COUNTRY STATE OF PLAY REPORTS … · REEPASA Countries State of Play Review: ... iii This report has been ... Figure 3.6 Stages of the Toolkit Process

COUNTRY STATE OF PLAY REPORTS

DELIVERABLE 2.1

September 2006

REEPASA Countries State of Play Review: Mozambique, Zambia, Swaziland & South Africa

i

Acronyms and Abbreviations AIDS Acquired Immuno-Deficiency Virus AREED Africa Rural Energy Enterprise Development ASGISA Accelerated and Shared Growth Initiative BEE Black Economic Empowerment BEH Basic Electrification at Household Level BP British Petroleum CDM Clean Development Mechanism CEC Copper Belt Energy Corporation CED Central Energy F\und CEEEZ Center for Energy, Environment and Engineering Zambia CFC Chloroflourocarbon CF-SEA Carbon Finance to promote Sustainable Energy Services in Africa CIA Central Intelligence Agency CIDA Canadian International Development Agency CNELEC National Electrical Council CO2 Carbon dioxide CP Cleaner Production CTP Core Training Program DME Department of Mineral and Energy (SA) DNA Designated National Authority DNA National Directorate of Water (Mozambique) DNENR Ministry of Energy (Mozambique) DoE Department of Energy (Zambia) DSM Demand Side Management ECZ Environmental Council of Zambia EDI Electricity Distribution Industry EDM Mozambique National Electrification Company ENMO Energia de Mozambique Lda EoI Expression of Interest ERB Energy Regulatory Board (Zambia) ERC Engineering Research Centre ESCO Energy Service Company ESD Energy for Sustainable Development FUNAE Fundo Nacional da Energia (National Fund for Energy) GDP Gross Domestic Product GEF Global Environmental Facility GE/IP Geographical Entities/Investment Package GNI Gross National Income GoM Government of Mozambique GRZ Government of the Republic of Zambia GVEP Global Village Energy Program Gwh GigaWatt Hour HIPC Highly Indebted Poor Countries IAES Increased Access to Energy Services ICJ International Court of Justice ICT Information and Communication Technology IeC Integrated Energy Centres IGCC Integrated Gasification Combined Cycle IMF International Monetary Fund INGC National Institute of Calamities Management IPP Independent Power Producers K Zambian Kwacha KfW Entwicklungsbank (German Development Bank) KITE Kumasi Institute of Technology and Environment Km Kilometer Kwh Kilowatt Hour LCREP Low Cost Rural Electrification Plan LED Light Emitting Diode LHPC Lunsemfwa Hydro Power Company


ii

LPG Liquified Petroleum Gas LULUCF Land Use, Land Use Change and Forestry MEWD Ministry of Energy and Water Development MICOA Ministry of Energy (Mozambique) MNRE Ministry of Natural Resources and Energy MW Mega Watts NE North East NEEA National Energy Efficiency Agency NEP National Electrification Program NEP National Energy Program NER National Energy Regulator NERSA National Energy Regulator NES National Electrification Strategy NGO Non Governmental Organization NOK Norwegian Kroner NRSE New and Renewable Sources of Energy OPPI Office for Promoting of Private Investment PARPA Action Plan for the Reduction of Absolute Poverty PFMA Public Finance Management Act PHRD Policy and Human Resource Development PJ Peta Joules PPA Power Purchase Agreement PPP Public Private Partnership PREPS Priority Rural Electrification Projects PRSP Poverty Reduction Strategy Paper PV Photo Voltaic R South African Rand RE Renewable Energy/ Rural Electrification REA Rural Electrification Agency RED Regional Electricity Distributors REEPASA Renewable and Efficient Energy for Poverty Alleviation in Southern Africa REFSO Renewable Energy Finance and Subsidy Office REMP Rural Electrification Master Plan REP Renewable Energy Portfolio RET Renewable Energy Technologies RSA Republic of South Africa SADC Southern Africa Development Community SANERI South Africa National Energy Institute SCORE Select Committee for Rural Electrification SEB Swaziland Electricity Board SECCP Sustainable Energy and Climate Change Partnership SEI Stockholm Environment Institute SIDA Swedish International Development Cooperation Aid Agency SIEMP SADC Energy Management Program SME Small and Medium Enterprises TAZAMA Tanzania-Zambia Mafuta Oil Company TREC Tradable Renewable Energy Certificates TV Television UEM Eduardo Mondale University UHEP Urban Household Energy Project UNEP United Nations Environmental Program UNESCO United Nations Educational, Scientific and Cultural Organization UNIDO United Nations Industrial Development Organization US$ American Dollars US$c American cents (US cents) V Volts VAT Value Added Tax WB World Bank WSSD World Summit on Sustainable Development


iii

This report has been prepared by Energy for Sustainable Development under the REEPASA project in conjunction with project partners, subcontractors and stakeholders: Project Co-ordinator Energy for Sustainable Development (ESD)

Project Partners Frauhofer Institute for Solar Energy Systems (ISE)

KWI Management Consultants GmBH (KWI)

Sub-Contractors Energy for Sustainable Development Africa (ESDA)

Renewable Energy Association of Swaziland (REASWA)

Centre for Energy, Environment and Engineering Zambia (CEEEZ)

Austral Palmer Development Group (PDG) Sustainable Transactions (ST) This report is an output of the European Commission funded project REEPASA. For further information and details of the project team and authors, please visit: http://reepasa.energyprojects.net

The sole responsibility for the content of this publication lies with the authors. It does not represent the opinion of the Community. The European Commission is not responsible for any use that may be made of the information contained therein.


iv

Table of Contents

Acronyms and Abbreviations ....................................................................................i Table of Contents.................................................................................................... iv List of Tables and Figures.......................................................................................vi Executive Summary ............................................................................................... vii

1.0 MOZAMBIQUE.............................................................................................. 10 1.1 Background ................................................................................................ 10

1.1.1 Population, Economy and Governance............................................... 10 1.1.2 Energy Balance................................................................................... 11 1.1.3 Electrification Statistics........................................................................ 14 1.1.4 Ministries, Agencies, Utilities and Other Players in the Energy Sector 15 1.1.5 Significant RE and Energy Efficient Projects....................................... 16 1.1.6 Significant Energy Policies and Regulation......................................... 17

1.2 Policy and Finance issues Relating to RE and Rational use of Energy...... 19 1.2.1 Policy and Finance Tools .................................................................... 19 1.2.2 Status of Designated National Authority (DNA)................................... 19 1.2.3 Areas of Low Penetration.................................................................... 21

1.3 Rural Energy Access.................................................................................. 22 1.3.1 Role of Renewable Energy in Meeting the Country’s Energy Needs .. 22 1.3.2 Major Electrification Programmes ....................................................... 22 1.3.3 Policy Targets to Promote Rural Electrification ................................... 25 1.3.4 Cross-sectoral Focus .......................................................................... 26 1.3.5 Projects and Studies on Productive Use of Off-Grid Electricity ........... 26 1.3.6 Proposed Areas for REEPASA ........................................................... 27

1.4 Local Authorities’ Electricity Management.................................................. 28 1.4.1 Role of LA in Generating and Distributing Electricity.......................... 28 1.4.2 Efforts to Streamline Use of Electricity ................................................ 29 1.4.3 Efforts to Assess and Develop Power Generation .............................. 29

1.5 Summary of Proposed REEPASA Activities............................................... 29 2.0 SWAZILAND ................................................................................................. 31

2.1 Background ................................................................................................ 31 2.1.1 Population, Economy and Governance............................................... 31 2.1.2 Energy Balance................................................................................... 31 2.1.3 Electrification Statistics........................................................................ 34 2.1.4 Ministries, Agencies, Utilities and Other Players in the Energy Sector 34 2.1.5 Significant RE and Energy Efficient Projects....................................... 35 2.1.6 Significant Energy Policies and Regulation......................................... 36

2.2 Policy and Finance issues Relating to RE and Rational use of Energy...... 37 2.2.1 Policy and Finance Tools .................................................................... 37 2.2.2 Status of Designated National Authority (DNA)................................... 37 2.2.3 Areas of Low Penetration.................................................................... 37

2.3 Rural Energy Access.................................................................................. 38 2.3.1 Role of Renewable Energy in Meeting the Country’s Energy Needs .. 38 2.3.2 Major Electrification Programmes ....................................................... 38 2.3.3 Policy Targets to Promote Rural Electrification ................................... 38 2.3.4 Projects and Studies on Productive Use of Off-Grid Electricity ........... 39

2.4 Local Authorities’ Electricity Management.................................................. 39 2.5 Summary of Proposed REEPASA Activities............................................... 40

3.0 ZAMBIA......................................................................................................... 42


v


3.2 Policy and Finance issues Relating to RE and Rational use of Energy...... 51 3.2.1 Policy and Finance Tools .................................................................... 51 3.2.2 Status of Designated National Authority (DNA)................................... 53 3.2.3 Opportunities for REEPASA................................................................ 54

3.3 Rural Energy Access.................................................................................. 57 3.3.1 Major Electrification Programmes ....................................................... 57 3.3.2 Policy Targets to Promote Rural Electrification ................................... 61 3.3.3 Cross-sectoral Focus .......................................................................... 64 3.3.4 Projects and Studies on Productive Use of Off-Grid Electricity ........... 64

3.4 Local Authorities’ Electricity Management.................................................. 66 3.4.1 Role of LA in Generating and Distributing Electricity........................... 66 3.4.2 Efforts to Streamline Use of Electricity ................................................ 67 3.4.3 Efforts to Assess and Develop Power Generation .............................. 68

3.5 Summary of Proposed REEPASA Activities............................................... 70 4.0 SOUTH AFRICA............................................................................................ 72


