Portfolio Committee on Energy National Energy Efficiency Strategy and Review Process

1. Portfolio Committee on Energy National Energy Efficiency Strategy and Review Process Ms Mokgadi Modise Chief Director: Clean Energy 31 January 2013

2. OUTLINE Background and context National Energy Efficiency Goals National Energy Efficiency Strategy (NEES) Objectives NEES Review Process EE Policy Mapping Study Overall Energy Efficiency Policy Framework Proposed National EE Action Plan National EE Interventions NEES Implementation Progress Stakeholders

3. BACKGROUND ON 2005 NEES • The White Paper on Energy Policy (1998) gives a mandate to the Department of Energy (DoE) to pursue an Energy Efficiency programme which is one of the lowest cost options for reducing energy consumption. • The NEES was approved by Cabinet and released in 2005 to explore the potential for improved energy utilisation through reducing the nation’s energy intensity (thus reducing greenhouse gas emissions), and decoupling economic growth from energy demand. • The original NEES stated that “Government will ensure that the necessary resources are made available to establish systems and legislation to facilitate the specification, collection, storage, maintenance and supply of energy-related data, according to the requirements of integrated energy planning and international standards.”

4. 2005 NATIONAL ENERGY EFFICIENCY GOALS • The NEES outlined how an overall energy demand reduction target of 12% by 2015 would be achieved with contribution from the subsectors, that is, industry and mining (15%), commercial and public buildings (15%), residential (10%) and transport (9%). • Implementation plans were drawn up for each of the sectors with forecasted targets of energy use reductions based upon assumptions about energy demand over the next 10 years, including the associated drivers, such as the economic development and population growth. • As part of implementing the NEES, interventions were to be implemented by concentrating on no-cost and low payback options with a high impact. These were to be followed by medium to long-term higher investment interventions. • Since the release of the NEES, several legislative frameworks had to be developed or put in place to support the implementation of the Strategy.

5. NATIONAL ENERGY EFFICIENCY STRATEGY OBJECTIVES The Vision of the NEES is “Reducing the energy intensity of the economy through energy efficiency” Achievement of this vision will assist in fulfilling the following national objectives: • Enhancing energy security by making better use of existing and new generation capacity. • Improving South Africa’s global competitiveness through reduced energy input cost. • Decoupling growth in energy consumption (and GHG emissions) from growth in GDP. • Improving global competitiveness will, in turn, contribute to job creation.

6. 2011 NEES REVIEW PROCESS (1) • The first review of the 2005 NEES was done in 2008, a revised document was then issued for public comments, however the comments received were not favourably, and requested a more radical alterations including clear definition of energy efficiency, monitoring system and baseline information that considers the fact companies are at different level of achievements of the targets. • Parallel to the development of NEES in 2005, an energy efficiency target Monitoring Methodology Handbook was also developed. • This EE Monitoring Methodology Handbook provides a detailed input data-streams required, however its review is also necessary to ensure that the South African energy efficiency monitoring system take full advantage of the current development and international best practice updates.

7. 2011 NEES REVIEW PROCESS (2) • The second NEES review process took into account current developments in the energy sector, that is, IRP 2010, National Climate Change Response Policy White Paper, and Industrial Policy Action Plan. • The second review has been conducted under the Industrial Energy Efficiency Improvement Project (IEEIP) in collaboration with the dti, Business, and international partners. • New measures are also being introduced through legislation, incentives, standards and training initiatives aimed at supporting the introduction of more efficient practices, energy management and systems optimisation to realise the potential savings and reduce the wastage which characterises every sector. In the implementation process, other national objectives will be addressed in creating ‘green’ jobs and developing the energy services market.

8. 2012 ENERGY EFFICIENCY POLICY MAPPING STUDY • Parallel to the 2011 NEES review process, an EE Policy Mapping Study was conducted through the South African Energy Programme (SAGEN) in collaboration with SANEDI and GIZ. • The outputs of the study provides a comprehensive policy and legislative context for the development of the National Energy Efficiency Action Plan (NEEAP) for the Republic of South Africa. • The purpose of this review was therefore to: • understand the existing energy efficiency policy and regulatory environment, key initiatives and programmes, and stakeholders • develop the framework for a monitoring tool and action plan to be used to assist in the development of a coordinated, unified and effective approach to: • energy efficiency, • energy conservation and • demand-side management.

