The Sustainable Energy Resource Handbook South Africa Volume 8 by GreenEconomyMedia

The

Sustainable Energy Resource Handbook South Africa Volume 8 The Essential Guide

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SUSTAINABLE ENERGY RESOURCE HANDBOOK

The

Sustainable Energy

Resource Handbook South Africa Volume 8 The Essential Guide

EDITOR Gregory Simpson CONTRIBUTORS Dr Tobias Bischof-Niemz, Brenda Martin, Alfred Hartzenburg, Tanya van Zyl, Dominic Milazi, Hemal Bhana, Iqeraam Petersen, David Lipschitz , Stefan Szewczuk, Roger Dixon, Andrew van Zyl, Marcin Leszek Wertz, Peter John Shepherd, Darryll Kilian, Warrick Stewart, Chilufya, Neil Cameron PEER REVIEWERS Milisha Pillay, Sashay Ramdharee, Brent Goliath LAYOUT & DESIGN Shanice Daniels EDITORIAL & PRODUCTION Gregory Simpson Shannon Manuel ADMIN MANAGER Chevonne Ismail PROOFREADER Monique Jacobs

CLIENT LIASON Linda Tom DISTRIBUTION & CIRCULATION MANAGER Edward MacDonald PROJECT MANAGER Louna Rae ADVERTISING EXECUTIVES Munyaradzi Jani CHIEF EXECUTIVE Robert Arendse, Gordon Brown DIRECTORS Gordon Brown Andrew Fehrsen Lloyd Macfarlane PUBLISHER

www.alive2green.com

The Sustainability Series of Handbooks PHYSICAL ADDRESS: Alive2green Cape Media House 28 Main Road Rondebosch Cape Town South Africa 7700 TEL: 078 023 0853 FAX: 086 694 7443 Company Registration Number: 2006/206388/23 Vat Number: 4130252432 ISBN No:978 0620 45240 3 Volume 8 First Published 2010 PRINTER: FA Print

SUSTAINABLE ENERGY RESOURCE HANDBOOK

The

Sustainability and Int REPORTING HAND South Africa 2014

All rights reserved. No part of this publication may be reproduced or transmitted in any way or in any form without the prior written consent of the publisher. The opinions expressed herein are not necessarily those of the Publisher or the Editor. All editorial contributions are accepted on the understanding that the contributor either owns or has obtained all necessary copyrights and permissions. IMAGES AND DIAGRAMS Space limitations and source format have affected the size of certain published images and/or diagrams in this publication. For larger PDF versions of these images, please contact the Publisher. DISTRIBUTION AND COPY SALES ENQUIRIES edwardm@hmpg.co.za ADVERTISING ENQUIRIES Louna Rae louna.rae@alive2green.com

CONTENTS The value of South Africa’s early projects under the REIPPPP Dr Tobias Bischof-Niemz and Dominic Milazi —18

Understanding and applying energy performance measurement correctly Alfred Hartzenburg —74

Independently procured renewable power in SA—an overview Brenda Martin, CEO of the SA Wind Energy Association —22

SA striving for consistant reporting Tanya van Zyl —78

Passive Design essentials: Residential Modelling Chilufya r—28 Nuclear Energy: Does South Africa have a real need? Iqeraam Petersen —36 South Africa’s energy future on a knife-edge David Lipschitz —44 New Trans-Africa pipeline and Green Economy rumbles on Michael Hartt, Celeste Hicks and Rio Matlhaku —48 Innovation unlocks Africa’s future energy mix Sally Brahm —52 Mitigating against the Time-of-Use Tariff by the Commercial Building Sector Stef —56 How sustainable is mining in SA? Roger Dixon, Marcin Wertz, Andrew van Zyl, Peter Shepherd, Darryll Kilian, Warrick Stewart —64 6

SUSTAINABLE ENERGY RESOURCE HANDBOOK

Moving to a Low Carbon Economy – Opportunities & Challenges Hemal Bhana —84 Climate change adaptation standards ar the necessary; the alternative is unacceptable Susanne Moser —88 Leading the next wave of small scale embedded generation ICLEI Case Study - No. 174, February 2015, Nelson Mandela Bay —92 Are we maximising the First Fuel? Gregory Simpson —98 Internet of things Neil Cameron —104

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CSIR ENERGY CENTRE Vision: To provide the knowledge base for the South African energy transition and beyond.

—

The Council for Scientific and Industrial Research (CSIR) aims to help South Africa achieve an energy-secure and low-carbon national economy. To this effect, the organisation has established an energy centre (EC), which will be the first port of call for South African decision-makers in politics, business and science, and will advise them on energy transition. The transition is a move towards a more sustainable and cleaner energy system in which energy is used more efficiently and primary energy is supplied by a significant share from renewable sources. The EC will leverage the learnings from the South African energy transition to support the creation of sustainable energy systems for other African countries. Furthermore, the EC aims to streamline all energy-related research across the CSIR, providing a coherent and organised response to the country’s energy challenges.

CSIR Energy Centre’s focus areas Energy demand

Energy supply

• Demand assessment in enduse sectors • Demand-side technologies (energy efficiency and demand response) • Demand forecasting (short term, long term and spatially)

• Resource assessment (solar and wind) • Renewable energy technologies (solar, wind, biogas, hydro, HPs, and biofuels) • Supply forecasting (short term and spatially) • Conventional energy technologies market intelligence

Energy storage • Batteries (design and integration) • Hydrogen (production, storage and integration) • Heat storage • Storage system integration (P2eMobility and P2pumping)

Energy systems • Energy planning • Grid planning (Transmission and distribution) • Micro grids (including island grids) • Smart grids (observability and controllability) • Energy-system operation

Energy markets and policy • Energy economics • Energy markets (local, regional and global) • Energy regulations • Energy trading • Energy statistics

Energy industry • Analytical tools for industrial development in the energy sector • Energy industrial development • Energy industry transition • Socio-economic development in the energy sector

Energy Autonomous Campus

For more information: Contact: Dr Tobias Bischof-Niemz Tel: (012) 841 2113 www.csir.co.za/csir-energy-centre

SUSTAINABLE ENERGY RESOURCE HANDBOOK

CONTRIBUTORS DR. TOBIAS BISCHOF-NIEMZ Dr Tobias Bischof-Niemz is the Centre Manager: Energy at the Council for Scientific and Industrial Research (CSIR) in Pretoria, where he leads the establishment of an integrated energy research centre and a growing team of scientists and engineers. Before joining the CSIR, he was with South Africa’s electric utility Eskom in the Energy Planning Unit, where he was part of the team that developed the long-term power-capacity expansion plan (Integrated Resource Plan – IRP) for South Africa. Dr. Bischof-Niemz is a member of the Ministerial Advisory Council on Energy. BRENDA MARTIN Brenda Martin, CEO of SAWEA, has worked at senior level in the Southern African development, education and energy policy sectors for over 15 years. In 2007 she initiated a national programme focused on climate-related behaviour change. Her work there included the implementation of small scale renewable energy projects and lobbying for energy policy change. Since 2014 she has worked part-time at the Energy Research Centre (UCT). She has served on the Ministerial Advisory Council on Energy (MACE) since its inception in February 2015. ALFRED HARTZENBURG Alfred Hartzenburg, National Project Manager: Industrial Energy Efficiency Project at NCPC-SA/CSIR. Hartzenburg heads up the South African Industrial Energy Efficiency Project (IEE Project), an international pilot project that is implemented by the National Cleaner Production Centre at the CSIR, and the United Nations Industrial Development Organization (UNIDO). In addition to a background in engineering (BSc in civil engineering, University of Cape Town).

TANYA VAN ZYL Tanya van Zyl is a Quality Assurance Manager at NCPC-SA. Van Zyl’s work experience includes eight years of energy efficiency and energy assessments working for Energy Cybernetics in the industrial, mining, manufacturing, commercial and public sectors. The same eight years were partially spent on Measurement and Verification (M&V) of energy saving opportunities implemented by Eskom IDM, the results of which were reported to Eskom. Tanya experience includes project management, business development, demand side management and energy management.

DOMINIC MILAZI Dominic Milazi joined the Energy Division at the Council for Scientific and Industrial Research (CSIR) in May 2015, where he is the Research Group Leader for Energy Market Design and Policy Analysis. Prior to joining the CSIR, he served as Project Manager (Renewable Energy Initiatives) at the National Department of Energy. In this post, he was responsible for the South African Wind Energy Program working in partnership with the United Nations Development Program (UNDP) and the Global Environmental Facility (GEF).

SUSTAINABLE ENERGY RESOURCE HANDBOOK

CONTRIBUTORS HEMEL BHANA Hemal Bhana, Strategy Manager at Carbon Trust Africa; a sustainability consultancy with a mission to accelerate the move to a sustainable, low carbon economy. Bhana has many years of work experience fulfilling roles as programme manager (National Business Initiative), management consultant (Accenture) and mechanical engineer (Sasol Synfuels) within mainly the energy sector. He also has experience within the mining, banking and manufacturing sector; and has worked in South Africa and Nigeria. His academic qualifications include an MBA from the University of Cape Town. IQERAAM PETERSEN Iqeraam Petersen, Investment Analyst at Futuregrowth Asset Management. Iqeraam is responsible for deal origination and structuring, credit analysis and transaction maintenance within the infrastructure and development sectors in South Africa and the rest of Africa. Iqeraam completed his three year articles at PricewaterhouseCoopers, with 50% of his time performing financial auditing in the financial service division and the remaining time performing IT system audits in the SAP ERP team.

DAVID LIPSCHITZ David Lipschitz FSAAEA, computer scientist, mentor and energy analyst with a Bachelor of Science Honours and an MBA, has run a Software Development business since 1994 and an Energy business since 2008. David motivates people to change the way they think about their environment and shows people that it is possible to live a sustainable lifestyle with minimal impact on the earth. Keynote, conference and workshop topics include energy efficiency, load shedding, and producing electricity.

STEFAN SZEWCZUK Stefan Szewczuk, Senior Engineer at CSIR, holds a BSc Aeronautical Engineering degree and an MSc degree in Mechanical Engineering from the University of the Witwatersrand and an MBA from the Herriot-Watt University in Scotland. Stefanâ&#x20AC;&#x2122;s primary interests are in wind energy, distributed generation and conversion of organic waste to biogas.

ROGER DIXON Roger Dixon, Corporate Consultant and former leader of SRK Consulting in Africa, is a charismatic thought leader who never minces his words, making for good reading at any turn. Specialisation: Gold mine management; project development; mine valuation; due diligence studies; engineering studies; mineral resource and reserve reporting.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

CONTRIBUTORS ANDREW VAN ZYL Andrew van Zyl, Partner and Principal Consultant at SRK Consulting, holds B Eng (Chemical) and M Com (Financial Economics), worked in production and project roles prior to 2006, at which time his focus shifted to strategy, business development and valuation. He has spent several years as technical advisor to government committees overseeing the negotiation of mining conventions and rail and mineral terminal concessions.

MARCIN LESZEK WERTZ Marcin Leszek Wertz, Partner/principal mining engineer, head of the Mining Business Unit at SRK Consulting Africa. He has held various supervisory and planning positions at the Finsch and Koffiefontein diamond mines, from 1987 to 1994; group mining engineer with Messina Investments, 1994/5; mine manager Star Diamonds 1995/6; SRK from 1996.

PETER JOHN SHEPHERD Peter John Shepherd, Principal Hydrologist/Partner at SRK Consulting. Specialisation: Storm rainfall estimation, Floodlines, dam hydrology; mine water management; river hydrology; maximising development iro potential flooding; hydrology; water supply; strategic water assessments and flood management.

DARRYLL KILIAN Darryll Kilian, Principal Environmental Scientist and Partner, SRK Consulting. Kilian has a Masters Degree in Environmental and Geographical Science from the University of Cape Town. He has over 24 years of experience in environmental management and development work, and has worked on environmental projects throughout Africa, including Tanzania, Angola, Sierra Leone and Mali.to Eskom. Tanya experience includes project management, business development, demand side management and energy management.

WARRICK STEWART Warrick Stewart, Consultant/Principal Environmental Scientist at SRK Consulting. Stewart has lead strategic environmental assessment, environmental management framework, systematic biodiversity planning, environmental impact assessment, biodiversity management, integrated coastal management, as well as integrated mine closure projects for over 16 years.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

CONTRIBUTORS CHILUFYA LOMBE Chilufya Lombe is a mechanical engineer that has extensive experience in both performance and accreditation modelling for sustainability projects and performed energy modelling for the first Green Star rated office and retail buildings in South Africa. With a background in traditional mechanical design, Lombe has a special interest in detailed modelling of building systems to optimise energy usage using advanced building simulation tools such as DesignBuilder and EnergyPlus.

NEIL CAMERON Neil Cameron, Johnson Controls Area General Manager, Building Efficiency – Africa. Johnson Controls is a provider of equipment, controls and services for heating, ventilating, air conditioning, refrigeration and security systems. They deliver products, services and solutions that increase energy efficiency and lower operating costs in buildings for more than one-million customers.

PEER REVIEWERS MILISHA PILLAY Milisha Pillay serves as a Project Manager: Industrial Energy Efficiency Project at the National Cleaner Production Centre South Africa (NCPC-SA). As part of her portfolio, she is responsible for managing and ensuring the delivery of the NCPC-SA’s key service offerings for the IEE Project in the KZN region. She has a BSc in Chemical Engineering from the University of KwaZulu-Natal and is currently undertaking a degree in Masters of Business Administration. She is a member of several engineering and energy associations and a UNIDO energy management expert. SASHAY RAMDHAREE Sashay Ramdharee, is a Regional Project Manager at the National Cleaner Production Centre of South Africa. His duties and responsibilities include: Project managing the reporting and implementation of energy system optimisation projects at large multinational companies in SA which consist of Steam, Fan, Compressor, Pump and Motor systems optimization and assisting companies in the implementation of Energy Management systems (EnMS)/ISO 50001. He is a degree qualified Chemical Engineer (Cum Laude) and is in the final year of a Masters in Chemical Engineering qualification. BRENT GOLIATH Brent Goliath serves as a Project Manager at the NCPC-SA, coming up through the ranks over the last seven years from intern level, showcasing the next wave of engineers in action. In addition to managing the process of in-plant assessments and EnMS and ESO interventions, Goliath also conducts IEE presentations to SME’s and large companies to encourage participation and manages the compilation of energy assessment data. Prior to joining the NCPC-SA, Goliath was the High Vacuum Plant Process Controller at Optical Coatings Technologies (OPCO). SUSTAINABLE ENERGY RESOURCE HANDBOOK

FOREWORD

The changing face of the energy sector

lmost as fast as technology makes it possible, the world is moving away from a centralised, large-scale energy generation; governments now need to make it easier for industry and consumers to pursue this route in the national interest—and not be held back by the narrower interests of electricity-generating utility companies. Among the sectors that are starting to take advantage of emerging innovations is mining—hit hard recently by production disruptions due to load-shedding, trimming of their normal supply levels, and rocketing prices. Rapid strides in renewable energy technology have allowed mines to start exploring greener avenues, although the need for baseload supply must still govern their current options. Notwithstanding the baseload requirement, mining heavyweight Sibanye has thrown its weight behind the opportunity presented by solar photovoltaic (PV), earmarking some R3 billion for an independent power project based on solar energy. The miner says its research is unequivocal: solar energy costs have already dropped to a level comparable to Eskom’s grid prices—and will continue downward while Eskom’s prices will only rise. Another breakthrough appears to be on the horizon that will begin to take the baseload argument forward into new and more fertile territory: battery storage. An indication of this came from battery innovators Tesla, who tellingly chose to exhibit at the Investing in African Mining Indaba earlier this year in Cape Town. If mines have doubts about how high-capacity batteries can be

SUSTAINABLE ENERGY RESOURCE HANDBOOK

used to store energy from non-continuous sources, Tesla clearly does not. This broadening space for localised generation is not only good news for industry —who can now choose from a growing range of technological sources and can pioneer new collaborations with other energy users; it is also good news for the government. While the state cannot abdicate its responsibility to facilitate the availability of electricity to all, it can cut down on the amount of high-interest debt it must incur for funding expensive energy projects. Our own Department of Energy has already shown the way, with its much-commended Renewable Energy Independent Power Producers Program (REIPPP); the state creates the framework and adjudicates in a fair and transparent manner, and the private sector brings the capital and expertise. Of course, there is one possible loser in all this: the monopoly utility, Eskom. On its version of events, the utility has to pay over the odds for this new source of green power—which it says it cannot afford to do. There are plenty of counter-arguments in the mix too. However, the real point is that the government cannot fully leverage the power of localised generation—be that from renewable or fossil fuel sources —unless Eskom’s role is well-defined and controlled. Industries like mining are major energy users, and their efforts to find sustainable solutions—largely at their own cost—should be encouraged and supported by the state. Independent power production at local level may be one of the answers. Roger Dixon, Marcin Wertz, Andrew van Zyl, Peter Shepherd, Darryll Kilian and Warrick Stewart of SRK Consulting

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SUSTAINABLE ENERGY RESOURCE HANDBOOK

ED’S NOTE

It’s all in the Mix

elcome to another edition of South Africa’s favourite sustainable energy handbook, it has certainly been another memorable year for the energy sector. The nuclear deal has undoubtedly been the central talking point, with the latest Western Cape High Court ruling against the deal putting a severe spanner in the works for pro-nuclear protagonists. There is certainly a place for nuclear in the energy mix, but it should not be a primary driver. Given our wealth of free solar radiation and gusty coastlines, renewable energy could easily account for 50% of our energy mix, especially with improvements in storage capabilities and pricing from lithium-iron batteries and hydrogen fuel cells, to name a few; coupled with innovative hybrid technology to incorporate gas. We need some nuclear at this stage, unless we are committed to lessening the coal dependence issue. Building the additional coal stations was a poor move in the first place if the government had nuclear ambitions. That money could have been spent developing various forms of energy, including nuclear on a smaller scale. A mix of various energies is essential to the health and well-being of any growing economy. Credit must go to the renewable sector for the work done thus far, helped by huge investments from the private sector—less so from the public sector—relative to the number thrown around for the nuclear deal or new coal power stations. If that kind of money was pumped into renewables, our electricity problems, and the side effects from burning large amounts of coal, would (arguably) largely be over. Poor air quality is noticeable when travelling to

SUSTAINABLE ENERGY RESOURCE HANDBOOK

Gauteng from Cape Town. When driving between Joburg and Pretoria, I’m also amazed at the lack Gregory Simpson, Editor of any noticeable ‘greening’ on many warehouses. Roof space is largely without solar or grey water systems, with the industrial designs not looking any different than 30 years ago. By law, any new building should have to comply with green principles to pass code. As you’ve come to expect, we have another jam-packed edition of the Sustainable Energy Handbook. The Renewable Energy Independent Power Project Procurement Program (REIPPPP) has been an example of business and government getting things right in South Africa. . However, for South Africa to truly embrace renewable energy it needs to introduced and legislated for greater residential useage. I’d go so far as to say any new house should have a thermal geyser, proper insulation and a grey water system as a basic requirement. Business should have stricter measures to ensure that more companies start feeding their own energy needs, and reduce in greenhouse emissions. But therein lies the problem with a state dominated energy provider, there is no incentive to think too far out the box, because you are the box. But don’t be discouraged because we’ve got a cracking line-up of top energy professionals and academics who have tackled these issues in their valuable contributions to the handbook. .So as we look to the rest of 2016, the industry will hold its breath for more stability in the economy, and a stronger rand to help those importers of renewable hardware that have been taking a hiding of late.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

Nanotechnology In Energy

Nanotechnology and Energy The electricity you receive in your home or school is largely generated by powerful generators in thermal and hydro-generating power stations. ESKOM is the main producer of electricity in South Africa. Most of the electricity generated by ESKOM comes from coal which is nonrenewable and will eventually run out. The process also uses a lot of water and generates harmful chemicals that come from the coal. Nanotechnology is used to make efficient solar cells and fuel cells that generate electricity, as well as batteries that can store and release energy. Solar cells and fuel cells help reduce emission of greenhouse gases such as carbon dioxide generated during electricity production using coal. Other examples of the use of nanotechnology in energy related applications include high-duty nanomaterials used for lighter and more rugged rotor blades of wind power plants as well as wear and corrosion protection layers for mechanically stressed components such as bearings and gear boxes. Poster information by: Professor SD Mhlanga Email: sabinano2008@gmail.com Cell: +2773 482 4277

SUSTAINABLE ENERGY RESOURCE HANDBOOK

Who is Thomas Young Thomas Young (1773- 1829) was the first man to use the term “energy” in a modern sense. He established the wave theory of light through the double-slit experiment to demonstrate interference of light. He came up with Young’s modulus which relates stress of a body to strain. He also came up with the principle of surface tension. Pretty much a lot of stuff you’ll encounter in your physical science class… This ‘young’ man certainly made history!

e from lls mad ves solar ce viable alternati t n ie ic Eff re a ls a teri nanoma y. of energ

Above: An ESKOM electricity generation plant in Lethabo, Free State. It uses coal and water to generate electricity.

Some current and future applications High efficiency light bulbs

A nano-engineered polymer matrix can be used for high efficiency light bulbs which produce white light and can be made into any shape. These light bulbs have twice the efficiency of compact fluorescence light bulbs.

Energy facts Energy sources can be classified into two categories: renewable energy (biomass, geothermal, solar, water and wind power) and non-renewable (fossil fuels such as coal, oil, natural gas, nuclear). Three-quarters of the worldâ&#x20AC;&#x2122;s energy is generated by burning fossil fuels. The release of carbon dioxide and greenhouse gases when fossil fuels are burned has a major impact on climate change and the environment. How would you use nanotechnology to efficiently generate energy using renewable energy e.g. from water? #Hint: Steam from sunlight.

