ENERGY SOUTH AFRICA YEARBOOK 2010/11 2010/11 ENERGY 8 Energy use in South Africa is characterised Policy and legislation by a high dependence on cheap and abund- The Department of Energy’s Strategic Plan antly available coal. South Africa imports a for 2010/11 to 2012/13 seeks to deliver large amount of crude oil. A limited quantity results along eight strategic objectives: of natural gas is also available. • ensure energy security: create and main- The country also mines uranium, which tain a balance between energy supply is exported, and imports enriched uranium and energy demand, develop strategic for its nuclear power plant, Koeberg. South partnerships, improve coordination in the Africa uses renewable energy in the form of sector and ensure reliable delivery and electricity generated by hydropower, most of logistics which is imported. • achieve universal access and transform Electricity is also generated from other the energy sector: diversify the energy renewable energy sources, mainly biomass mix, improve access and connectivity, and to a lesser extent solar and energy. provide quality and affordable energy, The Government intends to diversify promote the safe use of energy and trans- energy supply and is promoting the use of form the energy sector renewable energy technology as well as • regulate the energy sector: develop ef- other new energy technologies. In addition, fective legislation, policies and guidelines; it aims to improve energy efficiency through- encourage investment in the energy sec- out the economy. tor; and ensure compliance with legisla- The energy sector is critical to South Afri- tion ca’s economy, contributing about 15% to the • provide effective and efficient service country’s gross domestic product (GDP). delivery: understand stakeholder needs The Department of Energy is responsible and improve turnaround times for ensuring exploration, development, • utilise optimal energy resources: develop processing, utilisation and management enabling policies and encourage energy- of South Africa’s energy resources. As efficient technologies the country’s economy continues to grow, • ensure sustainable development: pro- energy is increasingly becoming a key mote clean-energy alternatives, encour- focus. age economic development and promote The Electricity and Nuclear Branch is job creation responsible for electricity and nuclear- • enhance the department’s culture sys- energy affairs, while the Hydrocarbons and tems and people: attract, develop and Energy Planning Branch is responsible for retain appropriate skills and promote coal, gas, liquid fuels, energy efficiency, good organisational culture renewable energy and energy planning, • promote corporate governance: optimal including the energy database. use of resources, manage budget ef- The Department of Energy was appropri- fectively, implement fraud and risk man- ated: agement and ensure compliance with • R5,535 billion for 2010/11 relevant prescripts. • R5,739 billion for 2011/12 In 2010, the Department of Energy was • R5,538 billion for 2012/2013. mandated to draft and publish the Integ- Ninety-seven percent of the budget, about rated Energy Planning Strategy to outline R5,3 billion, will be transferred to the Integ- the requisite processes, systems and struc- rated National Electrification Programme tures that would lead to the development of (INEP), the Nuclear Energy Corporation of the comprehensive Integrated Energy Plan South Africa (Necsa), the National Efficiency (IEP), as envisaged in the National Energy and Demand-Side Management (DSM) Pro- Act, 2008 (Act 34 of 2008). gramme and Transnet, leaving the depart- The Energy Act, 2008 was signed into law ment with R202 million, which translates to by President Jacob Zuma on 17 November 3% of the total budget allocation. 2009. This legislation focuses, among other A key activity is to develop an electricity things, on ensuring that diverse energy system operator independent of Eskom resources are available, in sustainable Holdings and target 10% of electricity sup- quantities and at affordable prices in sup- ply from independent power procedures. port of economic growth and poverty allevia- tion. It further provides for energy planning, 2010/11 Energy – SOUTH AFRICA YEARBOOK 2010/11 172 increased generation and consumption • provide the framework for ministerial of renewable energies and contingency determination of new generation capacity energy supply. (inclusive of the required feasibility stud- The department also reviewed the Petro- ies) as envisaged in the New Generation leum Products Act, 1977 (Act 120 of 1977), Capacity regulations. with a view towards strengthening its legis- lative framework to address the needs of a Energy and the economy developmental state, including the transfor- The energy sector creates jobs for about mation of the liquid-fuels industry. 