Energy Efficiency Financing Policy:

South Africa’s Standard Offer Scheme

Country Energy Policies

7 December 2011

Doc Id

Research has been undertaken into the market

potential for energy savings per technology

Technology Resid Comm Indus Total

Efficient Lighting 939 115 116 1,170

Solar Water Heating 3,713 3,713

Domestic Cooking Conversion

2,144 2,144

Infra red heating 766 766

Heat Pumps 960 224 569 1,753

Showerheads & Restrictors

240 160 400

Load Management 9 200 209

Heating, Ventilation & (HVAC)

14 70 84

Agricultural Initiatives 144 144

Efficient Compressed Air 1,255 1,255

Motor Efficiency 408 408

Variable Speed Drivers 417 417

Fan / Pumps 530 530

TOTAL 8,762 666 3,565 12,933

• The market’s total potential is the

estimated maximum amount of

demand savings that can be

achieved in each technology

class.

• The market potential was

estimated in a recent research

study conducted by EEDSM.

• In setting targets, the market

penetration in any of the

technology classes did not exceed

50% of the research finding’s

maximum market potential.

• The above conservative target

settings approach allows for

market estimation accuracy,

customer own projects and supply

chain constraints.

Doc Id L

ast M

od

ified

20

11

/09

/19

15

:47

:29

So

uth

Afric

a S

tan

da

rd T

ime

P

rinte

d 2

01

1/0

9/0

7 1

7:3

4:3

5

NERSA has granted Eskom funding to pursue these

market opportunities

• As part of the MYPD2, NERSA approved a total of R 5,445m for Energy Efficiency and

DSM. “These funds will be applied for project implementation and administrative costs

for DSM, energy efficiency and demand-reduction programmes, including a portion of the

solar water heating (SWH) initiated by the Department of Energy (DoE).”

Demand Savings (MW)

Current

Year

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Total

Eskom EEDSM 301 313 459 502 656 2231

MYPD2 NERSA Approved 289 301 447 1037

IRP2 252 242 315 501 656 1966

Demand Savings (MW) Claimed Since Inception Of IDM Programme

4

90 72

270

650

917

372 357

0

200

400

600

800

1000

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Dem

an

d S

avin

gs (

MW

)

Other CFL's

Demand Savings = 355 MW

5

Lets change this picture….

35

70

0

50

100

150

200

250Re

side

ntia

l

Ind

ust

rial

Red

istr

ibu

tor

Agr

icu

ltu

re

Co

mm

erc

ial

Group1

2010/2011

204

113

334 2

De

man

d S

avin

gs (

MW

)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1.22.8 3.5 3.9 4.4 4.5 5.3 5.3 5.3 5.3

8.7 9.0

32.0

Fun

din

g R

mill

/MW

Funding Of Technologies – R mill/MW

6

CFL = Best

“bang for buck”

but opportunity

exhausted over

47 million bulbs

installed

New

technologies

more expensive

SWH is

expensive

Down lighters

next “big”

opportunity

Doc Id

The IDM energy savings target for 2011/12 could power a city for a year

Source: Annual electricity consumption/sales as reported in the State of Cities 2006, City Energy Support Unit, Sustainable Energy Africa, 2006

1,280 G i g a w a t t h o u r s

Mangaung (1,397 GWh consumed during 2006)

Buffalo City (1,305 GWh consumed during 2006)

either of

Sol Plaatjie (514 GWh consumed during 2006)

or

for 2½ years

for ~1 year

Doc Id

Current Funding Mechanisms and Inititatives

ESCo Process

Rebates Mass Roll-

out Standard Offer

Standard

Product

Performance

Contracting

Size Projects >

1MW

Individual

Products

Large Scale Roll-

outs 50kW<Project<5MW Projects <100kW

Substantially larger

than ESCo process

>5MW

Eskom

Payment

Value

Based on

individual

project

calculation

Value per

product based

on savings

potential

In line with

MYPD

benchmarks,

with discretion

Standard value per

kWh saved per

technology. Focus on

daytime hrs 6am –

10pm weekdays.