4.2 Policy and Finance issues Relating to RE and Rational use of Energy...... 78 4.2.1 Barriers to Renewable Energy ............................................................ 79 4.2.2 Status of Designated National Authority (DNA)................................... 82 4.2.3 Areas with weak grids ......................................................................... 83 4.2.4 Opportunities for REEPASA in the areas above ................................. 83

4.3 Rural Energy Access.................................................................................. 84 4.3.1 Role of Renewable Energy in Meeting the Country’s Energy Needs .. 84 4.3.2 Major Electrification Programmes ....................................................... 84 4.3.3 Policy Targets to Promote Rural Electrification ................................... 88 4.3.4 Projects and Studies on Productive Use of Off-Grid Electricity ........... 96

4.4 Local Authorities’ Electricity Management................................................ 100 4.4.1 Role of LA in Generating and Distributing Electricity......................... 100 4.4.2 Efforts to Streamline Use of Electricity .............................................. 102

4.5 Summary of Proposed REEPASA Activities............................................. 102 References.......................................................................................................... 105


vi

List of Tables and Figures Table 1.1 Macroeconomic data ................................................................................ 10 Table 1.2 Electricity Production by Regions, 2001 to 2003....................................... 11 Table 1.3 Global Energy Balance EDM (GWh)......................................................... 12 Table I.4 Social, household, agriculture and general tariffs ...................................... 13 Table 1.5 Large consumers of low, medium and high voltage.................................. 14 Figure 1.1 Map of electrification prospects ............................................................... 15 Figure 1.2 Organization of regulators ....................................................................... 16 Table 1.6 Description of the activities of the CDM stakeholders............................... 19 Table 1.5 Planned Annual investments in Renewable Energy by districts................ 22 Table 1.8 Planned Total Investment in Renewable Energy. ..................................... 23 Table 1.9 Uncovered geographic areas by EDM ...................................................... 27 Table 1.10 Proposed activities under REEPASA...................................................... 29 Figure 2.1 Energy consumption groups.................................................................... 32 Figure 2.2 Sources of Electricity ............................................................................... 33 Table 2.1 Number of beneficiaries of the rural electrification project in each phase . 34 Figure 3.1 Energy Consumption Trends 1986-2002 (PJ) ......................................... 43 Table 3.1 Energy consumption by sector.................................................................. 44 Figure 3.2 Sectoral Energy Consumption Chart ....................................................... 44 Table 3.2 Total installed hydro-power capacity from main stations .......................... 45 Figure 3.3 National Power System, Grid layout and Interconnections...................... 46 Figure 3.4 Institutional Structure of the Energy Sector ............................................. 47 Table 3.1 Status, Achievements and Gaps............................................................... 54 Figure 3.5 Linkages between Partners under the AREED Initiative.......................... 58 Figure 3.6 Stages of the Toolkit Process.................................................................. 59 Table 3.4 Projects Funded under AREED in Zambia................................................ 60 Figure 3.7 Schematic Representation of Targeted Introduction of Electricity ........... 65 Figure 4.1 Provinces of the Republic of South Africa ............................................... 73 Table 4.1 Fuel Demand by types.............................................................................. 73 Table 4.2 Energy for the Residential Sector ............................................................. 74 Table 4.3 Residential Energy Use ............................................................................ 74 Figure 4.2 Institutional Arrangement for Distribution and Generation of RE ............. 77 Table 4.4 Estimates of theoretical potential for RE sources in South Africa ............. 79 Figure 4.3 World Industrial Electricity prices, in US$c (1999) Eskom ....................... 80 Table 4.5 Comparison of average international electricity generation costs............. 80 Table 4.6 Energy generating capacity in South Africa .............................................. 81 Table 4.7 Potential of renewable energy technologies ............................................. 85 Figure 4.4 Potential for Hydropower generation ....................................................... 85 Figure 4.5 Annual direct and diffuse solar radiation in South Africa ......................... 86 Figure 4.6 Map of wind power on South Africa ......................................................... 87 Figure 4.7 Total biomass energy potential in South Africa........................................ 88 Figure 4.8 Categorization of policy instruments........................................................ 89 Figure 4.9 Illustration of the subsidy process............................................................ 92 Figure 4.10 Schematic of the subsidy allocation method for 2005/2006................... 93 Table 4.8 Ranking of renewable energy projects (DME, REFSO) ............................ 93 Figure 4.11 Purchasing and using green power by TRECS ..................................... 95 Table 1.9 Hydro projects currently in operation ........................................................ 97 Table 4.10 Installed capacity and off grid PV systems (ERC, 2005)......................... 98 Table 4.11 Energy derived from biomass (ERC, 2005) ............................................ 99


vii

Executive Summary This report has been prepared as part of the EU funded project REEPASA (Renewable and Efficient Energy for Poverty Alleviation in Southern Africa), which is aimed at increasing the use of renewable energy technologies (RETs) for electricity generation and promoting the rational use of energy (RUE) for poverty alleviation in Southern Africa. It provides an assessment of the current state of affairs in each country and reviews national-level policy and regulations, finance mechanisms (including CDM activities), rural electrification efforts, and local authorities’ electricity use. It also summarises recommendations for activities through the REEPASA programme that could improve the quantity and quality of energy services provided to the poor in the studied areas. Mozambique contains large amounts of primary energy resources - hydro power has the potential to provide 14,000MW of electricity and the country has large deposits of coal. Energy policy in Mozambique is focused on increasing the low level of access to electricity from 6% at present to 15% by 2009. This is to be achieved through the incumbent operator (EDM) which has a monopoly over the transmission and distribution network and has a programme aiming to connect an additional 70,000 customers a year. Renewable energy lacks policy, financial and regulatory support - although the government supports its use for areas which are unlikely to be reached by the EDM connection programme. In co-operation with the Danish government EDM will provide financial assistance and support to develop electricity projects in 10 areas untouched by the existing connection scheme. This report finds that there is currently no government policy on the rational use of energy and that management of energy by local authorities is poor due to a lack of control over the distribution network and the absence of central policies to promote energy efficiency. Mozambique is currently setting up its Designated National Authority (DNA) with assistance being given by the UNEP to improve capacity. Swaziland sources 49% of its primary energy from biomass, in rural areas this rises to 77%, with urban areas having a 90% share of residential electricity. Access to electricity is limited by the lack of grid connections and the prohibitive costs of extending the grid to areas where customers are unable to pay for the costs of extension. The Swaziland Electricity Board (SEB) enjoys a monopoly over generation, transmission and distribution of power - the government is currently legislating to open up the sector by making SEB a private company and allowing other supply companies to feed power into the network. The generation mix is largely hydro and there is no government policy on the use of renewables. Foreign donors are providing assistance with rural electrification programmes aiming to give all households access to electricity by 2022. Management of energy by Local Authorities is at an early stage with no programmes in place as yet – this may change as energy prices rise and the authorities become aware of potential cost savings in areas such as water and sewerage. The Kyoto Protocol has only recently been ratified and the creation of a DNA is planned. Zambia has considerable primary energy resources, with large coal deposits and an estimated 4,000 MW of potential hydro capacity. Despite this only 2% of rural households are electrified due to the difficulties and costs of extending the grid to isolated areas. The power sector is dominated by the vertically structured state


viii

owned utility ZESCO, which struggles to maintain the grid network due to lack of a funds. Support for renewable technologies in the form of training, research and information has been provided in successive National Energy Plans, and in 2003 the government created a Rural Electrification Authority (REA) tasked with providing support to rural electrification programmes and mobilizing finance to encourage implementation of existing opportunities. Foreign donors are also active in the rural electrification field, for instance the UNEP supported AREED initiative provides financial support in the form of seed capital and training to encourage the development of rural energy service companies. Large power bills have encouraged local authorities to take steps to use energy more efficiently especially in the areas of sewerage and water, programmes exist supported by local institutions which have had some success in reducing energy wastage through training and information provision. Like Swaziland, Zambia has only recently ratified the Kyoto Protocol and has no functioning DNA, assistance to this end is being provided by the World Bank and UNEP. The South African government has set a target for all households to have access to electricity by 2012 – currently 52% of poor households have access to free basic electricity and is on track to meet this target. Government renewables policy aims to source 10 GWh of power from renewable sources by 2013, although there is currently a lack of incentives to achieve this - the cost of electricity in South Africa is 65% below the international average making it difficult for renewables to compete without assistance. To this end, the Department of Energy (DME) is developing a policy framework consisting of economic (subsidies, tax measures and tradeable permits) and/or regulatory (standards, codes and targets) instruments. The government has also set up a National Energy Efficiency Agency (NEEA) driven by the need to promote energy efficiency and demand side management due to a shortage of peak and baseload power. Local Authority control over the South African distribution network has resulted in 187 separate distribution authorities, with 200 different tariffs, making the system complex and difficult to staff. Efforts to reform this into six electricity distributors have been ongoing for 10 years. The South African DNA has been operating since 2004 and there are currently two projects registered with the Executive Board. For REEPASA, opportunities exist in all of the countries studied. Projects in Mozambique should concentrate on areas of the country not covered by EDM’s grid extension programme. Opportunities exist to commission studies to quantify the wind resource in areas where knowledge gaps exist and to pump underground water resources to irrigate crops and improve drinking water quality. In Swaziland REEPASA can assist with the development of renewables policies and action plans for their implementation. A proposal for REEPASA to develop Energy Service Companies (ESCO’s) which could provide electricity to rural communities that are not economically viable to connect to the grid has the support of the Swaziland Electricity Board (SEB). The DNA is suffering from a lack of capacity and the department responsible for creating the DNA has welcomed the possibility of support. Zambia, which is developing renewable and rural electrification policies may benefit by provision of assistance to further facilitate renewable electricity through the setting of targets and evaluation of existing policies. REEPASA can provide assistance in developing criteria to assess health, education and water supply impacts of rural electrification projects and develop projects to encourage the use and financing of renewables in niche areas such as crop-drying and honey processing. In South


ix

Africa REEPASA could help to analyse the cost and effectiveness of financial mechanisms which are needed to support the development of renewable generation. Further opportunities exist for promoting and examining embedded generation and the construction of mini-grids supplying rural communities. Local Authorities, having control over the distribution network could also be targeted for energy management programmes and renewable development by emphasizing tangible benefits such as security of supply and grid stabilization.