Electricity from windmills

Nanotube-filled polymers make it possible to make very strong, light-weight blades.

Electricity from waste heat

Thermocells built from nanotubes generate electricity when the sides of the cell are at different temperatures. The nanotube sheets could be wrapped around hot pipes, such as the exhaust pipe of your car, to generate electricity from heat that is usually wasted.

Hydrogen storage

Graphene layers and sodium nanoparticles can effectively store hydrogen by increasing the binding energy of hydrogen.

Clothing that generates electricity

Special nanofibres can be woven into clothing and that could turn normal movement into electricity to power up cell phones and other mobile electronic devices.

Steam from sunlight

Steam can be generated from water without having to boil it, by adding nanoparticles and exposing the mixture to sunlight! The steam can be used to generate electricity.

For more information please visit: www.npep.co.za; email: info@npep.co.za

SUSTAINABLE ENERGY RESOURCE HANDBOOK

Chapter 1 The value of South Africaâ&#x20AC;&#x2122;s early projects under the REIPPPP By Dr Tobias Bischof-Niemz and Dominic Milazi Over the last decade, global deployment of renewable energy has accelerated as costs have decreased. First movers for adopting renewable energy generally experienced higher costs and prior to 2010 projects were often made feasible through a range of subsidies and incentives.

s markets for renewable energy have matured, deployment is increasingly occurring due to favourable economics, compared to conventional generation options. These favourable economics are clearly quantifiable by looking at costs of externalities, short run marginal costs, and levelised cost of electricity of the various generation options. Countries that have adopted renewable energy most recently, therefore, benefit from cost reductions that have materialised due to the early-stage subsidy-based programmes from countries such as Germany, Spain, and Italy; kick-starting the acceleration of cost reductions and deployment.

SUSTAINABLE SUSTAINABLE ENERGY ENERGY RESOURCE RESOURCE HANDBOOK HANDBOOK

The timing of renewable energy deployment in any given country, therefore, has some impact on the prices observed when those particular procurement programmes were first launched. This impact is also reflected in renewable energy prices seen in South Africa since the beginning of the REIPPPP in 2011. Figure 1 shows that solar PV prices in South Africa started at above 0.3 USD/kWh and have decreased over 80% with the most competitive bids in the latest procurement windows reaching less than 0.05 USD/kWh. A similar trend is seen with onshore wind. Given these notable price decreases, policy-makers may question the merit of the first projects concluded under the REIPPPP and perhaps even conclude that South Africa suffers an

1.RENEWABLE ENERGY PRICES

Figure 1: Evolution of solar prices in various markets 2010-2016 (IRENA Auctions summary 2016)

Figure 2: Evolution of on-shore prices in various markets 2010-2016 (IRENA Auctions summary 2016)

economic loss paying for higher priced projects in the earlier REIPPPP bidding windows.

In South Africaâ&#x20AC;&#x2122;s example, under the electricity supply constraints of 2014 and 2015, the value of renewables is maximised due to displacement of expensive fuels used in peaking plants. The same analysis may show that the electricity supply system suffers a certain loss if the fuel savings are not sufficient to offset the tariff costs of procuring electricity from renewables. In particular, this approach may be used to show that renewable energy projects ostensibly caused a financial loss in the unconstrained supply situation that South Africa has enjoyed since 2015.

An approach to quantifying the benefit From about 2014, construction on the first group of renewable energy projects under the REIPPPP was being completed, and it became possible to measure the electricity output of these projects. The costs to South Africa for procuring this electricity could, therefore, be compared to the cost savings of avoided supply interruptions and avoided generation from other conventional generation options (i.e. coal, natural gas). Using this approach, an estimate was developed on the financial benefits of renewable energy, which amounted to R800 million for 2015. The supply side constraints in the electricity network meant that renewable energy projects were displacing production from natural gas power plants, which have high fuel costs. This magnified the financial benefits attributable to renewables. The comparison of renewable energy tariffs to avoided fuel costs from conventional generators can be a useful approach to analyse the nature of decisions made by policy-makers. In applying this approach, the specific context of each country should be kept in mind to ensure that the correct conclusions are reached regarding the merits of investing in and deploying new build generation options.

Placing early stage renewable energy projects in perspective As with all other markets globally, the decision to pursue a particular mix of technologies for electricity supply is taken with a long-term viewâ&#x20AC;&#x201D;typically 20 to 50 years. For a developing country such as South Africa, this takes on an even greater significance, given the electricity demand growth that is still to come. Estimates are that electricity demand may reach between 60GW and 80GW over the next 20 to 30 years and this places the projects in the first REIPPPP bidding windows, amounting to several hundred megawatts, into proper perspective. Moreover, a substantial portion of currently existing generation capacity in South Africa is to be decommissioned over

SUSTAINABLE ENERGY RESOURCE HANDBOOK

1.RENEWABLE ENERGY PRICES

the next 10 to 15 years implying that South Africa now finds itself at a turning point where the initial stages of a complete electricity sector re-configuration are taking place. In light of this, any introduction of new-generation options should be evaluated, not only in terms of avoided fuel cost or other short-term effects, but also in terms of an investment that is made to place South Africa on a sustainable 20-30 year path. The first procurement round of the REIPPPP yielded preferred bidder projects offering tariffs of approximately 0.3 USD/kWh and 0.15 USD/kWh for solar PV and onshore wind respectively. These tariffs apply over an allocation of about 1.5 GW, which amounts to less than 3% of all generation capacity that will exist in South Africa, post-2040. Assuming a capacity factor of 30% across all solar and wind projects mentioned above, 750MW of solar PV and 750MW of onshore wind over a 20-year Power Purchase Agreement period would represent an â&#x20AC;&#x153;investmentâ&#x20AC;? of approximately 12 billion USD over a 20-year period. This rudimentary estimate gives indication of the scale of investment which in reality lies between 15 to 25 billion USD, given that tariffs in the REIPPPP did not plateau until the most recent procurement windows in 2015. It is important for policymakers to assess what they have received in return for this 20-year investment over and above the well-documented immediate benefits which include job creation, foreign direct investment, and avoided economic loss in 2014, when South Africa was experiencing electricity supply shortages. A new option for low-cost electricity The most important contribution of the REIPPPP is to introduce a ready-made mechanism that can be easily employed for supply of cheap electricity to the country. The cost-effectiveness of renewable energy is now commonplace in so many markets that

SUSTAINABLE ENERGY RESOURCE HANDBOOK

it may be taken for granted. Low prices for renewables come about not only through lower technology costs from global economies of scale, but also through sound policies within individual countries that make the risk profile of projects acceptable to investors and IPPs. South Africa now understands how what optimal risk profile looks like and how to drive the deployment costs down. This knowledge will benefit the country for decades to come and the interest that other countries have shown in replicating elements of the REIPPPP shows the value created. The higher priced renewable energy projects implemented from the first two rounds represent less than 2% of the 240 TWh that currently make up the South African electricity system. As electricity demand grows, the cost significance and impact of this small group of projects will diminish, while their contribution as a blueprint for procurement and future development of the electricity system will expand. Monetary outflows from South Africa A common criticism of the early-stage REIPPPP projects is that the financial resources used to procure electricity from these higher priced projects flow to shareholders outside of South Africa. The financial outflows may be a result of procuring the generating asset (i.e. compensation to the EPC company) or as a result of procuring the electricity (i.e. compensation to shareholders of the IPP). Outflows from procuring the asset will occur regardless of the generation technology chosen if the technology is not developed in South Africa. It is, therefore, incorrect to characterise renewable energy as a technology that inordinately leads to outflow of revenues. When procuring electricity (as opposed to the electricity generating asset), the financing of the project then takes centre

1.RENEWABLE ENERGY PRICES

stage. Procurement rules may prescribe percentages on local or foreign shareholders and this may be used to control where the returns on the project flow to and ensure that they remain in South Africa. In competitive auction procurement processes, as we have in South Africa, placing restrictions on participating shareholders may drive up the cost of procured electricity since shareholders who can offer cheaper equity or debt may be excluded from the programme. In light of these particular tradeoffs, it is important for policymakers to clearly define where the emphasis should lie when developing the electricity supply system. Put simply: Should the emphasis be on shareholding? On localisation? On cheap electricity? Or on something else? And how do the steps taken in the early stages of the REIPPPP support or shed light on these points of emphasis? The primacy of cost-effective supply Energy procurement programmes may be used as platforms for any number of objectives: job creation, localisation, and technology development to name a few. Each of these approaches leads to benefits across multiple sectors. The provision of electricity, however, touches every sector of the economy by being an input cost to the production of all goods and services. The greatest benefit to the country will, therefore, come from producing electricity at the lowest cost possible and this is the metric that should be central to evaluating the investment made in renewables. As deployment costs for renewables continue to decline, many countries are taking up the challenge of introducing higher penetrations of renewable energy in their national electricity systems as they come to common conclusions on what the least-cost path looks like. In a country like South Africa, which has multiple priorities, it is

certainly necessary to adjust long-term power system plans in line with national policies and this may lead to departures from the least-cost path. Notwithstanding this reality, South Africa ranks among the countries that have designed a sound mechanism for fully exploiting this least cost path. This favourable position was achieved very efficiently with an investment that represents less than 1-2% of the total investment that will be required over the 20 to 30 year horizon of the Integrated Resource Plan. Moreover, technology costs are still in flux and the optimal mix of generation options may look different in the long term. For this reason, the deployment mechanism under the REIPPPP offers yet another oftenoverlooked advantage—planning flexibility. With an operational lifetime or purchase agreement of 20 years, an added level of flexibility is available to policymakers who may see it fit to adjust the mix at 20-year intervals to always update according to new least-cost mixes, as opposed to locking in a technology mix for 40 to 80 years. The value that renewables have delivered The high prices that South Africa paid in the early stages of the REIPPPP mirror the experience of many other countries. Looking beyond comparisons of fuel savings and tariffs alone, there is a great deal of value that those projects have delivered to the country. In essence, the first renewable energy projects may be likened to a “learning fee” that has positioned the country to understand and very effectively exploit a leastcost path. With the first 5 windows of the REIPPPP recently completed, the first bidding windows may look expensive but, as the country moves forward on a platform of cheaper electricity and an efficient procurement process, the learning fee will be seen in perspective as being a modest amount that delivered much value for the country.

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2.RENEWABLE ENERGY PRICES 1.RENEWABLE

Chapter 2 Independently procured renewable power in SA —an overview By Brenda Martin, CEO of the SA Wind Energy Association The Department of Energy’s (DoE) Independent Power Producers Procurement Programme (IPPP) was launched at the end of 2010 as one of the government’s urgent interventions to enhance and diversify South Africa’s power generation capacity. The Independent Power Producers Office (IPPO) was set up, as a partnership between Treasury and the Department of Energy, to manage all independently procured power.

he Renewable Energy Independent Power Producer Procurement Programme (REI4P) is one of three programmes of the IPPO, the other two being focused on gas and coal. Brought about by the country’s electricity development strategy, which aims to achieve a greater balanced energy mix that includes more gas and renewables, coal and co-generation, the IPPP as a whole has been hailed for the speed of its rollout and its relative transparency in terms of financing and procurement. In the case of the REI4P, the competitive bidding process has also resulted in a steady decline in the costs of privately built solar and wind power, at a cumulative average of 68%. Wind and solar power costs are now estimated by the CSIR to be 40% below that of new-build coal or nuclear power. Under the REI4P, a competitive bidding process is applied to procure RE generation capacity in line with the national Integrated

SUSTAINABLE SUSTAINABLE ENERGY ENERGY RESOURCE RESOURCE HANDBOOK HANDBOOK

2.RENEWABLE ENERGY

Resource Plan (IRP) for Electricity 2010-2030, and related Ministerial Determinations. The programme contributes to ten of the fourteen national outcomes outlined in the National Development Plan, including economic stability, energy security and environmental sustainability. It also contributes to achieving the country’s objective of reducing greenhouse gas emissions. Renewable power also has a positive water footprint, for example, each kWh of wind power produced saves the use of 1.2 litres of water. Once complete, the entire portfolio of REI4P will save 52 million litres of water each year.

“To-date the REIPPPP has created 26 790 jobs for SA citizens, of which 24 838 were in construction and 1 952 in operations.” In terms of the IRP, a total of 14 725 MW of independently procured renewable power, is allocated. By the end of 2016, 43% of this allocation had been procured over 6 bidding rounds—a total of 6 377 MW. There are now 55 operational private renewable power plants in operation, adding 3029 MW of power to the grid. Just over half of this power is generated by 19 wind plants—1 471 MW. 31 solar photovoltaic plants provide 1 344 MW, three concentrated solar plants provide 200 MW and there are two hydroelectric power plants totalling 14.3 MW. Construction timeframes for projects average out at just under two years. Unlike many megaprojects, 98% of the projects selected under the REI4P have reached commercial operation on time and within budget. Total investments made into the programme totalled over R194 billion by June 2016. Of this, 27.5% represents the foreign direct investment share i.e. R53.4 billion. This is the largest single investment stream into the country in recent years. With a minimum

ownership by local communities in an IPP of 2.5%—as a procurement condition, a considerable portion of investments have been structured and secured as local community equity. These add up to R91.1 billion. An individual community’s dividends earned will depend on the terms of each transaction corresponding with the relevant equity share. South Africa is now the largest wind power producer on the continent and is one of the top 10 utility-scale solar power producers in the world. Co-benefits of renewable power supply Beyond the generation of clean renewable power, the rules of the REI4P stipulate minimum commitments to community ownership, job creation, localisation and local socio-economic development. Such commitments are a key feature of the REIPPPP, unlike other renewable energy programmes in many parts of the world. The majority of renewable power plants are located in economically depressed rural areas of South Africa. During the construction phases, black South African citizens, particularly women and youths, have been the major beneficiaries. To date, the REIPPPP has created 26 790 jobs for SA citizens, of which 24 838 were in construction and 1 952 in operations. Once all procured power is operational, 57 627 jobs can be created for South African citizens over their 20-year lifespan. This is 127% more than what was planned for. 47% of the programme’s jobs are allocated to youth and women. Ten percent of the jobs created are for women. Of this, 33% are for women in top management positions in construction, and 32% in top management positions in operations. As the IPP office put it in its November 2016 report, “since IPPs have consistently been overachieving on job creation targets, it is

SUSTAINABLE ENERGY RESOURCE HANDBOOK

2.RENEWABLE ENERGY

expected that employment opportunities will grow beyond original expectations”. The rules of the REI4P stipulate that local communities within a 50km radius of power plants must have a shareholding of 2.5% of each project. In practice, average shareholding stands at 10.5%. In addition, services must be procured from local broad-based black economic empowerment (BBBEE) suppliers. A total of R65.5-billion has been spent on procurement from BBBEE firms to date. At the end of the day, the IPP office reported at the end of 2016, that a total of R9.2 billion has been committed by the renewables industry, to Socio-economic development. In alignment with the NDP, which singles out education as a critical building block for development due to the role it plays in building an inclusive society, the IPPs are targeting education as a priority area in their socio-economic development programmes, with approximately R145 million (47% of total spend) being invested directly into education and skills development to-date. Costs While the first rounds of the REI4P broke new ground to transition away from the country’s coal-dominated power mix, tariffs during the first round were significantly higher than subsequent rounds. The average tariff in bid

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“The value of further accelerating deployment of renewable energy is clear.” window 1 was R2.52/kWh. By round 4, this had dropped to R0.82/kWh. The CSIR reported in early 2017, that once the currently delayed procurement rounds are operational, the country will be paying 45% less each year for 50% more energy, compared to the projects already operational. These new renewable power projects will, therefore, be almost cost neutral from a purely fuel-saving perspective. As the REI4P has clearly demonstrated, renewable power is contributing directly to the grid, to socio-economic development and is attracting much-needed investment. It is predicted by the IPP office that SA GDP could increase by 1.2% by 2030, 106 100 new jobs can be created and SA welfare can increase by 3.6% by 2030—by consistent investment in RE. The value of further accelerating deployment of renewable energy is clear. These contributions are needed throughout South Africa, but particularly in rural areas where the bulk of renewable power plants are located.

CASE STUDY

Delmas Office – PV SYSTEM

The info on the system is as follow: Max. Peak Power : 123 kWp Number of modules : 396, 310W Polycrystalline Number of inverters : 2 (SMA Sunny Tri-power, 60W) Annual yield : 1 810 kWh/kWp Annual Generation : 222 302 kWh The Polycrystalline modules are mounted at a 15 degree inclination on top of the roof of the new DuPont Pioneer building located in the Delmas area.

This PV plant will generate clean sustainable electricity for the next 25 years. CO2 emissions avoided by this plant equates to roughly 130 756 kg/year.

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ADVERTORIAL

SANRAL Southern Region’s Corporate Head Office, Baywest, Port Elizabeth Overview SANRAL Southern Region’s new corporate head office in Port Elizabeth is the first 5 Star Greenstar rated office building in the Eastern Cape and the first in the new 320ha Baywest Precinct. It is located directly adjacent to Port Elizabeth’s N2 freeway as one approaches the city from Jeffries Bay. The building is conceptualised as open, connected interior spaces, enclosed in bold, context-responsive facades and a sweeping roof line. The focus of the green design was threefold. Firstly, to dramatically reduce energy use, secondly to save and reuse potable water and thirdly to provide a quiet, productive work environment. The client called for a 5 Star Greenstar Design and As-built rating using the Office v1.1 rating tool. The design rating has been achieved. The sustainability focus was three fold: Energy reduction - the project has included thermal double glazed facades, a highly insulated roof and ground floor slab and a 85kW peak roof mounted solar

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PV grid-tied system, which provides 40% of the building’s total energy requirement. Reduction in the use of potable water – this is made up of a rainwater harvesting system with 30 000l tank capacity which collects condensate and rainwater for toilet and urinal flushing Reduction of external and internal noise reduction. This was achieved using various sound absorbing materials and acoustic engineering strategies. SANRAL Baywest- PV System A photo voltaic system was installed, in line with the energy efficiency philosophy of the building. The photo voltaic system is a 109.7KWp system consisting of 414 x 265w panels and 3 invertors. The system was installed on top of the concrete roof slab. The system is mounted on brackets directing the panels towards the sun, to achieve maximum exposure. Currently the system is not a grid tied system as the local authority does not allowed

ADVERTORIAL

customers with medium voltage connections to feed power back into the grid. The system has been designed that, should this policy change, that the system will be able to feed power back into. The targeted annual yield for the system is 158Â 700kWh.

The system has been fully operational since March up to now and has peaked at 90kWhp. For the first two months the system has generated 24Â 120kWh. At the current moment the photo voltaic plant produces the bulk of electricity used by the building. Contact details: Activate: t: 011 788 8095 www.activate.co.za KLS: t: 021 948 0900 www.kls.co.za

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3.CASE STUDY

Chapter 3 Passive Design essentials: Residential Modelling By: Chilufya Lombe (Director at Solid Green), Residential Modelling, Waterfall Estate In the current state of rising HVAC costs it is vital that any new residential building design takes passive design measures seriously, to ensure maximum efficiency, reduce carbon footprint and curb energy costs.

xtensive modelling exercises were undertaken for a four-bedroom house on Waterfall Estate, Johannesburgâ&#x20AC;&#x201D;and the results yielded significant improvements in terms of energy and cost efficiency for this new home, with a 30% overall improvement in HVAC energy from optimising the building fabric. The clientâ&#x20AC;&#x2122;s goal for the house was to have an energy efficient home without compromising on comfort and without increasing the capital cost of the building. Air-conditioning was to be provided, but the building fabric was to be optimised in such a way that the need for occupants to actually use it was minimised, particularly in summer.

SUSTAINABLE SUSTAINABLE ENERGY ENERGY ENERGY RESOURCE RESOURCE RESOURCE HANDBOOK HANDBOOK HANDBOOK 28 SUSTAINABLE

3.CASE STUDY

Sunlight and thermal modelling The area is characterised by high diurnal temperature swings for large percentages of the year. This large difference between maximum and minimum daily temperatures indicates that there is a lot of potential for using thermal mass for passive cooling. Low night time temperatures means the building fabric can store ‘coolth’ and release it during the day, greatly reducing the need for active cooling. Fig. 1.1 – 1.5 illustrate the modelling for this building in these specific climatic conditions. Fig. 1.1 – 1.2 represents the path the sun follows with respect to the site location. This is often the easiest way to help design teams visualise the impact of the sun on the building. All shading elements, as indicated on the tender drawings, are captured in the actual building model; and self-shading from the building’s own form is also accounted for in the model. No adjacent buildings are present on site that can have overshadowing impact.

Sun Path Diagram, Fig. 1.2

Temperature Distribution, Fig. 1.3 Temperature Distribution Charts The percentage of hours above 26 °C is a good indicator of how much discomfort should be expected when using natural ventilation for cooling.

Sun Path Diagram, Fig. 1.1 Fig. 1.3 – 1.5 shows the temperature and humidity distribution for different months of the year. Every hour of the year is represented.

