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25 January 2008

As you've heard from Minister Erwin, we are facing an emergency situation. However, we are mindful that this electricity emergency cannot be solved by government alone, but will have to be a collective effort by both ourselves and South Africans in general. Let's all put our shoulders to the wheel to deal with the situation we find our selves in. We have received various suggestions from members of the public in terms of how we can save energy, which have been very useful and we are going to publish through various mediums.

During our deliberations in cabinet, it became obvious that the interventions that will provide us with immediate relief will be on the demand side management and energy efficiency. It goes without saying that we therefore, all need to ensure that energy conservation is a way of life.

The immediate need for the country is to ensure that our electrical system is brought back into balance. We will need to restore a workable reserve margin in order to alleviate strain on the generation assets and the primary energy supply chain. We also need to create breathing space for maintenance to be done.

Intervention timeframes
Our intervention timeframes are classified as:
* immediate (within six months),
* medium term (within 18 months), and
* long term (longer than 18 months).

Other short-term interventions that have been explored are the following:
* immediate implementation of the Power Conservation Programme (PCP),
* immediate implementation of specific demand side behavioural change programmes (DSM),
* renewed focus and emphasis on medium and long-term initiatives.

Power Conservation Programme

Most of the Demand Side Management (DSM) consumer behavioural change programmes need immediate implementation, however the impact will only be observed in the medium term. A Power Conservation Programme will have an immediate "quick hit" solution that will reduce and, depending on its success, negate the need for load shedding.

This is an urgent intervention to help alleviate the problems being experienced with power outages. Countries like Cuba and Brazil have already proven that an energy crisis could be turned around to make a country grow even more economically and save substantial amounts of money if a nation wide energy efficiency drive is politically driven.

I am sure most of you have heard about the proposed power rationing programme. We have gone a step further to look at how this power rationing can be done. Amongst other things we discussed, was the issue on how quotas will be allocated, who will be exempt from the programme, what incentives and penalties will be in place, when it will start and what legislative enablers we need to have in place for the programme to work.

Other intervention measures that seek to influence consumer behaviour in the medium to long term are the following:

Efficient lighting rollout programme
Roll out of compact fluorescent light (CFLs) fittings. It has been established that of the 10 million plus electrified households in South Africa, on an estimate of eight incandescent lights per household, it is projected that 800 mega watts (mw) could be saved by replacing with CFLs. The final target is to reduce the demand by 750 mw by 2010. The programme also accommodates a free CFL exchange for low-income households until 2015. In order to ensure that this roll – out is sustained, we intend to issue a restriction on the manufacturing of incandescent light bulbs. There will be certain exclusions granted for lamps for ovens, microwaves and for sensitive buildings and special cases.

Solar water heating programme

The programme is in progress with a target to install one million solar water heaters over the next three years. The current cost of the solar heater is prohibitive (it is estimated to cost between R7 000 and R20 000). It is also reported that the South African manufacturing capacity is only 10 000 units per annum. To eliminate these barriers, there is a subsidy of 20 to 30 percent depending on the cost of the unit. The potential savings of this programme is 650 mw. The programme is targeting both the households, group houses (e.g. army bases, mine residences) commercial and industrial applications.

National housing specifications

The behaviour can be entrenched by ensuring that the building standards are legislated and implemented. Local Government has indicated that the municipal bylaws will entrench energy efficient behaviour.

Smart metering for residential customers (Load management)

Although the smart metering can be initiated in the short term, the benefits will be reaped in the medium to long term.

Smart metering requires the use of wireless technologies which have to be retrofitted to existing conventional and pre-paid meters. In this manner the utility (Eskom or the municipality electricity distributor) will be able to remotely manage customer load. In this case a quick cost benefit analysis indicates that an improved communication between the utility and the customer meter will result in big energy savings during the peak demand. This is illustrated by the figures below.

The potential reduction is estimated to be 3 265 mw, made up of:
* geyser = 2 161 mw,
* laundry (two percent contribution to peak) = 246 mw,
* pool pumps (one percent contribution to peak) = 122 mw
* other appliances (six percent contribution to peak) = 736 mw.

The programme will need extensive human resources. The programme provides and opportunity for training and job creation.

Fuel switching

This refers to the substitution of electricity as a domestic energy source with Liquefied Petroleum Gas (LP Gas) in this case, in order to lower the burden of electricity generation. This strategy assists in ensuring that the appropriate energy carrier is used for the application – it is more energy efficient to cook with gas than with electricity. In addition, fuel switching to LP Gas ameliorates the strain experienced by the electricity network during peak times when domestic users are cooking at the same time.

Two challenges have to be overcome in respect of fuel switching to LP Gas. Lessons learned from the Cape Town electricity crisis indicate that supply chain issues and the pricing of LPG will need to be resolved as a matter of urgency. In order to overcome these challenges, the Department of Minerals and Energy has initiated a programme where concessions are issued and suppliers bid for these concessions. This is in line with Petroleum Products Amendment Act. The regulated pricing regime for LPG will be completed in the next two months. The opportunity to import the gas during supply shortages needs to be explored more, because the gas is actually a by-product in the oil refining process and is readily available in the global market. It is expected that this programme will save 500 mw.

Traffic lights and public lighting

All traffic lights and public lights will be converted to solar power with a battery backup. This is another extensive project that will cost approximately about R400 million. This will also be another opportunity for employment creation and skills development.

Hospitality industry

The Department of Trade and Industry will proclaim that the hospitality industry convert all water heating to solar power. The water heating method can be in the form of solar pre – heaters, thereby ensuring that electricity is not used whenever there is enough solar radiation available to heat water.

Other medium term interventions

Medium term interventions that are likely to influence the behaviour in the long term are the following:
* Implementing the Electricity Regulation Act as amended, especially on the issues pertaining energy efficiency
* Adjusting the tariff regime to reflect the actual cost of providing electricity
* Regulation of the maintenance regime of the electricity infrastructure
* Availability of primary energy (especially coal) for power generation.

Medium to long term intervention

Statement on renewable energy (RE) development

The Department of Minerals and Energy (DMW) has embarked on a number of renewable energy projects which are geared at increasing power generation in the country. Most of these projects have been supported by the DME either through policy pronouncements or through financial support. The renewable energy subsidy office (REFSO) has started disbursing subsidies for RE projects and this year we have provided four million rand for the development of these projects. We have supported a number of RE projects and these cover hydropower, biogas to electricity, wind power project (darling wind farm) and a green power pilot project which has included biomass electricity co-generation. The capacity of these projects is approximately 30 mw. The DME jointly with Central Energy Fund (CEF) has embarked on solar water heating project, which promotes the use of solar geysers, this project we expect to reduce energy consumption in the geysers which are major consumers of electricity.

Issued by: Department of Minerals and Energy
25 January 2008