Transformation of distribution

1. Transformation of distribution LIZ MCDAID GREEN CONNECTION SAFCEI Earthlife Africa Johburg

2. Aims of electricity system: • Universal access to electricity • Sustainable supply to low income at affordable prices • Reliable, clean, financially viable electricity system to support economic development

3. Planning for an intelligent future Generation Generation Transmission Generation Distribution Distribution End user Generation

4. Poverty Context 40% population earn less than R1000 per month Low income spending 12-20% on energy where high income will spend 6% (SECCP) Eg – equivalent of R4000 out of R20 000 income spend on energy At least 10% of South Africans live in 2700 urban settlements. (more than 1.2 million households. Proportion of households living in information settlements increased 21% to 22% in metros, despite increase of house –building. (SACN 2011). • Access does not equal use mixed fuel use : • Electricity – lighting • Paraffin – cooking “Quality of connections keeps people in poverty” 4 million do not cook with electricity 2 million use candles Women and girls can spend 6 hours on fuelwood gathering and cooking 50kWh not sufficient

5. Cost of electricity system • Rising tariffs due to generation choices mean increasing hardship, increasing disconnections for low income households. • Increasing tariffs could mean increasing own generation for industry, reduced customer base. • Implies less revenue to maintain distribution network

6. (2010) – www.thegreenconnection.org.za

7. Logical spending? $$$ Eskom consumers Treasury $$$ $$$ DPE

8. Need for integrated approach • Benefits of electricity provision impact on other departments: • Reduced air pollution – improved respiratory health • Improved lighting leads to improved school results – positive impact on education • Support small business – improves economic development and reduces burden of social grants

9. intelligent finance • Halt current model of pre-paid meters that limit tariff differentiation • Ensure pro-active procurement of appropriate distribution technology – for 21st century • Combine energy efficiency and modular approach and ensure differentiated revenue stream and cross subsidise City of Cape Town – strong renewable energy implies 7c/kWh increase but include efficiency and the price increase is only 0.2c/kWh (SEA, 2012)

10. Distribution Transformation • Distribution infrastructure: • Mini-grids • “smart” technology (net-metering, etc) • Flexible, small scale units – modular approach • Embedded generation • Capital expenditure - Treasury to drive funding backlog infrastructure • Operational expenditure – cost recovery with standard network charge • FBE increased – 100kWh

11. Case studies Green Connection – www.thegreenconnection.org.za

12. Governance challenges

13. Recommendations • Treasury to drive funding capex backlog – expand existing programmes • Use MYPD for operating costs – ensure cross-sub-subsidisation system to ensure Fbe and cost recovery from wealthy • Standard wheeling charge (not to discourage embedded generation but important to identify hidden generators ) • Integration/communication re ISMO and distribution to reduce risks • Legislation amendments – license to be revoked if not compliant • Data collection centrally managed and used for planning • Align reporting and budgeting and planning timelines of government silos • partnerships to support smaller munics. • Specific skill development plan – retraining of retrenched technical staff, bursaries, partnerships with private sector • Timeframe – ensure EDI budgeted for in 2013 – parliament to oversee • Inter-govermental task team supported but include non-govt. stakeholders – key objectives: • to ensure current capex allocation spent. • To ensure skills development plan