Temperature Distribution (Day), Fig. 1.4

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3.CASE STUDY

With the correct treatment of the façade, night time temperatures should always be comfortable in this climate. It is also clear that winter temperatures can fall quite low and heating will be required in winter months. Building fabric Thermal properties of standard materials were used directly from the extensive DesignBuilder materials database. The following tables represent various changes that can be implemented to achieve both the most energy efficient and thermally comfortable solution. Temperature Distribution (Night), Fig. 1.5 Passive Modelling A baseline model was created using known design parameters and best-practice inputs for different building elements. This baseline was then used to test the impact of various passive design elements. To truly optimise a building, a large number of combinations must be tested to ensure the interconnectivity between important design variables is fully assessed. Take glazing as an example: if the glazing specification is changed, then shading requirements, heating and cooling loads, thermal mass and natural ventilation requirements will also change. Fig. 2.1 illustrates how, with just a few options for various building elements, you can generate a large number of combinations to test. Parametric Design Combinations The most efficient set of solutions must be identified and assessed for accurate recommendations to be made. This is one of the big advantages of optimisation—you typically end up with a number of optimal solutions and have the choice to decide which solution best meets the design objectives Parametric Design Combinations, Fig. 2.1

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Glazing – options investigated, Fig. 3.1

Roof Insulation – options investigated, Fig. 3.2

External Walls – options investigated, Fig. 3.3

3.CASE STUDY

Ground Floor – options investigated, Fig. 3.4 Results Based on the results generated from the above, recommendations were then made with regards to the best combination of building fabric. The initial design was over-insulated for this climate and led to the building not being able to cool down passively at night. The table below shows that the proposed changes not only reduce the buildings energy use for active cooling but also save the client money. Overall Savings, Fig. 4.2 Fig. 4.2 shows the savings by means of the most effective combination of factors.

Best Combination, Fig. 4.1

“One of the most important aspects of passive design is fully understanding the local climate and making sure that the building is able to take advantage of the prevailing conditions.”

Best combination of building inputs: The baseline building can be improved by 30% overall in HVAC energy by optimising the building fabric. That represents 30% less energy to offset if the client would like to make the house carbon neutral. Reducing the cooling load effectively decreases the number of hours that the building will require active cooling. Although the overall heating has been increased, the energy consumption over a whole year has been decreased because heating is only required for two and a half months. These recommendations are therefore in line with the client’s objectives for an energy and cost efficient home.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

ELECTRIC CARS

Living with a Leaf

I started using the Nissan Leaf battery electric car from October 2014. At time of writing this we are into February. The car has been used as my daily commute for about 28 months. Home is in Midrand and workplace in Sandton – a 28km commute. I do not own another car (I do have a Hilux 4x4 that I use to lose myself in the Africa bush in order to clear my head from time to time). So all business trips are carried out using the Leaf. I also make use of the Gautrain and walk often to meetings from the station due to the poor Gautrain bus service. • The total distance covered over this time – 42’000km. • My average consumption rate – 12,9kWh per 100km. • My average speed over this time – 33,7km/h. Therefore: Time spent in the Leaf (driving) was 1’246 hours.

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Annual distance is about 18’000km (1’500km/ month). I find that I drive more now that I use the Leaf compared to before when I used a conventional car. Energy (electricity) cost per month is R19,35 for every 100km (compared to R117 for every 100km for a similar petrol car ) or R290 per month (compared to R1755 per month for petrol). Fortunately, all charge points that I have been using still provide electricity for free. In total I have consumed 5’418kWh of electrical energy over the 28 months. If I had used a petrol car of similar size this would have cost me almost R50’000 just to buy the fuel! The average speed of 33,7km/h is low due to traffic and because I do not travel at 120km/h on the highways – I try to cruise between 90-100km/h. I have experimented with the time to destinations and found that it does not really take longer at this cruising speed – due to congestion on the roads not allowing cars to travel at high speeds for long periods anyway. The biggest

ELECTRIC CARS

effect of this cruising speed is my relaxed state when I reach my destination. The low average speed is suspected to be caused mainly by traffic congestion. Nissan requires a check-up on the Leaf every 15’000km. This takes about 45min and carries no cost. Reports so far indicates no wear on the brake pads (I do make the most of regenerative braking) and no loss of battery capacity. The fast charge points close to the highway in Midrand provide a fast charge at times when I travel much between Pretoria and Johannesburg. Typically, I can take the battery from 20% to 80% of the charge capacity in about 20min. I just use these points for a 10min top-up of 30% in order to make sure I can get

Stats:

to my destination and back. I believe we only need fast chargers between cities and along long distances of travel like highways. EV users should charge whenever they park at a destination – so all destinations (places of work, shopping, services, meetings and home should have a charge point to top-up while the car is parked or feed back into the grid if needed. We can now explore some ideas with a few calculations: 1) The price of an EV is higher than the price of the petrol car. Does the 4-5 times lower energy consumtion make up for the difference in purchase price? Take a look at the sheet below:

Cost for the Leaf EV

Costs for a petrol Car R350’000

Distance

42000

R450’000

Time

Months

R10,71

Consumption of energy 12,9

kWh/100km

ave speed

km/h

33,7

Distance: Distance

42000

Year

18000

Energyw costs:

Total Costs

/km

R8,33

/km

L/100km

Energy Cost

R8’127

R49’140,00

R3’483

R21’060,00

R1,50

/kWh

R13,00

per litre

R19,35

/100km

R117,00

/100km

R458’127 R10,91

R399’140 /km

R9,50

/km

SUSTAINABLE ENERGY RESOURCE HANDBOOK

ELECTRIC CARS

What is interesting is that the lower energy cost is making up for the higher purchase price of R100’000. After 2 years and 4 months the total cost of travelling a kilometer is almost the same (R10,91 vs R9,50). This will improve as the annual distance travelled increases, for example, the EV will have paid for itself in 2 years and 4 months if the average annual kilometres driven was 44,100km – In this scenario, after a 5 year period, the car owner would have saved R115,000 by purchasing an EV. Petrol is produced from imported crude oil. Electricity is produced from local energy sources. Both prices will increase, but the risks associated with petrol is higher in terms of volatility and security of supply. A major positive is that electricity can also be produced from using solar radiation via PV cells. The installation of PV also involves capital costs, but then produces electricity for 25 years at no additional cost. Let’s take a look at this: 2) The EV uses electricity. Can this be produced from PV? It is possible to produce about 0,73kWh/day from a square meter of PV in South Africa on average, taking into account system losses.

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The battery of the Leaf has a capacity to store 24kWh. So it is safe to say that with 33m2 of PV it is possible to charge the Leaf battery and drive 150km. On average, the distance from home to work is much lower than 150km. The CSIR estimated that the country’s total peak capacity from private homes is about 10MW (about 50MWh per 5 sunshine hour day) and that the installation cost (big projects) is about R0,81/kWh . That is much lower than the cost of Eskom electricity today. 3) South African petrol car drivers consume about 12 billion litres of petrol and about 12 billion litres of diesel a year. Can this (oil and oil derived imports) be displaced by (local) electricity? If all vehicles were electric, the equivalent electrical energy required would be about 34 billion kWh per annum (or 34’400GWh per annum). For the sake of comparison, Germany generated 32’800GWh in 2014 from PV. This is renarkable as Germany has only about half the solar irradiation South Africa is blessed with. I believe it is safe to say that with an integrated balance between Eskom off-peak electricity and solar PV we could displace oil imports and power our rides with clean sustainable solar energy in South Africa.

ELECTRIC CARS

Unlocking the Electric Vehicle Potential for Africa At the African Utility Week (AUW) in Cape Town, UNIDO’s Low-carbon Transport Project of South Africa (LCT-SA) in collaboration with the South African National Energy Institute (SANEDI) will host an informative session with panel discussions to highlight the potential role that local entrepreneurs can play in realizing sustainable mobility solutions for Africa. On the 17th of May 2017, the AUW will facilitate the Energy Revolution Africa Workshops, themed “Highly efficient and almost carbon neutral economy“, which will play a key role in unpacking innovative industrial processes and products, as well as understanding requirements of long-term investments in the transport industry, amongst many energy efficient industries. The session on “Unlocking the Electric Vehicle Potential for Africa” is one of the sessions of the day. This information session targets African city planners developers and strategists, entrepreneurs in the transport industry, and other institutions and organizations interested in electrified mobility, the current state of electric vehicle technologies, and where and how electrification of mobility can find application and improve urban transportation. Audience members will be able to have a better understanding of the social benefitsof using EVs, as well as environmental and economic benefits of including efficient and sustainable mobility options in the transportation modal mix to move people and freight in cities. These innovative sustainable transport solutions are presented by South African SMEs eager to grow green economies within the transport industry, as well as demonstrate macroeconomic factors to better understand how the introduction of electrified transport

modes could add value to the economy of African cities. Over 3.0 million people die prematurely every year due to air pollution resultant from road transport emissions. Reducing the use of fossil fuels in cities is crucial to improve air quality and increase the quality of life and attractiveness of urban areas. This more sustainable scenario will require new cost-effective strategies, measures and tools to support the advancement and uptake of new and efficient modes of transport. The LCT-SA Project is funded by the Global Environment Facility (GEF), developed and implemented by the United Nations Industrial Development Organization (UNIDO), and hosted by the South African National Energy Development Institute (SANEDI) to support the promotion and widespread use of EVs and non-motorized transport (NMT), as well as the development and demonstration of the supporting infrastructure for EVs in South African Cities. The LCT-SA Project strives to support entrepreneurship in the transport industry to contribute to inclusive and sustainable industrial development. Tel: 011 038 4362 Email: LCTransport@sanedi.org.za Website: www.lctsa.co.za

SUSTAINABLE ENERGY RESOURCE HANDBOOK

4.ATOMIC INTRUSIONS

Chapter 4 Nuclear Energy: Does South Africa have a real need?

By: Iqeraam Petersen Peer reviewed by Sashay Ramdharee

As a developing economy, energy security is a foundational building block for the economic success of South Africa. Because of this simple fact, the Department of Energy’s recently published draft, ‘Integrated Energy Plan (IEP) and Integrated Resource Plan Update (IRP Update)’, considers South Africa’s energy mix and requirements, and will form the basis for the energy policy for decades to come. These are important documents for all citizens.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

4.ATOMIC INTRUSIONS

s a developing economy, energy security is a foundational building block for the economic success of South Africa. Because of this simple fact, the Department of Energy’s recently published draft Integrated Energy Plan (IEP) and Integrated Resource Plan Update (IRP Update) consider South Africa’s energy mix and requirements, and will form the basis for energy policy for decades to come. These are important documents for all citizens. Donald Kaberuka, a former president of the African Development Bank, said: “In all areas of infrastructure services, such as … energy, …there is a large gap when one compares Africa to the rest of the world.” When reading the research on the topic, a consensus view has emerged: Constraints on economic growth and poverty reduction in the African context arise from a lack of adequate infrastructure, with specific reference to transport, water and sanitation, energy, and ICT and communication networks. Not only does the lack of these types of infrastructure impact the lives of the majority of Africans, but it also negatively impacts the competitiveness of business. While IEP deals with both liquid fuel and electrical energy using a vast variety of assumptions, the focus of this article is on the forecasted electricity generation capacity mix, with a particular focus on the inclusion of the 9.6GW New Nuclear Build programme and the future requirements thereof. The IEP and IRP update aims to determine the optimal electricity generation mix from the following technologies: coal, nuclear, natural gas and various forms of renewable energy. They do this by running a variety of scenarios taking different macroeconomic,

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4.ATOMIC INTRUSIONS

demographic, socioeconomic and resource assumptions into account. While our view is that nuclear is an important part of a diversified energy mix, it must be implemented at a time, cost and scale appropriate which would optimise South Africa’s energy generation mix. This article aims to investigate whether the IEP 2016 aligns with this objective. But before we delve any deeper, let’s address the critical role of Eskom in the implementation of this key policy document . Eskom: A question of implementation Given the structure of SA’s electricity sector, the conclusions reached in these documents will not progress beyond the paper it’s written on without Eskom playing a constructive and supportive role. When it comes to building new generation capacity, Eskom has had challenges in building new projects on time and within budget. The Medupi mega project, a prime example of this, is a number of years late and significantly over budget: The first unit was expected to be operational in 2011 but this only occurred in 2015. Without taking into account the increased interest expense incurred due to the above delay, the capital cost increased from R135bn (R80bn in 2007 money) to an estimated R190bn, both in 2016 terms. This represents an overspend of 41%. It is believed that the cause of these delays and cost overruns was due to Eskom’s rushed planning. Back in 2005, instead of designing the plant taking into account site specific factors, Eskom used the 20 year old designs of a power station in the Eastern Cape to construct a slightly larger power station based in Limpopo. Thus, no construction company was able to offer a turn-key construction solution as they were simply unable to take on the full

SUSTAINABLE ENERGY RESOURCE HANDBOOK

construction risk. Instead of reassessing the situation after getting such feedback from the construction industry, Eskom decided to take on the risk themselves and unfortunately the risk materialised. The recent past doesn’t bode much better for such government programmes where Eskom under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is required to commit to purchasing electricity from Independent Power Producers (IPPs). In July 2016, Eskom effectively stalled the DoE’s globally acclaimed REIPPPP after refusing to sign any further power purchase agreements (PPAs). Various arms of government came out firmly against such a stance as it flies contrary to Ministerial determinations issued by Minister Joemat-Pettersson. Subsequently and only after the Presidency weighed in on the debate during the most recent State of the Nation address, has Eskom agreed to sign the pending PPAs. Unfortunately the damage has already been done; the uncertainty caused by Eskom’s stance has caused industry players to pause and think twice before investing time and resources in upcoming REIPPPP bidding rounds. While part of the ideal solution to the above is for the Department of Energy (DOE) to manage the procurement of future megaprojects/programmes together with the specialist project finance skills from National Treasury (as was done for REIPPPP), this idea doesn’t seem to be gaining any traction: The Minister of Energy announced towards the end of 2016 that Eskom would be put in charge of the nuclear new build programme. There is however a possibility that Eskom has learnt from the mistakes made with Medupi; as in a recent interview, Eskom’s Chief Nuclear Officer, David Nicholls, made all the right noises with respect to how the process will be managed, emphasising: Transparency around the process, a turn-key construction contract

4.ATOMIC INTRUSIONS

and cost containment per kWh of between 80c and R1. We will only really know if these are adhered to as the procurement process unfolds. To address the concerns above, a possible solution would be to reduce Eskom’s monopoly in the electricity sector by breaking it up into separate entities in charge of generation, distribution and buying of electricity. This would ensure that the buying office buys from the least cost producers and that no cross-subsidisation between generation and distribution units occurs. Unfortunately this proposal was taken off the table when the Independent System and Market Operator (ISMO) bill was dismissed by the ANC NEC in 2015. Eskom’s recent actions with respect to REIPPPP has highlighted the need for government to get Eskom on board with any electricity policy decisions made as they have the willpower and ability to frustrate the implementation of such policies. The DOE’s role is to set energy policy and Eskom’s role is to implement this policy. Is this a case of the “tail wagging the dog”? But without the above solutions being implemented, it is likely to remain the status quo. IEP: SA’s Energy Crystal Ball Coming back to the IEP, its main aim is to provide a roadmap for South Africa’s future energy requirements, which would in turn guide policy development and energy infrastructure investment going forward. It determines this through the use of scenario analysis, each of which have different assumptions regarding future energy requirements, economic development and policy impacts. The four scenarios used are: Base Case: The “business as usual” scenario which assumes all existing government policies continue. The 9.6GW new nuclear build is implemented and electrical capacity between of between 11 to 16 GW is imported.

Environmental Awareness: A more concerted effort is used to reduce greenhouse gas emissions, with externalities associated with carbon costed at R270/ton. Resource Constrained: This scenario assumes high commodity prices (particularly crude oil and gas). Domestic economic growth is impacted and remains lower than expected. Green Shoots: This scenario is an optimistic scenario which assumes an annual average GDP growth rate of 5.7% to 2030. In all but the Green Shoots scenario, the GDP growth assumptions used are as follows:

Given current industry forecasts, these assumptions do seem to be overly optimistic. For example, in the recent 2017 budget, Minister Gordhan forecasts GDP growth to be 1% in 2016/17 to 2.3% in 2019/2020. By using inflated GDP forecasts, the resultant forecasted energy demand will be higher than what we would actually need, which could result in decisions being made to increase energy generation capacity to a level that our country does not need or can ill afford. Taking into account the projected energy demands in each scenario, the accumulated new generation capacity (to be constructed by 2050) in each scenario is:

SUSTAINABLE ENERGY RESOURCE HANDBOOK

4.ATOMIC INTRUSIONS

In the Base Case, no new energy efficient capital investment improvements is undertaken while in the others these investments are done, which results in energy demand (and required capacity) in the base case being significantly higher than the other scenarios. The lower new capacity in the Green Shoots scenario is due to the reduced contribution to economic growth by high energy usage industries such as manufacturing and mining. New Nuclear Build Programme As mentioned above, the base case assumes that the 9.6GW nuclear build programme will go ahead. In order to test whether this is reasonable, the IEP adds another scenario which is equal to the base case except the new build programme does not need to go ahead. Another two base case variations are added as well, namely that no shale gas is extracted and solar water geysers are more aggressively rolled out. The resultant accumulated capacity for the Nuclear Relaxed scenario is roughly the same as the Base Case:

SUSTAINABLE ENERGY RESOURCE HANDBOOK

But if you delve a little bit deeper, the timing of when new capacity is brought on line is markedly different, with nuclear being built much later and gas earlier. This is best illustrated if we compare the 2030 energy mix for the Base Case and Nuclear Relaxed scenarios: Interestingly, looking at the No Shale and Nuclear Relaxed scenario generation mix, it would seem that in order to not undertake the New Nuclear Build programme the country will need to fast track harvesting of shale

4.ATOMIC INTRUSIONS

gas in the Karoo. Alternatively, South Africa will need to rely on importing shale gas and have the cost of electricity exposed to global commodity prices. A Case against Massive Capital Spend Getting back to the scenario analysis, translating the above costs to cost per kWh produced (in real terms) nicely illustrates what electricity generation mix decisions made today will have on the cost of electricity over the next 20 years. Given that the forecasting becomes more of a guessing game the further you look into the future, letâ&#x20AC;&#x2122;s rather focus on the next 10 years. Over this period, the least cost scenarios are the Base Case and the Nuclear Relaxed scenarios. In fact, there is a minimal cost differential between the Base Case and Nuclear Relaxed scenarios over the upcoming five years but on average, it would seem that Nuclear Relaxed is the slightly cheaper scenario over the next 10 years. The caveat here is that the GDP assumptions used in the Base Case are very optimistic. As a result, there is a strong likelihood that the IEP has overestimated future energy demand and therefore the required new electricity capacity and hence the push for nuclear energy. If this is the case,

the belief is that decisions made today need to allow for the flexibility to adapt the energy mix in the (likely) event that energy demand is lower than expected. In order to do this, we should avoid committing to large capital intensive mega build projects such as the 9.6GW Nuclear Build programme, which will take approximately seven years to complete. The electricity generation industry is in a state of dynamic flux, where productivity and price per unit of energy generated for some technologies are dropping rapidly. By undertaking such a long and large build programme, we run the risk that we are not able to capitalise on these new developments as we are locked into completing the 9.6GW New Nuclear Build programme. For example, there are major future technological advances which may make storage for renewables cheaper than other base load technologies. We should be in a position to take advantage of these. We therefore should instead focus on smaller but still large utility scale projects (under 2GWp capacity), whether gas or nuclear or any other appropriate technology, which would allow SA to curtail the building of new capacity, if required, in order to not have an over capacity that needs to be paid for.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

4.ATOMIC INTRUSIONS

To summarise, by not embarking on the New Nuclear Build programme, South Africa will have a flexible electricity generation industry which will be able to react to changing circumstances, all of this at no real increase in costs. While nuclear energy does have a place in the South African energy landscape, we believe that it needs to be implemented at a later

SUSTAINABLE ENERGY RESOURCE HANDBOOK

date than the IEP 2016 suggests. In order to avoid the pitfalls suffered during the planning of Medupi, and given the relative complexity of a nuclear programme, now is not the time to rush the procurement and planning of the 9.6GW New Build Nuclear Power programme. So the question remains: Why has Eskom issued the Nuclear RFP, are there alternative motives and for how long will the tail continue wagging the dog?

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Off-Grid â&#x20AC;&#x201C; Is this the future?

The results of detailed studies and surveys indicate that the lack of access to reliable and affordable energy is a constraint to growth and furthermore acts as a deterrent for further investment in energy-hungry industries. Approximately 70% of the population of sub-Saharan Africa lacks access to electricity and for a vast majority of businesses, they are unable to rely on state owned utilitiesâ&#x20AC;&#x2122; abilities to supply energy on a consistent and reliable basis. Historically the solution has been for industrial users, shopping centres, holiday resorts and in particular mining operations to self-generate by using diesel-fired generators. While this solved the problem for those particular sites, it did very little for the communities and employees in and around their places of employment. It was and still is a very expensive method to generate power . Just as the mobile phone has made communication and financial services viable in remote areas, so too can renewable energy be the catalyst to those remote and often offthe-grid towns to contribute to economic growth. The plummeting costs of solar technology together with the advancement of storage technology is seen to be a solution to energising these towns and users, replacing costly and environmentally unfriendly diesel generators. While solar on its own cannot be

the solution, what is evident and feasible is 9:24 AM that solar in conjunction with 2017/04/19 storage and other forms of generation could see remote economies grow as energy supply becomes cheaper and more reliable. While project financiers are comfortable financing utility scale renewable energy projects with long term off take agreements with state owned utilities, with or without government support, lenders would typically look to fund smaller off-grid installations using typical asset-backed funding structures with shorter tenors. The asset-backed financier would typically not take performance risk on the underlying assets. Infrastructure assets by their very nature are long term and funding should attempt to match the life of the asset, however given the size/value of the off-grid solutions and the counterparty risks, project financiers would typical steer clear of providing funding. Financial institutions with experience in the power sector and with an understanding of how to mitigate and structure for the risks inherent in off-grid solutions could potentially be the catalyst which would see the 600 million people in sub-Saharan Africa gain access to electricity which would not only improve their quality of life but also lead to economic growth in the region.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

5.CRITICAL COMMENT

Chapter 5 South Africas energy future on a knife/edge?

