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The Department of Energy (DoE) places emphasis on broadening electricity supply technologies to include gas and imports, as well as nuclear, biomass and renewable energy Energy resources (wind, solar and hydro), to meet the country’s future electricity needs and reduce its carbon-dioxide (CO₂) emissions. In 2013, Cabinet approved the new Household Electrifi cation Strategy, which will ensure that electricity is supplied to all households. New installations will take the form of renewables, with 220 000 grid connections and 215 000 non-grid connections planned for 2013. Goals beyond 2020 include contracting more than 20 000 megawatts (MW) of renewable energy, including an increasing share from regional hydro-electricity. About 11 000 MW of Eskom’s older coal-powered stations will be decommissioned, but close to 6 000 MW of new coal capacity will be contracted – part of it from other southern African countries. South Africa has committed to attain substantial reductions in CO₂ emissions by 2025. The country supports research, technology development and special measures aimed at environmentally sustainable economic growth. Legislation and policies The DoE derives its mandate from the White Paper on Energy Policy, 1998, the White Paper on Renewable Energy, 2003, and the National Energy Effi ciency Strategy. The following legislation regulates the energy sector: • The National Energy Act, 2008 (Act 34 of 2008) ensures that diverse energy resources are available in sustainable quantities and at affordable prices in South Africa. In addition, the Act provides for the increased use of renewable energies, contingency energy supplies, the holding of strategic energy feedstock and carriers, and adequate investment in energy infrastructure. • The Electricity Regulation Act, 2006 (Act 4 of 2006) establishes a national regulatory framework for the electricity supply industry to be enforced by the National Energy Regulator of South Africa (Nersa). The Minister of Energy is empowered to make determinations for the establishment of independent power producers (IPPs) to increase the supply of electricity. • The Petroleum Products Act, 1977 (Act 120 of 1977), as amended, provides for measures to save petroleum products and the economy in distribution costs, the maintenance and control of price, the furnishing of certain information

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2013ENERGY_NEW2.indd 135 2014/10/29 4:41 PM regarding petroleum products and the The department will continue to address these rendering of service. It further provides for the proposals through a combination of new and licensing of people involved in the manufac- existing programmes. turing, wholesale and retailing of prescribed Funds will continue to be allocated to the petroleum products. South African National Energy Development • The Central Energy Fund (CEF) Act, 1977 Institute (Sanedi) for research and development (Act 38 of 1977), as amended, provides for the into a carbon capture and storage project, and determination of state levies. for a hydraulic fracturing pilot to assess the • The Nuclear Energy Act, 1999 (Act 46 of 1999) potential for shale gas. provides for the establishment of the National The department aims to bring IPPs into the Energy Corporation of South Africa (Necsa) market when the Independent System and and defi nes its functions, powers, fi nancial Market Operator Bill of 2012 is signed into law. and operational accountability, governance The department will also continue imple- and management. It also regulates the menting the pilot approach to the distribution acquisition and possession of nuclear fuel, asset management programme, by providing nuclear and related material and equipment, capital subsidies to nine municipalities to ad- and the import and export thereof. dress maintenance, refurbishment and backlog Other relevant legislation includes the: concerns to improve the quality of electricity • National Nuclear Regulator (NNR) Act, 1999 supply. (Act 47 of 1999) The objectives of the revised energy effi ciency • National Radioactive Waste Disposal Institute strategy are to: Act, 2008 (Act 53 of 2008) • promote and develop energy effi ciency prac- • Petroleum Pipelines Act, 2003 (Act 60 of 2003) tices, norms and standards in different energy • Petroleum Pipelines Levies Act, 2004 (Act 28 sectors, including industries, commercial of 2004) buildings, households, transport and agricul- • Gas Act, 2001 (Act 48 of 2001) ture • Gas Regulator Levies Act, 2002 (Act 75 of • develop energy effi ciency policies and 2002) guidelines • National Energy Regulator Act, 2004 (Act 40 • facilitate information awareness, and capacity- of 2004) building campaigns concerning energy • Electricity Act, 1987 (Act 41 of 1987), as effi ciency and environmental issues amended • promote energy for sustainable development • National Environmental Management Act, • mitigate negative impacts of energy use on the 1999 (Act 107 of 1999) environment • Mineral and Petroleum Resources Develop- • promote energy effi ciency technologies and ment Act, 2002 (Act 28 of 2002) clean energy technologies, including environ- • Electricity Regulation Amendment Act, 2007 mentally sound energy technologies (Act 28 of 2007). • promote and facilitate international collabo- ration and cooperation National Energy Effi ciency Strategy • ensure the DoE’s participation at interna- The National Development Plan envisages that tional forums on energy effi ciency and the by 2030 South Africa will have an adequate environment, including the United Nations (UN) supply of electricity and liquid fuels to ensure that Commission on Sustainable Development, economic activity and welfare are not disrupted, the Kyoto Protocol and the UN Framework and that at least 95% of the population will have Convention on Climate Change. access to grid or off-grid electricity. The strategy includes Eskom’s demand-side The plan proposes that gas and other management (DSM). When a utility or local renewable resources such as wind, solar and authority that supplies electricity infl uences the hydro-electricity will be viable alternatives to way it is used by customers, this activity is known coal and will supply at least 20 000 MW of the as DSM. Municipalities are also implementing additional 29 000 MW of electricity needed by their own energy effi ciency strategies. 2030. In addition, 32 large companies have joined Other recommendations in the plan include forces with the DoE and Eskom by signing an diversifying power sources and ownership in energy effi ciency accord, committing themselves the electricity sector, supporting cleaner coal to targets contained in the strategy. technologies, and investing in human and To assist households in becoming more energy physical capital in the 12 largest electricity effi cient, the DoE initiated an appliance-labelling distributors. campaign. Labels on household appliances

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inform consumers of the energy effi ciency of the National Liquid Petroleum Gas (LPG) appliances. Strategy The DoE, in collaboration with the Department LPG is commonly used in mines to power of Public Works and Eskom, is retrofi tting smelting furnaces that are processing mate- government buildings to make them more rials, such as platinum and vanadium, as well as energy effi cient. This contributes a saving of domestically for cooking. about R600 000 in electricity bills a year. The strategy’s main objectives are to provide Eskom concluded 11 power buy-back deals access to safe, cleaner, effi cient, portable, with ferrochrome and alloys producers for the environmentally friendly and affordable thermal period 1 December 2012 to 31 March 2013 to fuel for all households, and to switch low-income create a demand-side cushion for its summer households away from the use of coal, paraffi n maintenance programme. and biomass to LPG. The utility secured buy-backs of up to 950 The strategy highlights strategic options that MW. The buy-backs were funded through an could be adopted for the orderly development of existing allocation for demand-management the LPG industry in South Africa to make LPG an programmes and were expected to have no energy carrier of choice for thermal applications. impact on the tariff. The domestic LPG price is regulated through the DoE by the Minister of Energy. National building standards Energy-effi cient regulations for new buildings Budget and funding form part of the deliverables of South Africa’s Over the medium term, infrastructure spend- National Energy Strategy to strengthen ing is expected to increase to R5,7 billion in standards and regulations for energy effi ciency. 2015/16. In 2013/14, some 200 000 households The energy-effi cient regulations apply to were electrifi ed; 18 new bulk substations were residential and commercial buildings, places of built; and 30 substations were upgraded. Eskom learning and worship, certain medical clinics and was allocated R3,5 billion over the medium term other categories of building. to fund the installation of high and low-pressure The regulations make it compulsory for all solar water geysers. Municipalities received new buildings to be designed and constructed an allocation of R538 million over the medium to a standard that makes it possible for the user term to install energy - effi cient lighting and to minimise the energy required to meet the technologies. functional requirements. This will save energy Necsa derives its revenue from the sale of signifi cantly, which will relieve pressure on the nuclear technology products, chemical products, electricity supply grid. nuclear engineering services and transfer In addition to temperature regulations, all payments received from government to fund buildings will also have to be fi tted with the operation of specifi c activities, namely renewable-energy water-heating systems such the decommissioning of strategic plants, the as solar systems, which also have to comply production and conversion of low-enriched with the South African national standards. uranium fuel and security. The increase in expenditure in 2013/14 National Strategic Fuels Stock Policy is due to an additional once-off allocation of The Energy Security Master Plan for Liquid Fuel R33,5 million to assist with the research outputs identifi ed a number of capacity constraints and and development facilities attached to the challenges faced by the petroleum sector in Safari-1 reactor. meeting the energy demand. In response to these, The corporation’s spending focus over the the National Strategic Fuels Stock Policy was medium term will be on six items: radioisotope fi nalised and published for comments in 2013. production, radiation applications, research and It sets out the framework for the storage of fuel development, specialised nuclear manufac- stock by government and the industry. It aims turing, the nuclear fuel cycle and nuclear power to ensure uninterrupted supply of petroleum generation support. products throughout South Africa by providing The fi rst three are priority focus areas and adequate strategic stocks and infrastructure aimed at expanding research and development such as storage facilities and pipeline capacity. programmes in support of the corporation’s core Strategic stocks are to be used during declared activities and contributing to the national system emergencies. The Minister of Energy will have of innovation strengthening the NTP Radioi- the power to decide when a shortage of fuel and sotopes’ position in the global market for medical oil is at such a level to warrant an emergency. radioisotopes. NTP Radioisotopes SOC Ltd, a subsidiary of the Necsa, conducts its sophis-

