Industrial Development Corporation

11 June 2013Showcase of Successfully Financed Industrial

Energy Efficiency Projects

Improving Competitiveness of South African Industry Through

Energy Efficiency Projects

Rafikh Ismail

Senior Account Manager

Contents Page

Introducing the IDC

South Africa’s Energy Mix

Green SBU

Focus Areas

Conclusion

The Industrial Development Corporation

o Established: 1940

o Type of organisation: Development Finance Institution (DFI)

o Ownership: South African Government

o Main business area: Providing funding for entrepreneurs and projects that are contributing to the industrialisation and job creation

o Geographic activities: South Africa and the rest of Africa

o Products: Wide range of custom financial products to suit a project’s needs including debt, equity, guarantees or a mixture of these

o Stage of investment: Early stage (feasibility), commercialisation, expansion

o Project development: Identification and development of projects adding to the industrial base

* At R6.90 per US$

Corporate Profile

The IDC’s Head Office in Sandton (Johannesburg)

Provides financing to entrepreneurs engaged in

competitive industries and enterprises based on

sound business principles

Pays income tax at corporate rates and dividends to

the shareholder

The vision of the IDC is to be the primary source of

commercially sustainable industrial development

and innovation to the benefit of South Africa and

the rest of the African continent

Aims to maximize developmental and financial returns

within an acceptable risk profile

IDC in action

Growing the Green Economy

The development of Green Industries in the Green economy is becoming a key focus area for development in South Africa and especially the Industrial Development Corporation of South Africa (IDC).

IDC has been at the forefront in supporting industrial growth and

development in South Africa since its inception in 1940. More

recently, IDC adopted a pro-active approach in developing the

green economy and specific focus and effort has been given to

green industries and technologies. The objective is to develop,

grow and invest in green industries focusing on investments to

enhance the environment, support carbon emission reduction,

avoidance and adaptation.

Investment in the Green Economy

The IDC’s role in growing the Green Economy would be through investments in:

1. clean production,

2. clean energy,

3. energy efficiency,

4. demand side management interventions,

5. emission and pollution mitigation,

6. waste reduction and

7. bio fuels.

A value chain approach will apply with the emphasis on industrial development

(including localization) and job creation.

Transition

Challenges:

Carbon intensity;Natural resource management;

Unemployment;Economic concentration;

Competitiveness; Protectionism;Operating environment.

Current drivers:

New Growth Path;

Integrated Resource PlanIndustrial Policy Action Plan;National Climate Change Response White Paper;

National Development Plan.

Opportunities:

Amongst best solar resources;Wind energy potential;

Biodiversity;Economic diversification through

infant industries;Job creation;

Up-skilling of workforce;First mover advantage.

Green Economy transition in SA

Contents Page

Introducing the IDC

South Africa’s Energy Mix

Green SBU

Focus Areas

Conclusion

South Africa: Current Market and Energy Situation

• Since the South African economy largely relies on coal reserves for electricity, many opportunities exist for Renewable energy (RE) and Energy Efficiency (EE) improvements.

• Currently, future energy supply is not expected to be sufficient to match the anticipated demand, and increased pressure on price and energy security, force industry players to focus on green initiatives (mainly RE and EE).

• Recurring power outages since early 2008have highlighted the fact that electricity generation is unable to keep pace with demand. In the light of adversity comes In the light of adversity comes In the light of adversity comes In the light of adversity comes

opportunity!!!opportunity!!!opportunity!!!opportunity!!!

South Africa’s Current Energy Mix

• The South African (SA) economy is dominated by energy intensive industry.

• SA is also one of the larger emitters of CO2

in the world. This is primarily due to the fact that 86% of its electricity generation is coal based.

Eskom Installed Generation Capacity MW

Coal 37755 MW

OCGT 2426 MW

Nucler 1930 MW

ConventionalHydro 600MW

Pumped Hydro1400MW

Wind 3MW

South Africa’s Integrated Resource Plan (IRP2010)

According to the IRP2010 a

total of 19 GW of overall

electricity will be

generated from RE,

estimated to cost close

to R500bn over the next

20 years up to 2030

(close to R100bn over

the next 5 years).

IDC’s targeted investment

over the next 5 years is

R25bn (including

manufacturing of green

components for green

industries).

