1. ENERGY PRESENTATION Joint Portfolio Committees on Minerals and Energy

2. OUTLINE Energy Legal Framework Understanding key players in the sector Public entities reporting to the Minister Other Key Players Energy Security Masterplan Status of ESMP Projects Challenges Performance over the last cycle The Electricity Scene Energy Security Policy Interventions Renewable energy Energy efficiency Socioeconomic Indicators

3. ELECTRICITY VALUE CHAIN

4. Petroleum Products Act 2003, No.120 of 1977 Gas Act 2001, No. 48 of 2001 Gas Regulator Levies Act, 2002, No. 75 of 2002 Petroleum Pipelines Act, 2003, No.60 of 2003 Petroleum Pipelines Levies Act, 2004, No. 28 of 2004 National Energy Act, 2008, No.34 of 2008 Central Energy Fund Act, Act No.38 of 1977 Electricity Regulation Act National Nuclear Regulator Act Nuclear Energy Act National Radioactive Waste Disposal Institute Act ENERGY LEGAL FRAMEWORK

5. CEF Group – iGas, Strategic Fuel Fund (SFF), Oil Pollution Control of South Africa, South African National Energy Research Institute (SANERI), African Exploration, CEF Carbon, Petroleum Agency of South Africa (PASA), South African Supplier Development Agency (SASDA), Energy Development Corporation (EDC) AND Petroleum and Gas Corporation of South Africa SANEDI (To be Established in terms of National Energy Act of 2008; incorporating SANERI) NECSA (South African Nuclear Energy Corporation) NNR (National Nuclear Regulator) NERSA (National Energy Regulator of South Africa) EDI HOLDINGS (distribution industry restructuring) PUBLIC ENTITIES REPORTING TO MINISTER

6. Sasol – Owns Two Refineries in Sasolburg and Secunda Engen – One Refinery in Durban BP – Co-owns Refinery with Shell in Durban Shell – Co-owns Refinery with BP in Durban Total – Co-owns Sasolburg Refinery with Sasol Chevron –Owns Refinery in Cape Town PetroSA – Owns Refinery in Mossel Bay All belong to association called SAPIA (South African Petroleum Industry Association) Eskom – vertically integrated state owned electricity monopoly UNDERSTANDING THE KEY PLAYERS

7. Transnet – Pipelines, Rail, Ports NAAMSA, Fuel Retailers Associations Nuclear Fuels Corporation (NUFCOR) Pebble Bed Modular Reactor Company (PBMR) Organised Labour Key Depts: DPE, Treasury, DoT, DWAEA, DTI OTHER KEY ROLEPLAYERS

8. The Energy Security Master Plan on liquid fuels was approved by Cabinet in September 2007 The Master plan sought to allow for the making of well-informed choices in respect of energy supply, energy carriers, demand sector strategies, as well as energy transformation approaches, cognisant of the need to minimize negative impacts on the environment and the economy In the short-term –the Master Plan focuses on developing supply chain solutions to South Africa’s liquid fuels supply challenges, management of liquid fuels demand and emergency response tactics. In the medium to long-term –the approach is broader and begins to integrate supply, demand, macroeconomics, geopolitics and climate change ENERGY SECURITY MASTER PLAN (ESMP) LIQUID FUELS

9. Proposed refinery at Coega – Feasibility stage Proposed Coal to Liquid plant by Sasol – Feasibility stage Transnet constructing Pipeline Oil companies building storage capacity Not sufficient progress on Clean fuels Strategic Stocks Policy not revised STATUS OF ESMP PROJECTS

10. Refining Capacity cannot meet demand – Huge import bill Port infrastructure needs to be upgraded – Limited room for unplanned incidents at ports Ability to supply inland market is challenged Inadequate storage infrastructure to supply demand – e.g. Airports Rail infrastructure needs to play a bigger role Human and Financial Capacity in the Department must be enhanced Alignment of State Departments and Entities CHALLENGES – LIQUID FUELS

11. Promulgation of Energy Act, 2008 No 34 of 2008 – Integrated Energy Planning, Energy Efficiency, Energy Research Ratlou Integrated Energy Centre in North West launched bringing the number to 6 nationally – Kuruman, Matatiele, Mutale, Eshane 4387 Licence applications processed (Retail, Wholesale licences) Implementation Plan for the ESMP Planning for National Integrated Energy Modelling system started Planning for World Cup Fuel Supply – Airports identified as areas requiring focus PERFORMANCE FROM PREVIOUS CYCLE

