1. PRESENTATION TO THE NATIONAL ASSEMBLY PORTFOLIO COMMITEE ON ENERGY
EXPLORING SOLUTIONS TO CHALLENGES ON FINANCING & CERTIFICATION ON LOCALLY PRODUCED RENEWABLE PROJECTS
PRESENTATION TO THE NATIONAL ASSEMBLY PORTFOLIO COMMITEE ON ENERGY
ENERGY STAKEHOLDER MEETING, 30 August 2012

2. OVERVIEW ROLE & CONTRIBUTION OF BANKING SECTOR
EXPERIENCES/LESSONS IN PROCUREMENT OF RENEWABLES
PROGNOSIS ON KEY ISSUES

3. ROLE & CONTRIBUTION OF BANKING SECTOR
INDEPENDENT POWER PRODUCERS (IPPS)
SUCCESS STORY - IRP INTRODUCED MARCH 2011 (17 MONTHS AGO)
% RENEWABLES (RE)
IRP 42% CAPACITY ( MW) RE
MW (RE TARGET)
MW (ACHIEVED 68% OF RE TARGET)
- FIRST RE PLANT ON LINE APRIL 2013
IPP RE PROJECT FINANCE R100 BN OF WHICH R70 BN FROM
DEBT FINANCE (COMMERCIAL BANKS PROVIDED/WILL PROVIDE IN
EXCESS OF 80% OF THIS FUNDING)
- LOCAL CONTENT (ROUND 1: 28.5%, ROUND 2:47.5%, TARGET
60/65%)
- COMPETITION (ROUND 1&2) HAS ALREADY DRIVEN DOWN PRICES
PV 2.8C/KWH TO 1.7C/KWH, WIND R1.14/KWH TO 89C/KWH
- SURPLUS BIDDERS/FINANCIAL INTEREST
RENEWABLE ENERGY IS AT CRITICAL STAGE. EARLY SIGNS ARE ENCOURAGING BUT THERE IS A LONG ROAD AHEAD

4. ROLE & CONTRIBUTION OF BANKING SECTOR (CONT.)
COMMERCIAL BANKS WILL COMPETE FOR & EXPLOIT ANY VIABLE & RESPONSIBLE
OPPORTUNITY (COMMERCIALLY VIABLE & SUSTAINABLE). DFIs (SUB-COMMERCIAL, RISK
SHARING)
ALREADY MOVED INTO:
- INVESTING SOLUTIONS E.G. GREEN EXCHANGE TRADED FUND (+30%
JSE OUT-PERFORMANCE)
- FX
- INTEREST RATE & COMMODITY HEDGING
- AGENCY/TRANSACTIONAL SERVICES
- CDM (R100M ALREADY INVESTED)
CAPITAL IS NOT AN ISSUE
BANKS ALREADY RETROFITTING THEIR EXISTING PREMISES (PLUS R100M SPENT)
- WHY: IT WORKS, DECREASES SUPPLY PRESSURE, DECREASES OPERATING
COSTS, STATE REBATES/TAX IINCENTIVES MAKE IT ATTRACTIVE (BEHAVIOURAL
ECONOMICS)
IT PLATFORM ELECTRICITY BACK UP (COST UNKNOWN)
ALREADY 3 -5 GREEN STAR AWARDS ON NEW BUILDINGS

5. EXPERIENCES/LESSONS IN PROCUREMENT OF RE
CHALLENGES (IPP’S)
- RISK
- TIME CONSTRAINTS
- INEXPERIENCE OF BIDDERS
- BUREAUCRACY
- STATE: BALANCE BETWEEN SOCIAL & ECONOMIC IMPERATIVES
- INABILITY TO REACH LOCAL CONTENT CRITERIA
- CORE MANUFACTURING LOW – ESPECIALLY IN PV AREA (NEED FOR AN ENABLING ENVIRONMENT: FINANCE REASSURANCE, MARKET LONGETIVITY)
- FEED-IN TARIFFS
- STATE BOTH “REFEREE & PLAYER”
CRITICAL FOCUS AREAS FOR RE:
- MARKET CERTAINTY
- LOCAL CONTENT
- FOREIGN MANUFACTURING INVESTMENT
- SUITABLE FINANCE (NBI CO-ORDINATED “GREEN FINANCE”
PROJECT (BANKS,DBSA,IDC). OUTCOME BY END 2012
- LACK OF EXPERTISE
- DECOUPLING VALUE CHAIN TO PROMOTE COMPETITION & TO
ENABLE MARKET TO GROW BEYOND ITS “INFANCY”
- RE INFRASTRUCTURE SUPPORT

6. PROGNOSIS ON KEY ISSUES
BEHAVIOURAL ECONOMICS AT PLAY: MARKET WILL RESPOND
- COMMERCIALLY/ECONOMICALLY VIABLE/SUSTAINABLE
- ENABLING ENVIRONMENT (STATE SUPPORT, RIGHT LEVEL OF REGULATORY
FRAMEWORK (DON’T OVERDO))
- COMPETITION
- OPPORTUNITY
- MARKET CERTAINTY (MANUFACTURERS, IPPS,CONSUMERS,)
- CONSUMER EDUCATION
FOCUS ON IMPLEMENTATION - KEY FOCUS AREAS/PRIORITIES (IT’S OK TO MAKE A
MISTAKE - LESS TALK/POLICY PERFECTION - MORE IMPLEMENTATION FOCUS)
NEED TO SEE LOCAL CONTENT/JOB CREATION IN BROADER VALUE CHAIN SENSE
(SA INC. OPERATES WITHIN GLOBAL CONTEXT WHERE INVESTMENT
& SKILLS FLOWS ARE MOBILE AND CONVERGE TO MOST ATTRACTIVE
DESTINATION/S (SIGNIFICANCE OF SA WITHIN GLOBAL CONTEXT, CORE COMPETENCIES,
SKILLS, COMPETITIVENESS, STABLE POLITICAL/MACRO-ECONOMICS, INVESTOR
PROTECTION ETC.)
BALANCE SOCIO/ECONOMIC DEMANDS OR FRIGHTEN BOTH LOCAL/ INTERNATIONAL INVESTORS AWAY

7. ANY QUESTIONS ?