By: David Lipschitz

In 2015, Eskom was load shedding its customers. Eskom didn’t have enough electricity, so instead of allowing a grid meltdown, where the whole grid went down, Eskom did something they called “load shedding.” This means that for between two and four hours at a time, Eskom switched off parts of the national electricity grid, thus saving themselves major problems. They kept their power stations running as best they could and they simply switched off their clients.

he problems were caused by electricity growth exceeding supply of new power stations; by failures in the system; and by bad long term implementation plans. And this being switched off led Eskom’s clients to look for alternatives. Many of us remember the last time there were power failures, back in 2008 / 2009. The initial plan was to buy a generator. Generators are loud, smelly things, and they require maintenance, and most people have up to eight hours of fuel reserves. What if we had more than the expected downtime? We would run out of fuel. Our businesses wouldn’t be able to operate. We’d have major problems. The secondary plan was to look at alternatives. Could one make electricity on site? How much would it cost? When would I break even? Did it make sense? Should I wait it out? At what point would we be at Grid Parity? And could I look at being more efficient, thus, not needing as much electricity as before? Energy efficiency became the order of the day. Negawatts, i.e. Negative Watts, the cheapest form of needing less electricity. Many of us found that we could save up

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5.CRITICAL COMMENT

to 30% of our electricity costs relatively painlessly and big businesses learnt how to move their peak demand around to save even more money. If one did research to discover if Eskom knew about this problem before it happened, one came across the following graph (figure 1). This graph comes from the White Paper on

Eskom’s culture has always been to build the biggest, which might not always be the best!

Renewable Energy, created in 2003. A “White Paper” is a government strategy document, setting out a government’s long-term strategy in an area. One can see that by 2003, everyone knew that Eskom and the South African government would run out of electricity by 2008. And one can also see that without new build, we would start losing electricity in the 2020s as old power stations are switched off. Eskom’s approach was to start planning to build the world’s biggest coal-fired power stations, instead of building smaller power stations, which would be easier to roll out, and scalable. Build one. Learn. Build the next one at a reduced cost and increased speed. Etc. One should note that

tions are coming on line. And the crisis is for Eskom, and the government, as Eskom is an SOA, a State-Owned-Entity, and the crisis is for the people of South Africa, especially as Eskom embarks on “Coal3” and “9.6 GW of Nuclear Power”. They talk of “stranded assets”. Only a public utility can have a “stranded asset”. A mere mortal like myself just has sunk costs. If I make a bad decision in business, or I invest in something that makes me money for a while and at some point, it isn’t making money anymore, then I may need to write it off and lose my investment. But the governments and utilities don’t write off power stations, even if there are better alternatives. They call them “stranded”. And they try to get their customers to pay

Jump forward to 2017 We have a different kind of crisis. Eskom tell us that we have too much electricity, because Medupi and Kusile coal power sta-

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5.CRITICAL COMMENT

for these stranded assets for years after they have reached the end of their useful lives. However, even with Medupi and Kusile bringing South Africa’s electricity grid up to speed, we still have the cliff that will start happening in the 2020s, when existing power stations will start being switched off. If we add 10 GW now, and we switch off 10 GW in the 2020’s, then we aren’t better off, electricity wise. At the same time, why does Eskom have all this excess electricity? The reason is mainly because the new power stations are so late that their clients have gone elsewhere. The smelters, big factories and others have moved to other countries,

buy it. The following graph shows the latest version of my grid parity (above). The green line is the decreasing cost of grid tie photovoltaic systems, without batteries. The red line is the electricity price in the city of Cape Town. The lower lines are what the City should be charging and what Eskom charge the city. If the city put up their prices by the NERSA-agreed increases, then we would be paying the maroon line’s pricing, but the city has a stepped increase tariff, so that the poor don’t need to pay for electricity and, therefore, those paying for electricity’s prices go up faster than the NERSA-agreed price increases. Coupled with this, in 2017, we have anoth-

City of Cape Town – When do we get to “Grid Parity”? ie. When can we make our own electricity cheaper than we can buy it? Cost per kwh. For Homeowners using 1,200kwh or more. Plus some other assumptions. David Lipschitz, 22/6/2015;2016 onwards are estimated R7.00

R6.67

R6.00

R5.00 R4.67 R4.00

R3.00

R2.61 R2.25

R2.40 R1.94

R2.00

R1.00

R1.87

R0.68

R.65

R0.66

R0.57

R0.38

R0.33

R0.00

R1.08 R0.79

2009

R1.11

R0.96 R0.60

R1.33

R1.36

R1.23

R1.27

R0.68 R0.74

kWh cost of manufacturing 2010

2011

2012

with more reliable and cheaper, electricity systems. And the rest of us have learnt how to make more with less, which is something that has been happening in the electricity world and in the marginal cost reduction world for centuries. Those of us who looked at “grid parity” years ago noticed that, by 2012, we would be at grid parity as home owners; by 2015, businesses would be at grid parity; and perhaps as early as 2017, homeowners would start being at grid parity, including batteries. “Grid parity” happens when one can make one’s own electricity cheaper than one can

R1.71

R1.59

R2.07

R1.55 R1.20 R0.91

R0.80

R1.13 R1.06

R1.22 R1.07

R0.47

kWh cost of buying 2008

R1.47

R1.30

R1.79

SUSTAINABLE ENERGY RESOURCE HANDBOOK

Homeowner should pay

Eskoms kWh selling price 2013

2014

2015

2016

2017

er energy crisis. In parts of South Africa, and especially for me, as I live in Cape Town, we have a water energy crisis. We have a shortage of water. This has been mainly caused by major population growth, without an associated increase in dams, and without the city and province implementing alternatives. The city and province have looked at alternatives, for example pumping water from major rives into dams during winter months, and desalination plants, but nothing has been done about this. Proposals go back as far as 2011 for the pumping solution. One can read about the Berg and Breede River

5.CRITICAL COMMENT

pumping schemes. Interestingly, it seems that the additional income that the City of Cape Town has made with its expensive Water Restriction tariffs, would cover the cost of this “augmentation scheme”. In 2011, News24 said that all the city’s water supply would be fully utilised by between 2017 and 2019! And proposals go back even further than that for using Table Mountain spring water. The city is still trying to get its users to save 11% of water use, yet 15% of water is wasted in our water reticulation system. And what happens when new water plants are online and the city’s clients have found alternatives? It seems that we have enough water in Cape Town and the Western Cape. But that it just isn’t being managed effectively. We know that people have taken responsibility for their own electricity provision. And we now see that people are taking responsibility for their own water provision? So, we need to ask the questions: what if people stop buying centrally-provided electricity and water? Will Eskom and the Municipalities be able to legally keep putting up prices to keep their incomes where they are now? And then there is a yet another energy crisis: a crisis of massive unemployment, which means a huge potential for a new way of working and thinking. Perhaps we need to step out of our myopic view of the world and see where we are headed, because once we do that, we can step in and see if there is an alternative approach to solving our problems. Tony Seba, a thought leader, says that by 2030, we’ll be driving electric vehicles

(EVs), parking garages will start becoming obsolete because the electric cars will drive themselves, and so we won’t need parking garages, and we won’t need to own the electric cars because we will only use them when we need them. At the same time, it is expected that battery prices will have come down dramatically, whilst at the same time, energy densities will have increased. The battery packs in our EVs will be a part of our energy system. Robots are doing more and more of our jobs, including automatic vehicle production, automatic mining, automatic warehousing. The associated labour loss is enormous. The need for centralised power stations will disappear! What happens when this kind of disruption occurs? What happens to jobs? What happens to our livelihood? What happens to our energy grids? What happens to our electricity grid and our water grid and our food grid and all our supply chains? They will surely change. Perhaps not as fast a Tony Seba says, but he does show slides in a YouTube presentation showing New York with 99% horse drawn carts in 1900 and 99% cars 13 years later! Do I have the answers? I have questions. I have ideas, especially around how our education system needs to change and around how the latent knowledge in our people needs to be utilised, in an ancient system brought up to date with modern ways of doing things, with an abundance of locally-produced and cheap electricity, water, food, etc, and with our economy trundling along, creating environmentally friendly jobs along the way.

References: • [1] http://www.thezeromarginalcostsociety.com/ • [2] http://www.dwa.gov.za/Projects/WC/ • [3] http://www.news24.com/SouthAfrica/News/Western-Cape-water-suppply-takesstrain-20110613 • [4] https://youtu.be/Kxryv2XrnqM

SUSTAINABLE ENERGY RESOURCE HANDBOOK

6.AFRICA IN FOCUS

Chapter 6 New Trans Africa Pipeline and green economy rumbles on By: Michael Hartt, Celeste Hicks and Rio Matlhaku In a major initiative to strengthen the West African economy, the Kingdom of Morocco and Federal Republic of Nigeria have announced that they will jointly develop a new regional gas pipeline connecting the two countries, bringing the resources of Nigeria to Morocco, its neighbours and Europe

he Trans African Pipeline project was announced during a royal visit to Nigeria by His Majesty, King Mohammed VI of Morocco, with President Muhammadu Buhari of Nigeria, and is designed to stimulate large-scale economic growth across the region. By accelerating the electrification of the region, the Trans African Pipeline will improve access to energy across West Africa. This will help to address one of the region’s most significant barriers to development—the lack of affordable energy. In addition, the project will strengthen energy exports to Europe, linking Nigerian gas to the European energy market through Morocco.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

6.AFRICA IN FOCUS

In West Africa, the Trans African Pipeline is designed to support the creation of industrial hubs that attract foreign investment. The project will, therefore, facilitate the expansion of sectors ranging from industry to food processing to fertilisers and improve the competitiveness of exports, particularly amongst African countries. Currently, intra-continent trade accounts for only 17 percent of African countries’ international trade, much lower than in Asia or Europe, in part, because trade costs between African countries are often comparatively higher. Designed with the participation of all concerned parties with the aim of speeding up electrification projects in the region, the project will also establish a competitive regional market for electricity, likely to be linked to the European market of energy. It will also spur local transformation of natural resources available for national and international markets. The project will be considered through new collaboration between Ithmar Capital, the Moroccan sovereign wealth fund, and the Nigeria Sovereign Investment Authority (NSIA). The two funds announced the signing of a Strategic Partnership Agreement (SPA) and a Memorandum of Understanding (MOU), which will see their countries cooperate on bilateral investment for the first time in recent history. Under the SPA, Ithmar Capital and NSIA have committed to jointly pursue investment in strategic sectors including food security, renewable energy and infrastructure. The SPA also commits the two institutions to share knowledge and expertise relating to the extractives sector, collaborate on research and best practices, and provide policy guidance in order to strengthen both countries’ capacity to manage natural resources. Similarly, the MOU provides for a broader alliance framework between the two entities.

It ensures Nigeria’s active involvement in the Green Growth Investment Fund (GGIF) Africa, an initiative to catalyse Africa’s transition to a green economy. GGIF Africa was launched during the UN Framework Convention on Climate Change Conference on Parties (COP22), held in November in Marrakech. It aims to accelerate regional growth by attracting foreign investors interested in Africa who seek responsible, sustainable opportunities. Together, the two agreements will create a formal structure to build relationships and create new opportunities between businesses in Morocco and Nigeria. They also represent a major commitment by two of Africa’s largest economies to collaborate on regional initiatives that will continue the continent’s development. The Nigerian Minister of Foreign Affairs, Dr Geoffrey Onyema, stated, “This South-South open platform will accelerate the structural transformation of the national economies of the region, thereby putting the entire region on a higher growth path. The two Heads of State agreed to set up a Bilateral Coordination Body to monitor this important project and commended such a strategic cooperation in Africa.” The new collaboration between Morocco and Nigeria is intended to set a model for South-South cooperation and act as a catalyst for African economic opportunities. It aligns with His Majesty, King Mohammed VI’s regional strategy, in which he has declared that Africa is the top priority in Morocco’s foreign policy and that the Kingdom will contribute to economic, social services and human development projects that directly improve the lives of people in the region. This includes projects related to the energy sector and, notably, sustainable and green projects. Morocco climate change plan In the past year, Morocco has banned the use of plastic bags, launched new plans

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6.AFRICA IN FOCUS

for extending the urban tram networks in Casablanca and Rabat, started the process of replacing its dirty old fleet of buses and taxis, launched Africa’s first city bicycle hire scheme, and launched a new initiative—the “Adaptation of African Agriculture”—to help the continent’s farmers adjust to climate change. Attention has been on the development of “mega” infrastructure projects in an ambitious plan to transform the country’s energy mix. Morocco has no fossil fuel reserves so is almost entirely reliant on imports. In 2015, King Mohammed VI committed the country to increasing its share of renewable electricity generation to 52% by 2030, aiming for the installation of around 10 gigawatts (GW). Of that, 14% is expected to come from solar, with plans to install 2GW of new capacity by 2020, as well as increases in wind power and hydraulic dams. Morocco has even opened the door to exchanging electricity produced from renewable sources with Europe. Morocco’s INDC (Intended Nationally Determined Contribution) plan submitted to the UNFCCC is equally ambitious and commits the country to cutting greenhouse gas emissions—particularly in agriculture—by 32% by 2030, compared to business as usual. Morocco has also committed to planting 200 000 hectares of forest (pdf ) and greatly increasing in irrigation. The commitment is dependent on accessing climate financing, but translates to a cumulative reduction of 401 megatonnes of C02 over the period 202030. In 2015 Morocco completely removed subsidies on petroleum products. The first phase of the giant Noor solar complex near Morocco’s southern desert town of Ouarzazate is the 160MW Noor One plant, which was opened by the king in February. Instead of PV (photovoltaic) solar panels, Noor uses CSP (concentrated solar power) technology—giant mirrors to reflect the sun’s rays onto tubes containing liquid,

SUSTAINABLE ENERGY RESOURCE HANDBOOK

which is super-heated to drive turbines. CSP offers storage of electricity for up to three hours after the sun has set, which covers peak demand times. Zambia rises, South Africa still slumbers, in Fieldstone Africa Renewable Index Meanwhile, Fieldstone Africa, a leading independent investment bank and financial service provider in energy and infrastructure in Africa, released its first renewables index for 2017. The Fieldstone Africa Renewables Index (FARI) FARI ranks national markets in terms of current suitability to invest (time and capital) to achieve successful renewable projects. In the previous Fieldstone Africa Renewables Index, released in October 2016, Morocco was rated the top country in Africa, followed by Uganda, with Egypt holding third place. In the latest index, Morocco still leads, due to its pioneering efforts in renewable base load in Africa resulting from its commitment to concentrated solar power (CSP). Uganda’s steady progress towards achieving its plan for 1 500MW of renewable generation by 2020 saw it retain its second place in the ranking. However, Zambia pipped Egypt to third place due to its solar and hydro initiatives, underpinned by a transparent regulatory and approval regime. Egypt’s aspiration to further develop its renewable energy programme has suffered from recent currency deregulation, leading to an exodus of international investors. Jason Harlan, CEO of Fieldstone Africa commented: “The signals for renewables in Africa continue to remain positive as FARI shows. Initiatives on the continent seem more credible than earlier efforts, and there is certainly a variety—from large-scale, systemic programmes to incremental build-up based on long-term goals.” South Africa, by far the country with the most potential, is still stuck in a category of its own, called “(Fitfully) Waking Giant”. At the time FARI was introduced, South Africa

6.AFRICA IN FOCUS

was the leading country on the continent in terms of its renewable energy programme. South Africa’s reputation and position on the index began to slip due to a refusal by the country’s energy utility, Eskom, to sign power purchasing agreements with several Independent Power Producers (IPPs). Power purchase agreements won by IPPs in rounds 4 and 4.5 of the government’s auction process, the Renewable Energy Independent Power Produce Procurement Programme (REIPPPP), have remained unsigned for several months, seriously denting investor confidence in what was internally recognised as a highly successful programme. This has changed somewhat over the last two months, with President Jacob Zuma announcing in his State Of The Nation address that they will be signed. However, Eskom is now trying to play old coal plants to be decommissioned against additional renewables and threatening to call in the government guarantee provisions for existing IPPs. These issues aside, South Africa’s potential remains high. The country could rocket back to the top of the index, based on South Africa’s Independent Resource Plan as it currently stands, which calls for the addition of 1 000 MW of renewable energy a year for several years. One positive development is that some small IPPs have been fast tracked and the long-outstanding Round 4 bids seem likely to be given the go-ahead. Harlan said it is hoped that, in due course, the “Big 5” category—which currently only comprises Morocco, Uganda and Zambia—will reach five entries as envisaged, as candidates listed in the “Honourable Mention” and “Countries To Watch” categories start to move up the ranking. Countries in the Honourable Mention category are: • Algeria (proposed a 4 000MW programme to utilise its solar potential)

• Ethiopia (focussing on hydro power, looking to establish IPPs for photovoltaic and geothermal) • Nigeria (focused on solar power, may yield several projects of scale) • Egypt (currency deregulation has led to exodus of international investors) • Senegal (commissioned 20MW photovoltaic at the end of 2016 and signed a wind programme of the same size) • Ivory Coast ( Re-joins the index for the second time with its biomass and seven hydro projects, including a 275MW project under construction) • Kenya (has issued seven licenses for photovoltaic projects after years of sorting through 3000 original renewable submissions). Countries To Watch category: • Cameroon (power utility ENEO is seeking partners to develop a 20MW solar generation plant) • Madagascar (new to the index, actively evaluating solar, hydro and wind.) • Mozambique (new to the index, has signed a 25MW power purchase agreement in conjunction with Norfund) Best Intentions (Not Best Results) Tanzania, on the east coast of Africa, is also in a category of its own, described as having the Best Intentions (Not Best Results) – the category aims to make note of plans that do not work in order for the index to be a useful tool. Tanzania’s drive to curb corruption has also led to the country attempting to keep its electricity prices very low even in the face of economic evidence showing this to be counterproductive. Harlan said FARI continues to track movements on renewable energy projects in Africa, the regulatory environment enabling investment in projects and the benefit to economies these initiatives bring.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

7.AFRICA

Chapter 7 Innovation unlocks Africa’s future energy mix By: Sally Braham New technologies and innovative approaches are opening doors for Africa’s off-grid and on-grid efforts to widen access to electricity.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

7.AFRICA

his was the message of SRK Consulting associate partner and principal environmental scientist Warrick Stewart, who was a panelist at the high-profile African Energy Indaba in Johannesburg recently. Stewart signalled exciting developments that will pick up the pace of energy project rollouts, from large-scale power generation to smaller renewable projects. He said the gathering of energy stakeholders acknowledged the need for African countries to explore a range of energy options—extending the capacity and reach of regional grids, while also harnessing new technologies to create a more varied energy mix. “Considerable innovation has taken place in terms of energy storage, through the development of battery technology,” said Stewart. “Up until a year or two ago, this was not readily available in a cost-effective format but has now seen an increase in uptake, mainly in the domestic space. There has also been a dramatic increase in commercial rooftop solar systems in countries like South Africa.”

“Kenya and Ghana were mentioned as governments that were making positive policy adjustments aimed at providing confidence to investors, and these efforts were attracting investment in energy projects.” As energy storage capacity evolves, there will be opportunities for renewables to start moving from non-baseload to baseload status, said SRK partner Darryll Kilian. “New technology is proving that bigger is not necessarily better, and that hybrid

SUSTAINABLE ENERGY RESOURCE HANDBOOK

7.AFRICA

projects involving more than one technology can be structured to provide continuous energy supply,” said Kilian. “This is also creating more opportunity for captive solutions which provide power for commercial companies or mines. Inventive funding solutions were also emerging for smaller projects of about 5 MW or less. There was still a need for reliable off-takers of energy, as the financial capacity of many African utilities can make it difficult for them to provide guarantees.” Gas discoveries were also likely to change the future energy landscape, said Stewart, providing another option for baseload production, or a more flexible energy source, to supplement renewables. “At the end of the day, it is in the interest of consumers for African countries to use the cheapest available sources of electricity,” he said. “Gas is likely to play an important part in a future system, in which energy supply is structured so that the least-cost energy sources can be employed most often.” Kilian highlighted the Indaba’s concern with policy and political consistency as a foundation for energy developments in Africa. Kenya and Ghana were mentioned as governments that were making positive policy adjustments aimed at providing confidence to investors, and these efforts were attracting investment in energy projects. “It was clear from a range of experts that policy uncertainty will discourage investment,” he said. “It was therefore no surprise that there was significant focus on the latest problems in South Africa regarding renewable energy and independent power projects (IPPs—when Eskom appeared to be holding back on signing off power purchase agreements with IPPs.” He said it was vital for the regulatory regime to be transparent and consistent, particularly as South Africa’s renewable energy

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IPP procurement programme had been so successful, that it was viewed as a model approach across the continent. “There was also discussion about the desirability of South Africa’s energy regulator being assigned an independent status, rather than falling under the Ministry of Energy,” he said. One of the key obstacles to broader energy access in Africa was the quality of the existing grids, which limited the ability of new power generation to be effectively harnessed and distributed. The good news was that development funding for energy projects was available and was increasingly used to bridge the gap when governments

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were not able to provide the necessary guarantees. On the down-side, however, many projects were still plagued by delays. “The roll-out of large projects—both generation and distribution—has in the past often been delayed by a lack of alignment between in-country regulatory requirements for environmental and social approvals, and those standards set by the lenders themselves,” said Stewart. “Working with the South African Power Pool (SAPP) to address key factors behind these delays, SRK has developed an Environmental and Social Management Framework (ESMF) to facilitate the

screening of projects in line with lenders’ requirements,” he said. “This will help accelerate the implementation of SAPP’s priority projects in the region, which promises to extend access to affordable electricity.” Stewart said the ESMF would ensure that the project development teams within the utilities and independent power producers (IPPs) were more aware of the project funders’ requirements. It would also facilitate the earlier involvement of these institutions’ environmental and social experts, in the project planning process—as early as the concept phase and pre-feasibility stage.