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2013ENERGY_NEW2.indd 137 2014/10/29 4:41 PM ticated operations from the Pelindaba nuclear • the production of medical isotopes facility near Pretoria. NTP exports its products • applied chemistry with an emphasis on to nearly 60 countries on fi ve continents and uranium chemistry maintains world-class quality (ISO 9001:2008), • the application of radiation and nuclear tech- safety and regulatory compliance systems nologies and performance. NTP is a world leader in • aspects of the nuclear fuel cycle, including the production and supply of radiochemicals, waste. in particular I-131 and Mo-99, the latter being The corporation is also responsible for: the most important isotope for devices used • operating the Safari-1 research reactor to in the practice of diagnostic nuclear medicine. undertake nuclear science research and The last three are aligned with the integrated development and to provide irradiation resource plan for electricity 2010 to 2030, and services for the production of medical radioi- requirements for the building of new nuclear sotopes power reactors. These requirements include the • decommissioning and decontaminating nu- manufacturing of specialised components and clear facilities the commercial exploitation of the corporation’s • implementing the Nuclear Non-Proliferation strategic fl uorine technology platform. Treaty and the Comprehensive Safeguards • Nersa’s budget for 2013/14 was R252,8 million Agreement with the International Atomic • NNR’s budget was R168,7 million Energy Agency (IAEA); the Africa Regional • Sanedi’s budget was R206,1 million. Cooperative Agreement for Research, Deve- lopment and Training related to Nuclear Role players Science and Technology; and the Pelindaba National Energy Regulator of South Treaty. Africa In the medium term, Necsa will focus on: Nersa is the regulatory authority for electricity, gas • radiation research, products and services and petroleum. In March 2013, Nersa granted • nuclear fuel research and development in Eskom an 8% tariff increase annually over a period relation to low-enriched uranium research- of fi ve years while also welcoming the differen- reactor production facilities tiated increase that will cushion the poor. • nuclear component manufacturing to support future nuclear programmes and future power National Nuclear Regulator reactors The NNR is responsible for the protection of • contributing to higher industrial manufacturing people, property and the environment against standards and sustainable job creation. nuclear damage. South African National Energy Nuclear Energy Corporation of Development Institute South Africa Sanedi is mandated to stimulate innovation in Necsa is a wholly state-owned company. Its energy research and development, transform functions are to: the gender and race profi le of researchers in • undertake and promote research into nuclear the sector, and improve South Africa’s competi- energy and radiation sciences and technology tiveness in energy research internationally. • process source, special nuclear and restricted material including uranium enrichment Central Energy Fund • collaborate with other entities. The CEF’s spending focus over the medium term The Nuclear Energy Act of 1999 provides for the is on accelerating spending on infrastructure, commercialisation of nuclear and related products as well as the development of renewable and and services, and delegates specifi c responsi- alternative energy sources. Projects incorporated bilities to Necsa, including the implementation over the medium term include Ikhwezi, with a and execution of national safeguards and other total approved budget of R11,2 billion; Sabre Oil international obligations. The Nuclear Energy and Gas in the Jubilee Production Field, with a Policy of 2008 elaborated on Necsa’s mandate total budget of R4 billion; and Irene and other relating to research and development and nuclear downstream acquisitions, with a total estimated fuel-cycle responsibilities. cost of R14 billion. Necsa’s main function is to serve as the anchor for nuclear energy research and development, South Africa’s Koeberg nuclear plant is the only nuclear power-generating facility on the African continent. The and innovation in South Africa. The research government plans to build new plants in the country with a focuses mainly on nuclear technology applica- total capacity of 9 gigawatts (GW) and it is expected to be tions such as: 9,6 GW by 2035.

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Other projects to be undertaken are Project Integrated energy centres (IECs) Mthombo, and projects in Venezuela and Government has identifi ed access to energy Equatorial Guinea. Project Mthombo is a for people in areas of greatest need as an PetroSA initiative to build a world-class crude urgent requirement to facilitate socio-economic refi nery in the Coega Industrial Development development. One of the many approaches Zone (IDZ) in the Eastern Cape. that the DoE has developed to address energy The initiative in Equatorial Guinea is a drilling poverty through deliberate interventions in the project, while the project in Venezuela relates to second economy is the IECs programme. the acquisition of a mature fi eld opportunity. The department is partnering with relevant This accounts for the strong growth in stakeholders, the private sector, municipalities acquisition of assets over the medium term. and communities in establishing the IECs. The CEF researches, fi nances, develops and As a result, this is a public-private partnership exploits appropriate energy solutions across venture. the spectrum of energy sources to meet South An IEC is a one-stop energy supplier, owned Africa’s future energy needs. and operated by the community cooperative and It is also mandated to manage the Equalisation organised as a community project. It provides Fund, which collects levies from the retail sales energy solutions to communities; access of petroleum products to eliminate unnecessary to affordable, safe and sustainable energy fl uctuations in the retail price of liquid fuel and to services; information and awareness on how give tariff protection to the synthetic fuel industry. to handle and use energy services such as The objectives of the CEF are to: paraffi n and LPG and small, medium and micro • manage the energy business for the benefi t of enterprise development through partnerships all South Africans with key stakeholders, such as the National • play an active role in the governance and Development Agency and the Department of planning of all its subsidiaries and coordi- Trade and Industry. nating the long-term future of the group The six IECs are: Kgalagadi and Moshaweng in • improve security of energy supply by diversi- Kuruman, Northern Cape; Eshane in Greytown, fying sources, and building and managing KwaZulu-Natal; Caba Mdeni in Matatiele and strategic energy stocks and energy infra- Mbizana, Eastern Cape; Mutale in Thohoyandou, structure Limpopo; and Ratlou in Makgobistad, North West. • develop and invest in renewable and alternative energy sources and in energy Sasol effi ciency Sasol is an international integrated energy and • develop human capacity and invest in relevant chemical company that leverages the talent and research and development expertise of more than 34 000 people working • manage and optimally exploit local strategic in 37 countries. The company develops and energy and related resources commercialises technologies, and builds and • mitigate against environmental impacts and operates world-scale facilities to produce a maximise sustainable development. range of product streams, including liquid fuels, high-value chemicals and low-carbon electricity. In August 2013, Russia’s State Nuclear Power Corporation, Sasol is expanding internationally based on a Rosatom, which is planning to bid for the construction of unique value proposition. The company is listed nuclear power plants in South Africa, decided to start train- on the JSE Limited in South Africa and on the ing nuclear industry specialists for South Africa. New York Stock Exchange in the United States of Rosatom signed a memorandum of cooperation with the North-West University, the only school of higher learning America (USA). that offers training in nuclear technologies. The intention The company is one of the world’s largest is to explore the potential for future collaboration, ranging producers of synthetic fuels. It mines coal in from education to specifi c technical projects in nuclear South Africa and produces natural gas and engineering, hydrogen technologies and energy. condensate in Mozambique, oil in Gabon and The memorandum promotes the development of techni- shale gas in Canada. cal education in South Africa and the possibility to fi nd out Sasol continues to advance its upstream oil more about modern Russian technologies. Joint research and gas activities in West and southern Africa, and scientifi c developments will provide a solid founda- the Asia Pacifi c region and Canada. In South tion for the development of Rosatom’s business relations in South Africa. At the end of December 2013, Rosatom Africa, Sasol refi nes imported crude oil and signed a memorandum of understanding with South Africa sells retail liquid fuels through its network of to provide end-to-end nuclear plant delivery and operation. some 400 service stations and supplies gas to industrial customers. It also supplies fuels to other licensed wholesalers in the region.