250 000 people. It generates around 95% The Department of Energy developed the of the electricity used in South Africa and Strategic Stocks Policy for petroleum prod- exports to countries in Africa. ucts to ensure that the economy does not This energy intensity is above average, suffer from shortages during severe liquid- with only 10 other countries having higher fuel supply disruptions. commercial primary energy intensities. It is largely a result of the economy’s struc- Integrated Resource Plan (IRP) ture with dominating large-scale, energy- To ensure reliable power supply, government intensive primary mineral beneficiation and established the Inter-Ministerial Committee mining industries. on Energy to develop a 20-year integrated resource plan. National Energy Regulator The department promulgated the IRP1 in of South Africa (Nersa) December 2009. This indicated the intention Nersa, which was launched in November to achieve the following targets: 2005, is the regulatory authority established • 10 000 Gigawatt hour (Gwh) (about 4% in terms of the National Energy Regulator of the energy mix) of renewable-energy (NER) Act, 2004 (Act 40 of 2004), with the usage (as indicated in the 2003 Renew- mandate to undertake the functions of the able Energy White Paper) gas regulator as set out in the Gas Act, 2001, • the implementation of energy efficiency (Act 48 of 2001); the Petroleum Pipelines and DSM through a financial incentives Regulatory Authority, as set out in the Petro- scheme leum Pipelines Act, 2003 (Act 60 of 2003); • the installation of one million solar water- the NER as set out in the Electricity Act, 1987 heaters. (Act 41 of 1987), as amended; and the Elec- In October 2010, the Inter-Ministerial Com- tricity Regulation Act, 2006 (Act 8 of 2006), mittee on Energy approved the draft IRP, as amended. a 20-year blueprint that indicates that the country is planning to commit to 14% nuclear Central Energy Fund (CEF) power as part of its future energy mix. The CEF is involved in the search for appro- According to the draft plan, South Africa’s priate energy solutions to meet the future electrical energy will, by 2030, comprise energy needs of South Africa, the Southern 48% baseload coal, 14% baseload nuclear, African Development Community (SADC) 16% renewable energy, 9% peaking open and the sub-Saharan African region. cycle gas turbine, 6% peaking pump stor- This includes oil, gas, electrical power, age, 5% mid-merit gas and 2% baseload solar energy, low-smoke fuels, biomass, import hydro. wind and renewable energy sources. The The IRP is a long-term electricity capacity CEF also manages the operation and devel- plan, which defines the need for new gen- opment of the South African Government’s eration and transmission capacity for the oil and gas assets and operations. country. The CEF, through its integrated oil- The IRP is intended to: company subsidiary, PetroSA, is involved • improve the long-term reliability of elec- tricity supply through meeting adequacy The Government supported clean-energy criteria over and above keeping pace with research at a number of universities and uni- economic growth and development i versities of technology in 2010. • ascertain South Africa’s capacity invest- In March 2010, the Department of Energy ment needs for the medium-term busi- invested in an electric car and the prototype of a hybrid ness planning environment e-bike. The hydrogen-fuelled bike called “A hi Fambeni” • consider environmental and other ex- (Tsonga for “let’s go”) was designed by a leading South ternality impacts and the effect of renewa- African-born motorbike designer, Pierre Terblanche, ble-energy technologies and was being developed at the Tshwane University of Technology. 173 SOUTH AFRICA YEARBOOK 2010/11 – Energy in the exploration for oil and gas onshore Government had put together a number and offshore in South Africa and the rest of initiatives to promote energy efficiency. of Africa. It is also involved in producing One such initiative is a proposal, through environmentally friendly petroleum fuels the National Treasury, that tax incentives and petrochemical products from gas and be applied to companies that demonstrate condensate at its synfuels refinery outside energy-efficient practices. Mossel Bay, and the management of oil- A financial incentive scheme is expected storage facilities. The Strategic Fuel Fund to be introduced in terms of which project manages South Africa’s strategic crude oil developers will be able to claim a rebate in reserves. respect of the amount of energy they have The CEF has established the Energy saved from the electricity system. Development Corporation (EDC) to pursue The Department