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Chapter 8 Mitigating against the Time-of-Use Tariff by the Commercial Building Sector By: Stefan Szewczuk The Time-of-Use (ToU) tariff is designed to discourage the use of electricity by commercial customers during peak demand periods with the morning peak tariff operating from 7:00am to 10:00am during weekdays. The evening peak demand period with the evening peak tariff is from 6:00pm to 8:00pm. But what are the effects on green businesses?

SUSTAINABLE ENERGY RESOURCE HANDBOOK

onsequently the ToU tariff encourages large users of electricity to apply their minds as to what demand-side measures they could implement to mitigate against the rising costs of bulk electricity generated by Eskom the South African electricity utility. Renewable energy supply technologies, such as those based on exploiting wind and solar resources, have shown a steady decline in costs. Figure 1shows the decline in costs and tariffs for large utility scale PV projects in the South African Department of Energyâ&#x20AC;&#x2122;s (DoE) Renewable Energy Independent Power Producer Programme (REIPPP), [online]. The cost and tariffs of PV technology has declined to below coal-new-build option,s and has opened new opportunities for the implementation of smaller than utility scale PV projects. These costs have declined to such an extent that PV systems can now be considered as a demand-side measure option and not merely as a mitigation option against load-shedding. Time-Of-Use (TOU) Tariffs Time-of-Use (ToU) metering sets a rate that

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is dependent on the time of use, and is designed to both recover higher generation cost during peak demand periods, and to encourage users to use less electricity during peak periods. Unlike flat rate metering charges a fixed rate per kWh of energy used, irrespective of the time of day or season in which the energy is used. Figures 2 and 3 (next page) depicts the principles for ToU tariffs, flat rate tariffs, and the solar PV generation curves for a fixed inclination system for summer and winter months. Features to note, are the times during the 24 hour day when off-peak, standard and peak period tariffs are applied. The summer ToU tariff is generally lower than during the winter months, when the demand for electricity is greater. The flat rate tariff is constant throughout the year irrespective of the season. Typically the peak tariff is applied in the morning from 7:00am until 10:00am and in the evenings from 6:00pm until 8:00pm. Superimposing the solar generation curve onto the ToU tariffs for both summer and winter provides for options to be considered with regards to demand-side management using PV based systems. During the summer months solar energy has the potential to be

Figure 1: Decline in costs of utility scale REIPPP PV projects, Bischof-Niemz and Roro (2015)

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utilised from approximately 6:00am in the morning, until approximately 6:00pm. During the winter months solar energy has the potential to be utilised from approximately 7:00am in the morning until 5:00pm in the afternoon.

Figure 2: Summer ToU metering vs solar generation curve

Figure 3: Winter ToU metering vs solar generation curve

SUSTAINABLE ENERGY RESOURCE HANDBOOK

It should be borne in mind that in South Africa the typical commercial environment, the work day is typically from 8:00am until 4:30pm. The question that should be asked and answered is: â&#x20AC;&#x153;Can the added expense of a singleaxis tracking system for a PV array be offset by the increased solar based energy that is generated that results in reduction in tariffs paid to bulk electricity supplier?â&#x20AC;? Case study The CSIR was commissioned by a public entity to develop an integrated energy management plan to increase its efficient use of energy and reduce its electricity bill. The CSIR was supplied with electricity consumption data for the period from 1 February 2015 until 31 March 2016 to analyse and to develop demand-side options to be considered. The time of use tariffs during the period February 2015 to March 2016 are presented in Table 1. A vast amount of measured data was provided, and consisted of the electricity consumption being measured every 15 minutes. Also provided was the monthly maximum demand charge. The ToU tariff and the maximum demand charge to total electricity cost can be derived for each month. The maximum demand charge is the highest average demand measured in

8.GREEN BUILDING

Time-of-UseTariffsfromFebruary2015toMarch2016 ZAR/kWhr Month/ OnStanOff-peak year peak dard Feb-15 1.06362 0.65322 0.45828 Mar-15 1.06362 0.65322 0.45828 Apr-15 1.06362 0.65322 0.45828 May-15 1.06362 0.65322 0.45828 Jun-15 3.2034 0.9918 0.53124 Jul-15 3.2034 1.16052 0.61674 Aug-15 3.2034 1.16052 0.61674 Sep-15 1.22208 0.75468 0.532038 Oct-15 1.22208 0.75468 0.532038 Nov-15 1.22208 0.75468 0.532038 Dec-15 1.22208 0.75468 0.532038 Jan-16 1.22208 0.75468 0.532038 Feb-16 1.22208 0.75468 0.532038 Mar-16 1.22208 0.75468 0.532038 kVA during an integrated period in a billing month. As an analogy the ToU charge is the distance covered, and the maximum demand charge is the top speed obtained. Figure 4 depicts in graphical form the ToU tariffs of onpeak, standard and off-peak, during the period from February 2015 through to March 2016.

To reiterate, the public entityâ&#x20AC;&#x2122;s electricity consumption is measured every 15 minutes resulting in a vast amount of data that is available for analysis. An Excel spreadsheet based methodology was developed to analyse the vast amount of data points. For each 24 hour period a consumption load profile in

Figure 4: ToU tariff from February 2015 to March 2016

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8.GREEN BUILDING

kWh was established with the ToU tariffs been given different colours to assist in visual analysis: • Green for off-peak tariff • Yellow for standard tariff, and • Red for on-peak tariff The cost paid in Rand/kwh, including VAT, for the electricity consumed was then superimposed on the consumption profile. Figure 5 shows the consumption profile in kWh with differing ToU tariffs being represented by the various colours of green, yellow and red for the winter day of 1 July 2015. Superimposed is the cost profile in Rand/kWh including VAT. Each vertical stripe is a consumption value that is measured every 15 minutes.

Figure 5: Electricity consumption and cost profile for winter: 1 July 2015

During the off-peak period (green) from 10:00pm in the night until 6:00am in the morning, there is a relatively constant consumption of approximately 450 kWh that is billed ZAR300.00 every 15 minutes. During the standard tariff period the consumption changes according to electricity demand with the associated increase in billing. However, during the on-peak periods (red) there is a large spike in billing costs for electricity consumption. The morning peak period is from 7:00am until 10:00am. During this period the maximum electricity consumption is approximately 700kWh that is billed approximately ZAR3000.00 every 15 minutes. Figure 6 shows the consumption profile in kWh with differing ToU tariffs being represented by the various colours of green, yellow and red for the summer day of 1 February 2015. Superimposed is the cost profile in Rand/kWh including VAT. Once again, each vertical stripe is a consumption value that is measured every 15 minutes. During the off-peak

Figure 6: Electricity consumption and cost profile for summer: 1 February 2016

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8.GREEN BUILDING

period (green) from 10:00pm in the night until 6:00am in the morning there is a relatively constant consumption of approximately 400 kWh that is billed ZAR250.00 every 15 minutes. During the standard tariff period the consumption changes according to electricity demand with the associated increase in billing. However during the on-peak periods (red) there is a gradual increase in billing costs for the electricity consumed. Once again, the morning peak period is from 7:00am until 10:00am. During this period the electricity consumption increases steadily from 400 kWh to 700kWh. In harmony with the increase in consumption the peak billing increases from ZAR500.00 to ZAR900.00 every 15 minutes. The impact of the winter and summer ToU tariffs is evident from Figure 5 (winter) and Figure 6 (summer). A similar analysis was done for each day during the period 1 February 2015 until 31 March 2016. By integrating the cost curves for each day the daily electricity bill can be calculated. Similarly this can be done on a weekly basis and also on a monthly basis. As stated previously the public entity also provided the maximum demand charge for each month. Adding the monthly ToU charge to the monthly maximum demand charge provides a total electricity bill for each month. This can be confirmed by analysing the electricity statements for each month. Figure 7 shows the total electricity costs on a monthly basis. The Peak, or maximum demand charge, is depicted in brown. This Peak, or maximum demand charge, is relatively constant and hovers around the ZAR500,000.00 per month. The Tariff or integrated monthly ToU costs are depicted in blue. The Peak and the Tariff costs are combined to provide the Total monthly electricity costs as depicted in green. The maximum paid was during the winter month of July 2015 where

ZAR2.5million was paid for electricity. The impact of the ToU tariff increases that were introduced on 1 June 2015 become evident when the reduced summer over winter ToU tariff was implemented on 1 September 2015. See Table 1 and Figure 4 for the ToU tariffs. Figure 7: Monthly total electricity costs (Base line)

Energy yield and LCOE estimations Based on further analysis using the methodology to procure PV assets at low lifetime costs and using PVSyst software the main results from this analysis is that the public entity: • has an hourly base load of 1500kW • a peak energy demand of 2500kW • during the day hours from 6:00am to 6:00pm an average of ZAR0.90/kWh was paid to the City of Tshwane • the energy consumption profile does match the solar PV generation profile Further analysis was done using a base case of a 500kWp PV array system, one for a fixed inclined system and the other for a single-axis tracking PV array system. Figure 8 depicts the results of the above analysis, showing the averaged load profile vs that of a 500kWp solar PV system—one analysis for a fixed inclined system and the other for a single-axis tracking system.

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8.GREEN BUILDING

Figure 8: Energy consumption vs fixed and tracking PV generation systems

more energy than the fixed inclination system per annum. However, it should be noted that the tracking system costs approximately

It was further calculated that the tracking system could generate approximately 1151MWh/annum, compared with that of the fixed inclined system generating approximately 934MWh/annum. The estimated cost for a 500kWp fixed inclination PV system is ZAR9million with the cost for a single-axis tracking PV system estimated to be ZAR9. 9million. The tracking system generates 23%

10% more compared to the fixed inclination system. Table 2 shows a summary of the cost estimation for a 500kWp PV system for a fixed inclined system, and that for a singleaxis tracking system and the estimated annual energy generated each system. Inputs into this analysis included referencing Alfheldt, (2013)

Table 2: Summary of estimated annual energy generation, investment costs for a 500kWp fixed inclined and single-axis PV array system

SUSTAINABLE ENERGY RESOURCE HANDBOOK

8.GREEN BUILDING

The South African Renewable Energy Independent Power Producer Programme (REIPP) is successfully implementing utility scale PV projects, with the price for electricity being offered under Bid Window 4 being ZAR0.82/ kWhr. This price is less than that of new build coal fired power stations. The CSIR has installed a 560 kWp, ground—mounted, single-axis PV tracking system, on its main campus in Pretoria, where the Levelised Cost of Electricity of the CSIR system is ZAR0.83/ kWhr, and is very competitive to the price offered under Bid Window 4. The CSIR’s solar PV system can be used as a base-line against which to compare similarly sized PV systems. Figure 9 depicts a stylised single-axis tracking PV array system. This attractive cost of ZAR0.83/kWh implies that small scale PV systems can be implemented with the associated investment benefits. Based on a case study for a public entity, the Time-of-Use tariff for this entity was investigated to establish the potential benefits of implementing a single-axis tracking solar PV system to generate electricity. Associated with the Time-of-Use tariff is the on-peak tariff period from 7:00am until 10:00am. Superimposing the solar PV generation curve onto the Time-of-Use tariffs for both summer and winter months provides for options to be considered, with regards to demand-side management using solar PV based systems. During the summer months the solar energy has the potential to be utilised

from approximately 6:00am in the morning until 6:00pm in the late afternoon. During the winter months the solar energy has the potential to be utilised from approximately 7:00am in the morning until 5:00pm in the afternoon. For the 500kWp it was calculated that the single-axis tracking PV system could generate approximately 1151MWh/annum, compared with that of the fixed inclined system generating approximately 934MWh/ annum. The estimated cost for a 500kWp fixed inclination PV system is ZAR9million, with the cost for a single-axis tracking PV system estimated to be ZAR9.9million. Consequently, the tracking based system generates 23% more energy than the fixed inclination system per annum, as the tracking system is able to capture the solar radiation more efficiently during much of the day-light hours However, it should be noted that the tracking system costs only approximately 10% more compared to the fixed inclination system. Consequently a fixed-axis tracking solar PV system can be used to mitigate against the morning on-peak tariff period without implementing any other demand-side measures. Furthermore, small scale singleaxis tracking PV systems can also reduce the monthly electricity bill payable to bulk suppliers of electricity.

References • Alfheldt. C., (2013) The localization potential of photovoltaics (PV) and strategy to support large scale roll out in South Africa, Prepared for SAPIA, WWF and the dti, March 2013 • Bischof-Niemz, T. and Roro, K.T., (2015)“A guideline for public entities on cost-efficient procurement of PV assets”, 31st European PV Solar Energy Conference and Exhibition (EU PVSEC 2015), Hamburg, Germany • REIPPP, online, available at http://www.ipprenewables.co.za/ [accessed 10 May 2016]

SUSTAINABLE ENERGY RESOURCE HANDBOOK

9.HEAVY INDUSTRY

Chapter 9 How sustainable is mining in SA? By: Roger Dixon, Marcin Wertz, Andrew van Zyl, Peter Shepherd, Darryll Kilian and Warrick Stewart of SRK Consulting Reeling from a plethora of difficulties over recent years, it is unsurprising that many observers have wondered about the future path and sustainability of South Africa’s mining industry. Speaking from a range of disciplines, experts from SRK Consulting interrogate the various sustainability factors—including reliable energy provision—that shape mining’s outlook today.

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9.HEAVY INDUSTRY

he parlous state of the country’s minerals sector was exacerbated a few years ago when state utility Eskom told mines it could no longer provide them with a reliable supply of electricity. This compounded problems like commodity price weakness, rising operational costs, an uncertain regulatory environment and concerns over water management. While the mood in recent months has changed for the better – with expectations of a global recovery that has already seen significant recovery in the price of certain commodities – the mining industry still has a long way to go if it wants to regain something of its former stature. Its future sustainability, moreover, lies in an increasingly complex world of competing demands and expectations – requiring integrated responses that cover a full 360 degree appreciation of risks and opportunities. The good news is that awareness is growing about the need to ‘do things differently’, and technology is also playing its role in facilitating solutions to improve energy efficiency and long-term sustainability in a range of fields. What began as a search for increased energy security and reliability has somewhat unexpectedly led to a possible solution to rising energy costs with renewable energy proving to be increasingly competitive. Reliable, affordable energy To discern the level of mining companies’ concerns about the sustainability of their current source of energy, one need only track the response of Sibanye Gold to their energy challenges; the company is not only the largest producer of gold in SA, but is among the top ten gold producers globally and the fifth largest producer of platinum group metals (PGMs) in the world.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

9.HEAVY INDUSTRY

Sibanye’s kWh cost of energy usage as a component of Sibanye’s operational costs rose from 9% in 2007 to over 20% in 2015, despite its consumption actually dropping 15% during this period. Supply constraints also interrupted mining continuity and contributed to substantial production and revenue losses. It therefore plans to start generating its own renewable energy by the end of this year, from a R3 billion, 150 MW solar photovoltaic (PV) independent power project. Other base load alternatives, including gas- and coal-fired power stations to supply between 200 MW and 600 MW, are also being explored. In terms of costs, Sibanye is adamant that solar PV generated electricity costs have fallen to the point that they are now comparable to Eskom’s; and while Eskom’s costs are expected to increase at rates above CPI, the cost of solar PV power is expected to continue dropping. The presence at this year’s Investing in African Mining Indaba of Tesla, well known for its innovations in battery technology, is another indication that mines are expected to be looking at a range of off-grid options for securing their energy supply and lowering their operational costs. Energy storage has long been a limiting factor for renewable energy generation from sun, wind and water; more affordable high-capacity batteries with improved efficiencies and security outside of renewable energy generation times (for example, daylight hours for solar facilities) via storage could change all that. Deeper means more energy The point to remember is that many of SA’s mature deep-level gold mines – which on the face of it may be considered in their sunset years – are also the sources of great hidden value. If technologies can be developed to continue releasing this value safely and economically, then even higher levels of energy will be demanded for basic functions

SUSTAINABLE ENERGY RESOURCE HANDBOOK

like hoisting, cooling and ventilation. Rising grid power prices may make these levels of energy consumption unaffordable. So it should be unsurprising that SA mines are considering alternative sources and experimenting with renewable options. Some local platinum and coal mines have already established solar facilities as test sites, generating energy for certain of their surface infrastructure. The scenario beyond SA is likely to be similar, as relatively high interest rates put a dampener on most African governments’ aspirations to beef up their large-scale, centralised generating capacity, or to embark on expensive distribution networks. These projects have high capital costs and

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long lead-times between initiation and revenue-generating phases, which can render them uneconomical in a high interest rate environment. More realistic are those schemes that put the solution directly into the hands of the endusers, who must themselves meet the initial investment but are able to enjoy the benefit of a much shorter payback period. The solar PV revolution quietly sweeping Africa’s rural areas is founded on this principle, bringing light and productive energy availability to low-income homes. Similarly, mining projects in Africa’s more remote and unserviced regions will increasingly deploy renewable energy as this technology evolves to compete with

traditional fossil fuels, or at least are likely to attempt a mix of energy sources. In countries like SA, which are weighing their options regarding carbon emissions regulation, mines must also consider a future carbon tax as a real business risk that on-site renewable energy generation can start to address. Indeed, SA’s Renewable Energy Independent Power Producer Program (REIPPP) has been so successful in attracting foreign and local funding from private sources, that many African countries are considering the same model. The concept requires little commitment from public funds – just a firm hand in creating and implementing a fair and transparent framework for adjudicating tenders and

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ensuring that power purchase agreements are met. Conserving energy, water Alongside new ways of generating more energy, and doing it cheaper, is a parallel effort that has been ongoing for some years now: simply using less electricity. Driven by forces including overall cost-cutting, Eskomâ&#x20AC;&#x2122;s price hikes and environmental factors, mines have become much better at conserving their energy use. These strategies are undoubtedly an effective way to reduce energy costs, as mines look for ways to address baseload demand in key areas such as crushing and milling facilities in metallurgical plants. Energy reduction measures in operations have included better planning and maintenance of equipment to limit energy intensity and wastage, as well as behaviour change and operational control and efficiencies of equipment like underground fans. Results have been encouraging; one example was the successful 10% cut-back in

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9.HEAVY INDUSTRY

usage at Eskom’s request, during the dark days of load-shedding. A similar focus has fallen on water in recent decades, as mining sustainability becomes increasingly caught up in managing this precious resource – both as a vital factor of production and an environmental risk. Challenges related to climate change and the variability of water supply will also feature increasingly on the agenda. The approach has shifted radically, away from “sourcing-all-youcan-to-meet-peak-needs” towards a careful management of the water balance on mine sites while grading water according to quality for different purposes. An important lesson learnt over the past century in mining is that the uncontrolled use of water results not only in higher costs from wastage, but in substantial environmental cost through pollution. On a mine-by-mine

level, this leads directly to higher closure costs; on the broader social level, SA is still dealing with a legacy of acid mine drainage in a number of mining regions. The future will see better management of the different water qualities on mine sites, with new mines designed with the necessary reticulation options to ensure more recycling and re-use. While the ‘zero water use’ vision expressed by mining companies at the Mining Indaba is some way off, it is a worthy goal for mines to aim at bringing no extra water onto site for its operations. In the meantime, there has been plenty of progress achieved in collaboration between mines, municipalities and communities – to share water resources and conserve wherever possible. This will become a key operational imperative as competition grows for scarce water resources, and will require mines to

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9.HEAVY INDUSTRY

engage actively with their local stakeholders – including industry and agriculture. There is much scope for mines and industry, for example, to co-operate on how to make the most of industrial-quality water without incurring the high treatment costs of purification to drinking standard. Technology is playing its role in mine water management, with improved dewatering systems and innovations to limit evaporation from effluent dams. Some solutions even address more than one sustainability issue at a time, such as the concept (now tried and tested) of floating solar panels on tailings dams – generating electrical energy while reducing water loss through evaporation. Good nature The impact of mines on the natural environment is clearly one of the core elements of sustainability – and one in which the mining sector has made great strides in recent decades. Driven by wider and deeper government regulation across the globe, mines have developed a vast body of knowledge and expertise focused on how to leave the environment as pristine as it was before mining.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

SA’s legislators have certainly been quick to follow the example of more developed countries, and in many cases have set the bar for environmental compliance. The impact has been overwhelmingly positive, with larger operators buying into global best practice by active participation in initiatives like the International Council for Mining and Metals, whose roles include promoting environmental conservation. Like all regulated fields, this needs effective policing, and the state is developing the necessary capacity to fully cover all the bases in terms of regulatory enforcement. Social impact and shared value Governments have the difficult task of balancing not only the fiscal benefits of mining to the shareholders, on one hand, and the state, on the other – but also of ensuring that mines spread their benefits as widely as possible to surrounding communities and society at large. The latter aspect has become increasingly topical as an element of sustainability – especially as a number of mining operations globally have been temporarily suspended or closed completely due to disruption by disgruntled communities.