10

1.0 MOZAMBIQUE 1.1 Background 1.1.1 Population, Economy and Governance Mozambique, in the south-eastern cost of Africa, is located between the parallels 10o27’ and 26o56’, latitude south and the meridians 30o12’ and 10o27’ to the east. According to the World Bank (WB), in 2004 19.1 millions inhabited this country, with over 80% living in rural areas and with an illiteracy rate about 56% amongst the adult population. The capital Maputo has over a million inhabitants. Mozambique is administratively divided into eleven provinces including the capital of the country, Maputo City, which also has the status of a province. Each province is divided into capital and districts which further divided into administrative posts. In total, Mozambique has 128 districts, 33 municipalities, 68 towns and 387 administrative posts. The country is crossed by several rivers including the Zambezi, and vegetation ranges from rainforest to grassy plains and semi-desert. The climate is hot and humid from October to March (the rainy season) but generally dry for the rest of the year. Both droughts and floods cause problems for farmers from time to time. There are ten major ethnic groups, and more than 30 different languages are spoken. Because of the colonial past, Portuguese is the official language, but English is increasingly been used. There is religious diversity: there are large groups of Christians and Muslims, as well as many animists. According to the WB classification of countries based on Gross National Income (GNI) per capita, Mozambique is ranked as a developing, low-income economy and in debt, with a Gross Domestic Product (GDP) per capita is estimated at USD 195. The government is still heavily dependent on external support, currently constituting about 17% of the overall GDP. Mozambique’s governmental system has passed through a major change, from social system to a democratic system. Major reforms have been carried out in economy in order to achieve a more market oriented system. Currently the Public Sector reform is been carried out for improvement of the government functioning. Table 1.1 Macroeconomic data

Macroeconomic profile1 GDP 5,933.34 (millions $, 2004) GDP per Capita 322 ($, 2004) GDP (growth) 7.2 (%, 2004) Interest rate (MAIBOR 12m) 26.2 (%, December de 2004) Exchange Rate MT/USD 22,501.7 (annual average, 2004)

1 The values for 2005 and 2006 are estimations.


11

Exchange rate MT/EUR 27,937.7 (annual average, 2004) Inflation 12.6 (%, Maputo city, 2004) Export 1,451.9 (millions de $, 2004) Import 1,753.9 (millions de $, 2004) Foreign Debt 4,404.5 (millions de $, 2004) Population per Km2 24.3 (2005) Pop. growth rate 2.4 (%, 2006) Illiteracy rate 53.6 (%, 2003) HIV/SIDA prevalence 16.2 (%, adults (15-49 yrs), 2004) Life expectancy 47.4 (yrs, 2006)

Source: INE, Ministério de Plano e Desenvolvimento.

The energy sector is one of six priority areas in Mozambique's Action Plan for the Reduction of Absolute Poverty (PARPA), and the government recognises that the development of the energy sector has a central role to play both by contributing to macro-economic growth and poverty reduction. 1.1.2 Energy Balance About 80 percent of Mozambique's population lives in rural areas and depends on wood for cooking as well as heating water for domestic use, room heating and drying of food stuffs. Mozambique’s energy resources can be classified into three categories: (i) Commercial forms of energy, consisting of hydropower, natural gas and coal; (ii) Biomass products, a group comprising fuel wood, vegetal coal, and animal dung; and (iii) Renewable energy resources, from which small hydro, wind and solar may have a special relevance in Mozambique. More than 90% of the families exclusively use fuel wood for cooking, and less than 10% use charcoal. This happened mostly due to the wood fuel be the most reliable and affordable source of energy for many households. Besides the domestic purposes, the biomass fuels are also used in agriculture for curing tobacco, in brick manufacturing, lime production, fish smoking, and coffee and tea drying. Table 1.2 Electricity Production by Regions, 2001 to 2003.

Region Production of Electricity. (GWh) Variation %

2001 2002 2003 2004 2002/2003 2003/2004 Total 300 296,4 277,6 148,5 -6,3 -46,5

North 33,7 35,5 38,2 41,6

7,6 8,9

Centre 226,2 256,5 237,8 95,1 -7,3 -60 South 40,1 4,4 1,6 *11,8 -63,6 637,5 Source. EDM. (does not include 1.7 gWh from Inhambane concession)


12

As it can be seen from the table above the major electricity producer has been the central region of Mozambique. The main source being the Cahora Bassa Hydro Power plant, which is located in the western province of Tete. The most active provinces regarding energy source and use are: Maputo, Sofala, Cabo Delgado and Inhambane, besides Tete. Most of Mozambique's primary energy consumption (80%) is met by traditional bio fuels (wood, charcoal, and agro/animal wastes) that are produced and used inefficiently. On the supply side, the growing demand for charcoal and fuel wood in the principal cities (Maputo, Beira, Nampula and Quelimane), combined with inefficient charcoal production practices, has led to a significant depletion of the forest stocks around those cities and in some cases as far away as 200 km.

Table 1.3 Global Energy Balance EDM (GWh)

2004 2003 Variation % Generation 146,267 276,673 -46 Purchase 1,537,821 1,444,774 6 Import 10,213 10,655 -4 Total Energy 1,924,908 1,829,851 5 Exports 278,525 245,615 13 Transmission Losses 66,465 101,262 -34 Gross Available 1,579,918 1,482,974 7 Auxiliary Consumption 16,869 52,320 -68 Distribution 1,049 1,430654 9 Public Lights 28,660 27,049 6 Internal Consumptions 10,384 10,830 -4 Distribution Losses 297,190 223,011 33 Invoicing 1,469,171 1,355,318 8 Total Losses 457,533 399,609 14

As stocks are depleted, supplying communities lose a significant source of their cash incomes and risk a loss of land productivity. On the end-use side, traditional combustion technologies and practices cause significant indoor air pollution, with adverse health consequences, particularly for women and children. The transition to modern cooking fuels is hampered, even in urban areas, by limited access to such fuels or high initial costs. Most of the kerosene the poor purchase is used for lighting purposes due to lack of access to electricity. Mozambique is rich in modern energy resources such as hydro power, natural gas, and coal, and can exploit them for exports and for domestic use. Currently the largest part of the power sector in Mozambique is the "export-oriented" market, centered on Cahora Bassa hydro power plant. In addition, GoM has agreements with foreign companies for the development of Pande and Temane gas fields, and building a gas pipeline for exports to South Africa. A number of other export-oriented, private sector-led energy projects, based on


13

hydroelectricity, coal for energy, and other minerals such as titanium, are at various stages of planning or implementation. Small hydro, wind and solar resources constitute the most promising renewable energy resources of the country. The small hydro potential of the country may be high, as there is significant number of small rivers crossing the country. Nevertheless its exact potential is still to be determined. Concerning wind resources, although the wind speed over the interior is less than 2m/s, the sea breeze at many locations along the coastline may well attain the 4.5 m/s. In the highland of interior, in the proximities of water bodies, like rivers and lakes, and in islands the wind regime is reasonable. However little wind data has been consistently collected over the years to enable us to make firm statements concerning wind utilization. The solar energy is one of the most promising renewable energy resources in the country (with average radiation in excess of 5.2 kWh/m2 a day) with a relatively uniform distribution along the country and available during the whole year. The utilization of hybrid PV/wind systems may result in an interesting combination in particular on coastal areas. Bio energy (Bio-Ethanol and Bio Diesel) is also an area that, due to the third oil shock the planet is facing today, will become a very interesting area for development in the country in order to provide alternatives for internal consumption of liquid fuels as well as for export purposes. An European Union directive on biofuels aims to increase the share of biofuels to 5,75% by 2010 and as much as 20% by 2020, which opens a vast market for export of biofuels and Mozambique and the SADC region is one of the best placed areas in the world to attract investment for this production. Cost & tariffs of electricity: Present cost per kWh is 1.5 cents of US$ Present average selling cost is 7.8 cents of US$ Present tariffs as follows: Table I.4 Social, household, agriculture and general tariffs

Tariffs Charged Consumption Level Social Household Agricultural General Fixed Tariff

[kWh] [Mt/kWh] [Mt/kWh] [Mt/kWh] [Mt/kWh] [Mt]

From 0 to 100 1,010 --- --- --- ----

From 0 to 200 --- 2,198 2,215 2,462 70,797

From 201 to 500 --- 2,929 3,164 3,516 70,797

Over 500 --- 3,077 3,462 3,847 70,797


14

Pre Paid 1,010 2,802 3,083 3,532 ---

Table 1.5 Large consumers of low, medium and high voltage

Tariffs Fixed Tariff Large Consumers Category [Mt/kWh] [Mt/kW] [Mt]

Low voltage 1,378 105,973 207,308

Medium voltage 1,144 118,615 973,079

High voltage 1,020 130,654 973,079

1.1.3 Electrification Statistics Although Mozambique generates more than 7 billion kWh of electricity annually, much of it from the Cahora Bassa hydro station, about 80% of this production is exported to South Africa. From the 128 districts Mozambique has, only 60 are covered by the EDM energy network. This reflects the 6% of the population with access to electricity. Those figures are expected to rise to 100 districts and 15% of the population with access to electricity by 2009. The figure below show which districts are covered by EDM network and which are expected to be integrated into the network by 2009. As the figure expresses, by 2009 Tete province and the provinces near by will be mostly electrified as result of the ongoing transfer process of the Cahora Bassa Dam to the Mozambican government.


