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CSIR - Just Energy Transition
GROUND-UP
The potential role that municipalities could and should play as part of South Africa’s just energy transition
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Energy security concerns, rising electricity prices, the emergence of low-cost renewable energy technologies and the growth of embedded generators have resulted in a range of challenges for utilities globally and now in South Africa. Municipal distributors are no exception here. In light of these dynamics, municipalities are being compelled to re-define their role in the electricity value chain and adapt their funding and operating models.
All of this being contextualised in the global consensus surrounding climate as part of commitments made in the Paris Agreement within the United Nations Framework Convention on Climate Change (UNFCCC). As part of this agreement, various nations have committed to National Determined Contributions (NDCs) that aim to reduce CO2 emissions, improve emissions reporting, and strategic planning that aims to improve national contributions to climate change mitigation. South Africa’s NDC was established in 2016 (inclusive of adaptation and mitigation components) based on The National Climate Change Response Policy (NCCRP) from 2011. The global energy transition aims to adhere to these requirements by enabling the cleanest and most sustainable energy mixes in all nations. The energy transition is currently occurring globally and domestically. Without proper planning, it is expected that substantial economic and socioeconomic losses would be incurred by the South African economy and society.
These losses will be compounded on a regional level in areas where coal mining activities have been driving economic activity. A regional and national just energy transition plan or strategy is therefore needed to ensure that this transition is associated with social inclusion, decent work for all and the eradication of poverty while the transition unfolds.
As part of the necessary planning in this domain, the Department of Mineral Resources and Energy (DMRE), the system operator (Eskom) and the National Energy Regulator of South Africa (NERSA) are responsible for the development, publication and updating of the national level long-term electricity sector plan known as the Integrated Resource Plan (IRP). As described in the Electricity Regulation Act No. 4 of 2006 and regulations in the Electricity Regulations for New Generation Capacity published in 2009; the IRP defines the manner in which the national electrical energy mix is expected to evolve into the future and considers a range of input assumptions, scenario development and detailed techno-economic modelling. As a result of the broad implications of the IRP for various stakeholders, it is consulted on with various government entities (including municipalities) and with social partners in structured forums and via public consultations. Although local government has well-defined vested interests in what the potential future energy mix could be in the country, the quantitative basis upon which structured submissions could be made to the long-term energy mix discussion have thus far been very limited. Simply put, municipalities have not known what their potential role in the future energy mix could be as it would classically be determined by utility-scale supply-side investments at a national level which local governments would not necessarily have much control over.
In recent years, this has changed as smaller, modular and more distributed supply-side and demand-side technologies have seen their costs fall dramatically globally and have simultaneously demonstrated similar cost declines as part of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). This has been driven by the likes of solar photovoltaics (PV) and wind energy technologies but have also been seen in integrated systems where the combination of these technologies are combined with battery energy storage and demand-side response to demonstrate the real capabilities of dispatchable and reliable electricity supply that can supplement wholesale grid-based electricity.
Hence, the municipal role in the future energy mix has become more complex in that there is an increased active role that municipalities could play. The boundary conditions upon which municipalities could enable, deploy and potentially procure their own energy supply needs an informed basis upon which to become a reality. However, without the fundamental underlying analytical support this becomes arbitrary. The development of municipal level IRPs, would enable a complementary and tightly integrated contribution to national energy policymaking, as a contribution to the country’s transition, whilst creating a solid foundation to empower municipalities to determine what type, when and the boundary conditions to procure and enable
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SMART GRIDS PROJECT ENHANCES MUNICIPAL REVENUE
SANEDI, as an agency of the Department of Mineral Resources and Energy, is a leader in energy research and innovation. Through our local and global partnerships, we’re well-positioned to catalyse growth, while working towards a greener South Africa.
SANEDI, in collaboration with the DMRE, developed and piloted the concept of Smart Grids in South Africa. The programme mainly focused on “Technology as an Enabler for Change” in the municipal environment. Municipalities are currently under huge financial pressure, largely as a result of poor revenue collection and incorrect tariff designs. The Enhanced Revenue Management project, piloted in ten municipalities, was designed to assist municipalities in collecting electricity revenues.
For projects that were properly designed and implemented, results have shown that technology can be used to improve revenue collection while also enhancing the effectiveness and efficiency of the municipalities, thereby returning them to sustainability.
energy solutions in their respective geographies. These municipal IRPs or Municipal Electrical Master Plans (MEMPs) could then also start to establish the business case for the municipal role in the sustainable energy transition, leveraging municipal competencies and integrating spatially dependent local resources and opportunities.
