Kuyasa and its scale-up to a National Sustainable Settlements Facility

1. Kuyasa and its scale-up to a National Sustainable Settlements Facility Parliamentary Portfolio Committee meeting Steve Thorne 26th July 2011

2. Contents • SouthSouthNorth • Kuyasa intro • Kuyasa implementation • National Sustainable Settlements Facility • Some conclusions

3. SouthSouthNorth • What are we? • Where are we? • Entry point – Sustainable Development • High hanging fruit • Mitigation and Adaptation • Project lead hands-on learning-by-doing • Knowledge in public domain

4. General Information South African Export Development Fund (SAEDF) August 2007 Kuyasacdm@telkomsa.net

5. The Kuyasa CDM Pilot The Kuyasa CDM Project: First Gold Standard and African CDM project registered. Currently being implemented in Khayelitsha, Cape Town • 2309 RDP houses • Solar Water Heaters • Insulated ceilings • Energy efficient lighting

7. Overall view of light and SWH interventions

8. Sectional view of ceiling installation

10. First steps in design • Selection retrofit of technologies (lighting, water heating and thermal performance improvements) • Selection of study sample (10 houses) • Retrofitting and monitoring housing through winter • 15 community based meetings • Project design drafting (using small scale CDM methods) • Project design registration • Fund raising for implementation • Business plan and transfer to implementers

12. Key methodological issues • Taking account of poverty by including suppressed demand for energy service • What does this mean? • How was it argued? • Difficulty – real and measurable emissions reductions • Difficulty – rigour versus simplicity

13. Some notes on Kuyasa • Implementation completed. • Many small sources of emissions make transaction costs high. • Cost R30m for implementation. • R200 000 for verification (awaiting completion) • Scale… public investment and ownership of CERs. • Suppressed demand needs to be included in methodological approach for replication. • NAMAs (Nationally Appropriate Mitigation Actions) may be more appropriate.

14. The National Sustainable Settlements Facility VISION: A clearing house which enables and incentivises access to financing for clean energy services in all low income housing in South Africa MISSION: To establish a Facility which 1) administers a CDM programme, and 2) leverages and manages access to the additional upfront financing required for the incremental capital costs of sustainable energy interventions in low income housing

15. NSSF progress to date • SSNA together with the CTCC developed Kuyasa as a pilot • REEEP funding to explore viable models for replication at scale, with a focus on financing • Programmatic CDM approved, providing avenue for carbon finance • Drafting Group established to provide guidance and legitimacy • Kuyasa being implement by SAEDF with DEAT grant finance • DANIDA funded development of a Business Plan for the NSHF • South African Export Development Fund (SAEDF) and Energy Development Corp. funding the development of a SWH programmatic methodology • DANIDA funding a work plan to achieve government endorsement and appointment of an incubator • DBSA funding the development of thermal efficiency methodology and programme/s and further establishment

16. National Sustainable Settlements Facility • Institutional and Financial architecture • Methodological and Programmatic issues • Interface with housing developers

17. Institutional and financial issues • Currently leadership through a drafting Group established to provide guidance and legitimacy. • Includes: DBSA, SANERI, DHS, DoE, Eskom, NHFC, DNA, SSNA, municipalities. • Where should the Facility be situated institutionally? • The income from carbon, demand side management, Renewable energy certificates, other externality interests.. • Loss of earnings for the utilities need to be recovered.

18. A Low Income Housing Programme for South Africa How to bring carbon finance forward? Assumptions Carbon price €15 Ongoing 50% equity investment R1000 beneficiary contribution Only Greenfield housing included No financing How to bring intervention costs down?

19. The National Sustainable Settlements Facility International Carbon Markets Carbon Collatoral? CDM Programme of Activities ThermalEfficiency Methodology SWH Methodology Energy Efficient Lighting Methodology Equity Loan Facility National Sustainable Settlements Facility Housing Project Housing Project Housing Project Housing Project

20. Methodological approach • Two new large scale methods • Solar Water Heating and • Thermal Performance improvements

21. High level Benefits Social • Respiratory health burden reduced • Provision of hot water – health / comfort • Household cost savings due to energy efficiency • Employment opportunities (EPWP) Economic • Peak demand reduced – defers new installed capacity • Leadership for low cost housing / energy industry • Entrepreneurial opportunities Environmental • Largest project of its kind in Africa - Leadership • City SWH target – 10% by 2010 (ie 80 000 houses) Project assists this target • Implementing global commitments Governance • Local participation and decision-making

22. National Sustainable Settlements Facility (NSSF) Key Conclusions • Carbon finance for low income housing requires a long term investment view. • But the returns to a programme are highly significant, both carbon revenues and co-benefits • Risks are manageable. • The issue is around availability of upfront financing for capital interventions and identifying an entity to drive the programme. • There is strong interest from CC community internationally, especially in Gold Standard programme. • What is the role of SA Government – avoided cost of supply (EEDSM?), job creation, health care, environmental services.

23. Conclusions into the future • NSSF Model is replicable for other sub-sectoral mitigation approaches using projects to head to programmes to sub-sectors to future developing country commitments

24. http://www.southsouthnorth.org