15

Figure 1.1 Map of electrification prospects

1.1.4 Ministries, Agencies, Utilities and Other Players in the Energy Sector In Mozambique the electricity sector can be divided into three mains types of institutions: i) Producers; ii) Distributors; and iii) Regulators. Among the producers the Cahora Bassa Dam is the major and the main electricity producer. Other ongoing projects related to energy production do exist. One is the Temane gas pipeline, which explores and distributes the gas production. There are also prospective oil production projects. The distributor market is monopolized by the EDM, which is the national electricity distributor. EDM practice a national uniform tariff with affordable electricity prices in all urban and rural areas including social tariff by utilizing a cross-subsidy scheme. They also use a prepayment metering which had a positive effect on their liquidity and not on their consumer number. The major governmental institution regulating all the issues related to the energy sector is the Ministry of Energy; to whom National Electrical Council (CNELEC), National Energy Fund (FUNAE), EDM and Petromoc respond. Under this body there are several bodies as National Directorate of Electricity, Renewable Energy and Fuel, shown in the illustration below. The three national directorates have the overall responsibility for energy sector developments. Their tasks include: (i) Policy formulation and implementation; (ii) Project definition and promotion; (iii) Initiation and formulation of regulations; and (iv) Energy planning and management, in their own delimited energy types or areas.


16

Figure 1.2 Organization of regulators

The main goal of the Government of Mozambique through the Mozambique National Electrification Company (EDM) and its master plan is to satisfy the primary needs of electricity all over the country, with sustainability in the long run. The extension of the national grid to the rural areas, the rehabilitation of the distribution network, intensification of distribution network in sub-urban areas, CO2-neutrele hydropower, are the main action carried out by EDM. EDM decided to establish a rather ambitious goal concerning adding new consumers. In 2005 EDM added 52.000 new consumers and established as a goal that for the period 2006 till 2009 those 70.000 new consumers will be added each year. This target will require annual investments in the order of 50 to 60 million USD. 1.1.5 Significant RE and Energy Efficient Projects As already stated, the Government of Mozambique aims to satisfy the primary needs of electricity all over the country, with sustainability in the long run. In order to achieve this they have carried out actions toward the extension of the national grid to the rural areas, the rehabilitation of the distribution network and intensification of distribution network in sub-urban areas. A number of projects has been undertaken and are planned for efficient use of the renewable energy use. The Mozambican National Authority places renewable energy as source of energy in remote and other areas not served by the national grid. The National Fund for Energy (FUNAE), supported by Danish Funds support is undertaking the promotion, education, project design and financing RE initiatives with participation of private sector, and so far FUNAE has spent about US$600 thousands financing solar system. Currently there are ongoing the following activities:

Minister

ND Electricity

ND Renewable Energy

ND Fuel


17

Biomass - Pilot project on improved kilns and stove to ensure energy conservation in Sofala and Maputo Provinces, brickets (experimental phase) and biogas. According to available data is estimated that on biomass there is about 3500-4000 million tones. 80% of energy consumption in the country is coming from biomass (charcoal and firewood) and is used basically for cooking Solar – Becoming popular mainly for lighting health centers, schools and for water pumping in rural areas. The National Directorate for Renewable Energy is drawing a national plan of action in accordance with the main stakeholder (EDM, health centre and schools). Mozambique’s solar radiation potential in average is 5.2 Kw/m2. The PV systems are also used for telecommunications, sea and railways lighting. Pilot projects financed by FUNAE are ongoing in Sofala (Guara-guara), in Maputo (Tinonganine & Djabula) and several individual in Cabo Delgado and Inhambane. Hydro – For data available, installable capacity is 14000mw. The National Directorate of renewable energy prepared a master plan which had a kick-off meeting on March, 6th. First action: national study to identify potential areas and priority definitions depending on sustainability and feasibility. Wind – Undergoing studies to measure wind potential for specific purpose and feasibility on using this source of energy Geothermic – There are some old studies. The National Directorate of New and Renewable Energy have planed to update this study. Heating – FUNAE is including in its programme the utilization of Solar Convectors to use solar energy to heat water for households in urban areas and hospitals and schools in the countryside But as for the Authorities, the outreach of energy throughout the country including rural areas will be mainly done through the expansion of the national grid, in order to pursue sustainable poverty reduction goal, which leaves or means that Renewable Energy (RE) will have a temporary role. 1.1.6 Significant Energy Policies and Regulation Major documents and acts relating to the energy sector: The Electricity Law of 1997 (Law number 21/97 from October 1st) lays the foundation of the energy regulation and it has opened the power sector in Mozambique for participation of new entrants, through concession contracts. Implementing regulations to permit private sector participation in all stages of electricity business were passed in April, 2000. Since then, the GoM: (i) has passed a decree establishing a power sector advisory body, CNELEC, with the aim of transforming it to a regulatory body within 5 years; (ii) is in the process of separating generation, transmission and distribution/supply functions of EDM to in order to run them as separate business lines; (iii) has established an "energy fund" (FUNAE) to collect specific levies, and to channel subsidies to specific


18

projects to expand access to modern energy or for demonstration projects; (iv) created a National Directorate of New and renewable Energy in 2005. Subsequent to the separation of EDM's functions and the creation of separate profit centers, the government plans to commercialize the utility and invite strategic private investment and management in distribution. It should be noted that EDM-owned and operated generation is insignificant as most of the power is either imported from South Africa or purchased from the Cahora Bassa plant, and that future generation capacity will be implemented by the private sector. Furthermore, the government intends to develop future transmission assets jointly with the private sector but to retain management of the transmission assets. The transmission company will also be the single buyer. The Government is also in the process of concession out the North Inhambane mini grids which were constructed under the IDA-funded Urban Household Energy Project (UHEP). This model, of decentralized energy supply through an off-grid system, could be replicated in other parts of the country which cannot be economically connected to the national power grid. The concession is explored by the ENMO (Energia de Moçambique Lda), a joint venture between ElectroTec (Mozambique), Rural Maintenance and Siemens (South Africa). This joint venture will be operating under a hierarchy which is as following: i) 1st line or top: Council of Ministries, CNELEC, District Government; ii) 2nd line or adjacent: DNE, CNLEC, FUNAE. The policy and strategy for the energy sector is currently in general form. Specifically for the Renewable Energy sector, this year the Government will draft a National Energy Plan. Description of official policy on RE: Renewable energy still lacks many policy, legislation and regulatory tools. At the moment, the energy sector has a general policy and strategy. With the creation of the Ministry on February 4th, 2005, three main areas have been defined namely electrical energy, new and renewable energy and fuels. In additional to that three national directorate have been created to support those technical domains, where their main task is to develop policy, strategies, legislation, etc. According to the mandate of the national directorates, the national directorate of new and renewable energy has been developing the national policy on renewable energy. Beside of the policy, other basic tools such as regulation on biomass for energy propose will be discussed in parallel. Description of official policy on rational use of energy: Currently, there is no policy on rational use of energy.


19

1.2 Policy and Finance issues Relating to RE and Rational use of Energy

1.2.1 Policy and Finance Tools Currently there are no Government policy/finance tools in place to promote RETs. But there is a target established under PARPA (49.2), which establishes that 25 rural villages (Postos Administrativos) shall receive PV systems. FUNAE has initiated and is testing the tariffs definition to be applied on solar PV systems. In 2006 six isolated rural villages in three provinces, namely Sofala, Manica and Tete will benefit of PV systems, supplying energy to 600 domestic consumers and 120 schools, health centers, local administration and economic agents. The concept is to lease PV equipment to rural household over a period of time (10 to 15 years) in such a way that the monthly payment (a fixed fee) is calculated in accordance with the rural population’s ability to pay so that sustainability can be attained. The basis to achieve this objective is to consider that initially PV systems will impact on replacing another energy source commonly used in rural areas for lighting, i.e., kerosene. At first, the fixed fee is calculated for what is called a Social Consumer; lower than monthly kerosene bill in order to incentive the use of PV system. All other fees are obtained by multiplying Social Consumer Fee by a factor reflecting difference on PV equipment costs (Factor = Cost PV/Cost PV of Social Consumer) 1.2.2 Status of Designated National Authority (DNA) The Designated National authority is under the approval process in the National Assembly. The main responsibility of this is foreseen as to assess, approve Clean Development Mechanism (CDM) projects and regulate the implementation of CDM projects in the country under the aim of sustainable development and poverty reduction of Mozambique. This body will operate under the National Directorate of Environment Management. The National Climate Change committee, currently carrying out DNA responsibilities, was established in 1997 and comprises the sector of energy, health, water, agriculture, universities, NGOs, forestry, education, finance, private sector. The following table describes the activities of each stakeholder mentioned. Table 1.6 Description of the activities of the CDM stakeholders

Institution Function

1 Ministry of environment Assessment and approve projects; Do the Environment Impact Assessment; Host the DNA

2 Ministry of Energy Assessment, promotion of energy projects and orientation on


20

sector priorities; Look for partnership

3 Ministry of Agriculture Assessment, promotions and orientations on sector priorities; Assessment and fitting of LULUCF projects

4 Ministry of Industry and trade Assessment, promotion and political fitting of projects

5 Ministry of Finance Financial and economic assessment, promotion advise investors, elaboration and management of projects data

6 Eduardo Mondlane University

Assessment, promotion training of projects proponents and coordination of all technical activities

Currently in Mozambique few projects are in development and were undertaken under the CDM framework such as the Matola and Maputo public transport fuel switching (from diesel to gas) by Eduardo Mondlane University in coordination with Ministry of Environment (MICOA), Fasol plant fuel switching project, Cimentos de Moçambique plant fuel switching project, Cervejas de Moçambique plant fuel switching, carbon sequestration through reforestation by fruit trees in Angonia and Tsangano districts in Tete province, and biogas promotion (use of animal dung). There is also the interest of Mozal in using gas on the production process. The CDM process in Mozambique is something new. There is a project called Capacity Development for the Clean Development Mechanism (CDM), which is implemented by UNEP Risø and financed by the Dutch Government and has the objective of:

• Improved regulatory frameworks, functioning national CDM entities, a pipeline of possible CDM projects, and clear definition of baseline parameters that form a basis for possible political endorsement and project agreements.

