Energy Efficiency Strategy, Regulations and Monitoring 18 September

2 Presentation Outline 1.Background and Context 2.National Energy Efficiency Goals 3.National Energy Efficiency Strategy (NEES) Objectives 4.NEES Review Process 5.EE Policy Mapping Study 6.Overall Energy Efficiency Policy Framework 7.Proposed National EE Action Plan 8.National EE Interventions 9.NEES Implementation Progress 10.Conclusion

Background National Energy Efficiency Strategy (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 2005 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.” 3

2005 National Energy Efficiency Goals The 2005 NEES outlined the overall energy intensity reduction target of 12% by 2015 with sectoral energy efficiency improvement of 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 (2005 – 2015 using 2000 year baselines), including the associated drivers, such as the economic development and population growth. As part of implementing the 2005 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 2005 NEES, several legislative frameworks had to be developed or put in place to support the implementation of the Strategy. 4

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. 5

2012 Energy Efficiency Policy Mapping Study Parallel to the 2005 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 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. 6

Overall Energy Efficiency Policy Framework Policy map, monitoring tool and Proposed NEEAP Framework State of Play National Stakeholders International Stakeholders Review of policy documentation, initiatives and programmes NEEAP international Best Practice 7

2011 NEES Review Processes (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 that companies are at different levels 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. 8

2011 NEES Review Process (2) The second review of the National Energy Efficiency Strategy (NEES) started in 2011, with public and sector workshops to discuss the scope and elements of the NEES that needs review. Focused engagements/discussions were also held on the development of regulations (Income Tax Allowance on EE Savings) and standards (SANS and SANS 50001) 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. The draft second NEES review document was then presented to the Government’s Infrastructure Development Cluster on the 10 th October 2012, and later to Cabinet on the 20 th October 2012.

2011 NEES Review Process (3) Cabinet approved the publication of the draft second NEES review document for public comment, and was then published through the government gazette on the 29 th of November The closing date for the submission of the comments was 30 th of January During this period more than 30 comments were received, and the comments were grouped into the following themes: (i) The use of year 2000 baselines, (ii) whether NEES targets are aspirational or mandatory, (iii) The need for an organisational structure; (iv) definition of energy efficiency as it relates to the mining sector; (v) The use of green procurement; (vi) Energy services company development and support; (vii) The alignment with National Development Plan; (viii) The inclusion of energy efficiency indicators; (ix) The monitoring and verification of energy savings; and (x) The funding mechanism for energy efficiency measures, etc.

2011 NEES Review Process (4) All comments were analysed, and responses provided and this resulted in an adjusted NEES document. Although the 2011 NEES review is completed, the targets were not revised because the current cycle of the Strategy is ending in The focus was more of lessons learnt, what were the gaps and how they were and are currently being addressed; last focus on potential areas of improvement and propose recommendations of what can still be done. In a view to assess energy efficiency trends since the publication of the 2005 NEES, the Department of Energy also developed a National Energy Efficiency Action/Implementation Plan. The NEEAP’s objectives is also to determine adjusted sector/sub-sector baselines from those developed in 2000 year in preparation for the post-2015 NEES targets. Other key deliverables of the NEEAP for the next 18 months is the development and implementation of the energy efficiency monitoring system, energy management, measurement and verification of the past energy savings, functional energy efficiency incentive scheme.

Proposal for SA NEEAP Structure 12 NEEAP for South Africa High Level Contextual Environment, Objectives and Targets – with reference to National EE Strategy Sector 1 Sector 2 Sector 4 Sector 3 Sector Breakdown – as defined in the National EE Strategy 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 1 Programme analysis and detail activities Details of specific initiative number 2 Compliance with legislation or policy Details of specific initiative number 2 Programme analysis and detail activities Energy Efficiency Trends in South Africa 2000 – 2015 (to assess energy efficiency improvement levels) Alignment between individual programmes and overall objectives

National Energy Efficiency Interventions 13 49m campaign Other campaigns including schools etc. 49m campaign Other campaigns including schools etc. Localize supply of LED technology for street-lighting Source supply- install of LED Measure impact relative to baseline 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 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 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 Solicit various interventions through a Request for Proposals Measure impact relative to baseline Awareness CampaignMunicipal 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

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). 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 14

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EEMS-Residential Sector Data Flow 16

EEMS-Public Sector Data Flow 17

NEES Implementation Progress Standards & Regulations (1) Standards for Energy use in new buildings, Energy Management, and Measurement and Verification of energy savings (SANS XA, SANS & SANS respectively) were developed with South African Bureau of Standards (SABS) through the dti. SANS 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. 18

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 19

NEES Implementation Progress Standards and Regulations (3) Income Tax Allowance on Energy Efficiency Savings (section 12i & 12L of the Income Tax Act). –Draft Regulations on Section 12L have been completed and will be promulgated by the Ministry of Finance. –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). Minimum Energy Performance Specifications (MEPS) of household electricity appliances are being developed including energy performance of buildings. Mandatory provision of energy management plan is being considered with stakeholders. 20

Conclusion It is recommended that the PCE notes progress on the: –review of the 2005 National Energy Efficiency Strategy; –National Energy Efficiency Action/Implementation Plan of the NEES in order to assess the energy efficiency improvements since 2005, and prepare for the post-2015 energy efficiency targets; –development of standards and regulations on energy efficiency; –Development of the Income Tax Allowance on Energy Efficiency savings under section 12L of the Income Tax Act; –On the development of the energy efficiency monitoring system to track energy efficiency improvements since 2005 and using the 2000 base year and baselines; and –Process to establish post-2015 National Energy Efficiency Strategy 21