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2013ENERGY_NEW2.indd 139 2014/10/29 4:41 PM Through Sasol Synfuels International, Sasol is nuclear decision, which government was intent pursuing international opportunities to commer- on making before the end of 2013/14. cialise its gas-to-liquids (GTL) and coal-to-liquids South Africa has opted for a phased decision- (CTL) technology. making approach under the direction of the Sasol’s energy cluster focuses on the manufac- NNEECC, which is chaired by President Zuma. turing, refi ning and marketing of automotive and It was previously overseen by the Deputy industrial fuels, oils and gas. President. With partners in China, the company launched The Minister of Energy said China, France, a feasibility study into a CTL plant with a potential Korea and the USA would be visited to assist capacity of around 80 000 barrels per day. in determining South Africa’s approach to the End products include petrol; diesel; jet fuel; introduction of new nuclear energy capacity, over fuel oil; illuminating paraffi n; liquefi ed petroleum and above that which already exists at Koeberg, in gas; pipeline gas; lubricants and greases; the Western Cape. bitumen and naphtha. The NNEECC includes the ministers of energy, Sasol’s local energy cluster comprises the public enterprises, economic development, trade following: and industry, water affairs and environment, • Sasol Oil, which handles crude oil refi ning fi nance and mineral resources, with the DoE activities as well as the blending and marketing serving as a secretariat. of liquid fuels and lubricants. A nuclear energy technical committee, led • Sasol Gas, which supplies pipeline gas to by the relevant directors-general, reports to the industrial and commercial customers. ministers. Senior offi cials lead a nuclear energy • Sasol Mining, which produces about working group incorporating various working 40 million tons (Mt) of saleable coal a year. subgroups. • Sasol Synfuels, which operates the coal-based They have the task of examining everything synfuels manufacturing facility at Secunda, in from fi nance and funding to security and safety. Mpumalanga. Southern African Power Pool (SAPP) Eskom The SAPP allows the free trading of electricity Eskom generates, transmits and distributes between SADC member countries, providing electricity to industrial, mining, commercial, South Africa with access to the vast hydropower agricultural and residential customers and potential in the countries to the north, notably redistributors. the signifi cant potential in the Congo River (Inga Additional power stations and major power Falls). lines are being built to meet rising electricity The SAPP has made it possible for members demand in South Africa. to delay capital expenditure on new plants due Eskom will continue to focus on improving to the existence of interconnections and a power and strengthening its core business of pool in the region. electricity generation, transmission, trading and SAPP member countries are Angola, distribution. Botswana, the Democratic Republic of Congo Eskom buys electricity from and sells it to the (DRC), Lesotho, Malawi, Mozambique, Namibia, countries of the Southern African Development South Africa, Swaziland, Tanzania, Zambia and Community (SADC). Future involvement in Zimbabwe. African markets outside South Africa – the SADC countries connected to the South African grid and the rest of Africa – is limited to those Other role players projects that have a direct impact on ensuring • iGas is the offi cial state agency for the security of supply for South Africa. development of the hydrocarbon gas industry In September 2013, President Jacob Zuma in southern Africa. offi cially re-opened Eskom’s Grootvlei power • PetroSA is a government-owned oil and station, which will contribute towards meeting gas company mandated by Cabinet to lead the country’s energy demand requirements by developments in gas infrastructure in the providing maintenance space for other power Western Cape. stations. • The Petroleum Agency of South Africa promotes the exploration and exploitation of National Nuclear Energy Executive natural oil and gas, both onshore and offshore, Coordination Committee (NNEECC) in South Africa and undertakes the necessary The DoE undertook study tours to a number of marketing, promotion and monitoring of key nuclear-energy jurisdictions ahead of a fi nal operations.

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• Petronet owns, operates, manages and main- • upgrading the existing refi neries; allowing tains a network of 3 000 km of high-pressure signifi cant expansion of one or more of the petroleum and gas pipelines on behalf of existing refi neries government. • importing refi ned products • building a refi nery in Angola or Nigeria and Energy resources buying a share of the product of that refi nery. South Africa produces about 5% of its fuel needs The least risky and most cost-effective option is to from gas, about 35% from coal and about 50% continue importing a share of refi ned products until from local crude oil refi neries. About 10% is the country reaches a stage where it can absorb imported from refi neries elsewhere in the world. the output of either a new refi nery or a major The country has a sizeable capital stock and upgrade of an existing refi nery. South Africa will, management capacity to produce fuel from gas. therefore, continue to import, taking a decision The DoE’s Hydrocarbons and Energy Planning on the next step by 2016/17. Timing is important, Branch is responsible for coal, gas, liquid fuels, given lead-time requirements to develop a new energy effi ciency, renewable energy and energy refi nery (estimated at about eight to 10 years) that planning, including the energy database. would be expected to produce output by 2025 to The White Paper on the Promotion of 2028 (if no other options are implemented). Renewable Energy and Clean Energy Other issues related to liquid fuels include: Development (2002) commits South Africa to • clean fuel standards producing 5% of the country’s energy supply • vehicle carbon tax from renewable energy sources by 2013. • electric vehicles • use of public transport. Liquid fuels The South African liquid-fuels sector presents The recommendations made in the Energy, several opportunities for investors throughout Security Master Plan for Liquid Fuels, approved the petroleum value chain. by Cabinet in 2007, continue to be implemented, A key feature of the South African liquid-fuels with the focus primarily on addressing short to sector is that most transport fuel is produced medium-term infrastructural constraints within in the coastal areas, about 68% of which is the liquid fuels sector. consumed in Gauteng. This requires investments South Africa faces a number of specifi c in storage and distribution facilities for the supply challenges in the liquid fuels sector: of petroleum products at the point of need. Gas stocks for the existing gas-to-liquids plant The construction of the new multi-product from offshore fi elds are declining. South Africa pipeline, which was funded under the department should source suffi cient feedstocks to support through Transnet, was completed. The new and increase production. 555-km pipeline, which has a 70-year design life, The best option to secure feedstocks would runs from Durban to Gauteng. It can transport be to invest in gas fi elds close or adjacent to jet fuel, 93-grade and 95-grade unleaded petrol, existing fi elds in the southern Cape, as marginal low-sulphur diesel and ultra-low-sulphur diesel. costs are lower and it will allow for further The trunk pipeline, with pump stations, ter- exploitation of existing fi elds, maximising use of minals and a 160-km inland pipeline network, existing capital. came into operation at the end of 2013, PetroSA is best placed to lead this petroleum increasing capacity from the existing 4,4 billion refi nery investment, given its existing capital and litres to 8,4 billion litres. management experience. These mega infrastructural projects and In the longer term, the Mossel Bay Refi nery related support infrastructure require a close could use either liquefi ed natural gas imports or and ongoing partnership between state-owned Karoo shale gas, if it becomes available. Refi ning enterprises and private companies. capacity has run out and South Africa now has to import a share of its refi ned fuel needs. There Oil and natural gas are fi ve options to deal with this, namely: South Africa has very limited oil reserves. About • building a new oil-to-liquid refi nery (such as 60% of its crude oil requirements are met by the proposed Mthombo Project in Coega) imports from the Middle East and Africa. • building a new CTL refi nery Refi ned petroleum products such as petrol, diesel, residual fuel oil, paraffi n, jet fuel, aviation South Africans achieved an average of 629 MW reduction gasoline, LPG and refi nery gas are produced by in their electricity usage during Earth Hour in March 2013. the following methods: The campaign encourages individuals and businesses to • crude oil refi ning (oil refi neries) lead energy-smart lifestyles, to save power, save the planet and save their pockets. • CTL and GTL fuels (Sasol) • natural GTL (PetroSA). 141

2013ENERGY_NEW2.indd 141 2014/10/29 4:41 PM The wholesale and retail markets for petroleum The centre can also be used daily to monitor products in South Africa are subject to a set of and guide drilling operations for PetroSA’s gas government controls. Government regulates drilling project Ikhwezi located off the East Coast wholesale margins and controls the retail price to sustain its GTL refi nery in Mossel Bay. of petrol. The industry has entered into product- Using data fed back from drilling bits on such exchange agreements to serve different markets. things as sand or rock type or the resistivity of Together, these controls provide for access the substance being drilled, offi cials will also be to fuel throughout the country and protect able to adjust where exactly to drill, compare consumers, while rendering a reasonable return data from old drilling sites and make changes to on investment to the oil industry and enhancing the angle or direction of its active drill bits. opportunities for employment. This is particularly useful to the Ikhwezi project Refi neries and Sasol produce LPG and where horizontal drilling is taking place 1,5 km illuminating paraffi n (kerosene). Most LPG is along the basin at a depth of four kilometres from consumed in the country and the rest is used in the surface. refi neries as fuel and/or exported regionally. The department views natural gas as an Alternative gas resources evolving energy source, despite the country’s Experiments are underway to assess the limited gas reserves. There are projects potential for mining coal-bed methane gas, underway to explore the potential of importing although the overall potential of this resource for natural gas, both as liquid natural gas and producing electricity in South Africa is probably compressed natural gas. less than previously thought. To this end, the Integrated Resources Plan Underground coal gassifi cation technology is (IRP) was developed, which incorporates gas also being developed. among alternative energy sources for electricity According to the USA Energy Information generation. The IRP presents a 20-year view Administration, technically recoverable shale- on South Africa’s energy mix that seeks to gas resources in South Africa form the fi fth largest balance growth in demand with South Africa’s reserve globally. Drilling more wells is necessary commitments to reduce its dependence on coal to confi rm recoverable reserves. and to lower climate-changing emissions. Even if economically recoverable resources are The IRP aims to: much lower than currently estimated, shale gas as • improve the country’s global competitiveness a transitional fuel has the potential to contribute a • support job creation very large proportion of South Africa’s electricity • improve the management of natural resources needs. • reduce and mitigate greenhouse gas (GHG) In investigating the potential for accessing emissions in line with reduction targets. shale gas in the Karoo Basin in the Northern Global energy company GDF Suez announced Cape, Cabinet decided that only normal explo- in June 2013 that it would be proceeding with ration would take place until a proper and rele- two open-cycle gas-turbines in South Africa. vant regulatory framework had been put in place, GDF Suez holds a 43% equity interest in and until government was satisfi ed that it could the project, Investec, 34,5%, and Kagiso Tiso deal adequately with the consequences of the Holdings, 20%, with the remaining 2,5% to technique known as hydraulic fracturing. be allocated to a community trust. In addition Cabinet established a task team to evaluate to investing equity in the project, Investec, the use of a hydraulic fracturing technique in jointly with Nedbank, has underwritten about the extraction of shale gas. This task team R1,5 billion in debt required for the development comprised representatives from the departments of the wind farm. of environmental affairs, water affairs, science In August 2013, South Africa’s state-owned and technology, energy, mineral resources, the oil and gas company PetroSA launched a Petroleum Agency of South Africa, the Council R15-million geoscience collaboration, visuali- for Geoscience, Square Kilometre Array South sation and technology centre, which will prove Africa, the Water Research Commission and a boost to gas exploration and drilling. Geosci- Eskom. entists, engineers and technical offi cials will be The task team appointed a working group of able to collaborate in the Ulwazi (Knowledge) experts that brought on board technical advisers Collaboration and Visualisation Centre, which is and academics from the universities of the Free equipped with various screens and computers State and of the Western Cape, who served as a that can display 3D imaging of subsurface reference group. formations. This will make it possible to take This team was tasked with evaluating the better informed and faster decisions when potential environmental risks posed by the use drilling for gas. of hydraulic fracturing as a method of extracting 142