Future Generation Planned by 2030

Coal 6300 MW

OCGT 3900 MW

Nucler 9600 MW

Hydro 2600 MW

CCGT 2400 MW

Wind 8400MW

Solar PV 8400 MW

CSP 1000 MW

Driving opportunities to develop

the Green economy from an

energy generation perspective$

Contents Page

Introducing the IDC

South Africa’s Energy Mix

Green SBU

Focus Areas

Conclusion

Green Industries SBU:Focus

Energy efficiencyEnergy efficiency

Heat, Electricity & building efficiency

Cleaner production / Industrial Efficiency

Transport Efficiency

Waste to Energy

Fuel Based EnergyFuel Based Energy

Co-generation

Emission and pollution mitigationEmission and pollution mitigation

Air pollution control

Waste Management/ Recycling

Clean stoves

Bio FuelsBio Fuels

Bio Ethanol Bio Diesel

Renewable Energy: Non-Fuel Power Renewable Energy: Non-Fuel Power

Wind Power Generation

Concentrated Solar Power

Solar Photo Voltaic Power

Services related

to renewable

energy & energy

efficiency

Services related

to renewable

energy & energy

efficiency

Local

manufacturing

related to

renewable

energy & energy

efficiency

Local

manufacturing

related to

renewable

energy & energy

efficiency

Hydro

Emerging Industries!

Fuel Based

Energy

12% Energy

Efficiency

4%

Renewable

Energy

76%

Biofuels

8%

Green

Portfolio

R10,4 bn

R7.5 bn

R1.4b

R422m

16 ProjectsExposure R620m

20 ProjectsExposure R185m

3 ProjectsExposure R193m

20 ProjectsExposure R1.5bn

Green Industries SBU:Portfolio

Contents Page

Introducing the IDC

South Africa’s Energy Mix

Green SBU

Focus Areas

Conclusion

IDC

Total Investment -

R631m

Total Round

1 & 2

Investment

R74.7bn

Total Investment –

R16bn

Total Investment –

R24bn

Total Investment –

R34bn

6%

94%

IDC

32%

68%

SOLAR PV WIND

CSP HYDRO

8%

92%

IDC

22%

78%

IDC

Renewable Energy:IDC’s participation

Energy Efficiency:Current reality & IDC focus

Industrial energy efficiency

Solar water heaters & heat pumps

Lighting Solar PV rooftop –self use

Energy servicing companies (ESCOS)

IDC focus areas

Reluctance in the

market is due to:

EE not business as

usual

Uncertainty: Lack of

awareness

Capital Expenditure Required – not

necessary budgeted for

Relatively Low Tariffs compared to international benchmarks

EE Solution

Incentives –Though Rebates,

Performance Contracting

Funding : Concessional rates available

Market and Technology Awareness

• EE is simply the process of doing more with less energy.

• EE is globally accepted to be 3 times cheaper than traditional coal fired

power stations and is quicker to implement and achieve immediate savings.

Energy Efficiency:Green SBU industry participation

Participation on the Inter-Departmental Government SWH Project Steering

Committee

R4.7Bn Approved for the Roll out of SWH to achieve the 1 million SWH – 2012 Budget Speech

Localisation: Designation done through DTI for SWH

SAIA : South African Insurance Industry proposal to get all electrical geysers replaced with Energy Efficient Alternatives

Knowledge Sharing and

Capacity Building

Presenting to : 1. German Chamber of Commerce PV Conference2. SAPVIA : PV Association

Presentations Carbon conference: Greentech 2012SAEE

Many other industry participation events

Workshops arranged:

-GEEF Conference on Funded Case-National Foundry Network-National Cleaner Production Centre -Plastics Association of South Africa-Irrigation and Pack-houses

Internal SBU awareness and integration:

- Energy and Carbon Impact Assessment Tool-All Regional Offices trained on GEEF and EE/RE- 9 SBUs and PIMD

Fuel Based Green Energy: IDC focus

Co generation Waste to energy

Biogas Waste recycling

Air pollution

IDC focus areas

Meat to Market

Jan Kempdorp

SACC

Renewable Energy:Opportunities in the rest of Africa

MOZAMBIQUE

-hydro

NAMIBIA

-hydro

BOTSWANA

-solar

KENYA

-wind, geothermal

UGANDA

-biomass

TANZANIA

-hydro

ZAMBIA

-hydro, solar

SWAZILAND

- biomass, hydro

D.R. CONGO

- hydro

ETHIOPIA

-wind

ZIMBABWE

-hydro, solar

SENEGAL

-solar

MOROCCO

-wind, solar

Key challenges:

• Political instability

• No clear PPA framework

and process

• Project cost

• Grid connection

• Lack of strong project

partners & developers

Conclusion

• Pro-active approach to develop Green Industries

• Renewable energy

• Energy efficiency

• Fuel based green energy

• Emission and pollution management

• Bio fuels

• As well as localisation opportunities

• Focus on early phase project development;

• Develop specific funding interventions;

• Support and development of an emerging industry at various level.

• Value chain approach with an objective to develop a long term sustainable

industry.

Day Month Year

The Industrial Development Corporation

19 Fredman Drive, Sandown

PO Box 784055, Sandton, 2146

South Africa

Telephone (011) 269 3000

Facsimile (011) 269 2116

E-mail callcentre@idc.co.za

Thank You!

Any Questions?

RAFIKH ISMAIL

+2711 269 3297+2776 984 9893rafikhi@idc.co.za