IMPLICATIONS ON SONA PORTFOLIO COMMITTEE ON ENERGY 22 FEBRUARY 2013

IMPLICATIONS ON SONA PORTFOLIO COMMITTEE ON ENERGY 22 FEBRUARY 2013

CONTENT • INTRODUCTION • PRESIDENT’S REMARKS • IMPACT ON THE PRESIDENT’S REMARKS • 2013/14 MTEF ALLOCATIONS • WAY FORWARD

INTRODUCTION • In his state of the State of the National Address, President Jacob Zuma outlined key policy objectives and priorities. Specifically to energy, the President focused on, among other things, the National Development Plan (NDP) and the New Growth Path. • The National Develop Plan (NDP) represents a bold, strategic and integrated platform to mobilise the state, private investors and the South African public behind a clearly articulated storyline of South Africa’s opportunities.

PRESIDENT’S REMARKS • The NDP envisages the eradication of poverty, provision of quality education and creating jobs in the next two decades. • NDP is a roadmap to a South Africa where all citizens will have electricity, jobs, housing, public transport, recreation and a clean environment. • The plan seeks to emphasise energy efficiency and resilience in addressing renewable energy resources. Steps towards achieving the vision need strategies for reducing its carbon emission to sustainable level through mitigation policies.

PRESIDENT’S REMARKS • Key contributors to stabilising emissions include a commitment to undertake mitigation actions, appropriate mix of carbon pricing mechanisms, an expanded renewable energy programme; an advanced liquid and bio-fuel sector; an effective mix of energy efficiency and demand management incentives. • In addition, the poor and vulnerable will continue to be affected and must be protected from the transitional costs associated with mitigation, such as increased costs of energy and job losses in carbon intensive industries.

PRESIDENT’S REMARKS • The Department of Energy has already made a significant progress on job-generating programmes such as working for energy and energy efficiency interventions in the residential housing sector, e.g. solar water heating programme. • There are also initiatives under way to increase renewable energy and enforce mandatory energy efficiency requirements for industry. • The new growth path is focusing on creating jobs in manufacturing, agriculture, mining and infrastructure development.

IMPACT OF THE REMARKS KEY FOCUS AREAS FOR 2013/14 • Integrated Energy Planning – Programme 2 • Energy Efficiency – Programme 2 • Implementation of the IRP – Programme 2 • Electricity and Electrification – Programme 2 • Hydrocarbons – Programme 3 • Nuclear – Programme 4 • Clean Energy – Programme 5 • Job Creation – Cross cutting

Integrated Energy Planning – Programme 2 • Electricity generation, with installed capacity of 40 870 MW, has become a constraint on our economic growth,. • Until the next base-load generation capacity (Medupi and Kusile Power Stations) has been commissioned, South Africa faces possible shortages, with very little new capacity coming on stream • This is exacerbated by the tight supply-demand balances, with the reserve margin deteriorating from 15.14% in 2010 to less than 10.14% in 2012 • A number of initiatives are underway to improve the situation, through Energy Infrastructure Development as directed by President Zuma in the State of the Nation Address (SONA) – we reflect on the alignment of our activities relative to the SONA

SONA Commitment to Infrastructure Development • SONA indicated progress regarding the R860 billion infrastructure programme. Our contribution can be summarised by indicating progress in the Implementation of the Integrated Resource Plan, Energy Efficiency Implementation, Increasing Access to Energy, through various initiatives, such as: • Renewable Energy IPP Programme • New baseload power stations (coal, gas, cogeneration etc.) • Rehabilitation of electricity distribution infrastructure • Increasing access to energy through the electrification programme • Reducing electricity demand and cushioning the poor from increasing tariffs through solar water heaters

Renewable Energy IPP ProgrammePROGRAM 2

Renewable Energy IPP Programme - PROGRAM 2

New Generation Capacity in line with IRP -PROGRAM 2 • In December 2012, Minister of Energy determined in accordance with S34 of the Electricity Regulation Act and the IRP that new generation capacity is required– Coal, Gas, Cogeneration, additional PV, wind, CSP, hydro

Proposed Infrastructure Rehabilitation Plan PROGRAM 2 Output 1 Pilot at certain Municipalities to test delivery model. Phase 1 Output 2 Pilot Funding model based on DFI Finance. Phase 2 Output 3 Consolidation of delivery model, including Funding. Full Implementation Phase 3 SECRET

Reducing Demand through Solar Water Heaters – revised contracting model for increasing local content – PROGRAM 2 Provides policy framework Implementation Agreement DoE MoU Supplies local product that meets requirements as per designation, standards Eskom Manufacturer Supply Agreement Implements policy framework, including the procurement of systems SABS Provides the support in relation to independent testing and compliance

IMPACT OF THE REMARKS

2013/14 MTEF ALLOCATIONSELECTRICITY DEMAND SIDE MANAGEMENT GRANT (ESKOM & MUNICIPALITIES)

2013/14 MTEF ALLOCATIONS INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME GRANTS

Way forward The Department has noted the proposals made in the plan and the Minister has immediately directed the following: • The formation of the NDP alignment forum comprising of all the DDGs and chaired by the DG; • Development of a workplan to align the Department Strategic Plan with the NDP by May 2013; and • Report of progress every four months to the Minister.

CHALLENGES • Scarcity of both human resources and Financial resources • Shortage of skills • Other resources which are beyond our control

THANK YOU Q & A

IMPLICATIONS ON SONA PORTFOLIO COMMITTEE ON ENERGY 22 FEBRUARY 2013