1. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa SMART Electricity Planning a healthy, modern, affordable electricity supply for all Presentation on The co-generation of electricity to the Portfolio Committee on Energy (PCE). 25 th July 2013, Cape Town. By Robert Fischer, Programme Manager Policy & Research at Project 90 by 2030. Representing the Electricity Governance Initiative of South Africa (EGI-SA).

2. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa Electricity Governance Initiative of SA (EGI-SA) EGI-SA is a collaborative partnership between a number of civil society organisations, which draws on the global expertise and experience of the international EGI project, and is also more informally associated with other civil society organisations. The aim of EGI-SA is to build a roadmap towards a positive electricity future for South Africa, by: Producing expert analyses and research to inform decision- making processes, Building the capacity of civil society to engage in these processes, Advocating for transparent, inclusive governance that results in legitimate decisions that uphold public interests.

3. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa Electricity Governance Initiative of SA EGI-SA partner organisations (July 2013): groundWork environmental justice action

4. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa Challenges Is “Keeping the lights on” enough? Eskom’s difficulties to build new generation Eskom’s difficulties to maintain existing generation Global and local economic uncertainties Unemployment and other socio-economic challenges Only 84% of households have access to electricity Local impacts on environment and people: AMD, air pollution. Climate change. How will a 4°C warmer world look like? There are limits to adaptation.

5. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa

6. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa What are short- to mid-term options? Do we wait until Eskom delivers? Do we accept a slower economic development due to lack of electricity? Or: Do we allow, encourage and assist ALL to actively participate in the electricity sector? Energy Efficiency and Demand Side Management – implement NEES and continue ambitiously with EEDSM. - Do not relax when Medupi and Kusile eventually go online. Short- to mid-term supply options; including: CSP, Solar PV, Wind, Natural gas, Hydro, Imports, other? Waste2Energy, Biomass, Biogas, rooftop-Solar PV, other? AND: Co-generation: Combined Heat and Power.

7. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa Co-generation: Background & policy context IMPORTANT: Avoid confusion between (fossil-fuel based) own-generation of only electricity and co-generation with the co-benefit of electricity + heating and in some cases cooling (tri- generation). Background - Co-generation in SA is under-utilised. Some reasons: Historically low electricity tariffs. High capital requirements. Long-term ROI. CHP is technically more complex to integrate with industrial processes. Brief policy context: IRP2010 and the Medium Term Risk Mitigation Plan (MTRMP): The MTRMP as Appendix E to the IRP2010 calls for urgent action: The non-Eskom co-generation, own generation and renewable generation targets for the next 3 to 5 years must be achieved (Target of over 2,300MW). A ministerial determination (MTRMP IPP Procurement Programme 2012) from 19 th December 2012 (No. 1076. GG No. 36005) states in: Section 1. that energy generation capacity is needed to contribute towards energy security, including 800 Megawatts (MW) to be generated, from Industrial Cogeneration sources… Section 3. electricity procured from the Industrial Cogeneration and Natural Gas energy sources described above (“the electricity”), shall be procured through one or more IPP procurement programmes… We ask PCE to clarify the status on these committed and determined co-generation projects.

8. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa CHP worldwide and in South Africa World 9% of global power generations (IEA, 2008). IEA states that the potential for CHP is significantly higher. European CHP potential studies expect CHP to double by 2025. South Africa Estimated 327MW - 0.8% (Dingle, 2013) Dingle estimates a potential of 3.4GW (8%) by 2020. IEA estimates a potential of 17% for South Africa by 2030 – 15GW.

9. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa Options for way forward Urgently review MTRMP, etc. on co-generation. Review IPP/PPA/licensing regulations to remove barriers to CHP. (ISMO?) IEP / IRP3 will have to include the CHP-potential. Ensure that co-generation is preferred over own-generation, where feasible. Support sector and sub-sector potential analysis. Support skill development and establish local content criteria for CHP. Support research in emerging CHP-technologies, e.g. fuel-cells. Build natural gas infrastructure - essential for broad CHP-uptake. Eskom: On-looker or active participant? Eskom loses revenue to EEDSM and to own- and co-generation. Can Eskom be a service provider to industry and design, engineer, build, operate and even own CHP? Electricity Governance Initiative of SA

10. SMART ELECTRICITY Planning and building a modern infrastructure for South Africa SMART Electricity Planning a healthy, modern, affordable electricity supply for all Thank you! Electricity Governance Initiative of SA