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shale gas, and the negative and positive social South Africa’s coal is obtained from collieries and economic impacts of shale gas exploitation that range from among the largest in the world to as identifi ed in the Karoo Basin. small-scale producers. Cabinet approved the task team’s report and About 51% of South African coal mining is lifted the moratorium on processing applications done underground, while the rest is produced by for exploration in the Karoo Basin on condition of open-cast methods. the appropriate regulations, controls and coordi- The coal-mining industry is highly concen- nation systems being established, which were in trated, with fi ve companies accounting for 85% place by the end of 2013. of saleable coal production. There will be ongoing research, facilitated by Production is concentrated in large mines, relevant institutions, to develop and enhance with 11 mines accounting for 70% of the output. scientifi c knowledge, including but not limited South African coal for local electricity production to the geo-hydrology of the prospective areas, is among the cheapest in the world. The benefi - methodologies for hydraulic fracturing in South ciation of coal, particularly for export, results in Africa and environmental impact. more than 65 Mt of coal discards being produced every year. Electricity About 21% of the run-of-mine coal produced By 2013, nearly 88% of the population had is exported, and 21% is used locally (excluding access to electricity. power-station coal). The rest is not saleable and However, electricity demand is expected to is discarded. double over the next 20 years as government The remainder of South Africa’s coal produc- implements its Programme of Action, including the tion feeds the various local industries: Infrastructure Development Programme, to put the • 62% is used for electricity generation country’s economy onto a higher growth path. • 23% for petrochemical industries (Sasol) To this end, more than R340 billion will be • 8% for general industry spent on Eskom’s New Build Programme. This • 4% for the metallurgical industry (Mittal) will bring on line a further 11 641 MW of new • 4% is purchased by merchants and sold locally capacity in the short term, adding to Eskom’s or exported. existing 40 000 MW of capacity. The key role played by South Africa’s coal Government’s goal is to ensure that 92% of reserves in the economy is illustrated by the all South African households have electricity by fact that Eskom ranks fi rst in the world as a 2014. steam coal user and seventh as an electricity generator. Sasol is the largest coal-to-chemicals Coal producer in the world. South Africa’s indigenous energy-resource base is dominated by coal. Internationally, coal is Renewable and alternative fuels the most widely used primary fuel, accounting The DoE has the sole mandate to promote for about 36% of total fuel consumption of the the use of renewable energy, initiate projects world’s electricity production. to advance the use of renewable energy and By international standards, South Africa’s coal annually monitor the precise quantity of energy deposits are relatively shallow with thick seams, produced from renewable energy. making them easier and cheaper to mine. At the The White Paper on Renewable Energy present production rate, it is estimated that there (2003) has set a target of 10 000 GWh of more than 50 years of coal supply left. energy to be produced from renewable energy Coal provides for about 65% of South Africa’s sources (mainly from biomass, wind, solar and primary energy needs. This is unlikely to change small-scale hydro) by 2013. signifi cantly in the next two decades, owing to Following Cabinet approval of the White the relative lack of suitable alternatives to coal Paper, the DoE proceeded with the development as an energy source. Many of the deposits can of its renewable energy strategy. be exploited at extremely favourable costs and, The White Paper’s target of 10 000 GWh as a result, a large coal-mining industry has renewable energy contribution to fi nal energy developed. consumption by 2013 was confi rmed to be In addition to the extensive use of coal in economically viable with subsidies and carbon the domestic economy, about 28% of South fi nancing. Africa’s production is exported, mainly through Achieving the target will: the Richards Bay Coal Terminal, making South • add about 1 667 MW of new renewable energy Africa the fourth largest coal exporting country capacity, with a nett impact on gross domestic in the world. product as high as R1,071 billion a year

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2013ENERGY_NEW2.indd 143 2014/10/29 4:41 PM • create additional government revenue of the CEF are the main investors in the sector, in R299 million South Africa. The IDC, in particular, is involved in • stimulate additional income that will fl ow all four of South Africa’s current biofuel projects. to low-income households by as much as The biofuels sector has strong linkages to R128 million, creating just over 20 000 new jobs agriculture, manufacturing and distribution, and • contribute to water savings of 16,5 million has the potential to create substantial numbers kilolitres, which translates into a R26,6 million of labour-intensive jobs in the agriculture sector saving. in particular. In addition, second-generation Renewable energy sources, other than biomass biofuel technology will also contribute to South (the energy from plants and plant-derived Africa meeting its renewable energy targets materials) have not yet been exploited optimally sustainably. in South Africa. Government has committed to a 2% blend The vision of the DoE is to make adequate target for biofuels inclusion in the national fuel and affordable energy available to developing supply. If South Africa increased its blending communities through a mix of providing target to 10%, some 125 000 direct jobs could alternative energy resources at a reasonable be created, many of which would be based in cost. The aim is to satisfy the basic needs of the rural areas, where poverty is widespread. developing sector and at the same time promote South Africa set the beginning of October 2015 the effective use of South Africa’s vast alternative as the date from which fuel producers would energy sources. have to blend diesel and petrol with biofuels. To monitor progress towards the White Paper’s Fuel producers would be required to blend a target of producing 10 000 GWh of energy from minimum of 5% biodiesel in diesel and between renewable energy sources by 2013, a monitoring 2% and 10% of bioethanol in petrol. and evaluation project has been set up. Biofuels are expected to reduce the country’s Every year, the department collects data on reliance on imported fuel. renewable energy contributions from relevant The biofuels industry in South Africa, the stakeholders to assess or evaluate progress continent’s biggest agricultural producer, has towards this goal. been held back by an inadequate regulatory The target can be achieved mainly from the regime and concerns that biofuels would hurt production of renewable energy by grid, off-grid food security and affect food prices. (a source of energy not connected to a grid) and Canola, sunfl ower and soya are feedstock for biofuel facilities. This renewable energy will be biodiesel, while sugarcane and sugar beet are used for power generation to the grid and for feedstock for ethanol. water heating purposes. The Government said maize, South Africa’s The 10 000 GWh 2013 target is equivalent staple food, could not be used in the production to about 5% of all electricity produced in South of biofuels to ensure food security and control Africa at present. This is equivalent to replacing high prices. two 660-MW units of Eskom’s combined coal-fi red power stations. Hydropower Energy from water can be generated from Biofuel waves, tides, waterfalls and rivers and will never The biofuel sector has grown rapidly interna- be depleted as long as water is available. South tionally. However, South Africa has remained Africa has a mix of small hydroelectricity stations only a peripheral participant in the sector’s and pumped-water storage schemes. growth. There are several reasons for this: Pumping uses some electricity, but this is • Being a relatively new sector, there are various done in off-peak periods. During peak hours, complex regulatory barriers to be fi nalised. when extra electricity is needed, the water is • The global economic crisis and the resultant released through a turbine that drives an electric reduction in oil prices reduced the commercial generator. Peak hours are usually from 06:00 to viability of some investments and negatively 08:00 and 18:00 to 20:00. affected investor sentiment. South Africa used to import electricity from • National debates focus on food-versus-fuel the Cahora Bassa hydropower station in arguments and the potential to create biofuels Mozambique and will do so again once the using crop surpluses. transmission line is repaired. There is also South Africa has signifi cant potential to develop the potential to import more hydropower from a commercially viable biofuels sector, notwith- countries such as Zambia, Zimbabwe and DRC. standing the country’s water-poor status. The If this happens, South Africa could become less Industrial Development Corporation (IDC) and dependent on coal-fi red power stations.