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The start of this discussion needs to be around the status of any mine as a diminishing asset; stakeholders need to recognise the mineral asset as the ‘seed capital’ for a broader ecosystem, in which all stakeholders invest – so that the ecosystem can develop a life of its own and survive even after the mineral asset is depleted. Without the input of all stakeholders, this vision is not sustainable. The reasonable expectation that stakeholders have of a mine as a source of sustainable development, is that they will all be left better off than when the mining project began. Sadly, this has not been everyone’s experience of the SA mining industry. When workers invest their labour, for instance, they expect themselves and their families to be better off than when they started – with regard to services like education and health provision. This aspect of sustainability is often difficult to attain in SA’s historical context, however, as the majority of mineworkers still do not bring their families with them to join the community. The migrant system appears more stubbornly entrenched than many would have expected, creating even greater strains on operational stability; with so many families living apart, and requiring support to survive in distant rural areas, it is even more difficult to develop sustainable mine-based communities. Mines nonetheless are expected to address these issues in their Social and Labour Plans, and there is progress on various fronts to institutionalise social investment, local economic development and skills development. A further aspect of the state’s role in SA’s context is to broaden mining’s benefits through ownership and control. This is also clearly a sustainability issue, as it addresses questions of legitimacy and social order – which must in the long term be satisfied if the industry is to remain a stable and rewarding place to invest. Here, the path has been tricky to say the least. While the principles of broad-based

black economic empowerment are generally accepted as a valid approach to address past injustice in the economy, applying the approach has proved more difficult. The Mining Charter process, for instance, and the surrounding uncertainty has done the sector no favours in terms of attracting much-needed investment. Mechanising for productivity Certainly the sustainability of SA mining will also have to be built on the continued viability of mining enterprises that can compete with global competitors, especially as the downside of commodity price cycles ejects the poorest performers from the survival race. This competiveness is under stress in certain segments of the SA mining industry, as our traditionally labour-intensive operations struggle to keep up with comparative outputs per employee in more developed sectors. While retro-fitting many of our deep-level, narrow-reef mines with mechanised mining options may not necessarily yield the results anticipated, there are plenty of examples in SA where greenfield mines are planned and run in a mechanised and more productive manner. Best practice is combining with technological advances in remote mining equipment, digital communication, sensors and monitoring. With greater automation and remote operation, workers can be located further from the high-energy danger zones of underground operations, for instance, making mines both safer and more productive. There is clearly no ‘silver bullet’ to secure the sustainability of SA’s mining sector, but an integrated approach that addresses all relevant factors – with a healthy dose of mutual respect and common purpose among stakeholders – will most certainly prove to be effective in the long-term.

SUSTAINABLE ENERGY RESOURCE HANDBOOK

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10.ENERGY EFFICIENCY

Chapter 10 Understanding and applying energy performance measurement correctly By: Alfred Hartzenburg (courtesy of UNIDO) Experience has shown that Energy Performance Measurement is probably the least understood by organisations, leading to an incorrect picture of actual energy performance, with subsequent negative implications on the credibility of conformity assessment and perceived value of energy management systems.

he profile of energy efficiency has risen recently, due to increased concerns about local and global environmental impacts of energy use. Challenges to energy security have also brought energy efficiency to the fore, as they directly contribute to reducing energy use, and in 2005, leaders of the G8 and five major developing nations, mandated the International Energy Agency (IEA) to undertake an assessment of the performance of energy efficiency policy and identified four key sectors: buildings, appliances, transport and industry.

SUSTAINABLE SUSTAINABLE ENERGY ENERGY RESOURCE RESOURCE HANDBOOK HANDBOOK

10.ENERGY EFFICIENCY

Since 2010 the National Cleaner Production Centre of South Africa (NCPC-SA), through its Industrial Energy Project (IEEP), have been working in South Africa to build the competencies and capacity of energy efficiency consultants and to assist industrial enterprises in the implementation of an Energy Management System (EnMS), aligned to the international energy management standard, ISO 50001. The IEEP promotes EnMS as an energy efficiency best-practice and ISO 50001 as a key supporting complementary policy-driven tool. As of March 2017 the IEE Project qualified 157 energy efficiency experts of which 107 are EnMS experts (consultants, service providers and embedded energy managers), and carried out EnMS implementation work in more than 70 companies.

Based on the well-known Plan-Do-Check-Act approach of other ISO management system standards, ie. ISO 9001 and ISO 14001, ISO 50001 offers a state-of-the art framework for organisations willing to implement energy management systems through the development of policy, formation of an energy management team, conducting the planning,

implementation and checking activities, all aimed to improve the organisations energy performance and sustain its improvement over time. EnMS provides a structured and systematic approach on how to integrate energy efficiency in enterprise management culture and daily practices. EnMS provides: Compared to other ISO management system standards, ISO 50001 has a unique feature which makes it substantially different from all other ISO management system standards: it requires organisations to improve energy performance. In order to improve energy performance ,an organization has to first know its energy performance. This means to identify and understand drivers and variables affecting energy use and consumption, define appropriate indicators that reliably allow measuring and monitoring energy performance, as well as facilitate optimal operations control and identification of energy savings and performance improvement opportunities. The right understanding and measurement of energy per formance, and the definition of appropr iate energy performance indicators, (EnPIs) are critical steps for the development of a meaningful baseline and the implementation of an effective and successful EnMS, that saves energy, money, and creates value and business benefits for the organization. After more than five years of international and national ISO 50001 EnMS implementation experience, there is large evidence showing that the topics

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of Energy Performance, and Energy A review of the performance and sustainabilPerformance Indicators, are probably ity of the more than 100 EnMS implementathe least understood by organisations, tion projects in South Africa today promptincluding industrial enterprises, as well as ed the IEE Project to address shortcomings by a significant share of EE practitioners and in the understanding and measurement of services providers, with major detrimental energy performance, not dissimilar to what impact on the pace and the effectiveness UNIDO discovered in other IEEP operational of EnMS implementation. countries. Subsequently training in Energy It has also become evident that the great Performance Measurement and Indicators majority of enterprises, and a significant (EnPMIs) commenced and become an intenumber of EE service gral part of IEEP trainproviders make use of “Compared to other ISO man- ing. energy performance agement system standards ISO “How many indicators, that are 50001 has a unique feature managers have been either incorrect or which makes it substantially told by their staff that improperly used, i.e. different from all other ISO man- high coal consumption leading to a partial or agement system standards” was due to low incorrect picture of production output? actual energy performance. How is it possible for them to judge whether Such lack of proper understanding this is an excuse or a reason?” within companies about actual energy These are the opening words from a fuel performance, and the limited competencies efficiency bulletin, published in 1943 by the on the side of EE consultants and service US Government’s Ministry of Fuel and Power, providers represent major barriers to, which criticises the “ton of coal per ton of and serious risks for proper and effective output” metric as a misleading indicator of implementation of EnMS/ISO 50001 fuel efficiency. and its broad dissemination. The energy The author was Oliver Lyle, Managing performance knowledge deficit is even Director of the Eponymous Sugar Refinery, a greater between EnMS/ISO 50001 auditors very knowledgeable and eminent engineer and certification bodies, with subsequent who had no time whatsoever for the Specific negative implications on the credibility of Energy Consumption ratio. Any working conformity assessments and the enterprises’ engineer today will know that SECs vary perceived value of implementing EnMS/ISO continuously for reasons that have nothing 50001. to do with energy efficiency. A recognition of the importance of Energy Performance Measurement is a energy performance indicators for EnMS, basic, yet significant, way of addressing both and of the existing gap with respect to energy security and environment concerns understanding and competencies for and there are different measures of energy development on meaningful EnPIs (and efficiency performance. Policy makers should related baselines), is demonstrated by the consider the suitability of Energy Performance fact that a separate international standard Measurement, based on criteria such as (i.e. ISO 50006), focused on EnPIs and Baseline reliability, feasibility and verifiability as it may has been developed by the ISO Technical be necessary in developing a regulatory Committees TC242 and subsequently TC301, framework. who developed ISO 50001. Whilst energy performance measurement

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10.ENERGY EFFICIENCY

provides an objective support for decision making there are also often subjective reasons for performance measurement, viz. There are many ways to measure how energy is efficiently or inefficiently used by a significant energy user, a machine, process, particular factory, company or country, and these indices include: Energy Efficiency Boiler efficiency, for example, is a useful indicator, but decreasing boiler load through pipe insulation, leak repair or demand management will almost always result in reduced efficiency due to lower loads. In this case, overall system efficiency will improve but not the boiler efficiency. Absolute Consumption Absolute consumption is good for setting future budgets and monitoring spending versus budget, but is not useful for energy performance measurement. Specific Energy Consumption Ratio (SEC) SEC may be useful for cost allocation, legal reporting, corporate compliance and benchmarking, but not useful for energy perfor-

mance measurement, except if baseload consumption is negligible and where there is only one relevant variable driving energy consumption. Normalisation of Relevant Variables This is the only effective way to know if performance is improving or not, whether targets are being met and it can be applied either to the whole facility or individual energy users in factories and buildings, by applying a regression analysis or other scientific models. In closing, I encourage and challenge energy managers to develop effective measures to counter these common excuses and for not applying normalisation, some of these measure are, engaging and educating top and corporate management, highlighting the weakness and dangers of using ratios indiscriminately, selling the benefits of reporting performance accurately, starting to gather data of all relevant variables, introducing normalisation as an additional reporting metric to show and explain to top management the differences when production volumes change, and finally, systematically phasing out inappropriate ratios.

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11.ENVIRONMENTAL MANAGEMENT

Chapter 11 SA striving for consistent reporting

By: Tanya Van Zyl

Since the industrial revolution the burning of fossil fuels has increased, which directly correlates to the increase of carbon dioxide levels in our atmosphere and thus the rapid increase of global warming. This has made the reduction of carbon emissions the priority of the world.

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11.ENVIRONMENTAL MANAGEMENT

n order to reduce carbon emissions it is important to have accurate carbon emissions records/calculations. The graph below shows the total emissions in Giga-Ton of Carbon Dioxide CO2 equivalent (Co2e) emitted by different countries in 2013. It also shows the tons of CO2e per capita (per person). South Africa emitted 7.7 tons CO2e per person, which is that same as the per capita emissions by China and roughly the same as the Netherlands (7.8). The heaviest contributors to total emissions were China with 10.6 million tons of CO2e in 2013, and the US with 5.2 million tons COÂ˛e.

Previous uncertainty in reporting of Carbon Emissions In South Africa, energy, and more specifically electricity), saving projects were implemented even prior to 1999. General energy awareness was raised particularly through the Eskom Integrated Demand Management (IDM) program, and the benefits of energy savings were mostly reported in kilo-watt hour saved during a defined period. Basic conversion to carbon emissions reductions was performed using emissions factors published by Eskom annually. There was however a lack of uniform approach to the calculation of emissions reduction from other energy sources

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11.ENVIRONMENTAL MANAGEMENT

nationally and even internationally. Carbon emissions reporting and reduction was a voluntary process for South Africa under the Kyoto Protocol. All of these factors contributed to the resulting poor reporting on carbon savings from energy saving projects. Projects and initiatives, such as the Resource Efficient and Cleaner Production project, Industrial Energy Efficiency project, as well as the Private Sector Energy Efficiency project are examples of further nationally, and internationally funded programmes implemented to encourage energy and resource efficiency. With time, the reporting focus shifted from reporting energy savings in kWh to reporting in both kWh and carbon emissions reductions as a result of energy saving. However the link is not obvious for a layperson. The South African electricity generation landscape is dominated by Eskom who produced 95% of South Africa’s electricity in 2014¹. Coal was the major contributing energy source for electricity generation in 2013 to the tune of 91%3.

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If coal is the predominant energy source for electricity generation, it is safe to assume that most electricity savings projects would, therefore, result in savings of coal combusted to generate electricity. When coal is combusted to generate electricity carbon emissions are generated. It was in the calculation of “how much” carbon emissions was mitigated by the electricity savings projects, and the “how to report on your carbon footprint and carbon mitigation” that uncertainty prevailed. It is also important to note that carbon dioxide (CO₂) is not the only greenhouse gas that needs to be reported; others include: • Methane (CH₄) • Nitrous Oxide (N₂O) • Hydrofluorocarbons (HFCs) • Perfluorocarbons (PFCs) and • Sulphur Hexa fluoride (SF6) etc. • Sulphur Oxides (SOx) Current developments in the reporting of Carbon Emissions On 3 April 2017 the Department of Environ-

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mental Affairs published the “National Greenhouse Gas Emissions Reporting Regulations”. The purpose of these regulations was to introduce a single national reporting system for the transparent reporting of greenhouse gas emissions, which will be used: • To update and maintain a National Greenhouse Gas Inventory • for the Republic of South Africa to meet its reporting obligations under the United Framework Convention on Climate Change (UNFCCC) and instrument treaties to which it is bound • To inform the formulation and implementation of legislation and policy Under this legislation, a “Data provider, Category A” was any person in control of conducting an activity mentioned in Annexure A, above the mentioned threshold in the same annexure. “Category B” data providers was any organ of state, research institution or academic institution, which holds greenhouse gas emissions data, or activity data relevant for calculating greenhouse gas emissions, relating to a category identified in Annexure A. Industries included in Annexure A were broadly the following: • Energy • Industrial processes • Agriculture and Forestry and other land use • Waste • Other such as Indirect N2O Emissions from the Atmospheric Deposition of Nitrogen in NOx and NH3. Category A data providers are also required to register on the National Atmospheric Emissions Inventory System (NAEIS). Data must be uploaded by data providers to the NAEIS system for the preceding calendar year by the 31st of March of the following year. The methodologies to be used to calculate and report on carbon emissions are the

Intergovernmental Panel Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories (2006). The IPCC guidelines include Inventory software programmed with sets of emissions factors ,that can be used to calculate emissions on a Tier 1 methodology. Tier 1, 2 and 3 methodologies are defined to be methodologies used for determining greenhouse gas emissions. Tier 1 is a methodology of calculation, using readily available statistical data on the intensity of processes (activity data) and IPCC emissions factors. Tier 2 includes countryspecific emissions factors, and Tier 3 is any methodology that is more detailed than Tier 2 and might include direct measurement. Annexure A specifies the Tier methodology to be used when a data provider’s total installed capacity for an activity is higher than the mentioned threshold. Since Tier 2 and Tier 3 is expected to be more accurate than Tier 1, in estimation of emissions, the legislation also makes provision for a transitional period of up to five years, during which data providers may report on emissions using lower tier methodologies than those mentioned in Annexure A. The Tier 1 methodology is, however, the minimum requirement. Benefits of mandatory reporting The benefits of mandatory reporting could include that companies would be forced to keep tabs on their emissions and would hopefully, of their own accord, start reducing their emissions. There might also be a willingness to invest in companies that have environmentally friendly products since consumers prefer environmentally friendly products. The graph, on the next page, shows “The Economists” comparison of carbon mitigation efforts and how much tons of Carbon emissions Equivalent they have saved.

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11.ENVIRONMENTAL MANAGEMENT

The Montreal protocol is estimated to have had the highest impact in Carbon Emissions to the value of 5.6billion tons CO2e while the rest of the top performers on this graph includes energy production interventions; Hydropower, Nuclear power and other renewables. The Montreal protocol was signed in 1987. The protocol was an agreement to phase out substances such as chlorofluorocarbons (CFCs) mainly used as refrigerants in airconditioning systems and refrigerators etc. It was a hot topic at the time that these refrigerant gasses were causing damage to the ozone layer. Regulations; shown in red in the graph below, also showed carbon emissions reduction to the medium and low end of the

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spectrum of this graph. It should, however, be said that the regulations included were implemented in countries with large carbon footprints, such as the US, EU and China, and included not just the reporting of emissions, but measures to reduce emissions. South Africaâ&#x20AC;&#x2122;s standardisation on internationally recognised methodologies in carbon reporting, should pave the way for more carbon reduction implementation projects and a greener, more competitive economy. In my opinion, it should, however be followed with regulations that enforce reduction in carbon emissions. These matters do, however, need to be handled in a way that it does not negatively impact on businesses, and place an already strained economy at risk of further decline.

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12.SUSTAINABLE ECONOMICS

Chapter 12 Moving to low carbon economy By: Hemal Bhana Despite recent political uncertainty in South Africa and globally, there is an increasing tide of action by governments, businesses and societies to move towards a low carbon economy.

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12.SUSTAINABLE ECONOMICS

hat is a low carbon economy?Â To answer this question, we have to understand a bit about whatâ&#x20AC;&#x2122;s happened over the last 200 years to create the carbon intensive global economy we have currently. A low carbon economy is therefore an economy where growth is achieved sustainably, by integrating all aspects of the economy around technologies and practices with low emissions. 1 The benefits of shifting towards a low-carbon economy include: At the UNFCCC Conference of the Parties in Paris in December 2015, governments committed to take action to limit temperature increase to below 2 degrees Celsius. Under the agreement, all 197 countries, including South Africa, must submit and report on carbon emission targets, and developed nations agreed to supply $100 billion to fund projects in developing countries. Big business is also playing their part to drive action; the Science Based Target Initiative (SBTI), created in 2015 by the

Worldwide Fund for Nature, Carbon Disclosure Project, United Nations Global Compact and World Resources Institute provides and assures methodologies for companies to set carbon intensity reduction targets in line with the Paris agreement. To date over 260 companies have committed to this initiative, including six in South Africa. () Figure 1 is from a methodology called the sectoral decarbonisation approach, developed by SBTI, and shows the global carbon reductions needed across 13 carbon intensive sectors by 2050 in order to achieve a low carbon economy. Power generation is by far the sector which has to reduce emissions the most. There are significant challenges in achieving these reductions, not least being: How do we move towards a low carbon economy? There are a number of existing technologies and behavioural changes that need to be widely implemented in order to move

Figure 1: Global sectoral carbon reduction pathways as per Science Based Target Initiative Source: International Energy Agency, via www.sciencebasedtargets.org

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12.SUSTAINABLE ECONOMICS

towards a low carbon economy, most of these are already happening and further momentum is needed to ensure widespread usage. The following seven categories broadly encapsulate the actions required primarily by individuals, businesses, power generation utilities, and governments to achieve this move, and have been derived from an OECD report on transitioning to a low carbon economy. 1. Implement Energy Efficiency: This category refers to behavioural changes to reduce energy use, like switching equipment off when not in use, or reducing peak demand by sequencing the start-up of equipment, as well as making use of more energy efficient technologies. From the Private Sector Energy Efficiency programme which ran in South Africa from 2013-2015, energy savings of between 10%-40% were achieved which correspondingly reduced the carbon footprint of the nearly 1 000 businesses audited. Visit http://piv.nbi. org.za/2017/Website%202017/PSEE%20 Reports/Final/Energy%20Efficiency%20Finance.pdf for information about third party financial sources to implement energy efficiency and renewable initiatives. Did you know? The Department of Energy has issued an updated draft energy efficiency strategy in 2016, which sets ambitious targets of between 10%-35% energy reduction within key industrial sectors including transport, manufacturing and mining by 2025. Key Technologies/Practices: Energy efficient motors, variable speed drives, LED lighting, Variable Refrigerant volume (VRV) Heating, ventilation, and air-conditioning systems, building management systems,

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occupancy sensors and timers, better insulation of building structures or pipes, waste heat recovery. Key Questions: What are the main users of energy in your house/workplace/factory? Measure it. 2. Reduce waste generation: This category can refer to both municipal waste as well as waste created by industry and households, the idea being to reduce waste going to landfill by recycling materials such as glass, paper, plastic and composting food waste. Furthermore, organic waste, which gives off methane gas, can be tapped at large sites, as a renewable source to produce electricity. Some industrial waste can be useful to other sectors and increase profitability, eg. Fly-ash from coal power stations can be used as an aggregate in cement or bricks, and waste rubber from tyres can be used in the carpet industry. Key Questions: What are the main waste streams in your house/workplace/factory? Measure it. 3. Use low-carbon technologies: This category refers to a wide spectrum of technologies which have a reduced carbon footprint, in comparison to an alternative. Examples would be more fuel efficient engines , using innovations such as turbocharging and better combustion, in the automotive industry in comparison to older vehicles and video-conferencing as opposed to air travel. Other low carbon innovations which will become more mainstream as the technology is refined include low carbon cement, internet shopping, the industrial internet of things, machineto-machine learning technologies in the building, transport and energy sectors and carbon capture and storage for the power generation and other carbon-intensive sectors.

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“A low carbon economy is therefore an economy where growth is achieved sustainably, by integrating all aspects of the economy around technologies and practices with low emissions.” Key Questions:What low carbon technologies can be implemented cost-effectively now? 4. Optimise logistics: This category refers to technologies and behavioural changes to reduce fuel consumption in fleet transportation (ships, trucks, railways) of raw materials or finished goods. Vehicle fleet management systems make use of meters to monitor harsh braking, GPS to track location/ speed, and route management systems to optimise the route and maximise load transported. Newer technologies which will become more prevalent, include self-driving cars, electric vehicles/trucks with battery storage, hydrogen fuel cell vehicles and plug-in hybrids. Key Questions: Are my fleet staff properly trained and incentivised to drive efficiently? 5. Less carbon intensive inputs and outputs: Inputs refer to the raw materials used in some process in order to produce an output for the consumer, eg., water, malt and hops are inputs ,in order to produce beer, through a brewing process. This category refers to making the supply chain more efficient by reducing the energy usage of upstream and downstream suppliers, as well as considering less carbon intensive inputs, (eg. Using gas for heating instead of electricity or organic crops, instead of crops using lots of fertiliser, and designing outputs that are not as carbon intensive (eg. Buildings orientated correctly require less energy to heat or cool) Key questions:Do I understand my supply chain and who are the top 20 carbon intensive suppliers?