The Just Energy Transition (JET) aims to ensure that the aforementioned transition occurs in a just manner considering environmental, economic and social effects with the goals of decent work for all, social inclusion and the eradication of poverty. A broad overview of the current just transition landscape that should be further investigated is provided in Figure 1 where key stakeholders are highlighted. It is notable that most stakeholders do not or have not contributed to all spheres of the just transition (most specialise in a one or two specific spheres only). Similarly, local government is not in this graphical illustration (yet) but most definitely should be as a ground-up approach to the JET is essential for success. These two items also illustrate part of the reason as to why South Africa does not have a consolidated just transition plan or planning framework.
There is critical quantitative and qualitative research, stakeholder consultation and planning necessary over the coming months and years necessary to identify the economic,
Figure 1
• Effect on bio-diversity • GHG emissions • Air quality • Resource use • Land use • Research Institutions: CSIR, SEA, WWF, SANBI, Water research Council, TIPS, Oneworld • Stakeholders: GCF, DEFF, IKI, NPC, UNECA, MPG,
Agora, Earthlife Africa, Ground work, World Bank
• Economic growth • Number and quality of jobs • Government spending • Economic diversification • Skills • Research Institutions: CSIR, TIPS, Greencape, NBI,
UCT, Meridian • Stakeholders: DPME, EDD, NT, IKI, Dti, IPPO, Exxaro,
Eskom, Sasol, EIUG, GIZ, MPG, Chamber of mines,
Agora, Res4Africa, Labour Unions, World Bank technical, cost and socio economic impacts of the transition in South Africa to better understand the benefits for various sectors as well as South African society as a whole. The immediate impacts seen at a local government level will be real and substantial. How new investments in new sustainable electrical infrastructure investments (driven by power generation capacity) as an input to sustainable growth needs to be well understood. Local resources should be leveraged and network infrastructure linkages created to ensure any negative impacts of the transition are mitigated and benefits are maximised whilst enabling all social partners to make the best decisions as geographies transition.
By Ruan Fourie and Jarrad Wright Council for Scientific and Industrial Research (CSIR)
Enviromental Effects
Economic Effects Social Effects
Technical and Cost Effects
• Health impacts • Community participation • Quality of life • Crime • Other social pathologies • Research Institutions: CSIR, YES, NBI, Oneworld, SEA • Stakeholders: DPME, NPC, DSD, IPPO, UNECA, MPG,
Labour Unions
• Cost of various technologies • Impacts on electricity tariffs • Grid stability and reliability • Research Institutions: CSIR, ESKOM, UCT, Meridian • Stakeholders: DPE, DOE, NT, NERSA, SASOL, GIZ,
MPG, World Bank
Founded in 2005, Ntiyiso Consulting is an authentically African and globally wired management consulting firm that seeks to empower institutions that enable Africa’s development. Ntiyiso Consulting helps improve cash positions of large and medium-sized municipalities; turns around or improves the revenue, profitability or social mandate performance of large and medium organisations; and unlocks economic opportunities on behalf of communities and regions. We deliver sustainable and evidence-based solutions through three subsidiaries, viz. Ntiyiso Revenue Consulting, Ntiyiso Business Consulting and Ntiyiso Industrialisation Consulting. Ntiyiso means ‘TRUTH’ in Xitsonga. Ntiyiso Consulting is, therefore, naturally inclined to deliver the most trusted solutions to its clients.
NTIYISO CONSULTING LEADERSHIP TEAM
ALEX MABUNDA
Group Chief Executive O cer
ANDISA RAMAVHUNGA
Group Chief Advisor
MIYELANI HOLENI
Group Chief Advisor
NTIYISO CONSULTING SUBSIDIARIES
We improve cash positions of large and medium-sized municipalities. Here we optimise all or some components of the revenue value chain.
“If it is money, we will find it for you”.
We turnaround or improve
of large and medium organisations. We achieve this by aligning the organisational ecosystem viz. strategy, leadership, people, architecture, routines and culture.
“We provide innovative solutions to inspire business success”.
We unlock economic opportunities on behalf of communities and regions. We achieve this through end-to-end project conceptualisation and development. We also develop strategic economic development plans and infrastructure master plans.
