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Kuyasa: Low cost Housing Energy Upgrade CDM

Paper Three: Financing the Development Dividend S outh African Case Studies The Kuyasa Housing Energy Upgrade and Bellville Landfill Projects. Kuyasa: Low cost Housing Energy Upgrade CDM. Retrofit 2309 low-cost RDP houses in Kuyasa, Khayelitsha with: ceiling insulation,

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Kuyasa: Low cost Housing Energy Upgrade CDM

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  1. Paper Three: Financing the Development DividendSouth African Case StudiesThe Kuyasa Housing Energy Upgrade and Bellville Landfill Projects

  2. Kuyasa: Low cost Housing Energy Upgrade CDM Retrofit 2309 low-cost RDP houses in Kuyasa, Khayelitsha with: • ceiling insulation, • solar water heaters and • Compact Fluorescent Lights

  3. Development Dividend • Alleviates energy poverty • Saves R600/hh/annum in energy costs • Creates over 100 person years employment • Improves health conditions for occupants • Improves local air quality • Contributes towards meeting renewable energy targets • Example of sustainable energy in Western Cape • Reduces peak energy demand • Benchmark for replication throughout SA

  4. Kuyasa Design • Designed for replication (modular basis, per technology and per household) • 1.5m existing low income houses in SA • Huge housing backlog – greenfield housing • SSN to develop a programmatic CDM project as part of its second funding phase

  5. Carbon Income Community Financing Kuyasa (Based on 10 year cash flow) Total Cost R28m • Outflows: • Upfront Project cost: R28m • Ongoing Maintenance Costs R1.14m (NPV over 10 years at 12%) Current Anticipated Inflows: • Carbon Income R5 m price of carbon is €15) • Community repayment scheme R2.4m? (R20/hh/month, NPV over 5 years) • Grant funding

  6. The financial challenge… • To finance Kuyasa, and programmatic Kuyasa in a sustainable manner. • Now the objective of a REEEP project • Key issues: • no revenue, this is a public sector project • Need to link to current government priorities and funding lines • Premium CDM revenues = 20% of costs • Economies of scale, CER price increases • Transaction costs > CDM benefits

  7. Bellville South Landfill Project

  8. Bellville: Proposed CDM Project • 2 Project Activities (Small Scale Methodologies used) • Capping and Active Extraction of LFG • Sale of LFG to adjacent Sacks Circle Industrial Area to replace LSO use • Development Dividend • Rehabilitation of landfill • Provides funds to manage landfill reducing danger and discomfort to community • 20 Jobs created • Renewable energy source • Reduces air pollution of industrial estate

  9. Financing plan • City to put capping, project out to tender • Implementer to undertake EIA, project activities and CDM activities • Royalty from gas concession and CERs back to City (high IRR, CERs = 50% of project revenues) • City to operate community fund, and CDM fund for other projects • Landfills are ‘CDM goldmines’

  10. Project Risks • Issue of closure • Implementer not interested in capping • Gas contract still to be negotiated • Poor relationship with community • EIA required (timing, who) • Kyoto ‘window’ closing • City Waste Management in crisis • Issues around IPP and electricity price • Effect of drought on LFG levels

  11. Current Status • Project at standstill for over a year • Confusion and delay in decision making results in project being unviable without capping • Lack of capacity of municipality to deal with CDM from transactional perspective

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