12. “blackouts” and “brownouts” continue Used to be municipalities mainly, now also Eskom (January 2008) Recovery plan in place for short-medium term, with NERT in place as per Cabinet decision Intensified energy efficiency Cogeneration and renewable energy IPPs Eskom financing model being developed Nersa will make tariff determination soon and pricing rising to long run marginal cost Additional support to Eskom being considrered by National Treasury Improved regulatory environment Electricity Regulation Act operational from October 2006 New proposed regulations – integrated resource planning, new generation capacity, energy efficiency and demand side management THE ELECTRICITY SCENE

13. Demand projections (assumption of 2.5% sales growth) indicate a need for power as indicated below; South Africa remains in the the top 7% of greenhouse gas emitters in the world Nuclear will play a central role on the supply side from 2015 (LTMS); Considering nuclear plant lead times, earliest can only be 2018; Decisions are urgently required Only 76% of households have access to electricity; Free Basic Energy rollout does not provide the intended poverty relief THE ELECTRICITY SCENE

14. Energy White Paper position provides for diversification of energy mix, including coal, nuclear, gas and renewable energy Recall that Cabinet decision requires: Eskom to do 70% of new generation, and Independent Power Producers (IPP) will do 30% By 2013, the RE share of generation capacity must be 10 000GWh Nuclear energy policy approved by Cabinet: Framework for prospecting, mining, milling and use of nuclear materials for energy use Radioactive waste management policy and strategy approved Establishes radioactive waste governance framework Establishment of a Cabinet Committee to oversee implementation ENERGY SECURITY POLICY

15. Cabinet adopted Long term mitigation scenarios (LTMS): Growth without constraints Peak, Plateau and Decline (from 2035) in respect of GHG emissions Start now scenario – 27% nuclear by 2030 Scale up scenario – 50% nuclear by 2050 By 2013, the RE share of generation capacity must be 10 000GWh These scenarios must guide our mitigation plans Even on scale up scenario, this would be inconsistent with the decrease in GHG emissions required by “Science” This will likely put pressure on the RSA position post Copenhagen 2009 ENERGY SECURITY POLICY

16. Eskom build program (nuclear decision finalization?) Independent Power Producers (IPPs) Renewable energy IPPs ( feed-in tariff) Energy efficiency and demand side management National Electricity Response Plan INTERVENTIONS

17. 17  100MW of wind farms planned across the country  REFSO project support is limited to projects under R100 million. subsidy rate is now R1million per MW. To date projects with total installed capacity of 24 MW have been subsidised to date at a total cost of R15m  Initiative to install over 500 000 solar water heaters  The Solar Water Heating programme has an enegy diversity and demand side management capability. At present, about 1000 systems have been implemented and plans and over 1.75 m planned for the next MTEF period  The financing framework for Biofuels has been established. Research into 2 nd generation biofuels programme is currently underway  NERSA has approved REFIT for Wind, Small Hydro Schemes, Landfill and Solar Concentrated Power. RENEWABLE ENERGY

18. 18 –Energy Efficient Lighting programme has been implemented in government buildings and households in select municipalities –Involves exchange of incandescent lighting with compact fluorescent lighting (CFLs) –To date over 20 million CFLs have been replaced –Power Conservation Program to start in 2010 Facilitates trading in energy savings –Pilot Projects: 2010 Host Cities, involving CFLs and traffic lights ENERGY EFFICIENCY

19. 19 Designated National Authority (DNA) –Responsible for registering Clean Development Mechanism (CDM) projects –CDM is an intiative under the UN Framework Convention on Climate Change (mitigates against climate change) –15 projects registered and over 120 in the pipeline; –Tradeable Renewable Energy Certificate (TRECs) implementation framework is being finalised, to enable benefits to be derived from climate change benefits associated with renewable energy sources. ENERGY EFFICIENCY

20. SOCIO-ECONOMIC INTERVENTIONS Challenges Universal access to energy (electricity and thermal energy) Funding to align with universal access target of 2014 for human settlements Skills capacity related to accelerated program for 2014 Also opportunity for job creation: Expanded Public Works Structuring of “poverty tariff” to cushion the poor as prices rise Increased access to Free Basic Energy (including alternative non- grid carriers)

21. BACKLOG AS AT 2007

22. Thank You.