• Better skills and increased capacity to 1) define a regulatory framework that supports CDM activities, 2) identify prospective CDM projects, 3) formulate investment plans, 4) validate CDM projects, and 5) monitor and report the results of CDM activities.

• Experience on CDM capacity building and relevant institutional approaches that can be shared with other countries and form the basis for further activities.

• Operational information and guidelines for awareness raising and capacity building on CDM that can be applied in the project but are also available for broader use and application.

So in relation to climate change policy and CDM policy there is no specific policy, though there exist sectored policies that have things to do with CDM process like: Land Law (Law 19/97 of 1st October):


21

The key aspect of the new law is its recognition of the right to land through occupation on part of rural families, based on oral testimonial. This is particularly important because it opens up opportunities for safeguarding the right to land of many Mozambicans who cultivate it. It helps the rural families to cultivate oilseed and other alternative energy source inputs, without damaging the environment and excessive use of the renewable resources. This law compels for: i. Recognition of the right to land use and/or utilization according to

customary norms and practices; and ii. compulsory consultation to the communities when demarcating and titling

the right to use and/or utilize land. iii. The period of exploitation of the land can not exceed 50 years. Forestry and Wildlife Law (Law 10/99 of 7th July 1999): i. Integration of local communities’ interests, of the private sector and civil

society; ii. Ecologically sustainable use of resources; iii. Establishment of mechanisms for private appropriation; and iv. Recognition of customary rights Land Policy (Resolution 10/95 of 17th October 1995): i. Ensure the populations and investors’ access to land; ii. Ensure women’s access to and use of land; iii. Enforce an ecologically-sustainable use of the resources; iv. Promote national and foreign private investment without prejudicing the

resident populations, and ensuring benefits to the state; and v. Ensure active participation by nationals as partners in private enterprises. 1.2.3 Areas of Low Penetration There are several areas with weak grids and which represent good sites for REEPASA analysis. Among those there are those which are planned to be covered in the rural electrification program. There are also the ones mentioned in 1.3 f) under the following section, Local Authorities´ Electricity Management.


22

1.3 Rural Energy Access 1.3.1 Role of Renewable Energy in Meeting the Country’s Energy Needs Renewable energy are seen as the alternative way of reaching the rural areas where the national electrification does not reach, due to feasibility, high costs or geographic limitations. Renewable energies are also taken seriously into investigation as a mean of alternative source of energy for most of the off grid areas. 1.3.2 Major Electrification Programmes Government Initiatives (through FUNAE – PV Systems): The priority is to use renewable energies, more specifically solar, using appropriate photovoltaic(PV) systems for four (4) different categories of consumers: i) Social household, ii) Non-social household/Small Shop Owners; iii) Institutions (Schools, health posts, Administrative posts and Police); iv) Shop owners equipped with fridges of 170 liters of capacity. An extra value per district of USD 15,000 corresponding to the installation of 10 public Streetlights equipped with: Solar panel, battery, lamp and light bulb (LED) of 26 W is presented. This produces the same light intensity (lumens) as a conventional streetlight sodium vapor bulb of 70 W; Also an extra value per district of USD 9,000 corresponding to the installation of Photovoltaic Pumping Systems with the capacity of extracting 10 m3/day of water from the height of 52 meters and equipped with a reservoir tank of 1000 liters of capacity is presented; The introduction of public streetlights and water pumping systems indicates an extra investment of approx. USD 1,680,000 for the group of localities listed below. The following table contains a summary of investments detailed per locality, households per district and province, with a total value of approximately 10.3 millions USD. Adding the optional costs above mentioned the total value amounts to approx. 11.3 millions USD that is needed to electrify the identified districts. For the realistic planning of financial resources, the following timetable is presented, indicating annual investments for the next seven years including 2006. Table 1.5 Planned Annual investments in Renewable Energy by districts

Year Districts (for localities per district refer to

Number of households benefiting

Value of PV systems

Optional systems (Streetlights and Water Pumping)

Total investment


23

annex) (1000xUSD) (1000xUSD) (1000xUS$)

2006 PES 2006 Mecufi

638 270

663 289

144 48

807 337

2007 Namuno 1 570 1 680 144 1 824

2008 Balama Lalaua

890 625

952 669

96 48

1 048 717

2009

Lugela Chinde Tambara Macossa Machaze

395 585 285 100 270

423 626 305 107 290

96 72 72 72 48

519 698 377 179 338

2010

Sanga Mavago Mecula Majune Muembe Nguauma

290 165 165 295 255 400

310 177 177 316 273 428

96 48 48 72 48 48

406 225 225 388 321 476

2011

Maringué Muanza Machanga Massangena Chigubo

440 165 545 115 80

471 177 583 123 86

72 48 48 48 48

543 225 631 171 134

2012

Mabalane Chicualacuala Mabote Funhaloro Nipepe

195 225 245 330 225

209 241 262 353 348

72 72 72 48 48

281 313 334 410 396

Table 1.8 Planned Total Investment in Renewable Energy.

Year 2006 2007 2008 2009 2010 2011 2012 Invest.(1000xUSD) 1 144 1 824 1 765 2 111 2 041 1 704 1 734

Government Initiatives (through EDM): Renewable Energy is considered as the main source of energy in remote and other areas not served by the national grid. Under this label, given to the RE, the rural electrification program, grouped by main types are: • Transmission Projects

o Network reinforcement in the Beira Corridor o Phombeya Nampula 220Kv transmission project o Nampula/Monapo reinforcement project o Voltage control facilities in the north-eastern system o Maputo/Infulene reinforcement project o Infulene/Manhiça/Macia 110KV transmission Project

• Grid Extension/Rural electrification projects


24

o Electrification of the Marrupa and Mecanhelas areas – Niassa Province o Electrification of the Gilé and Pebane areas – Zambézia Province o Electrification of the Chibabava area – Sofala Province o Electrification of the Vilanculos area – Inhambane Province o Electrification of the Furancungo/Luia area – Tete Province o Electrification of the Mogincual and Mecuburi areas – Nampula Province o Electrification of the Mocómboa da Praia area – Cabo Delgado Province o Electrification of the Limpopo Valley area – Gaza Province o Electrification/Rehabilitation of distribution networks in Maputo Province o Electrification of the Chimuara, Chupanga and Chinde areas – Zambézia

Province

• Distribution Network rehabilitation o Rehabilitation of Maputo and Matola distribution networks o Rehabilitation of Xai-Xai, Chokwe and Inhambane distribution networks o Rehabilitation of Beira and Dondo distribution networks o Rehabilitation of Chimoio, Tete and Quelimane distribution networks o Rehabilitation of Nampula,Nacala and Monapo distribution networks o Rehabilitation of Lichinga, Cuamba and Pemba distribution networks

• Generation Projects o Rehabilitation of Mavuzi and Chicamba Hydropower plants o Massingir Hydropower Project o Alto Malema Hydropower Project o Quedas and Ocua Hydropower Project on Lúrio River

• Remote Control Center o Remote Control Center in the Nothen/Central region – Feasibility study

Danish Cooperation: Mainly directed towards the promotion, education, project design and financing RE initiatives with participation of private sector. They are working in cooperation with FUNAE, EDM and Ministry of Energy. World Bank Cooperation: The World Bank projects on the power sector have aimed for improvements in the rural electrification, institutional strengthening and capacity building and renewable energy promotion. Currently a number of projects can be identified among many ongoing:

• Energy Reform and Access Project;

• Mineral resources management capacity building;

• MZ-Southern Africa regional Gas project;

• Mozambique: Energy Reform and Access Program;


25

Norwegian Cooperation: The overall goal of Norwegian development cooperation with Mozambique is to support Mozambique's fight against poverty. Cooperation between Mozambique and Norway in the energy sector has existed since the 1970s, and includes both institutional support (to ENH, DNCH, DNR and UTIP) and rural electrification projects through the state owned Electricidade de Moçambique (EDM). The rural electrification projects consist of three ongoing initiatives:

• Assistance to the Gurué-Cuamba-Lichinga Transmission Line Project. This is part of ongoing efforts for the electrification of the Niassa Province. The project goal is defined as increased economic activity and enhanced living conditions in the area influenced by the transmission line. The objective is defined as connecting the Niassa Province to the national electricity grid and supply of stable power from Cahora Bassa. The project has a total cost of 305 million, and is co-financed with Sweden.

• Namacurra Electrification Project. This is part of ongoing efforts for the electrification of the Zambezia Province. The goal of the project is defined as increased economic activity and enhanced living conditions in the area influenced by the new distribution grid. The objective is to have the Namacurra, Mganja and Inhassunge districts connected to the national electricity grid and supplied by stable power from Cahora Bassa. The project had original budgeted costs of NOK 45 million. An additional amount of NOK 12 million was granted in September 2004.

• Namacurra Electrification Project - Extension to Pebane. The planned extension to the coastal town of Pebane in Zambezia will also be made with the overall development goal of increased economic activity and enhanced living conditions in the area reached by the new distribution grid. The Embassy will recommend support to the Project with approximately NOK 25 million for the period 2005-2006.