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However, the generation of hydro-electricity is Africa, is well endowed with sunshine all year not without environmental effects; for example, round. The annual 24-hour global solar radiation large areas of land may be fl ooded when dams average is about 220 W/m2 for South Africa, are built, which will disrupt wildlife habitats and compared with about 150 W/m2 for parts of the residential and farming areas. USA, and about 100 W/m2 for Europe. Irrespective of the size of its installation, any This makes the local resource one of the hydropower development will require author- largest in the world. The solar resource is the isation in terms of the National Water Act 1998, most readily accessible in South Africa. It lends (Act 36 of 1998). itself to a number of potential uses. The Eastern Cape and KwaZulu-Natal are The launch of the solar energy farm, the fi rst endowed with the best potential for the renewable energy project in North West took development of small, i.e. less than 1 MW, place in May 2013. Located at Buffelspoort, hydropower plants. These plants can either be RustMo1 Solar Farm is a 7 MW solar photo- stand-alones or in a hybrid combination with voltaic (PV) power-generation facility, which will other renewable energy sources. Advantage supply power to the Eskom grid. can be derived from the association with other The project includes the installation of 11 uses of water – such as water supply, irrigation inverters and 29 808 PV solar modules, with and fl ood control – which are critical to the future a step-up transformer to connect to the 88kV economic and socio-economic development of substation. The farm will produce 244 643 MWh South Africa. of energy over the 20-year contract period. Ocean energy could potentially be derived Commercial operations at the farm started in from the various characteristics of the sea. For November 2013. example, the rise and fall of the waves could be The development of the farm was awarded converted into hydraulic pressure by mechanical to Momentous Energy, a South African black- compression devices. owned development company. Such pressure could drive a turbine generator Fifteen projects are being developed under to produce electricity, while the tidal variation, the IPPPP programme with the RustMo1 solar sea current and different thermal layers in the PV plant being the fi rst to be approved. ocean could also be used. By the start of 2014, other solar PV projects The main reason why this energy resource is ranging from fi ve to 340 MW earmarked for not being harnessed is that there is no existing Brits; Christiana; Taung; Rustenburg; Vryburg; reliable technology for generating electricity from Mahikeng; Tswaing and Orkney were at various the sea. stages of the bidding and planning process for Eskom is continuing resource surveys of the implementation. Agulhas Current on the east coast of South In August 2013, Spanish renewable energy Africa and of wave energy, in partnership with group Abengoa completed construction of the the Department of Environmental Affairs and the tower section of South Africa’s fi rst concentrating Bayworld Centre for Research and Education. solar power (CSP) plant, one of three such plants Results have proved the technical feasibility under development in the semi-desert Northern of extracting signifi cant large-scale renewable Cape that will add 200 MW of renewable energy energy from the current. to the country’s national grid. The Bramhoek and Bedford dams have both Abengoa is one of 28 IPPs that signed contracts been completed and the R23-billion Ingula with the South African Government late in 2012. Pumped Storage Scheme was implemented The fi rst round of a programme will see an initial during 2013/14. By the end of 2013, some 1 400 MW of renewable energy being added 2 400 MW of capacity had been awarded to to South Africa’s energy mix, while bringing an renewable projects. estimated R47 billion in new investment into the According to the IRP’s 20-year projection country. on electricity supply and demand, about 6% The DoE aims to bring 17 800 MW from of electricity generated in the country will be renewable sources online by 2030. required to come from hydro resources. Abengoa, in partnership with the IDC and community trusts in Upington and Pofadder, is Solar power building Khi Solar One, a 50-MW solar tower Most areas in South Africa average more than plant near Upington, and KaXu Solar One, 2 500 hours of sunshine per year, and average a 100-MW parabolic trough solar plant near daily solar-radiation levels range between Pofadder. According to the Southern Africa Solar 4,5 kWh/m2 and 6,5 kWh/m2 in one day. The Thermal and Electricity Association, the two southern African region and in fact the whole of power stations will leverage investment of over

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2013ENERGY_NEW2.indd 145 2014/10/29 4:41 PM R10 billion and together will generate almost 500 Wind power GWh clean solar electricity a year. The Darling Wind Farm in the Western Cape has According to Abengoa, the two plants will four wind turbines, which can supply 5,2 MW. reduce South Africa’s CO₂ emissions by about All the electricity produced will be sold to Cape 498 000 t a year, while creating between 1 400 Town as part of a long-term power agreement and 2 000 construction jobs and about 70 with the city. The facility consists of four German- permanent operation jobs, as well as numerous designed wind turbines. The structures are 50 m indirect jobs to fulfi l the needs required by the high with the blades spanning 31 m. Each turbine plant and its construction. can produce 1,3 MW, bringing the total output of Gauteng plans to spend R11 billion installing the wind farm to 5,2 MW. solar panels on all its state-owned buildings in In November 2013, construction of the wind the near future. turbine manufacturing facility was well on its way In September 2013, Norway-based Scatec to being completed at the Coega IDZ. Solar announced that it had completed its 75-MW The Wind Tower Factory Project, which was solar PV power plant in Kalkbult in the Northern more than 60% complete by the start of 2014, Cape three months ahead of schedule, making is a joint initiative between the DCD Group, the it the fi rst project under South Africa’s renewable IDC and the Coega Development Corporation. energy programme for IPPs to be connected to Construction of the facility, located in Zone 3 the grid and operational. of the Coega IDZ, started in March 2013, and Scatec Solar was also one of 28 IPPs that was expected to be completed before the end of signed contracts with government in the fi rst round February 2014. It would be a fi rst of its kind for of a programme that would see an initial 1 400 MW the Eastern Cape. of renewable energy being added to South Africa’s Once completed, the DCD wind tower energy mix, while bringing an estimated R47 billion manufacturing facility will produce complete in new investment into the country. tubular steel towers, which will entail manufac- The DoE aims to bring 17 800 MW from turing the round steel tower sections from fl at renewable sources online by 2030. steel, welding fl anges and assembling the inner Scatec Solar has been awarded three projects parts of the towers. The wind turbine towers with a total capacity of 190 MW. Construction of will vary in size, ranging between 80 and 120 its next two projects, located in the Northern and metres, with individual sections weighing 40 to Eastern Cape, was to be fi nished by mid-2014. 60 t. According to Coega the project has created The completed Kalkbult plant consists of more 250 temporary jobs, with more than 90% of the than 312 000 solar panels mounted on 156 km workers coming from the Nelson Mandela Bay of substructure, inverters, transformers and a region. substation. Kalkbult’s electricity will be sold to Eskom Hybrid systems through a 20-year purchase agreement. Accord- Hybrid energy systems are a combination of ing to Scatec Solar, the annual production of two or more renewable energy sources such 135-million kWh will cover the electricity demand as photovoltaic, wind, micro-hydro, storage of 33 000 households, while reducing the batteries and fuel-powered generator sets to country’s CO₂ emissions by almost 115 000 tons provide a reliable off-grid supply. per year. There are two pilot hybrid systems in the South Africa has some of the best conditions Eastern Cape at the Hluleka Nature Reserve for solar power in the world, and the Kalkbult on the Wild Coast and at the neighbouring plant’s output of 135-million kWh a year will Lucingweni community. benefi t both the region and the local community, The Hluleka hybrid mini-grid system consists in which it operates. of two proven 2,5-kW wind generators and The De Aar Solar Power Project installed the three Shell solar PV module arrays fi tted with last of around 160 000 solar panels in September 56 100-watt PV modules wired in series (total 2013. The project employed some 500 people, 10,6 kW). An integrated design approach, which mostly from the De Aar community and the staff resulted in a joint energy, water purifi cation and installed around 3 000 panels per day during telecommunication system, was followed. The the peak construction phase. The De Aar plant, energy system uses renewable energy, solar which will produce 45,6 MW of energy, is meant water heaters and LPG. One diesel generator is to begin operations by April 2014, but it is ahead retained for back-up supply. The Hluleka system of schedule and was expected to come online has been in operation since June 2002. before the target date. The Lucingweni hybrid system consists of 50-kW solar PV panels and 36-kW wind

