Transformation of distribution

LIZ MCDAIDGREEN CONNECTION

SAFCEIEarthlife Africa Johburg

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

Planning for an intelligent future

Generation

GenerationTransmissio

n

Distribution Distribution

End user GENERATION

Generation

Poverty Context

• Access does not equal usemixed fuel use :– Electricity – lighting– Paraffin – cooking

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

4 million do not cook with electricity2 million use candlesWomen and girls can spend 6 hours on fuelwood gathering and cooking

50kWh not sufficient

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).

“Quality of connections keeps people in poverty”

• 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

Cost of electricity system

HH elec rural Rc/kWh

HH elec urban Rc/kWh

Social grant/ mnth

Child support grant/ mnth

Petrol price

2003 R0.92 0.407 R700 R160 R3.81

2009 R1.14 0.54 R1010 R240 R7.82

% change 23% 32.4% 44% 50% 105%

(2010) – www.thegreenconnection.org.za

Logical spending?Eskom

consumers

$$$

$$$$$$

DPE

Treasury

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

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)

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

Case studiesName description Costs incl.

distribution/ kWh

capex

NuRa solar homes (SA)

Solar system plus gas R12.56 Donor

Gobabeb (Namibia) Solar, wind, diesel R1.68 Donor

Katana (Tanzania) Biomass R1.44 Commercial

Nollie-se Kloof tourism (SA)

Solar, micro-hydro, wind

R1.44 Commercial

Poultry farm (SA) Biogas R 0.40 Commercial

Eskom rural Coal grid R 1.14 Commercial

Green Connection – www.thegreenconnection.org.za

Governance challengesIssue Way forward

Financial accountability Failure to spend NERSA to use licence claw back

Institutional capacity Lack of skills Education, private sector

Transparency/ Availability of data Central information base – NERSA/statsSA

Coordination Silo based Stakeholder task team

Evaluation/Enforcement Growing backlog Parliament oversight of task team

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