All three rural electrification projects have increased economic activity and enhanced living conditions - i.e. poverty reduction - as project goals. 1.3.3 Policy Targets to Promote Rural Electrification An alternative electrification program has been developed through coordination meetings between FUNAE and EDM. This plans aims optimizing the use of funds and promoting an accelerated way of providing the population access to the


26

benefits of electricity, through, initially, covering lighting necessities with consequent reduction in use of kerosene, and afterwards, supply of PV systems by FUNAE. This program targets a list of selected districts which will not be reached by EDM grid within ten years, and its foreseen to take place until year 2012 and at end all districts will have access to some form of electricity. 1.3.4 Cross-sectoral Focus Under the World Bank, Energy Reform Assistance Program, 100 schools and 100 health centers will be electrified over the next years using PV systems in the Provinces of Nampula and Zambézia, in addition to FUNAE program. 1.3.5 Projects and Studies on Productive Use of Off-Grid Electricity FUNAE and EDM have decided to co-participate in the launch of a low cost rural electrification plan after having produced the terms of reference and obtained financial support from DANIDA. It is hoped that the study will begin in the last trimester of 2006. FUNAE has published a document named “Reflections Low Cost Rural Electrification Systems” in order to create a common thought with regards to the potential questions and problems that could arise during the plan’s implementation. This document was disseminated between FUNAE and EDM’s technicians involved with this program. This document approached various aspects related to this plan, namely:

a) Energy Supply; b) Consumption and Sustainability; c) Institutional Framework and d) Local Operators.

One of the aspects stated in the document mentioned above was the necessity to create the concept of Basic Electrification at a Household level (BEH) which includes the basic equipment that needs to be supplied (with the state’s support and through FUNAE) to the communities. The so called “Reflections” document briefly describes the content of the BEH concept. The aim of this document is to look at how the BEH will be introduced when the implementation of the Project begins. Furthermore, it will look at the creation of national stocks and a distribution and support network whilst predicting a timely replacement of the BEH components. The terms of reference of the “Low Cost Rural Electrification Plan” propose the identification of Geographical Entities/Investment Packages - (GE/IP). These will be submitted to financial agencies and donors for purposes of obtaining financial aid destined to its implementation. GE/IP will be comprised of dozens of small/medium projects whose dimensions can reach up from the thousands of


27

dollars to some hundred thousand dollars, but never individual projects of great magnitude. It should be emphasized that we are dealing with low cost technologies with the aim of supplying rural communities with very low electricity consumption. The outputs of this joint EDM/FUNAE effort on low cost rural electrification study are:

• Inception Report, including draft technical reports;

• Database of potential areas to be electrified;

• Technical reports;

• A draft Low Cost Rural Electrification Plan (LCREP);

• The final Low Cost Rural Electrification Plan (LCREP) with Project Documents for each Geographical Entity/Investment Package to be electrified under the LCREP;

• Technical paper and related Guidelines (including a training package) on the negative impact of current practices in using replaceable dry cell batteries

• Guidelines for tender packages that combine areas/sites in a cost-effective and logical way;

• An estimate on the potential reductions in pollution resulting from the proposed grid extensions;

• Advise and – if feasible - prepare documentation for EDM/FUNAE to seek funding from international carbon reduction schemes (2);

• A report outlining strategies for productive use of electricity in the electrified areas.

1.3.6 Proposed Areas for REEPASA Since FUNAE has established a program till 2012 to electrify, by using PV systems, uncovered geographic areas by EDM it is suggested that REEPASA work focus in those areas namely: Table 1.9 Uncovered geographic areas by EDM

Province Areas

Niassa Sanga: Unango-sede, Lucibessi, Macaloge and Matchedje, Mavago: Mavago-sede and M’sawize, Mecula: Mecula-sede and Matondovela, Majune: Malanga-sede, Muaquia and Nairrubi, Muembe: Muembe-sede and Chiconono, Nguauma: Massangulo-sede and Tepela, Nipepe: Nipepe-sede and Muipite

2 See www.carbonfinace.org


28

Cabo Delgado Balama: Balama-sede, Impire, Kwekwe and Mavala, Namuno: Namuno-sede, Hucula, Machoca, Meloco, N’cumpe and Papai, Mecufi: Mecufi-sede, Murrebue

Nampula Lalaua: Lalaua-sede and Meti, Mojincual: Liupo-sede, Namige, Quinga and Quixaxe

Zambezia Lugela: Lugela-sede, Muabanana, Munhamade and Tacuane, Chinde: Chinde-sede, Luabo and Micaune

Manica Tambara: Nhacolo-sede, Buzua and Nhacafula, Macossa: Macossa-sede, Nhamagua and Neguawala, Machaze: Chitobe-sede and Save

Sofala Maringué: Maringué-sede, Canchiche and Súbwe, Muanza: Munza-sede and Galinha, Machanga: Machanga-sede and Divinhe

Gaza Massangena: Massangena-sede and Mavue, Chigubo: Chigubo-sede and Dindiza, Mabalane: Mabalane-sede, Combomune and Ntalavene, Chicualacuala: Eduardo Mondlane-sede, Mapai and Pafuri

Inhambane Mabote: Mabote-sede, Zinave and Zimane, Funhaloro: Funhaloro-sede and Tome

1.4 Local Authorities’ Electricity Management 1.4.1 Role of LA in Generating and Distributing Electricity Level 1 – where EDM has been, since its establishment, in charge of generating and distributing electricity like provincial capitals, and district capitals and villages under the National Grid – No changes shall, at this stage be considered, which means no role to local authorities. Level 2 – Where private concessions have been established (Case of Northern Inhambane Province) ENMO concession. In these cases, the role of local authorities is to be in accordance with the terms of the concession. Level 3 – Isolated Areas to be supplied with PV systems funded by FUNAE – A Local Operator is designated as the outcome of a process involving local community and rural local authorities. The Local Operator is a key element of FUNAE’s strategy of providing new and renewable energy supplies to isolated remote areas. The Local Operator will undergo special training during project implementation, acting as a liaison between the community, suppliers and FUNAE. The Local Operator will be responsible for basic maintenance of the systems and will be trained to exert a quality control in terms of battery or dry cell operation including its re-collection once its life has expired to avoid any sort of negative environmental impact. Level 4 – Low Cost Rural Electrification (Joint EDM/FUNAE ongoing program) – The identification of the Local Operator should be part of FUNAE’s responsibility. FUNAE and EDM collaborate in the provision of the basic training that will


29

provide the operator with the necessary tools to provide some basic assistance to the system; obtain safety knowledge with regards to the equipment and the people using it as well as sufficient management knowledge to be able to perform its tasks and others if deemed necessary. The Local Operator will only be necessary in the low cost energy distribution systems if it can contribute in a decisive manner to keep costs low. This will allow for the costs related with the system’s management to be kept at a low level. Local Operator to have the following responsibilities:

• Supporting the electricity connections to the local communities;

• The timely collection of payments of the fixed rates destined to the payment of equipment provided by FUNAE, EDM’s connecting charges and energy consumed per category

• Appeal to new consumers and identify productive for electricity

• Commercialization of electric equipment necessary to EBAF/BEH (Basic Household Electricity)

• Participation in the search for new and innovative solutions for the most common jobs in maintenance (such as gardening of weeds), as a way of involving the community and thus contributing to the creation of local employment;

• Fight and dissuasion of vandalism and theft activities. 1.4.2 Efforts to Streamline Use of Electricity In Mozambique’s case this is not applicable. A local authority, such as Municipalities does not have the prerogative in the direct use of electricity. 1.4.3 Efforts to Assess and Develop Power Generation There are ongoing studies in order to identify each off grid area potentialities in terms of energy source, its feasibility. There is also at the governmental level an integrated bottom-up energy plan designing process ongoing which makes this process of identification of off grid areas, their potentialities and all alternative energy sources existing a relatively easier task, 1.5 Summary of Proposed REEPASA Activities Table 1.10 Proposed activities under REEPASA

Project Summary

Potential Partners


30

Underground waters’ exploration for human and animal consumption in arid and semi arid zones of the country, using renewable energies (wind and solar energy).

This projects intends to assess the feasibility of use of renewable energies technologies (solar and wind energy) for underground waters exploration in arid and semi arid zones (Maputo, Gaza, Inhambane, Sofala, Manica and Tete provinces), for human and animal consumption, reducing population’s vulnerability to droughts. The project will research on the incident of underground waters in the referred regions, assess the existence of renewable energies resources and recommend the most appropriated technologies in specific places, on basis of the piloting units installed in some zones.

Eduardo Mondlane University (UEM), Ministry of energy (DNENR), Energy Fund (FUNAE), National Directorate of water (DNA), National Institute for Calamities Management (INGC).

Stocktaking of the wind energy potential in some regions of the country and preparation of letters of winds.

The project aims to stocktaking of wind energy potential and characterization of the regime of winds, in some regions of Mozambique, to prepare a letter of winds of the same regions. Some areas were identified where the wind energy potential seems promising. These areas are located mostly near the coastal belt (Maputo, Inhambane, Sofala, Nampula and Cabo Delgado provinces), in high regions of the interior (Niassa and Tete provinces) and in the proximities of masses of water (rivers and lakes) (Niassa and Zambézia provinces). In chosen zones there will be installed systems of measurement, results of which will be used to check the existence of wind energy resource in these regions.

Eduardo Mondlane University (UEM), Ministry of Energy (DNEE, DNENR), Energy Fund (FUNAE), National Institute of Meteorology (INAM), Bruno & Lopes – Moçambique (BLM), Engenheiros Civis Associados, Lda.


