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Renewable Energy at the Local Government Level SALGA/GIZ Small Scale Embedded Generation Workshop 18.04.2013 SALGA NATIONAL OFFICE PRETORIA.

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Presentation on theme: "Renewable Energy at the Local Government Level SALGA/GIZ Small Scale Embedded Generation Workshop 18.04.2013 SALGA NATIONAL OFFICE PRETORIA."— Presentation transcript:

1 Renewable Energy at the Local Government Level SALGA/GIZ Small Scale Embedded Generation Workshop SALGA NATIONAL OFFICE PRETORIA

2 08:00-08:30ARRIVAL / COFFEE 08:30-08:45 Welcome and introductions SALGA Representative 08:45-09:00 Agenda overview SALGA representative PART 1: Regulatory Framework Conditions, Financing Models and Technical Support 09:00-09:30Overview on AMEU SSEG Working Group Gerrit Teunissen, City Power 09:30-10:45 Areas of support provided by GIZ/SALGA Regulatory framework (results of needs analysis study). Technological orientation and possible business models. Technical aspects: GIZ SAGEN Grid Integration Component. Fritjof Boerstler, GIZ/SALGA 10:45-11:15 Areas of support provided by the Technical Assistance Unit (National Treasury): Unblocking the regulatory barriers (perceived or real) in the MFMA and PFMA and developing of innovative financing models of financially viable climate change related projects TAU Representative TEA 11:45 – 12:30 Areas of support provided by SEA (REEEP) Modelling the revenue impacts of the SSEG of small scale PV and developing the business strategies of small scale PV in the context of city and national priorities Andrew Janisch, Sustainable Energy Africa 12:30 – 13:15 Areas of support by Eskom ESKOM Standard Offer Programme: status and developments Danie Pienaar ESKOM Lunch PART 2: Way Forward 13:45-15:00 Mapping of interfaces, division of responsibilities and Way Forward ALL 15:00-15:30ClosureSALGA/GIZ Representative

3 Renewable Energy and the Role of Local Government SALGA/GIZ Small Scale Embedded Generation Workshop Dr Fritjof Boerstler GIZ-Advisor RE South African Local Government Association (SALGA)

4 Technical cooperation (GIZ): 3 Programmes South African German Energy Programme (SAGEN) Climate Support Programme Skills Development for Green Jobs Financial cooperation (KfW): 6 Projects in total, for example The Green Energy Efficiency Fund implemented by IDC for EE/RE; SHS in rural areas, co-financing of a 100 MW concentrated solar power plant in the Northern Cape Scientific and Technological cooperation projects, for example the Enerkey project Responding to the challenges – The Focal Area on Energy and Climate

5 South African – German Energy Programme (SAGEN) Component 2: Energy Efficiency Objective: The conditions for investments in EE have improved Component 2: Energy Efficiency Objective: The conditions for investments in EE have improved Component 1: Renewable Energy Objective: The conditions for investments in RE have improved Component 1: Renewable Energy Objective: The conditions for investments in RE have improved Sub-Component 1.1: Institutional and regulatory capacities for promotion of RE Sub-Component 1.3: Technical expertise for wind and solar Sub-Component 1.2: Support to grid and system integration of RE Sub-Component 2.1: Institutional capacity development for EE promotion Sub-Component 2.2: Implementation of innovative EE programmes Sub-Component 2.3: Development of a market for energy service provides Sub-Component 2.4: Technology dissemination and private sector cooperation

6 SAGEN Component 1: Geographic Focus LG (Districts and Province Level

7 Renewable Energy and the Role of Local Government SALGA/GIZ – An Overview Dr Fritjof Boerstler GIZ-Advisor RE South African Local Government Association (SALGA)

8 ? Focus RE – from a national and local government perspective IRP White Paper Vision BlueprintLegislation NEA ERA 1 NGR IEP IPP (REI4P) Constitution of South Africa (1996):Schedule 4B Competency in relation to electricity and gas reticulation. ERA Schedule 4 NERSA SC-SSEG

9 Compiled by Giljova S., GIZ, source: Municipal Integrated Development Plans ( ) Interest by municipalities to engage in RE-activities Baseline 45 District Municipalities 8 Metros 226 Local Municipalities Push Factors Energy security Increase in tariffs Pull Factor Climate Change

10 Political Will Data Collection Strategy Development Institutional Set up Legal requirements National Climate Change Response White paper State of Energy Report Energy and Climate Change Strategy/AP RE/EE Committee ERA MFMA MSA Institutional and Regulatory framework L RE-regulatory framework for municipalities The Stepping Stones Compiled by author

11 Current status on RE The metros perspective Compiled by author. Source of information: State of Energy in South African Cities 2011, SEA and AURECON NAS, 2012

12 Solar PV WtE Wind Mixture Overview: Exisiting and Planned RE-Projects

13 Form of Engagements 1. Public Private Partnerships (PPP)

14 Management contracts Sub-contracting Technical assistance contract Supply and Civil Works Contracts Foundation Determination PPP Leasing BOT Concession BOO Private Sector Commitment Duration of Contracts