Standard value

per item

calculated based

on savings

potential

Competitive bidding

process. Contract

over 3 yrs.

Funding

Customer and

Eskom (up to

NERSA

benchmark)

Customer and

Eskom (up to

NERSA

benchmark)

Eskom or DoE

Market price per

technology (up to 85%

of NERSA

benchmark)

Market price per

technology (up to

NERSA

benchmark)

Customer and

Eskom (up to

NERSA

benchmark)

Payment Progress

payments to

ESCo’s

Rebate claimed

by consumer

Progress

payments

70% on

implementation, 10%

pa based on M&V

100% on

installation, based

on M&V

Progress payments

with retainer at a

rate of 55c/kWh

peak hrs.

Investment

Decision

Individual IC

approval

Once-off IC

approval per

technology

Individual IC

approval

Bulk IC approval per

technology

Bulk IC approval

per technology

Bulk approval of

individual projects

Procurement

Decision

Price

evaluation

based on

submitted

approval

Rebate

administration

outsourced

Individual tender

processes

Streamline individual

project approvals

Possibly no

requirements if

outsourced

Streamline

individual project

approvals

Possibly no

requirements if

outsourced

RFI

Tender

Cumulative Progress on Registration Of Standard Offer Projects - As at end October 2011

9

47

1114

24

3538

0

14

28

42

56

70

0

10

20

30

40

50A

pr

Ma

y

Jun

Jul

Aug

Sep

Oct

Dem

an

d (

MW

) &

En

erg

y (

GW

h)

Savin

gs

No

. o

f p

roje

cts

FY 2012

FY 2012 = 38 projects registered with a demand savings = 12.8MWSince inception (July 2010) - 52 projects registered with a demand savings of 16.4MW

No. Of Projects Demand Savings (MW) Energy Savings (GWh)

Cumulative Progress on Registration Of Standard Product Projects - As at end October 2011

10

516

38

68

132

229

328

0

10

20

30

40

50

0

90

180

270

360

450A

pr

Ma

y

Jun

Jul

Aug

Sep

Oct

Dem

an

d (

MW

) &

En

erg

y (

GW

h)

Savin

gs

No

. o

f p

roje

cts

FY 2012

FY 2012 - 328 projects registered with a demand savings = 9.4MWSince inception (Jan 2011) - 362 projects registered with a demand savings of 11.7MW

No. Of Projects Demand Savings (MW) Energy Savings (GWh)

Doc Id

Standard Products

We started with lighting

Extension of standard product offer to include:

Air

conditioners Solar water

heaters

Heat

pumps

Shower

heads

Performance Contracting

For Industrial and large

commercial customers For projects that save

more than 5MW

Pays 55c/kWh during

‘peak’ (06:00 – 22:00)

Pays 10c/kWh off

peak and weekends

Published rate and invitation to tender

Contracts to value of R 750m awarded

Breakdown Of ESCOs In Industrial Sector

• Numerous ESCOs participate in the IDM programme

• To date the top 5 ESCOs have delivered 72% of the demand savings achieved

0 50 100 150 200 250

Others

ESCo 10

ESCo 9

ESCo 8

ESCo 7

ESCo 6

ESCo 5

ESCo 4

ESCo 3

ESCo 2

ESCo 1

97

7

7

10

13

15

21

29

36

67

225

Demand Savings (MW)

Breakdown Of ESCOs In Commercial Sector

• Many smaller ESCOs (44) participate in the IDM programme in the Commercial

Sector

• To date the top 5 ESCOs have delivered 61% of the demand savings achieved

0 5 10 15 20 25 30

Others

ESCo 10

ESCo 9

ESCo 8

ESCo 7

ESCo 6

ESCo 5

ESCo 4

ESCo 3

ESCo 2

ESCo 1

21

3

3

3

3

4

4

5

7

15

27

Demand Savings (MW)

34 ESCOs

Doc Id

15

Thank you