31

2.0 SWAZILAND 2.1 Background 2.1.1 Population, Economy and Governance

The kingdom of Swaziland with an area of only 17364km2 is one of the smallest countries in Africa. Located in the south eastern part of Africa between latitude 25° and 28° south and longitude 31° and 32° east, the country share borders with South Africa in the north, west and south and with Mozambique in the east, hence it is physically landlocked. The population of Swaziland is estimated at around 1.1 million with an annual growth rate of 2.7%. The population of Swaziland is young, with 60% being under 20 years and 46% being 15 years and below. 76% of the population lives in rural areas while 24% lives in urban areas, [Swaziland human development report 2001]. Despite being classified as a lower middle income developing country, 66% of Swaziland’s population still lives below the poverty line. The Kingdom of Swaziland is ruled by an absolute monarchy. King Mswati III is the head of state. The Prime Minister, who is appointed by the King, is head of government. Cabinet Ministers are also appointed by the King within the house of parliament. Parliament, which is the legislative body, consists of the House of Assembly, with 65 members (55 elected by the people from the 55 constituencies and 10 appointed by the King) and the House of Senate with 30 members (10 appointed by the house of assembly and 20 appointed by the King). A dual system of government is in operation, with the modern arm (cabinet and civil service) being balanced by the King’s traditional advisers (Swazi National Council or SNC). Due to this system, decisions are delayed and/or postponed and the pace of reforms is slow. On July 26, 2005 King Mswati III ratified Swaziland’s constitution which became effective from February 2006. This is Swaziland’s first constitution in over 30 years. The new constitution does not allow political parties. The country has also a dual legal system of traditional courts, under the chiefs, and a Roman-Dutch system comprising of Magistrate Courts, High Court and the Court of Appeals. For local administration Swaziland is divided into four regions, each with an administrator appointed by the King and 9 municipal governments. Parallel to the government structure is the traditional system consisting of the King and his advisers, traditional courts, and 55 Tinkhundla (sub regional districts in which traditional chiefs are grouped). 2.1.2 Energy Balance


32

Swaziland's fuel and energy requirements are met from the following main sources: (1999 Energy Balance of Swaziland)

• Electricity (10%)

• Coal (16%)

• Fuel wood, biomass waste and other renewable sources (49%)

• Petroleum products (25%) The types of energy used reflect the socio-economic conditions and rural-urban dichotomy of Swaziland. For instance, most of the coal and electricity are used by industrial consumers, companies, town and urban dwellers; whereas most rural households satisfy their basic energy requirements from fuel wood which is collected from within the area surrounding the homestead. The major consumer groups of fuel energy in order of consumption are illustrated below: Figure 2.1 Energy consumption groups

Agriculture3%

Households

25%services

1%Industry 53%

Transport 18%

Electricity: Provision of electrical energy in Swaziland is the responsibility of the Swaziland Electricity Board (SEB), established by the Electricity Act No. 10/1963. SEB is currently enjoying a monopoly in the generation, transmission, distribution and supply of electricity. Additional electric power requirements are provided through imports from the Republic of South Africa’s electricity utility (ESKOM). Arrangements have already been made by SEB to buy power from Mozambique, where hydro-electric power prices are lower than power from ESKOM.


33

Figure 2.2 Sources of Electricity

As a result of potential capacity constraints in South Africa, ESKOM have put a cap on increasing the existing power sales to Swaziland in the future. This has put pressure on the Government of Swaziland to investigate alternative sources of electricity supply. There is presently a feasibility study underway to review the possibility for coal fired power generation. Coal: Swaziland meets local demand through imports (low grade bituminous coal) from the Republic of South Africa. Although a higher grade coal (Anthracite) is produced in the country, almost all of it is exported to Europe, USA, and South Africa. Coal imports (total 242,000 tons in 1994) are used by local industries and coal consumption by households is very minimal. Petroleum Products: Swaziland satisfies its petroleum products demand through 100% imports from the RSA. The Ministry of Natural Resources and Energy (MNRE) plays a regulatory role in the pricing of gasoline, diesel and kerosene. There are five private companies which supply the country with petroleum products (Shell Oil, BP, Engen, Caltex Oil and Total.) These companies hold stocks of less than eight days. This situation is critical to the economy should there be a disruption in supply. Government therefore adopted a pre-feasibility study (1992) to undertake the establishment of a 60 days storage depot for petrol and diesel. The depot has yet to be built. Fuel wood, Biomass Waste and Other Sources: Woodfuel constitutes the most important domestic fuel source for the majority of Swazis, 77% of who live in rural homesteads. Even in urban households, wood is the most important fuel on a gross energy basis. Wood is therefore becoming increasingly scarce and deforestation and land degradation are ominously visible

Imported Power Eskom

75%

Imported Power STEM

EDM15%

Local Generation (Hydro & Diesel)

10%


34

across Swaziland. Nationwide, it is estimated that the total annual wood consumption exceeds the total sustainable wood supply by about 30%. Projections suggest that rural household energy consumption will rise at a greater rate than in urban areas. Woodfuel use is expected to increase by 50% by the year 2010. Poverty is likely to prevent a major fuel switch (to LPG, electricity or paraffin) taking place, so the pressure on woodfuel reserves is unlikely to lessen and women and children will continue to bear the burden of the collection of this energy source. 2.1.3 Electrification Statistics

The household access to electricity in Swaziland as of 31 March 2005 stands at 24.49%. At present, more than 90% of the residential electricity is consumed by urban households. Although many rural households and establishments would like to have electricity, only few are connected to the national grid. The Rural Electrification Project seeks to make electricity accessible in rural areas. The long-term objective of the project is to stimulate economic growth in rural areas. The project brings electricity to government institutions located in rural areas (schools, clinics, Tinkhundla centres, OVC centres (kitchens) and border posts).The project is divided into five phases and currently it is on its fourth phase with close to 100,000 beneficiaries. Table 2.1 Number of beneficiaries of the rural electrification project in each phase

Phase 1 Phase 2: stage 1 Phase 2: stage 2 Phase 3 No. of Beneficiaries

50 000 40 000 20 000 30 000

Schools 72 80 48 57 Clinics 7 4 5 2 Border 2 2 2 3 Tinkhundla 1 1 1 1 2.1.4 Ministries, Agencies, Utilities and Other Players in the Energy Sector The Ministry of Natural Resources and Energy (MNRE) is the Ministry responsible for the energy sector in the country and one of the major key players. The Energy Section within the Ministry is an independent unit responsible for all energy related matters. With its mission to ensure the sustainable supply and use of energy for all, the Energy Section also fulfills an essential role in advising the Government, public institutions and the private sector in all energy related matters. Another key player in the energy sector is the Swaziland Electricity Board (SEB), which is a Government owned company established under the electricity act of 1963. It has authority to set its own tariffs and other charges and is also responsible for developing and extending power across the country. Currently the


35

company is enjoying a monopoly on the import, distribution and supply of electricity through the national grid. In addition to the electricity supplied from SEB, some of the major industries (sugar and forest industries) produce electricity for their own industrial consumption and for their company towns. These companies are connected to the grid but do not sell the generated electricity to SEB. 2.1.5 Significant RE and Energy Efficient Projects Swaziland has several potential renewable energy resources including biomass, solar and hydro. However, the adoption and use of these potential resources has been at a very slow pace. Currently the only grid connected renewable source of energy in Swaziland is Hydro. There are 3 main hydro plants within the country; these are all operated by SEB:

• Ezulwini 20MW

• Edwaleni 15MW

• Maguduza 6.5MW The Maguga Dam was opened in 2002; there is an intention to install a further 19.2MW of hydro power at this site. Installation of the plant is currently on-going. Commercial biomass energy in the form of bagasse (from the sugar industry) and wood waste (from the forest industry) is used for heat and electricity production. These generators are connected to the grid; however the companies do not sell the electricity to SEB. The Ministry of Natural Resources and Energy has been involved in a number of initiatives to promote the use of renewable energy. Between 1992 and 1995 the Ministry established an extensive solar pilot project mainly to electrify clinics and schools. Several street lighting, solar water heating and vaccine refrigeration systems were also installed through the project. The project also installed four PV water pumping schemes in the different regions of the country. However, this project was not successful due in part to some technical issues but mainly as a result of the very high rate of theft of the solar panels. Other initiatives include the UNESCO funded Mphaphati Solar Village project in 1999. The project used PV systems to electrify a primary school at Mphaphati. This included 600Wp installed at the school for lighting and various audio visual equipment as well as individual SHS for the teacher’s housing. The project has been very successful and has been used as a best practice case study over the years. However, in 2005 the area was electrified and slowly the project is now being superceded by grid electrification.


36

To date the use of other renewable energy technologies for electrical generation has been limited. Some use of PV and wind generation has been installed on a small scale by private individuals. There is currently no grid connected wind generated power in the country; however a project is currently underway in the Shewula community (NE of Swaziland) to install a small 20kW turbine. Both MNRE and SEB have outlined their support in forming a power purchase agreement for the grid connection of this turbine. 2.1.6 Significant Energy Policies and Regulation

The energy sector in Swaziland is currently undergoing a significant reform. At present, the Swaziland Electricity Board (SEB) controls all generation, transmission and supply of electricity. However this is set to change, with the coming into force of three Bills currently awaiting Cabinet’s approval. These are: Swaziland Electricity Company Bill, 2005: This Bill seeks to provide for the establishment of the Swaziland Electricity Company as a company under the Swaziland Company Act of 1912. For the exercise and performance by the company of the powers and functions presently performed by the Swaziland Electricity Board relating to generation, transmission, distribution, and supply of electricity. Once SEB has been set up as a company, it is proposed that the generation of electricity will be open to competition, hence the current monopoly will cease with the effectiveness of this Bill.

Energy Regulatory Authority Bill, 2005: The objective of this bill is to establish an Energy Regulatory Authority which will oversee all matters relating to the generation, transmission, distribution and supply of electricity. Electricity Bill, 2005: The objective of this bill is to provide for the regulation of the generation, transmission, distribution and supply of electricity.