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generators serving 220 dwellings (four lights • construction per dwelling, radio, television, mobile phone • plant-operation charger, street lighting, telecommunications and • skills for the relevant government departments water pumping). • regulatory skills • supporting industry skills Tradable renewables • decommissioning and rehabilitation The White Paper on Renewable Energy Policy • radioactive waste management. proposed that tradable renewable energy The Nuclear Fuel Cycle Strategy for the benefi - certifi cates be investigated to fi nd out whether ciation of uranium resources is a key factor with these could be one of the funding streams to special focus on: support the implementation of the renewable • securing uranium mineral resources energy programme in South Africa. This would • developing a uranium conversion plant be in addition to other funding options, i.e. sale • developing a uranium enrichment plant of physical electrical power through a power • developing a fuel fabrication plant. purchase agreement into the electrical grid at Eskom is investigating the possibility of prevailing electricity market prices and certifi ed generating up to 20 000 MW of new nuclear emission reductions trading through the clean power capacity by 2025. This will entail recapi- development mechanism (CDM), a UN framework talising certain nuclear agencies, fi nancing mechanism that encourages developing countries others and setting up new ones. to implement emission-reduction projects to earn The main organisations directly involved in the certifi ed emission reductions. nuclear sector fulfi l the following functions: A tradable renewable energy certifi cate is an • The Department of Health’s Directorate: electronic record that verifi es the origin of energy Radiation Control issues licences for Group 3 by a registered renewable energy entity. It is hazardous substances (electronic product- also referred to as a green certifi cate or green generating X-rays, other ionising beams, tag. Tradable renewable energy certifi cates electrons, neutrons or other particle radiation or are based on separating the various attributes non-ionising radiation) and Group 4 hazardous of renewable resource-based energy provision substances (radioactive material outside a from the physical energy carrier, electric or nuclear installation, which does not form part of otherwise. It is another revenue stream for or is used or intended to be used in the nuclear renewable energy IPPs and its major advantage fuel cycle, and which is used or intended to is that, apart from potential extra income, certif- be used for medical, scientifi c, agricultural, icates can be traded worldwide and separately commercial or industrial purposes). from the electricity grid infrastructure. • The Koeberg Nuclear Power Station is responsible for about 6% of total electricity Nuclear generation and is owned by Eskom. Nuclear energy is set to play a vital role in • The iThemba Laboratory for Accelerator- South Africa’s IRP implementation process. Based Sciences brings together scientists The success and deployment of nuclear power working in the physical, medical and biological requires public acceptance, and public education sciences. The facilities provide opportunities is the most important topic surrounding nuclear for modern research, advanced education, energy. the treatment of cancers and the production of Proper safety measures were put in place and unique radioisotopes. overseen by the appropriate expert authorities. • The Nuclear Fuels Corporation of South Africa As a member of the IAEA, South Africa is obliged is responsible for uranium-ore refi nement and to comply with the relevant guidelines and export. safeguards on nuclear plants. The nuclear sector in South Africa is mainly Programmes and projects governed by the Nuclear Energy Act, 1999 The department participates in the Women in (Act 46 of 1999) and the NNR Act of 1999. The Nuclear South Africa Programme. Government DoE administers these Acts. is expected to accelerate preparatory work to The Department of Health administers ensure greater reliance on nuclear energy and the Hazardous Substances Act, 1973 (Act 15 of other renewable energies. The department has 1973), related to Group 3 and Group 4 hazardous introduced initiatives such as the South African substances. Young Nuclear Professionals Society and the Skills development strategies and acquisition Women in Nuclear South Africa Programme and retention of the relevant skills to support to promote the industry among historically the nuclear programme will be addressed in the disadvantaged people. following categories: 147

2013ENERGY_NEW2.indd 147 2014/10/29 4:41 PM Wind Resource Map its reactors were vulnerable to natural causes The DoE launched the country’s fi rst Large like tsunamis. As a member of the agency, the Scale High Resolution (250 m) Wind Resource country had to meet several milestones. Map in July 2013. It is expected that the map is In February 2013, the agency ended the peer going to be a useful instrument in government’s review mission to South Africa. The agency had planning for the effi cient use of the country’s never before visited a country with an existing wind resources. nuclear programme. The data is based on the Verifi ed Numerical In September 2013, the DoE launched the Wind Atlas for South Africa (WASA), which was public-consultation phase for the formulation of launched in March 2012. It includes important an Integrated Energy Plan (IEP) for South Africa, information such as ground surface terrain which it says should be published during the effects that determine the local wind climate course of 2014. and, in turn, can be used to identify high-yielding In July 2013, Cabinet endorsed a draft Integrated wind development zones; and the estimation of Energy Planning Report, which provides the basis available wind energy and capacity which can be for the current set of consultations. used by prospective wind farm developers of all The publication of an IEP is a requirement sizes in their planning process. of the National Energy Act of 2008, but South The Wind Resource Map offers important Africa has hitherto not had a fully consulted IEP benefi ts for planners, policy makers and industry. as envisaged in the legislation, despite having These benefi ts include cost and timing savings as published an Integrated Resource Plan for the viability, in terms of wind speed, of a potential electricity early in 2011. site can be predicted with known and traceable accuracy, while it also levels the playing fi eld Renewable Energy Independent Power between small or large industry players to identify Producer Procurement (REIPPP) and develop project sites for wind farms. Bidding Programme It will also assist government in calculating the This programme is an indication that government potential yield of wind energy resources, among wants to create space for IPPs to also generate other things. electricity in the country. By 2014, under the The Large Scale High Resolution Wind REIPPP the department is expected to enter Resource Map is available to the public from the Window 3 having already selected bidders for a WASA’s online portal http://wasadata.csir.co.za/ total of 2 614 MW to be added to the country’s wasa1/WASAData. power grid by 2016. The purpose of the WASA is to improve South Africa wants to procure 3 625 MW of knowledge and the quality of resource assess- renewable energy through this process. ment methods and tools, to make available this According to the IRP 2010, about 42% of knowledge and tools free of charge for planning electricity generated in South Africa has to come and development of wind farms and off-grid from renewable resources. electrifi cation, and to build capacity of local By March 2013, the department had installed institutions to do wind resource measurements. 335 000 solar water systems out of a target of one million by the end of 2014. Integrated Resources Plan By May 2013, South Africa had signed agree- At the Africa Energy Indaba in February 2013, ments with preferred bidders in Window 2 of the the Minister of Energy said South Africa intended REIPPP that would contribute to the country’s to introduce nuclear power to help lower carbon energy mix and job creation. emissions. The department signed implementation agree- The IRP 2010 to 2030 envisages 9 600 MW ments and direct agreements with each bidder, additional nuclear capacity by 2030. The IRP while power parastatal Eskom signed power is a 20-year projection on electricity supply and purchase agreements with the bidders. Eskom is demand. committed to the diversifi cation of the country’s Following the Fukushima nuclear accident, energy resources. South Africa, through the NNR, needed to fi nd Of the 19 bidders, nine were selected for assurance in terms of the safety of existing the solar PV technology taking up 417,1 MW, installations. The safety of the Safari-1 research seven for wind, two for small hydro and one reactor and Koeberg nuclear power station were for concentrated solar thermal (CSP). For reassessed. In June 2013, the NNR announced solar PV, 417 MW was taken up by bidders that the country’s nuclear installations could with the maximum MW allocated for round two withstand natural events. at 450; for wind, 562,5 MW was taken up with South Africa is a member of the IAEA and had the maximum allocation at 650 MW. For small signed up for stress tests to ascertain whether hydro, 13,3 MW was taken up from a maximum 148

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allocated for round two at 75 MW, while for CSP the conclusion of the third bid-submission round the allocated maximum 50 MW was taken up. In under the REIPPP. the second window, bidders took up 1 0439 MW. The preferred bidders in this window are located Integrated National Electrifi cation in the Eastern Cape, Free State, Northern Cape Programme (Inep) and Western Cape. Between 1994 and 2013/14, just under The IRP 2010 lays specifi c emphasis on 5,7 million households had been electrifi ed broadening electricity supply technologies to under the programme, while in the period from include gas, imports, nuclear, biomass, and 2002 to 2013/14, some 68 115 households in renewables (wind, solar and hydro) in response the Eastern Cape, KwaZulu-Natal and Limpopo to the country’s future electricity needs as well had been supplied with non-grid technology