6. Install Renewable energies: This category refers to renewable energies which can be implemented at utility scale to provide electricity, eg. Solar photo-voltaic, concentrated solar power, bioenergy, wind turbines, geothermal, hydro-power, off-grid and mini-grid systems using renewables), as well as demand side management technologies, such as solar water heaters, solar panels with battery storage. According to the International Renewable Energy Agency (IRENA), global renewable energy capacity has doubled from 989GW in 2007, to 2 006GW in 2016 (18% of total energy capacity, forecast to double by 2030). In South Africa, through the Renewable Energy Independent Power Producer Programme, over 3GW of renewables have been commissioned to date. In order to achieve a low carbon economy, the shift from coal to less carbon intensive sources like renewables, gas and nuclear is imperative. 7. Carbon taxes and offsets: This category refers to mandatory penalties like carbon taxes enforced by governments, or offset programmes and voluntary emissions trading schemes which allow carbon credits to be sold from heavy polluters to less carbon intensive players. Will South Africa become a low carbon economy? In conclusion, the world is heading towards a lower carbon economy and South Africa is following this global trend. It will require active engagement by all players in society in order to attain this vision.

• 1: http://www.rscproject.org/indicators/index.php?page=definitions • 2: http://www.oecd.org/corporate/mne/transitiontoalow-carboneconomy.htm

References

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13.ENVIRONMENT

Chapter 13 Climate change adaptation standards are necessary: The alternative is unacceptable By: Susanne C. Moser, PhD Why we should consider climate change adaptation standards as part of the climate governance toolkit?

few years ago, a colleague of mine who heads up the environmental planning and climate resilience efforts of a mid-sized African city confessed she just threw out every single climate change adaptation planning guide she had collected over the years. None of these “best practice” guides (mostly from Europe and North America) actually helped her do her work south of the equator, so she couldn’t see holding on to them. No thanks to procedural adaptation standards! Climate change adaptation standards—No thanks! Another colleague, currently assisting local communities in the San Francisco Bay Area with their efforts to prepare for sea-level rise, sent me a well-considered email arguing against standards for climate change adaptation, suggesting essentially that the field is too young, our practices not tried and true, too nascent to

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standardise them. If anything, he argued, we need more freedom for experimentation, not confinement in the straitjacket of uniformity, to figure out what worked. No thanks! And while I defended the need for adaptation standards in that exchange, I myself, have long been known to argue that there is no single or simple answer in determining what “adaptation success” might mean¹. There are far too many value judgments, trade-offs, cross-sectoral and cross-scalar complexities ,and context-sensitive questions involved to give any one answer, and all stakeholders (including the private sector) need to be at the table to answer them. But does that then not contradict the very idea of standards, which by their very nature assume that there is a particular way of going about climate change adaptation, that is better than their lesser alternatives? So, if we cannot answer what “success” is, how can we possibly set standards for adaptation to climate change?

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Climate change adaptation standards are necessary, because the alternative is unacceptable. Admittedly, these are pretty sharp arguments against standards. If only it were that easy to dismiss them! For starters, there are the very practical questions I—and many others—get asked nowadays by planners, decision-makers, policy-makers, leaders of professional societies, philanthropies and non-governmental organizations: What adaptation practices work? Which are better than others? Are we making any progress toward resilience? How should we build infrastructure now? What is a good adaptation decision? How do we design an adequate adaptation process? Who should sit at the table? How should we train adaptation professionals? What is ethical practice? I wish there was something I could point to, that would help me answer these questions ,with more than my personal judgment from 20-some years of experience. And now that there is an explicit adaptation goal in the Paris Agreement, finding reliable answers to these questions has become an imperative.3 Beyond this first layer of practical questions lie deeper issues though. Consider this: anyone who goes for something, as simple, and personal as a chiropractic treatment can be assured that the practitioner has been professionally trained, carries a license, and regularly attends professional development sessions to maintain that license. If one would feel the treatment was inadequate or harmful, there is a process in place to hear the grievance and get compensated if actual harm is found. In climate change adaptation—an arguably far more complex and consequential endeavour— there is almost no professional training (a few courses offered around the world is all!); no assurance that such training is comprehensive or sophisticated; no certification; nor a process for mediating contrasting opinions about adequate, or negligent professional behaviour.

But you might say, adaptation is carried out by professionals, say engineers, conservation specialists, health care provider, or planners, and each of these professions has its standards. Is that not enough? Surely, no business would think of hiring an engineer who had not been adequately trained and certified? No municipality would approve the budget for upgrading its infrastructure if that bridge, road, or sewage treatment plant, were not built to specifications that ensured performance for a specified number of years. And yet, in climate change adaptation, a community planner might hire consultants to help develop an adaptation plan, blindly trusting that they know what they are doing. A community may pay for an upgrade to its infrastructure by engineers, who they can trust to know how to build a bridge, but only hope to have relevant training in climate science, impacts and adaptation. In fact, what should that local official look for among the qualifications? For example, besides subject-matter qualifications, how important are skills such as a solid understanding of climate science, and the ability to effectively facilitate stakeholder engagement? How much awareness and appropriate navigation of the ethical environmental, intergenerational or social-justice issues involved in adaptation is needed? Should they know how to design decision processes in the face of deep uncertainty? How important is effective communication, systems thinking, interdisciplinary, or the ability to manage complex, politicised processes? To me banking on the assumption that an engineer or a medical professional knows about adaptation is like asking an orthopaedist, whom we know and trust because of how they helped us before, to evaluate a skin rash. Or—to make the point more forcefully—to assess a worsening heart murmur. And then consider this: a manager of a business with global supply chains and trading

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13.ENVIRONMENT

partners sees the necessity for thinking about adaptation and hires someone to oversee the company’s adaptation efforts. Then some unprecedented climate extreme affects a crucial production site along the supply chain, and the business disruption costs millions in losses because no one had thought to also implement adaptation efforts at other sites, considered redundancies, or checked whether adaptation efforts taken elsewhere were “good enough.”4 And even if she did all these things, her concerns probably got drowned out in debates over production goals, quarterly returns, and business imperatives. Without adaptation standards, the things that are already being measured to indicate performance will simply win out over adaptation, which is not codified. Climate change adaptation standards for an emerging field? Standards can be developed for many aspects of adaptation, as St. Clair and Aalbu discuss: design standards (structural specifications), performance standards (outcome specifications), and procedural standards (process specifications).2 But what if we just do not know, yet, what skills and qualifications an adaptation professional should have? What if it is unknowable what the best pathway forward, is given climate change uncertainties, the difficulty of predicting impacts with any temporal and geographic specificity, and the limited reliability of solutions under changing conditions? What if it is not proven yet, what designs, approaches and practices work? And what if we cannot agree on desirable outcomes? All metaphors will be limited, but we do have exemplars that can provide insight, inspiration and encouragement for situations, where a particular practice is not yet standardised. Take the procedural standards for experimental drug use. We allow it, and allow it only, under controlled circumstances, when we have tried everything else, and we have clear indication that the experimental drug is promising, even

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if we do not yet have enough evidence that it will work. We must follow proper procedure and carefully collect information about the consequences of such use. Following these procedural standards does not guarantee that the ill patient will walk away healthy. But it does ensure clear communication of risks and potential benefits, clarity on liability, a dependable and transparent process detailing the conditions and implementation of the experiment, a protocol for close monitoring of the consequences of using the drug, and because of all of these procedural standards— ultimately—some degree of protection for both the individual and for society. Standards convey values Any one metaphor or way of framing the adaptation challenge will bring forward different sets of concerns and issues to which we need to pay attention. That is why it is essential to bring a wide variety of voices to the standard-setting table so that different perspectives and situational contexts can be considered. But consider what lies beneath the standards that guide risky, uncertain, experimental and unproven procedures! They reveal certain values that we wish to maintain, even if we cannot ensure success. In the above example, the protection of human dignity, respect for informed decision-making, an appropriate balance of rights and responsibility of all involved, an imperative of learning from the trial, and the importance of trust come through. As we move toward setting standards for climate change adaptation, we may on the surface haggle over technicalities, but underneath, find ourselves enmeshed in the profoundly important negotiation over the values they bespeak, the values that should guide humanity’s path forward in an uncertain climatic, natural and social environment. As to the values that might guide us, we can draw on widely accepted ones: The Universal Declaration

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of Human Rights might be a fruitful, if general, starting place5. The Earth Charter 6 may serve as a more directly relevant complement to guide the development of climate change adaptation standards given its focus on values informing social and environmental sustainability in a continually changing context. A place to start For sheer efficiency and ease, it might be useful to start these difficult negotiations with the standards we already have in place. It seems only reasonable to begin the development of adaptation standards with an inventory of existing standards that determine what we do; what, where and how we build; how we act; and then examine each for their fitness for, and responsiveness to, changing conditions.⁷ In doing so, it is prudent not to assume a particular climate target but perpetual change. The next step then is to assess which of these existing standards, if implemented, would help us become better prepared for changing

average and extreme conditions? Which of them hinder us from instituting better practices? Can those existing standards be adjusted by adding an “uncertainty buffer”? Or can they be made “dynamic” (i.e., by moving from fixed numbers to standards that are relative to a baseline, which will require regular updating)? That way climate change could be mainstreamed into existing practices, and—while clearly affecting stakeholder interests—be easier to accept by those who will have to enact them. Only after existing standards have been fully considered, should we ask bigger questions: What are we missing? What practice relevant to climate change adaptation are we overlooking? In what ways is adaptation unique or significantly different to demand novel approaches? How do we create space for innovation without undue violation of the deepest values we wish to maintain? What is flawed or biased in existing practice that new standards could help transform fundamentally?

References • 1. Moser, SC, and MT Boykoff (eds.) 2013. Successful Adaptation to Climate Change: Linking Science and Practice in a Rapidly Changing World, London: Routledge. • 2. St.Clair, AL, and K Aalbu. 2016. . Group Technology and Research Position Paper 4-2016, Høvik, Norway: DNV GL. • 3. See Article 7 of the Paris Agreement, which ; see discussion also in: Magnan, A. K. and T. Ribera. 2016. Global adaptation after Paris. Science 352: 1280-1282. • 4. Moser, SC, and JAF Hart. 2015. The long arm of climate change: Societal teleconnections and the future of climate change impacts studies. Climatic Change 129 (1-2):13-26. • 5. UN (1948). The . • 6. Earth Charter Initiative. 2000. . • 7. One important, if incomplete, example is: . Washington, DC: The Executive Office of the President of the United States. • 8. The Bridgespan Group. 2009. The Strong Field Framework: A Guide and Toolkit for Funders and Nonprofits Committed to Large-Scale Impact. San Francisco, CA: The James Irvine Foundation.

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14.ICLEI CASE STUDY

Chapter 14 Leading the next wave of small scale embedded generation ICLEI Case Study â&#x20AC;&#x201C; No. 174, February 2015, Nelson Mandela Bay In 2008, the Nelson Mandela Bay Metropolitan Municipality (NMBM) spearheaded the piloting of small-scale embedded energy generation in South Africa: they connected a small-scale wind and solar energy generation pilot site to the energy grid using a simple system for net metering.

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ubsequently, in September 2011, the National Energy Regulator of South Africa (NERSA) developed and approved the Standard Conditions for Small-Scale (<100kW) Embedded Generation (SSEG), within Municipal Boundaries. Embedding small-scale generation is inherently a local matter; as such, municipalities play an important role, in terms of creating the infrastructure necessary, to enable and facilitate the connection of small-scale renewable energy production to the electricity grid. In addition, the municipality regulates the practice to ensure the optimal reticulation of electricity (distribution network). Although conscious of the fact that facilitating SSEG would not be financially profitable for the municipality, a long-term perspective motivated NMBM to pursue it further. By facilitating the uptake of embedded generation, NMBM is laying a foundation for low-carbon urban growth, economic and socio-economic development, and improved energy security through the diversification of the local energy mix. Moreover, they are working alongside citizens to do so. Therein, SSEG allows NMBM to drive economic growth and development, deliver services to the community, and promote a safe and healthy environment for residents. Meeting energy demand with small-scale renewable energy In 2007, South Africa’s electricity demand exceeded supply. This prompted Eskom, the state-owned power utility, to implement the practice of load shedding, (the planned interruption of service in targeted areas), in order to protect against the destabilisation of the national electricity grid. This challenging circumstance, together with growing concerns about rising greenhouse gas emissions ,and global climate change, has generated

increased interest in the viability of renewable energy in South Africa. Access to reliable energy is a key indicator for quality-of-life, and it is inextricably linked with socio-economic well-being. Consequently, there is considerable interest in the potential benefits of small-scale renewable energy, such as: additional generation capacity; reduction of transmission losses; potential for enhancement of grid stability; and mobilisation of additional small-scale investment with broader participation. Nelson Mandela Bay’s context for alternative energy Urbanisation is correlated to increased energy consumption, and in 2008, the demand for electricity in NMBM was greater than the available supply. This trend was seen throughout urban areas in South Afric.a. In response, rolling blackouts through load shedding and a national mandate to reduce energy demand by 12 percent were introduced by Eskom. Of NMBM’s 1.15 million inhabitants, 97.7 percent live in urban areas and 12 percent live in informal settlements. In consideration of its significant urban population (and its annual growth rate of 1.38 percent), the NMBM local authority has made renewable energy production a major aspect of its local economic development and social welfare strategy. Coal is the predominant method for energy production in South Africa, and its subsequent distribution is a major source of municipal revenue. Because of its prominence, the interruptions to energy services that occur with load shedding brought about a greater awareness of the total cost of electricity and the limitations in regard to coal-fired power. The increased demand for energy, and lack of available supply, has seen energy costs rise. This has generated greater dialogue about the need for a move to renewable en-

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ergy sources and increased energy efficiency. It has also, however, driven many of NMBM’s inhabitants to, sometimes illegally, seek out unregulated sources of energy. As consumers began to desire and pursue unregulated sources of energy, it became apparent that the longer NMBM waited to regulate these sources, the more difficult it would be to manage them effectively. Consequently, NMBM has significantly developed its renewable energy infrastructure. This decision is further motivated by the belief that: renewable energy will be less expensive in the longer term; will create investment opportunities and platforms for local economic development; and will improve social welfare in the municipality. Small-scale embedded generation: An essential component in low carbon urban development In 2005, motivated by the South African National Government’s White Paper on Renewable Energy (2003), NMBM started in- pursuing small-scale embedded generation vestigating renewable energy possibilities an increasingly viable option. for the municipality. In 2008, NMBM was In 2010, NMBM presented their granted approval from the National Energy experience with SSEG to NERSA. With the Regulator of South Africa (NERSA) to pilot a benefit of NMBM’s pioneering input, NERSA small-scale embedded generation residen- subsequently developed the Standard tial site. The pilot system consisted of both Conditions for Embedded Generation within wind (1kW) and solar (initially 1kW, later Municipal Boundaries in September 2011. increased to 5kW) and Under these conditions, used a simple system for which remain under review, net-metering. “A tax incentive for busi- providers with generation At the time, the nesses, which allows or- systems smaller than 100kW conclusion was that ganisations to depreciate can produce electricity in small-scale embedded renewable energy assets the absence of a generation generation, although over three years (year 1: license. technically feasible, was not 50%, year 2: 30%, year 3: Following this incentive, financially viable. However, 20%) is in place.” the NMBM Electricity the cost of renewable and Energy Directorate energy generation decreased considerably recommended in May 2012 that their in the years following 2008. This, combined colleagues in NMBM Infrastructure, with the increase in electricity tariffs, made Engineering and Energy Committee revise the

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previously proposed Green Economy Business Plan to incorporate embedded generation. On 29 June 2012, a Mayoral Resolution was signed by the Executive Mayor. The Resolution stated that the Electricity and Energy Directorate could develop the process, requirements, specifications and standards that producers must adhere to in the NMBM Application for the Connection of Small-Scale Embedded Generation (SSEG) and Interim Requirements for SSEG. This process has required initiatives directed at building operational capacity and raising awareness in the region. To these ends, NMBM Electricity & Energy: Projects sub directorate has made presentations to business leaders interested in the implications of SSEG for business in NMBM. To get the ball rolling, preceding a cost of supply of electricity study (performed in 20122013), NMBM set the export price of electricity

into the grid equal to the import cost. The only additional costs to the generator were that of the procurement and installation of the bidirectional meter and web-based modem: 190 USD for a one-phase-meter/modem and 365 USD for a three-phase-meter/modem. These bi-directional meters allow for the net-metering of electricity consumption imported from the grid, as well for electricity produced and exported back to the grid by the local small-scale generator. The four-step process for becoming a small-scale generator is as follows: In March 2013, the first small-scale generation system, a 3.8kW solar PV ground mounted system, was installed and officially connected to the grid. NMBM is facilitating embedded generation, through minimal cost requirements and an accessible application process. The

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municipality covers 50 percent of the cost of the bi-directional meters. Moreover, a tax incentive for businesses, which allows organisations to depreciate renewable energy assets over three years, (year 1: 50%, year 2: 30%, year 3: 20%), is in place. NMBM maintains a one-to-one ratio between import tariff and export tariffs; this sets NMBM apart from other municipalities in South Africa, which offer a reduced return on the tariff for electricity exported back into the grid through SSEG. NMBM recognises that electricity cannot remain the primary source of municipal revenue, and that sustained investment into Nelson Mandela Bay is very important. Thus, NMBM is currently not concerned about the loss in revenue experienced with embedded generation, which explains the one-for-one offset, wherein generators export electricity at the same tariff at which they import electricity, regardless of the generator being residential, commercial or industrial. Instead, NMBM has incorporated embedded generation into a long-term perspective. It is focusing on maintaining control over the grid, enabling economic development and investment opportunities associated with embedded generation, and establishing the Nelson Mandela Bay as renewable energy manufacturing hub At present, standard domestic and commercial tariffs are applied as is, with only administrative charges and a service charge for export exceeding 950 kWh being levied. The tariff structure currently applied by NMBM does not reflect the real cost of embedded generation, as it does not address aspects such as grid maintenance and administration costs. Â In order to ensure a sustainable platform for energy investment, distributing entities need to maintain the infrastructure, and generators cannot expect to use the electrical grid as storage without contributing to its maintenance and upgrade. NMBM will amend

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the tariffs and fees in the future, but not until a follow-up tariff study and cost analysis has been performed. Results To date, 27 embedded generation systems have been connected to the NMBM grid, with 25 of these systems being smaller than 100kW. These systems complement the existing NMBM renewable energy framework; NMBM also allows generation systems of 100kW to 5MW to connect to the grid, provided they are licensed by NERSA. The primary direct impact of the NMBM facilitating embedded generation is the retention of control over the electrical grid through regulated grid connection. Generators are going to connect to the grid, whether regulated or not. Permitting and facilitating embedded generation, and making the process simple and cost effective, is encouraging compliant grid connection. It is foreseen that SSEG will positively impact future economic development and investment opportunities, and represents a step towards the overarching goal of establishing Nelson Mandela Bay as a renewable energy manufacturing hub. An unexpected outcome of the process has been the improvement of the relationship between consumers and the municipality. The local community, both residential and business, is becoming increasingly involved in energy generation, while the NMBM and independent generators continue to take positive steps towards a cooperative future: a significant portion of Nelson Mandela Bayâ&#x20AC;&#x2122;s electricity is now generated by localised renewable energy generation systems of varying sizes. If the demand for distributed generation becomes too big and/or the cost of renewables dips below that of Eskom, municipalities will be able to buy from large-scale private generators such as Amatola Green Power (who are involved in

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the purchasing of surplus energy generated through SSEG). This will necessitate greater levels of cooperation between generators and the NMBM. Lessons learned —Community comes first The tariff and fee structure for embedded generation is such, that the long-term benefit gained through collaboration in the electricity supply within NMBM, is of greater value than the loss in revenue and costs for maintaining the local grid. A clear national framework for SSEG would facilitate work done by municipalities. The possibility of local authorities having more control over local energy supply and planning would give independent power producers fair

access to both the national and local grid. For this to occur, a favourable regulatory environment would need to be established at a national government level. Notwithstanding deregulation, a decision support tool for municipalities, developed by national government, highlighting the ‘pros’ and ‘cons’ of SSEG, could facilitate the roll-out of SSEG by municipalities as it provides the security of knowing that decisions are within legislative parameters. Replication In addition to assessing the potential capacity for solar and wind generation, there are important aspects that other municipalities need to consider before allowing SSEG.

References: • Standard Conditions for Embedded Generation within Municipal Boundaries. Reasons for Decision. NERSA. • Cost of Unserved Electricity (COUE) – IRP 2010 Input Parameter information sheet (supply input). NERSA. www.doe-irp.co.za/factsheet.html • NRS Information Brochure, Electricity Suppliers Liaison Committee. 2006. • Unlocking the rooftop PV market in South Africa. Centre for Renewable and Sustainable Studies. Reinecke, J. et al. 2013 • Nelson Mandela Bay Interim Requirements for Small Scale Embedded Generation (SSEG). 1 July 2014. • Application for the Connection of Small Scale Embedded Generation (SSEG). NMBM Electricity & Energy Directorate. • Electricity Supply By-Law. Nelson Mandela Metropolitan Municipality.1990. • eThekwini Municipality Residential Embedded Generation Tariff (REG Tariff ) – http://www. • durban.gov.za/City_Services/electricity/Tariffs/Documents/REGtariff.pdf • eThekwini Municipality workshop_on_role_of_munics_in_embedded_generation/ eThekwini_Electricity_ • Department_Guidelines_for_connecting_to_the_grid.pdf • Presentation: Small scale embedded generation the road to approved grid connection in • Cape Town. Brian Jones. • Presentation: Small scale renewable energy generation in the City of Cape Town. Brian • Jones. Presented at the 14th annual African Utility Week. 13 – 14 May 2014. • Presentation: Analysis of the impact on municipal electricity revenues of an increased scale of energy efficiency and small scale own and embedded generation. Hilton Trollip. • Presented at the South African Economic Regulation Conference (SAERC). 21 Sept 2012.