9. OVERALL ENERGY EFFICIENCY POLICY FRAMEWORK International Stakeholders Review of policy documentation, initiatives and programmes National Stakeholders Policy map, monitoring tool and Proposed NEEAP Framework State of Play NEEAP international Best Practice

10. ANALYSED ENERGY EFFICIENCY POLICY, INITIATIVES AND PROGRAMMES • Overview • Current status and implementing agency • Key EE objectives and targets • Specific links to EE • Summary of effectiveness in relation to EE Policy, Strategy, Regulations, Taxes and Incentives • Supreme law – RSA Constitution • Energy Policy and Strategy • Energy Regulations and Legislation • Energy Efficiency Incentive Programmes, taxes, rebates and other incentives • Industrial policy, strategy and relative incentive programmes • Environmental and Climate Change National Policy and Strategy • Overview • Implementing body • Programme Targets • Links to Acts, Policy or Regulations • Funding Source, Format and Value • Comments, effectiveness Challenges & Opportunities Energy Efficiency Initiatives • Overview • Initiatives • Comments, effectiveness Challenges & Opportunities Government, International Agencies and Donor Funded Programmes

11. NEEAP for South Africa PROPOSAL FOR SA NEEAP STRUCTURE High Level Contextual Environment, Objectives and Targets – with reference to EE Strategy for detail Sector Breakdown – as defined in the EE Strategy Sector 4 Sector 3 Sector 2 Sector 1 Sector outline, overall targets and approach. Opportunities and challenges. Methodological approach. Applicable legislation Targeted / priority areas Details of specific initiative number 1 Compliance with legislation or policy Details of specific initiative number 2 Compliance with legislation or policy Alignment between individual programmes and overall objectives Details of specific initiative number 1 Programme analysis and details Details of specific initiative number 2 Programme analysis and details Summation of Results

12. CONSULTED STAKEHOLDERS FOR EE POLICY MAPPING STUDY

13. Localize supply of LED technology for street-lighting • Source supply-install of LED • Measure impact relative to baseline • Collate database of public buildings • Measure baseline consumption • Source supply-install of technologies that reduce consumption • Measure impact relative to baseline • Source supply of product that is >80% local content. • Source installation and maintenance • Initiate Standard Offer model for solar geysers • Measure impact relative to baseline • Solicit various interventions through a Request for Proposals • Measure impact relative to baseline • 49m campaign • Other campaigns including schools etc. Awareness Campaign Municipal Streetlighing Programme Public Buildings Programme Solar Water Heating Programme Industrial EE Improvement Programme Improve public awareness and increase public participation in EE programme Increase Municipal revenues (decrease consumption) by retrofitting street-lighting with new technologies. Retrofit HVAC, lighting etc. with new technologies, reduce energy consumption in line with building codes Increase penetration in high consumption domestic areas by replacing electric geysers Decrease energy intensity through various other interventions (Request for Proposals) Policy, Institutional Arrangements, Standards and Regulatory Mechanisms including the Measurement of baseline consumptions in respect of each programme followed by monitoring of targets NATIONAL ENERGY EFFICIENCY INTERVENTIONS

14. NEES IMPLEMENTATION PROGRESS Energy Efficiency Monitoring System (EEMS) • Regarding legislation to implement the NEES, the DoE promulgated “the Regulations for Mandatory Provision of Energy Data” in March 2012, which will assist in the collection of energy efficiency data required for the EEMS, and the setting of long-term targets. • In light of the above, the DoE embarked on the establishment of an EEMS in 2011. • The EEMS will track the achievements of the targets set out in the NEES but the quantum of data necessary to determine the progress on targets will only be available by the time of the third NEES review in 2015.

15. ENERGY EFFICIENCY MONITORING SYSTEM • The project is being implemented together with South African Local Government Association (SALGA) and South African National Energy Development Institute (SANEDI) as a financial administrator. • The project management is through a Project Steering Committee (PSC) with representatives from other government departments. • Overall objectives are to: • Institutionalise energy efficiency monitoring system and develop energy efficiency management systems within government structures • Track the developing state of energy efficiency in South Africa using updated energy efficiency indicators • Identify drivers for, and responses to energy efficiency changes • Monitor progress towards the targets and goals set in the National Energy Efficiency Strategy • Inform future energy efficiency policies, financing, regulations and plans