as the necessity to reduce its CO2 emissions. (solar panels and renewable energy). A total of South Africa wants to procure 3 725 MW 181 004 connections had been made during of renewable energy through this process. 2013/14, which was just ahead of Inep’s target According to the IRP 2010, projection on of 180 000. This could be attributed to improved electricity supply and demand, about 42% of effi ciencies as a result of being more involved electricity generated in South Africa has to come in the operational activities of implementers and from renewable resources. good cooperation from Eskom and municipalities. Job opportunities, local content and community There were still 3,3 million households without development are the essential ingredients of the electricity, with 75% of these in the Eskom supply programme. area, and 25% in municipal supply areas. Localisation needs constant emphasis because The total number of planned connections for in its design and implementation, the REIPPP is 2013/14 was 276 703. The department received biased toward the economic development of the an increase of R400 million in its funding country with bidders being subjected to local allocation, which accounted for the higher content assessment. number of connections projected. The total Progress is being made with the construction allocation for 2013/14 was R3 547 billion. of 28 Window 1 projects announced in 2011. The socio-economic impact of the electrifi - The total fi nancial injection in all these projects cation programme was signifi cant in the area amounts to R28 billion for a net generation of job creation, where one permanent job capacity of 1 043 MW. was created for every R800 000 to R1 million Lessons learnt from Window 1 and 2 will spent. There had also been training, with 700 be taken into account. The IRP envisages interns having been trained at Inep and at local 17 800 MW. The fi rst three determinations government level. There had been community amount to 2 755 MW. Because of the size of upliftment, poverty alleviation and access to renewable energy there will be other windows basic services. not necessarily related to this determination. In May 2013, the department issued a request New Build Programme for proposals (RFP) for the third bid window of Eskom’s New Build Programme was launched the programme. The improvements to the RFP in 2005 with the aim of adding more than for Window 3 were made available on the IPP 17 000 MW to the national electricity grid by website. 2018. As part of the programme, Eskom has The REIPPP won the Green Infrastructure spent R20,5 billion on recommissioning three Project of the Year Award at the 6th Global power stations that have been out of service for Infrastructure Leadership Forum held in New over 20 years: Camden, Komati and Grootvlei, York. all in Mpumalanga. Together, the stations can In November 2013, the DoE informed another produce an estimated 3 800 MW, which equals 17 renewable-energy developers that they had that of a new power station. been appointed as preferred bidders, following The cost of recommissioning the retired stations is estimated at almost R100 billion less In July 2013, the Minister of International Relations and than the cost of constructing a new station, with Cooperation attended the International Conference on the electricity available sooner. Camden was Nuclear Security in Vienna, Austria. Organised by the Inter- reopened in 2010, with work progressing on national Atomic Energy Agency (IAEA), the summit adopted Komati and Grootvlei. All three were operational a declaration emphasising that while the responsibility for nuclear security rests entirely with individual member by 2013. states, the IAEA plays a central role in strengthening the Two new coal power stations are under nuclear security framework globally and in leading coordi- construction – the 4 800-MW Medupi Power nation of international activities in nuclear security. Station near Lephalale in Limpopo and Kusile in

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output of 4 800 MW. as to how CO2 could be stored in these less Medupi is scheduled for full commercial favourable formations. operation by 2015 and Kusile by 2018, although The Karoo Basin is the closest to the current individual units will be brought online earlier as major sources of CO₂ emissions. they are completed. • The CO₂ Test Injection Experiment of safely

injecting CO2 into South African reservoirs is Carbon capture and storage roadmap essential to understanding the suitability of Although South Africa has a programme to the local geology as a storage medium. It is increase the use of renewable energy and also necessary to ascertain the dispersion and energy effi ciency, coal is likely to provide most transformation reactions of CO₂ in the storage of the country’s primary energy for the next few medium and its effects on the surroundings decades. of the storage medium. This experiment will The displacement of fossil fuels by renewable be informed by similar injection activities and nuclear energy is seen as a gradual task. underway internationally. Carbon capture and storage is a transition • A demonstration plant will test an integrated measure from fossil fuel to nuclear and operating system under local conditions and renewable energy. form an essential link between feasibility trials To this end, the South African Centre for and a full-scale commercial plant. This phase Carbon Capture and Storage was established in will demonstrate the safe injection of CO₂ March 2009. into South African geological formations. The The fi ve phases of the roadmap and their magnitude of the demonstration plant is in the status are as follows: order of hundreds of thousands of tons of CO₂ • A preliminary investigation was undertaken per year. by the Council for Scientifi c and Industrial • If positive outcomes of the demonstration Research for the then Department of Minerals plant ensue, a full-scale commercial plant and Energy to ascertain whether South Africa is envisaged. This phase will depend on the

had potential capturable CO2 sources and outputs of the previous phases. storage sites. The results of that investigation, released in 2004, showed that South Africa had Working for Energy Programme capturable emissions and potential storage The Working for Energy Programme is a social sites. Preliminary investigation identifi ed that programme mainly intended to provide energy the synfuel industry in South Africa produced services derived from renewable resources

30 Mt per year of 95% concentration CO2. to rural and urban low-income houses. In • The Carbon Dioxide Geological Storage this manner it facilitates job creation, skills Atlas, launched in August 2010, will locate development, community-based enterprise and characterise potential storage sites at a development and the emancipation of youth, theoretical level and on a geological basin women and people with disabilities. It thereby extent. The atlas will then be taken into the creating sustainable livelihoods. It is an integral South African Centre for Carbon Capture and part of the Expanded Public Works Programme. Storage’s programme of work and developed The programme was conceived in 2008/09 to locate a storage site suitable for a test and transferred by the DoE to Saneri. injection. Pre-atlas knowledge had identifi ed The major focus area is the provision of

four possible CO2 geological storage basins: sustainable energy solutions (supply side) -Orange Basin (offshore of the west coast) with special emphasis on the youth, women - Outeniqua Basin (offshore of the southern and people with disabilities in rural areas and coastline and site of the only producing gas/ low-income urban communities in terms of: petroleum wells in South Africa) • labour-intensive options, targeting short-term -Durban/Zululand Basin (east coast) employment opportunities - Karoo On-Shore Basin (near the main • sustainable employment opportunities, and coal fi elds and most coal-based electricity enhancing stimulated local economic activity generation and synfuel production). • community development initiatives and cross- The fi rst three are conventional types of storage cutting human capital development. that is depleted oil/gas wells and deep saline formations. Designated National Authority (DNA) for The fourth, the Karoo Basin, has sandstone Clean Development Mechanism formations that are subject to low permeability The DoE is mandated to regulate and promote and also to dolerite intrusions. the implementation of a CDM in South Africa.

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This is done to make sure that South Africa regarding refi nery upgrades and development, complies with its obligations under the Kyoto and will make recommendations on the future Protocol and the UN Framework Convention on of the refi nery infrastructure in the country. Climate Change. As a further response to the global situation As custodian of the CDM, the DNA is and domestic development imperatives, the responsible for ensuring that CDM investments department decided to strengthen the Strategic are in line with sustainable development Fuels Fund (SFF), a subsidiary of the CEF. objectives and that South Africa benefi ts from The DoE will position the SFF to improve the CDM. the country’s strategic petroleum reserves By November 2013, 347 CDM projects had and enable the country to better respond to been submitted to the DNA – 209 Project Idea catastrophic global events that impact on the Notes (PINs) and 138 Project Design Documents petroleum trade. (PDDs). Out of 138 PDDs, 80 were registered (27 PoAs) by the CDM Executive Board as CDM Renewable energy programmes from projects (12 issued with CERs), and 58 were Eskom at different stages of the project cycle – DNA Eskom has an active research programme approval, validation stage and/or request for investigating ways to harness South Africa’s review. The projects submitted to the DNA for renewable energy sources for power generation. initial review and approval cover the following Eskom is looking to increase the renewables types: biofuels; energy effi ciency; waste component of its supply mix. management; cogeneration; fuel switching and The long-term strategic energy plan includes a hydropower, and cover sectors like manufac- mix of all viable sources, including renewables, turing, mining, agriculture, energy, waste to be implemented where commercially viable. management, housing, transport and residential. The two most advanced areas under investi- At its 73rd meeting in May 2013, the CDM gation are wind-generated and concentrated Executive Board adopted the SAPP Grid solar thermal power. Emission Factor as a standardised baseline Eskom’s renewable energy journey has for the SAPP. This implies that all the member been affected by several factors, including the countries listed in the report will from now on use changing nature of power generation, environ- only one value as the emission factor as outlined mental concerns and procuring loans that will in the report. fund solar and wind-electricity generation. As part of addressing some of the identifi ed challenges to CDM Development in South Sere Wind Farm Africa, the DNA hosted a waste-to-energy Eskom has awarded technology group Siemens workshop in July 2013. The aim of the workshop the contract to supply 46 wind turbines to its was to discuss and provide capacity-building to 100 MW Sere wind farm project being developed municipalities with respect to the interpretation on a 3 700-ha site near Vredendal in the of the Municipal Finance Management Act and Western Cape. The R2,4-billion renewable- any other related legislature that ought to be energy project was scheduled to begin feeding taken into account when implementing waste- electricity into the grid by the fi rst half of 2014. to-energy projects from inception to implemen- The turbine contract comprises about 65% tation including monitoring and evaluation. of the project’s total capital expenditure, with the other main contract being for the supply, Liquid Fuels Roadmap installation and commissioning of a 132-kV As a result of identifi ed constraints throughout transmission line and a substation close to the the liquid-fuels supply chain, the DoE project site. embarked on a process to develop a liquid- Sere is receiving some of its funding from fuels infrastructure roadmap. A key objective of the World Bank’s US$3,75-billion Eskom this roadmap is to ensure that South Africa has Investment Support Project, approved in 2010 access to reliable, affordable, clean, suffi cient primarily to support the Medupi coal-fi red power and sustainable sources of energy to meet the station. Additional funding was secured from the country’s liquid fuel demand. African Development Bank (AfDB), the French development agency, Agence Française de The 20-Year Liquid Fuels Infrastructure Développement (AFD), and the Clean Tech- Plan nology Fund. The 20-Year Liquid Fuels Infrastructure Plan In total, the World Bank component comprises will form the basis for the implementation of 32,4% of the overall funding plan for Sere, the Presidential Infrastructure Coordinating situated about 300 km north of Cape Town. The Commission Strategic Implementation Project AFD component, meanwhile, is 36,7%, while the 151