15 Example 1: RE PPP – Maintenance Contract

16 City of Johannesburg: Waste to Energy Project (Biogas to Electricity) Example 1: RE Maintenance Contract Location: Johannesburg Waters Northern Waste Water Treatment Works near Diepsloot Operational since Nov 2012 Upgrading sludge digestion facilities (by- product biogas) Product of sewage treatment Aim: to reduce the electricity consumption by replacing the Eskom supplied electricity

17 Power plant is capable of producing 1.1MW of power for the treatment plant, which is 18% of its power requirements. Plans to ramp up the project to 4MW, which would be 65% of the sites power requirement, and the plant was designed to suit the upgrade. City of Johannesburg: Waste to Energy Project (Biogas to Electricity) Example 1: RE Maintenance Contract Power plant is capable of producing 1.1MW of power for the treatment plant, which is 18% of its power requirements. Plans to ramp up the project to 4MW, which would be 65% of the sites power requirement, and the plant was designed to suit the upgrade.

18 Example 1: RE Maintenance Contract City of Johannesburg: Waste to Energy Project Cost of sewage treatment in direct correlation with tariff development

19 Example 1: Public Electricity expenditure (eThekwini)

20 Contract duration Etc Ownership (only at BOO level all other stages imply assets ownership by public entity) in this sense a BOO would be very difficult according to section 14 MFMA Municipal Asset transfer regulation. Not in iterest of munic (e.g. eThekwini Land fill site management) Management contracts Sub-contracting Technical assistance contract Supply and Civil Works Contracts Foundation Commitment, data, strategy, institutional capacity + determination (ERA, section 34) PPP Leasing BOT Concession BOO Private Sector Commitment - +

21 Example 2: RE PPP BOT Contracts

22 Total 32 of registered projects (3 RE-projects) Standardized PPP provisions and PPP manual Growing interest by municipalities and private sector to engage in PPP Example 2: RE PPP BOT Contracts

23 PPP Models Example 1/2 Service can often be delivered more efficient and cheaper by IPP Less financial/technical risks for munics Projects seem to be bankable using ESCOM- rates (tariffs) Support by NT along the entire way Onerous and costly process (minimum of 2 years) Lack of awareness (process and eligible technologies) On-grid feed-in specifications not clear Two legislations to be followed? Credit risk Provisions of loans difficult PROCON Perceptions about PPP

24 Form of Engagements 2. Power Purchase Agreements

25 Contract between municipality and EG Foundation Commitment, data, strategy, institutional capacity + determination (ERA, section 34) PPA Voluntary Market (PPA between willing Buyer/Willing Seller) Private Sector Commitment - +

26 Example 3: PPA Contracts between municipality and EG

27 eThekwini – guidelines and forms Example 3: PPA between Municipality and EG Registration Form PPA eThekwini first municipality in SA to establish a formal application process for grid-tied energy generation Currently 6 EPGs have followed procedure and are in operation

28 Co-generation eThekwini Example 3: PPA between Municipality and EG NCP Alcohols (Co-generation) 2.8 MW of electricity is generated, of which 2.4 MW is used up on site with 0,4 MW being sold back to the grid NCP has signed a PPA with eThekwini (3 years) ESCOM Megaflex rates used (capital cost low)

29 PPA Models Example 3 Control of SSEG-activity by municipality Existing projects and layouts MFMA (Section 33) Expensive and time consuming tender process Security of investment not guaranteed Feed-in tariff (?) PRO CON Perceptions about PPA

30 Contract between municipality and EG Foundation Commitment, data, strategy, institutional capacity + determination (ERA, section 34) PPA Voluntary Market (PPA between willing Buyer/Willing Seller) Private Sector Commitment - +

31 Example 4: PPA Contracts between willing buyer and willing seller

32 Example 4: PPA between willing buyer + willing seller Location: premises of the Beefcor at Bronkhorstspruit 10 year PPA between generator (Bio2Watt) and user (BMW) 3 MW biogas to electricity plant (60,000 tons of biowaste per annum) Electricity to be sold at ZAR 0.96/kWh Wheeling agreements with ESKOM and Tswhane Municipality (40 km distance) Bronkorsspruit Biogas project BBP

33 Example 4: PPA Contracts between willing buyer and willing seller

34 Voluntary Market Models Example 4 Existing (and certified) traders Existing wheeling agreements Market driven/demand- based (willing buyer willing seller) Market restricted by willing buyers Municipality only benefits from wheeling charges PRO CON Observations

35 ? All Solar PV (CSP) Bioenergy Waste to Energy Biogas to Electricity PPP/PPA Selection of Pilot Municipalities (Circular) Feasibility Studies Green Tariff LCOE (Green Tariff for solar PV, business models) Workshop Green Tariff Cost of Supply Study (Green Tariff)? Business Models/ Regulatory Framework RE Technology Grid Integration Safety Standards Impact ??? GIZ/SALGA RE-Activities

36 Contact:


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