16. MUNICIPAL EEDSM MONITORING AND EVALUATION Planning Reporting Implementation • Inventory List (i.e public • lighting, etc) • Budget Required • EE measures/interventions • Energy savings potentials • Emissions reduction • potentials • Economic viability (RoI) • Business/Implementation plan • M&V process • Contractors appointment • Monthly/quarterly reporting • Budget spending • Budget Spending • MW/MWh saved • tCO2 saved • Reliability of data source Indicators , Economic Efficiency, Payback Period • Number of jobs created per Mio investment • MWh/a saved per Mio • tCO2 saved per Mio • Total energy cost savings

17. Municipal EEDSM Development & Implementation EEDSM Project(s) Implementation % EE Improvement for Municipalities Data Validation EE Monitoring & Evaluation System Inventory/Baseline Determination Implementation Adjustment of the Baselines/Inventory List EEDSM Grant Allocations Analysis of Business/Implementation Plan EEDSM RfP

18. NEES IMPLEMENTATION PROGRESS Standards & Regulations (1) • Standards for Energy use in new buildings, Energy Management, and Measurement and Verification of energy savings (SANS 104400 XA, SANS 50001 & SANS 50010 respectively) were developed with South African Bureau of Standards (SABS) through the dti. • SANS 50010 will be of use to local industries in four ways, namely to: (i) enable industries to accurately quantify the true benefits as a result of energy savings measures; (ii) provide consistent feedback regarding the typical performance of the various energy savings opportunities available to industry; (iii) let companies improve their monitoring against targets; and (iv) allow companies to claim any tax benefits available to them from energy-saving programmes.

19. NEES IMPLEMENTATION PROGRESS Standards and Regulations (2) • Standard for Energy Management (SANS 50001) – This standard will assist in the continual improvement framework to incorporate energy management into everyday organizational practices. In the context of Energy Management, companies will do the following: • Plan: conduct the energy review and establish the baseline, energy performance indicators (EnPIs), objectives, targets and action plans necessary to deliver results that will improve energy performance in accordance with the organization's energy policy; • Do: implement the energy management action plans; • Check: monitor and measure processes and the key characteristics of operations that determine energy performance

20. NEES IMPLEMENTATION PROGRESS Standards & Regulations (3) • Income Tax Act allowances on industrial energy efficient manufacturing capabilities and energy efficiency savings, Section 12l and 12L. • Draft Regulations on Section 12 L is providing for an allowance on Energy Efficiency Savings are in the pipeline for promulgation (i.e. allowance for measured and verified savings). • Draft Regulations on Section 12L have been completed and will be promulgated once the finalisation of the amendment of section 12 L by National Treasury based on the Office of the Chief State Law Advisor. • Regulations for 12i is aimed at the large manufacturing investments (i.e. upgrades, expansions or new facilities that exceed R30 million and R200 million respectively).

21. STAKEHOLDERS CONSULTED IN THE DRAFTING OF 2011 NEES REVIEW DOCUMENT • The DoE invited national, provincial and local government departments to workshops in Gauteng and KwaZulu Natal, and interested and affected parties to sector workshops in 2011. • Focused engagements/discussions were also held on the development of regulations and standards interlinked to the NEES continued with the dti, National Treasury, DEA, Mineral Resources, the National Regulator for Compulsory Specifications and SABS as part of this second review. • In addition to the above, the Business Unity South Africa (BUSA) and the National Business Initiative (NBI) were also engaged. • The draft 2011 NEES second review document was presented to the Infrastructure Development Cluster on the 10th October 2012.

22. 2011 NEES REVIEW STAKEHOLDERS CONSULTATION PROCESS • The stakeholders consultation process of the 2011 NEES review document will also take into consideration the EE Policy Mapping Study findings and recommendations, and also utilised for the development of a multi-year National Energy Efficiency Action Plan • Apart from the public comments that are expected to be received, the Department of Energy will also coordinate workshop sessions targeting government departments, and NEDLAC social partners. • International Partners will also be informed of the 2011 NEES review process, and specifically the planned energy efficiency interventions for the next three years.

23. ACTION PLAN AFTER PUBLIC CONSULTATION • Once the Public Consultation process has been completed, all comments will be consolidated and incorporated into the draft NEES Second Review Document.

24. CONCLUSION • Public comments for the 2011 NEES review process will also take into consideration the EE Policy Mapping Study findings and recommendations, and the development of a multi-year National Energy Efficiency Action Plan (NEEAP). • Draft NEES Second Review Document approved by Cabinet to be gazetted for public comments. • That targeted sector workshops will be held as part of the 2011 NEES review. • The draft 2011 NEES second review document will be gazetted for a period of six weeks (from 29 November 2012 to 30 January 2013) to allow the pubic adequate time to comment.