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Chapter 15 Are we maximising the first fuel? By: Gregory Simpson As South Africa strives to stay internationally competitive, with energy demands growing by the day, it is essential that industry stakeholders employ stringent industrial energy-saving technology and methodology to preserve what some experts refer to as, the first fuel.

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or too long, industry has played lip service to energy efficiency, but with the onset of cutthroat competitiveness between industrial players, small-medium prolonged savings can make or break operations long term. To help guide industry though greater energy efficiency practice at the workplace, the Industrial Energy Efficiency (IEE) project was established in 2010 in response to the growing need to improve South Africa’s energy efficiency. The United Nations Industrial Development Organization (UNIDO), along with the Swiss Secretariat for Economic Affairs, the UK Department of International Development and partnered by South Africa’s Departments of Trade and Industry and of Energy, embarked on a programme to address the global drive for greater energy efficiency. The ultimate goal is to demonstrate the positive impact of energy management as a means of reducing carbon-dioxide emissions and to demonstrate the effectiveness and financial impact of in-plant energy management. The project is hosted by the National Cleaner Production Centre of South Africa (NCPC-SA) at the CSIR, and to find out more, Gregory Simpson caught up with knowledgeable National Project Manager for the IEE, Alf Hartzenberg. Hartzenberg, who holds diplomas in Textiles, Production Management, Business Administration and Financial Management, has almost 40 years of industry experience, studied civil engineering at the Univeristy of Cape Town (UCT). He is also one of five UN EU Green Flower Ecolabel trainers in South Africa. Six years into the IEE project, what are some of the highlights and low lights thus far? Six years after we launched in 2010 we have had many highlights and have, in fact, been

Alf Hartzenberg, National Project Manager for the IEE

guilty of having our heads so deep into driving and achieving and chasing targets and outcomes, that at times we have neglected to sit back and just reflect on what we’ve really achieved. In terms of the numbers, the savings were quite phenomenal: 1.2 terawatt hours and 1 200 gigawatt hours are quite significant and the equivalent greenhouse gas emission reduction saved a huge amount of money: R1.8 billion saved in energy spend. But those are the numbers. Beyond that, what was certainly fulfilling and a highlight for me was the formation of a more vibrant energy services sector. Through the work we did we fostered and promoted energy services as a more meaningful option to young graduates and to experienced practitioners in the field of energy, as there was a lack of understanding in the industry. This is evidenced by the number of expert consultants we had in the NCPC five years ago when I joined, we had a group of no more than 13. Today we have a group of experts, in excess of 120, that we can draw on to undertake our assessments and to provide technical assistance. So that, in a very small

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microcosm, is reflective of what I see in the broader market out there. It’ hasn’t been great, we’ve had our failures. We’ve had some spectacular failures. We’ve worked with very large corporates in South Africa, large energy users that through a lack of internal commitment from top management have failed dismally in driving the sustainability of the energy management systems we’ve implemented. Companies that were really set to do well lost all the advantages gained through our implementation and virtually went back to square one because of the loss of some critical and key elements. That’s one of the barriers to energy management systems and energy efficiency, not only in South Africa but globally, in that the technical knowledge resides with one or two individuals in the company and it’s not broadened. When you don’t have top management commitment, that becomes one of your big challenges. I have seen companies develop energy management systems in a style, and in a language, and in a manner, that was peculiar to their needs and their conversation and their business. There was a company that identified trust as the essential ingredient on which to build an energy management system. They did not proceed until they had that established a level of trust between the top management, the employer, the owners and the workers in the company, and that’s quite amazing. Others have taken slightly different routes, but all of this speaks to looking at how, within your company, you can get somebody to understand why he has to switch off an idle machine not producing anything; switch the light off in a common area; why he has to be aware of how his or her actions impact on energy consumption and how that, in turn, impacts on the tenure of their job and job security. Once you start to achieve that level of appreciation and buy-in, then you are pretty well set to really achieve great things.

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Sector by sector, which areas really need the most improvement in terms of their energy usage and who is doing best? When we started, we identified what we thought were the five energy intensive sectors in South Africa. We looked at agri-processing, automotives, mining, chemicals, liquid fuels and we looked at iron and steel. And yes, they are large users. Very soon we discovered that those are not all, there were other sectors that needed as much help. We very quickly adopted the attitude that we would rather be more inclusive than exclusive, so we started to look at other sectors: pulp and paper; clothing, footwear, textiles and leather; and we expanded that into commercial sectors like data centres, warehouses and commercial buildings. We have found that some of the biggest savings we have recorded to date in the public

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have come out of the non-metallic mineral sector, like cement and lime, the iron and steel sector and the automotive sector. This was because they are not only the largest users of energy but they were facing some serious global competition. In terms of the iron and steel sector, they were facing softer global iron and steel prices and they were even facing dumping by China in South Africa. So a lot of them were at risk of closing down, in fact one of our flagship companies faced that very real scenario in 2011. A lot of the automotive companies are under pressure to improve their energy performance, relative to other automotive sites globally, but they are not competing with each other in South Africa. Toyota does not compete with Volkswagen. Volkswagen Uitenhage will compete with other Volkswagen sites in Africa and south east Asia and

South America. So itâ&#x20AC;&#x2122;s ultimately driving the focus on reducing the energy content per car producer. We had seen Toyota, by implementing one of our energy management systems, go from being the worst energy plant globally to being in the top three in the world today,. What uptake do you get from the rank and file and management when you come in with these new ideas? Itâ&#x20AC;&#x2122;s more a case of what are we prepared to accept than what they are willing to do with us. One of the lessons learnt over the first six years was the lip service paid to top management commitment. They would come along and say we support this, they would sign off on the energy policy and they would believe that they have concluded their task and that they could wipe their hands and move on. This is

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not that kind of commitment, this needs a lot more than signing an energy policy. The environment is obviously a big talking point, what sort of carbon footprint reductions have you seen? When I talk to the cynics and the tree huggers about the environment they always poke and joke at us, but I am starting to discern an attitude change, albeit small at this stage. In South African business, where it’s not only about driving profits, it’s now looking at triple bottom line, looking at the pattern of the environment and the people within the business. As part of the UNIDA programme, it’s very important that we equally foster the interest of women, so gender mainstreaming, gender equality, is a very strong focus in what we’re doing in Phase 2, and that we drive initiatives that will promote poverty alleviation. And, in comparison to the other 16 countries involved in this project, how are we doing? South Africa, by virtue of the fact that our government is proactive and they need to be commended for that, is the first country to have adopted the project. South Africa is also, and may still be, the only country today among those other 16 that have adopted and launched the full range of services within the IEE project. In a big way South Africa is seen as a big brother to them. In fact, the exchange, discussions, communication and engagement between project management units in other countries is starting to increase. This became evident to me when I was invited to share and present South Africa’s achievements and performance to date in the IEE project in Vienna in May this year. We have clearly matured in many instances and have moved beyond the mantel of the UNIDA support and started to effect greater customisation. We have also learnt from them – there are certainly great lessons to be learnt from what is

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being done in Indonesia and Iran and I look at lessons learnt in Moldova and Ecuador. South Africa has taken a role within the community of IEE operation countries, with regard to implementing this project theme, of almost a big brother, even to Russia and the Ukraine and some of the larger countries within that group. I can very proudly say that we are starting to add great value to the programme. When we started this programme in South Africa in 2010, more than 95% of our trainers were international specialists, best practice specialists from Europe and America who had worked in similar programmes in the preceding ten years. Today, we have 90% South African trainers delivering, AND we have eight South Africans who are training in other countries. Clearly we have demonstrated to UNIDA that South Africa has not only learnt quickly but matured to a level where we can, as equals, present training in the Philippines, Malaysia, Iran, Egypt, Vietnam and Indonesia. How do we foster more energy efficient studies at our universities? It’s a challenge that we embraced mid-term through the first phase of the project. We started to look at some of the universities, the premier universities in South Africa. Stellenbosch University showed great interest, and they looked at and considered offering postgraduate engineering and science modules in energy management systems optimisation and energy systems optimisation. It didn’t get far. We engaged with, among others, UCT and a few other universities but that didn’t get far either. We’ve been talking to the University of Pretoria, University of Johannesburg and more recently we’ve engaged the Mangosuthu University of Technology in KwaZulu-Natal and they have made probably the most serious overture and commitment to introduce postgraduate courses or even undergraduate courses within their institution, and that is a good start.

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We have engaged the UCT Energy Research Centre with a lot of our energy systems training during their Masters programme, but I don’t think we’ve nearly done enough. We need to step into high schools and offer energy as a career choice for a lot of young Grade 12’s, and instil a greater sense of awareness of the importance of energy efficiency, not only in the workplace, but also in the home. So that is one area where I believe Phase 2 will challenge us to do more. In one of our components in phase 2 we speak about what we see as bridging training at TVET (Technical and Vocational Education and Training) Colleges. We take young graduates from these Colleges and offer them a bridging course that will render them eligible to enter our expert training programme – so that’s a start. Energy efficiency has often been referred to as the first fuel, how would you respond to that? The study was initially conducted by the American Council for an Energy Efficient Economy (ACEEE), and it was largely done by comparing the cost of power. They looked at the cost of power for renewables, wind power generation, PD solar, bio-mass, they looked at nuclear, coal and fuel oils and the prices generally range from about 8 to 12 US cents per kilowatt hour. Energy efficiency compared to that was set at 3 US cents per kilowatt hour, so if you can change the way you look at energy efficiency or you look at energy efficiency in a way that reduces the need to expand the amount of power generation or power stations South Africa needs, then we can achieve that significantly cheaper. I speak to a lot of experts in renewable energy and the plea to them is essentially this: we support what you’re doing, in fact we buy-in to what you’re doing so strongly that we will lose some of that on sales in Phase 2, but before you go out and look at the sexy renewable energy technologies consider the importance of the

very boring energy efficiency improvements that you need to undertake. The boring refers to existing technologies, improving the day-today operations of those equipment processes within the plant and driving down kilowatt hours. Once you’ve achieved that, once you’ve achieved a great measure of success in doing so then consider the renewable energy, but as a first fuel energy efficiency remains not only the most cost effective but also the most logical first step to looking at ways of improving your primary sources. And the “internet of things” is a big buzzword, how can that improve energy efficiency moving forward? I was amazed by the amount of budget being earmarked to the internet of things, almost a trillion dollars. Incredibly large funding, but there’s no doubt that when we start looking at the impact that smart grids may have on the ability to manage energy, to shift energy, so that we operate within what we have and what is available in South Africa, I believe that that plays a big role. At first Jeremy Rifkin’s: Third Industrial Revolution sounded quite strange when it spoke about collaborative power compared to what we hear being said today. In a recent conference in Cape Town, one of the leaders in this area tabled a proposal for a very different structure in South Africa, removing from Eskom some of the current responsibilities and power it has and investing that in the public sector who would be able to deliver more efficiently and more speedily on the needs within the national economy. So the discussions seem to have started, be it is very early. We are starting to see some thought-provoking ideas and concepts on how we can evolve this economy of ours from this monolithic generator and supplier of electricity in South Africa to one that’s more distributor orientated. At this stage that may be a few bridges ahead in terms of where we are, but clearly the conversation is getting louder.

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16.TECHNOLOGY

Chapter 16 The Internet of Things: Land of Opportunity By: Neil Cameron The worldwide web most of us are familiar with is a place populated by about 2.5 billion people who go online to find information, entertainment and shopping, or to stay in touch with friends and share ideas with colleagues. The internet was made by people, for people.

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ut now it has become the Internet of Things (IoT). Experts predict that in a few years there could be 100 billion devices— actual physical things—connected to the web. Some of these devices are online today and more, many more, are coming soon. In the IoT, devices equipped with sensors, hardware and software are networked together through the internet, where they can communicate with one another, machine-to-machine (M2M). Intelligent devices are changing the way we eat, drive, communicate, receive medical care, light our cities and consume energy. Sensors embedded in roads control traffic flow. Vending machines tell us when they need to be refilled. A heart patient’s pacemaker alerts her cardiologist to a problem before it becomes dangerous. With sensors in the soil, farm fields know when they need to be irrigated and fertilised. Nowhere is the impact of the IoT felt more than in the world of building efficiency. The big game-changer is M2M communication, coupled with sophisticated new tools like cloud-based solutions and applications, which analyse the massive amounts data, gathered by sensors and turn it into useful information that helps building managers do their jobs better. Imagine thousands of electrical switches, thermostats, lights, door locks, air-handling units, chillers and other components gathering and sharing data. Even solving problems on their own. We are seeing this more acutely in the South African market where buildings aggregate information or data from sensors but there isn’t a significant uptake to ‘share’ this information over the ‘Internet’, ultimately underpinning smart environments that lead to smart cities. However, value is certainly being derived with real-time communication

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And there are real needs. As the global demand for energy rises, sustainability and energy efficiency aren’t just good financial goals—they’re becoming mandates in many countries, creating new and very real business challenges. The IoT gives us the power to meet these challenges, and the opportunity to redefine absolutely every aspect of our industry. Because when everything works together, everything works better, works more efficiently and lasts longer than ever before. And it doesn’t stop with making buildings more efficient, the IoT makes us humans work better and more efficiently, too. and access to data which delivers a number of benefits such as proactive monitoring of the facility and the early detection of failure which can significantly reduce downtime. In the very near future, lights equipped with sensors that detect the presence or absence of building occupants will cut energy consumption by an estimated 50 to 75 percent. Interconnected units of equipment will work together to find the most efficient way to heat or cool a facility without human intervention. Machines will diagnose their own need for maintenance, which will be scheduled automatically. Total integration will become a reality. This is all happening now because two important drivers are in place: Opportunity and necessity. Advances in wireless networking technology and standardised communication protocols make it possible to collect data from sensors almost anywhere, any time. Silicon chips continue to get smaller and more powerful even as their cost drops. Advancements like cloud computing make it possible to crunch numbers and store data on a never-before-seen scale, again with declining costs.

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Condition-based maintenance HVAC is a long-term investment: chillers are big-ticket items that are meant to last the lifetime of a building—about 25-30 years— in fact a recent demolition of one of the first four star hotels in Dubai led to the retirement of three YORK® YT Chillers after nearly 34 years of service. These chillers were one of the first centrifugal chiller installations in the region. While scheduled maintenance may keep the equipment ticking over, condition-based maintenance ensures promised performance and energy efficiencies are achieved. With ecoand cost-conscious mindsets steering buyers’ decisions, HVAC companies are increasingly aligned to sustainable maintenance practices. They offer a number of attractive conditionbased maintenance approaches to suit the risk and investment stance of companies and property owners. The reality is that chillers can and do last a lot longer. There are chillers that are over 50 years old that are still pulling a full shift in industrial and commercial environments. The machines that make it to this age are in various states of repair but the best have had a dedicated team attending to maintenance. These chillers are often only retired when replacement parts become difficult to source

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or advancing technologies begin to make strides in efficiency that they cannot hope to emulate. With longevity now a key factor in HVAC vendors’ roadmaps, the sophisticated, digitally-enhanced machines being built today can reach four decades and more. What is condition-based maintenance? Quite simply it is the ability to continuously monitor, assess and refine the performance of plant equipment. Monitoring may include vibration analysis, use of real-time performance data from sensors on and within the machine, and analysis of the chiller’s alignment or deviation from its published operating ‘signature’—the frequency and rate at which the machine functions at designed conditions. The major vendors have all released such signatures to support equipment maintenance and care. Specialised service providers can make use of published signatures to provide condition-based maintenance services for a broad array of HVAC equipment. The value of a 24x7 monitoring is significant.

Condition-based maintenance approaches For equipment at different life stages, and for owners with different HVAC priority levels, there are different condition-based maintenance models that can be applied. The future of condition-based maintenance? Condition-based maintenance has been around for about 10 years but the reality of what can be achieved with the performance data that is being collected is only just becoming apparent. I believe that within five years condition-based maintenance will become the norm. The functionality will be built into HVAC equipment and plant equipment will ‘talk’ to the building, automatically finding optimal solutions to performance issues in conjunction with other connected systems, and automatically scheduling needed maintenance. Do you have a long-term plan to maximise your HVAC investment? The IoT, the improved ability to use available data intelligently and proven condition-based maintenance approaches make it easy to do, no matter the age or sophistication of your equipment.

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ADVERTORIAL

Design considerations for Lightning Protection Systems in Photovoltaic Power Plants Utility scale solar photovoltaic plants are relatively new in South Africa, so there is therefore not a large body of local data available to influence and guide best practice in regard to Lightning Protection Systems (LPS) for such installations and to guide the interpretation of SANS/IEC62305. The design of the LPS requires an engineer who has some specialist knowledge and experience in Electromagnetic Compatibility (EMC). Although the risk evaluation matrix of SANS IEC 62305 is a logical process, it can have dire results if a practitioner produces faulty output based on poor-quality input. Solar PV plants are inherently geographically expansive when compared with other complex outdoor electrical installations and have complex AC and DC electronic systems and cabling for power, control and monitoring (especially where the panels track the sun). The design of the system ensures minimal damage during a lightning strike, while balancing cost benefit considerations which is a significant challenge. SANS/IEC 62305 allows for cost-benefit trade-offs between the costs associated with loss of equipment, production losses and repairs as a result of lightning strikes vs. the costs of further improvements to the LPS. This calculated cost benefit approach must be done thoroughly, analysing all required factors, given that for large solar plants lost production costs have a major impact on these trade-offs. The ideal is to embody the decisions taken and trade-offs

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approved in the eventual contract so that there is no doubt about the scope of work and reasons driving cost decisions versus best practice design and the resultant risks undertaken by the employer and the contractor respectively. Three key design elements to consider in our opinion are: External Lightning Protection: Designs must ensure that the lightning strike is intercepted (with an air termination system); the lightning current is conducted safely towards earth (using a down conductor system) and is dispersed into the earth (using an earth termination system). Air termination masts can be incorporated into the support structure of the panels, provided there are significant

ADVERTORIAL

clearances between the lightning current path and sensitive components. In the absence of such clearances, damage to panels and electronic components, in the event of a lightning strike, is a real posibility. It is necessary to perform a cost-benefit analysis to assess the most effective engineering trade-off and to embody the outcome in the contract format chosen. Where the PV panel support structure includes a steel pipe, the down conductor should never be run inside such a pipe, since the magnetically-induced opposing currents from the magnetic field in the pipe during a high current strike will, in fact, render this down conductor totally ineffective.

“Although the risk evaluation matrix of SANS IEC 62305 is a logical process, it can have dire results if a practitioner produces faulty output based on poor-quality input.” Earthing System: The system design must ensure creation of a low impedance path for conducting lightning current into the earth, provide equipotential bonding between the down-conductors and ensure that lightning and surge currents are effectively dissipated without causing excessive potential differences. Most Solar Plants do have extensive cable trench routes which can be used to bury earth mat conductors; however it is critical that the earth conductors are interconnected into a grid structure even though the cableroute network normally follows a tree-type structure. Every structure requires multiple paths for the current or surge to dissipate. If there are any cases where the lightning current has only a single path to dissipate into earth the earth mat is inherently not providing an equipotential earth mat.

Internal Lightning Protection: The design must ensure that the direct lightning current and the effects of the Lightning Electromagnetic Pulse, (LEMP) do not penetrate to the sensitive electronic circuitry and cause damage and/or malfunction. To this end: • Electrostatic shielding of all signal/ control cabling with proper earthing has to be assessed; • Magnetic shielding of internal electronic components has to be assessed; • Zone boundaries (boundaries where there is an increase in the sensitivity of the internal components to damage/ disruption) have to be defined and the need for a coordinated Surge Protection Methodology (SPM) has to be assessed. All electronic components should be enclosed in metallic enclosures to ensure that all sensitive control circuits are shielded. Control cables should have continuous earth shields and shield appropriately earthed. Appropriate surge suppression devices should be installed where cables enter sensitive zones. Stephen Reynders and Prof Jan Reynders, SMEC South Africa

About SMEC South Africa SMEC South Africa provides a comprehensive suite of consulting services including, detailed specialist designs, assessment of claims, dispute resolution, expert determination and technical audit services. For more information contact Stephen Reynders, SMEC South Africa Stephen. Reynders@smec.com / +27 (0)11 369 0600.

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110 SUSTAINABLE ENERGY RESOURCE HANDBOOK

INDEX OF ADVERTISERS COMPANY

PAGE

Activate Architects (pty) Ltd

25-27

ArcelorMittal South Africa Pty Ltd

IBC

BlueScope Steel Southern Africa (Pty) Ltd

CONCO Group

CSIR Energy Centre

CSIR/NCPC - Louna Rae

OBC

Ellies Energy

HyPlat (Pty) Ltd

72-73

Investec Bank Ltd

IFC;43

Marsh South Africa

SAASTA

16-17

Sika South Africa (Pty) Ltd

2-3

SMEC

108-110

UNIDO

32-35

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ÂŠPhoto credit: Global Roofing Solutions The cladding to the new Head Office for Statistics SA, winner of the Global Roofing Solutions Metal Cladding Category at Steel Awards 2016, accentuates the strong geometric lines of the building.

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