membership of international bodies such as the IEA Bio-energy.
In the past five years the Department and relevant stakeholders have benefited through capacity building programmes that have been implemented using donor funds. Information dissemination to the public has also been the key focus areas over the past few years. Together with the Central Energy Fund, we embarked on intensive awareness raising campaigns in the last three years targeting the communities, industry and learners. I am happy to report that through SANERI, the government has introduced a master's programme on renewable energy and sustainable energy at Stellenbosch University. This programme will certainly contribute towards the development of skills in the energy sector.
It is evident that a lot of work has been done since the approval of the Renewable Energy White Paper in 2003. However, this effort did not come without challenges which in most cases hampered the completion of some of the projects we have planned. These challenges were submitted and noted by the Cabinet in January 2008 as a progress report on the implementation of the Renewable Energy White Paper. To date contribution in installed MW by renewable energy technologies still remains very small. We could attribute this to the fact that during the last five years the focus was on creating enabling environment to increase the uptake of renewable energy. Now is the time for implementation and we will fine tune any outstanding issues as we go along.
In conclusion, programme director, I call upon all the interested stakeholders present in this Summit to join us in assessing the progress made thus far since the establishment of the white paper and through action plans and programmes that will be implemented to achieve the 2013 target. The country needs to develop and promote commercially viable renewable energy projects to increase their visibility and despite the situation in international financial markets, we still hope that our countries that have diplomatic relations with South Africa, and have already proven their commitment to developing the renewable energy sector will invest in the SA programme.
Thank you.
Source: Department of Minerals and Energy (http://www.dme.gov.za/)