2013ENERGY_NEW2.indd 151 2014/10/29 4:41 PM AfDB component comprises 26,8%. Eskom is as concentrated solar power, which uses mirrors carrying the development costs. to refl ect the sun’s rays. Each turbine has a height of 115 m, a rotor PV systems make a direct conversion into diameter of 108 m and a power output of 2,3 MW. electricity, and are ideal to use at peak load The turbine order was the second for Siemens times. However, there is no cost-effective way to in South Africa, with the fi rst having been store this power. awarded by the developers of the 138-MW Concentrated solar power, on the other hand, Jeffreys Bay wind farm. captures the sun as heat and turns it into steam to The Eastern Cape wind project secured a power power turbines, which in turn generate electricity purchase agreement following the fi rst bidding − much like coal-fi red plants. Its advantage is round under South Africa’s Renewable Energy that it is cheap and effi cient to store heat, so Independent Power Producer Procurement power can be supplied around the clock. Programme. Mainstream Renewable Power, Globeleq, International cooperation Thebe Investments, Enzani and Usizo In March 2013, Denmark committed to help constructed the project. South Africa meet its future goals of having a low-carbon economy and reducing the growth Ingula Pumped Storage Scheme of GHGs by deploying low-carbon technologies. The Ingula Pumped Storage Scheme near Van An agreement signed between the two Reenen in KwaZulu-Natal, consists of an upper governments will see Denmark providing and a lower dam; both with the capacity to hold fi nancial support to South Africa to invest in about 22 million cubic metres of water capacity. wind-based electricity generations while the The dams, 4,6 km apart, are connected Danish will also give technical support to Eskom by underground waterways, through an to integrate renewable energy into the electricity underground powerhouse accommodating supply. 4 x 333-MW pump turbines. Danish International Development Assistance During times of peak energy consumption, will make available an interim grant of DKK40 water will be released from the upper dam million to South Africa. Some of the money will be through the pump turbines to the lower dam to used to further develop the WASA for the country generate electricity. to pursue and invest in wind-based electricity as During times of low-energy demand the pump opposed to power obtained from fossil fuels. turbines are used to pump the water from the In October 2012, the government of Denmark lower dam back up to the upper dam. The project launched a new strategy for South Africa aimed came on line during 2013/14. at improving relations between the two countries. In October 2013, Eskom and Agence Underground coal gassifi cation Française de Développement (AFD) signed a Eskom also has an underground coal gassifi - R1,3 billion loan agreement. cation project in the pilot stage, with a test plant The loan will go towards funding the 50-MW next to Majuba Power Station in Mpumalanga. CSP plant near Upington, Northern Cape. The gas produced is co-fi red with coal in The CSP project is expected to deliver an Majuba’s Unit Four, and contributes 3 MW to the annual energy production of 525 GWh and will station’s output. be suffi cient to power 200 000 homes. The process entails using coal seams that CSP comprises technologies that concentrate cannot be mined for various reasons – they may be the sun’s energy through large mirrors and utilise too deep, fractured, or of poor quality – and turns that concentrated thermal energy to produce the coal into clean gas on site. With the region’s steam to drive a conventional steam turbine substantial coal reserves, there is potential in this for electricity generation. The technologies are source of power. Eskom has developed a 10-year similar to conventional power plants in that transmission development plan which includes steam is used to power a turbine and generator, renewable energy integration. but the fossil fuel combustion is replaced with free, non-polluting solar energy. Concentrated solar power A solar park is a concentrated zone of solar Sustainable development in Africa plants that are built in clusters, sharing common The Intergovernmental Memorandum of Under- transmission and infrastructure. Together, these standing (MoU) on the Western Power Corridor clusters generate thousands of megawatts of Project was signed in October 2004. electricity. The types of technology used are This New Partnership for Africa’s Development solar PV and concentrated PV, which operate fl agship programme intends to pilot the use of with semiconductors and solar panels, as well hydro-electric energy obtained from the Inga 152

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rapids site in the DRC to ensure the security of The DoE is expected to respond to and supply in the SADC. mitigate climate change. The participating utilities are those of Angola, South Africa is classifi ed as a developing Botswana, the DRC, Namibia and South Africa. country or a non-Annex 1 country. This means A joint-venture company has been formed that within the international political and to initiate studies determining the viability of negotiation context, South Africa is not required the project and to build, own and operate the to reduce its GHG emissions. infrastructure. The South African economy depends greatly The main project outside South Africa’s borders on fossil fuels for energy generation and is Westcor. It entails a fi ve-way intergovernmental consumption, and is therefore, a signifi cant MoU signed between the utilities of Angola, emitter due to relatively high values being derived Botswana, the DRC, Namibia and South Africa. from emission intensity and emissions per capita. Westcor will tap into some of the potential in the Therefore, South Africa is proactively moving DRC. Inga III, a 3 500-MW hydro plant on the the economy towards becoming less carbon- Congo River, will be the fi rst of these projects. intensive, with the DoE playing a prominent At the same time, the countries to the role. The department has introduced systems north could benefi t through access to the to access investment through the CDM of the coal-fi red power resources in the south. Such Kyoto Protocol. It developed the White Paper an arrangement should stabilise the energy on Renewable Energy and Clean Energy requirements of the region well into this century. Development, together with an energy effi ciency Exploitation of the vast hydropower resources programme, to support diversifi cation in pursuit would constitute a signifi cant infusion of of a less carbon-intensive energy economy. renewable-energy resources into the energy The Grand I MoU signed with the DRC is economy of the region over the medium to long an important milestone in working towards term. sustainable African partnerships aimed at The Lesotho Highlands Water Project could developing strategies for low-carbon economies contribute some 72 MW of hydroelectric power and interconnected energy systems. to the system in the short term. The Tete-Maputo Power Transmission Line, Global pressures regarding the environmental also known as the Centre-South Project (Cesul), impact and displacement of settlements by huge in Mozambique, will improve the ability to storage dams are likely to limit the exploitation of evacuate power from the projects in the northern hydropower on a large scale. Mozambique complex, particularly releasing the Irrespective of the size of installation, any hydropower potential relating to Mpanda Nkuwa hydropower development will require author- and Cahora Bassa. isation in terms of the National Water Act, 1998 The South African Renewables Initiative (Act 36 of 1998). secures international fi nancing partnerships in investment in deploying renewable energy; Energy and the global environment and develops renewable supply chains through South Africa is among the top 20 emitters securing a critical mass of renewable energy, of GHGs in the world and the largest emitter without imposing undue burden on the fi scus or in Africa, largely because of the economy’s the South African consumer. dependence on fossil fuels. It emits more than In line with this objective, the DoE has signed 400 Mt of CO₂ per year. a Declaration of Intent with Germany, the United The National Climate Change Strategy, Kingdom, Denmark, Norway and the European developed by the former Department of Investment Bank. This agreement will lead to the Environmental Affairs and Tourism, requires establishment of a fund to assist in the deployment that government departments collaborate in a of renewable energy. coordinated manner to ensure that response Further, the department participates in measures to climate change are properly structures such as the: directed and carried out with a national focus. • International Renewable Energy Agency • International Energy Forum The Minister of Energy addressed the sixth Annual Bloom- • International Partnership for Energy Effi ciency berg New Energy Finance (BNEF) 2013 Summit held in New York City as part of a working visit to the United States, Cooperation in April 2013. The summit is a leading discussion forum for • UN Industrial Development Organisation decision-makers in the clean energy sector. The BNEF is an • Clean Energy Ministerial invitation-only forum providing a platform for engagement • African Union-European Union Energy Partner- at the intersection of energy markets, industry, fi nance and ship. policy.

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2013ENERGY_NEW2.indd 153 2014/10/29 4:41 PM Cross-border gas trade agreement When overproduction occurs, export permits To facilitate the movement of gas across are required and generally granted, provided international borders, cross-border gas trade that the needs of both South Africa and other agreements have been signed with Mozambique Southern African Customs Union members are and Namibia. met. More diesel than petrol is exported, due to Since the arrival of natural gas from the balance of supply and demand of petrol and Mozambique in 2004, the contribution of natural diesel relative to refi nery confi gurations. gas to the primary energy supply has risen from Although petrol and diesel make up 55% of 1,5% to 3,3% (2005). total liquid-fuel exports, South Africa is also the This fi gure is expected to rise to 4,3% when the main supplier of all other liquid fuels to Botswana, new Mozambique-South Africa gas-transmission Lesotho, Namibia and Swaziland. pipeline reaches maximum capacity. At bilateral level, the DoE signed seven The South Africa-Namibia Gas Commission agreements/declarations of intent with Denmark, addresses harnessing the natural gas reserves the DRC, Ghana, the International Energy in the Kudu Gas Field. Agency, Korea, Lesotho and the Swiss Confed- eration. These agreements cover access to Import and export of fuel products capacity-building, funding, technology, exchange The importation of refi ned products is restricted of information and the development of energy to special cases where local producers cannot infrastructure on the continent, with the objective meet demand. It is subject to State control to of increasing generation capacity. promote local refi nery usage.

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