National Energy Policy 2003: The overall aim of the policy is to improve the accessibility of energy to all households at affordable prices. An emphasis is placed on sustainability and environmental concerns and a number of the specific policy statements outlined in the policy relate to promoting the use of renewable and sustainable forms of energy, particularly in the rural areas.


37

Renewable Energy Programme and Action Plan 1997: This indicates a long-term programme for the development of renewable energy in the country. A number of activities in the plan have already been undertaken but there are still activities requiring attention, particularly in the area of biomass energy and quality assurance of renewable energy technologies. This programme however is generally outdated and a number of the activities have yet to be carried out, mainly due to issues of funding. 2.2 Policy and Finance issues Relating to RE and Rational use

of Energy 2.2.1 Policy and Finance Tools There are currently no specific policy or finance tools in place, or being discussed, to promote the adoption of renewable energy technologies in the country. The reason cited for this is that SEB uses mainly hydro (which is a renewable) to generate electricity hence the Ministry has not, to date, seen a need for incentives such as setting up preferential tariffs for power generated from renewables. 2.2.2 Status of Designated National Authority (DNA) Swaziland is still in its early stages of forming the Designated National Authority, with the Kyoto Protocol only ratified a month ago and only coming into force on the 16th April 2006. It was agreed three years ago that the DNA will sit within the Meteorology department. Currently the Meteorology department, with support from the Ministry of Natural Resources and Energy is preparing a paper outlining the potential structure and set-up of the DNA. This paper will need to be presented to Cabinet for approval. 2.2.3 Areas of Low Penetration

• Sigcaweni

• Shewula

• Sistatsatweni

• Mpuluzi

• Dumane

• Mthunzini

• Nsalitje

• Majembeni


38

2.3 Rural Energy Access 2.3.1 Role of Renewable Energy in Meeting the Country’s Energy Needs Swaziland currently generates grid electricity from renewables (mainly hydro) and this locally generated electricity is used only to meet peak demands. The Energy Section in the Ministry of Natural Resources and Energy has conducted a feasibility study on the use of mini hydro to reinforce the grid and the identification of suitable sites. The Ministry has recently received further funding from Government to begin a small pilot project which should include the development of a number of mini and micro hydro sites. 2.3.2 Major Electrification Programmes The Government of the Kingdom of Swaziland signed a Protocol with the Republic of China on Taiwan whereupon the latter would fund a Rural Electrification Project in Swaziland. The Project is currently underway and it’s already on its 4th phase. The goal of the rural electrification programme is that access to electricity is made available to all the citizens of the country by 2022 which is in line with the National Development Strategy. Under the Rural Electrification Programme, the Ministry of Natural Resources and Energy (MNRE) through the Select Committee for Rural Electrification (SCORE) developed selection criteria and identified priority areas that could benefit from extending the national electricity grid to rural areas of Swaziland. Each and every one of the selected project areas had to meet the set criteria. The areas selected to benefit from the project meet two basic criteria:

• There must be government (public) institutions, such as schools, clinics or Tinkhundla centres which will also benefit the surrounding communities.

• The beneficiary communities must show an interest of using electricity as a source of energy. This was measured by the number of applications from the selected areas.

SEB was appointed the implementing agents for the Rural Electrification Projects. The administration costs of the projects will be borne by SEB as its contribution. 2.3.3 Policy Targets to Promote Rural Electrification


39

The government has a policy target of electrifying all households by 2022. 2.3.4 Projects and Studies on Productive Use of Off-Grid Electricity The Micro and Mini hydro study conducted by the Energy Section in the Ministry of Natural Resources and Energy was a broad-brush assessment on the potential of micro and mini hydro-power generation in the country. The study identified 30 potential sites for power generation from mini and micro hydro (i.e. less than 2MW and 100kW) respectively. These schemes are aimed at complimenting the rural electrification programme through the development of mini grids to take power to specific rural communities. The study also identifies one small hydro site with the potential for an 8MW-peak/1MW base load plant, which could be connected to the grid. 2.4 Local Authorities’ Electricity Management

The Mbabane City Council, which is the local authority covering Swaziland’s capital city, is not directly involved in any generation, distribution or supply of energy. The council offers delivery services such as:

• Road maintenance and street lighting,

• Leisure fields and cemetery services and maintenance,

• Sanitation (not including sewage collection or treatment)

• Household and commercial waste collection

• Waste removal systems

• Environmental pollution control and monitoring

• Building plan approval and building inspection efficiency

• Food safety The council uses energy in all their delivery services and pays for electricity from SEB like any other customer. However, the Council has it in its future plans, as it grows, to buy electricity in bulk and sell it to their customers. There are currently no energy management plans within the Council and no energy efficiency measures have been adopted. There are currently no efforts or any future plans to assess and develop power generation within the council. The Council is aware of the potential opportunities and benefits of energy generation from their land fill sites, but these have not yet been explored due to the financial implications involved.


40

2.5 Summary of Proposed REEPASA Activities Policy/Finance Tools:

• One of the proposed activities in this area is the review and update of the current Renewable Energy Action Plan of 1997. A number of activities in the plan have already been undertaken with a few still requiring attention, particularly in the area of biomass energy and quality assurance of renewable energy technologies. However, MNRE have expressed that much of this Action Plan is now potentially outdated and would benefit from review. No renewable energy targets exist currently in Swaziland, either in the Action Plan or within the Energy Policy. A review and update of the Action Plan could provide a good opportunity for developing specific generation targets and incorporating them within a Government document.

• The Energy Section did a study on micro and mini hydropower generation potential for Swaziland, and over 30 potential sites were identified. In order to develop this potential further, additional work is required to develop pilot programmes to address operational issues such as revenue collection for the sale of electricity from mini-grids. There is also a need to identify further sites throughout the country and the impacts that these could have for income generation activities.

• The Meteorology Department is currently striving to set up a structure for the DNA within Swaziland. However, those responsible within this department have expressed a strong interest in receiving any form of support from the REEPESA project in setting up the DNA, as the department is suffering from a lack of capacity. There is therefore a good opportunity in providing assistance with the setting up of the DNA in the country at this critical stage.

Rural Electrification:

• The recent Rural Electrification Programme has created large problems for SEB in terms of not receiving the expected number of domestic customers even though the infrastructure has been put in place. SEB therefore conducted a preliminary social survey on rural electrification which included studies on communities interested in connecting to the grid and the barriers that they have to connection. The principle issues appear to be those of cost; people are unable to pay the up front connection fees even when the infrastructure is brought to them. Even when connected, many rural customers are not able to afford the ongoing service and supply costs. SEB is therefore very keen to link the supply of electricity to rural households with forms of income generation, and also to subsidize in


41

some way the cost of the initial connection. As a follow up to this study, SEB have expressed an interest in setting up some form of ESCO which would exist specifically to supply electricity to the rural areas. The ESCO might provide its own small scale generation and should be linked to income generating activities for its customers. It is envisaged that the ESCO would be subsidized in some way by Government but would also be in a position to generate its own income, through power generation or through business ventures and the repayment of micro-loans. Through a revolving fund, the ESCO would be in a position to offer small low interest or interest free loans to those customers that wish to connect. SEB would be interested, if possible, in using the REEPESA project to help look into possible structures for such an energy service company and for assistance with its development.

• The VUNUMOYA project at Shewula presents another possible activity opportunity within the REEPESA project. The VUNUMOYA project aims to install a 20kW wind turbine within a small rural community. The turbine will be installed at the end of a low voltage network and it is proposed that the community will benefit by selling electricity from the community owned project to SEB. There may be opportunities for the REEPASA project to help in the setting up of the power purchase agreements and other financial structures required, as this is the first project of its kind in Swaziland.

Local Authorities’ Electricity Management: Conduct energy audits for the Mbabane City council estate and set up an energy management programme for the council.


42

3.0 ZAMBIA 3.1 Background 3.1.1 Population, Economy and Governance

Zambia’s population is estimated at 11.3 million as at July 2005. This figure takes account of the effects of excess mortality due to AIDS resulting in lower life expectancy, higher infant mortality and death rates, lower population and growth rates, and changes in the distribution of population by age and sex than would otherwise be expected. The age structure comprises; 0-14 years: 46.5% (male 2,626,911/female 2,609,857), 15-64 years: 51.1% (male 2,848,402/female 2,904,376), and 65 years and over: 2.4% (male 118,043/female 154,206). The growth rate is 2.12% and life expectancy is 39.7 years whilst literacy is given as 86.0% for male, and 74.8% for female. The overall poverty level is 73% with overall extreme poverty at 57.9% out of which urban overall poverty is 56.0 % and rural 83.1%. (World Factbook, 2004) Despite progress in privatization and budgetary reform, Zambia's economic growth remains somewhat below the 5% to 7% needed to reduce poverty significantly. Privatization of government-owned copper mines relieved the government from covering mammoth losses generated by the industry and greatly improved the chances for copper mining to return to profitability and spur economic growth. Copper output increased in 2004 and is expected to increase again in 2005, due to higher copper prices and the opening of new mines. The maize harvest was again good in 2004, helping boost GDP and agricultural exports. Cooperation continues with international bodies on programs to reduce poverty, including a new lending arrangement with the IMF in the second quarter, 2004. A tighter monetary policy will help cut inflation, but Zambia still has a serious problem with fiscal discipline. For the year 2004, GDP was estimated at US$ 9.4 billion and growth rate of 4.2%. GDP ratio is 14.9% agriculture, 28.96% industry including mining, and 56.1% services. Inflation rate was 18.93, and unemployment was at 50.9%. The national debt was US$ 5.35 billion in 2004. However, due to HIPC attainment and debt forgiveness from the Gleneagles Summit, the national debt has been extensively reduced to about US$ 0.5 billion (World Factbook, 2004) The country name is Republic of Zambia and government type is republic. The capital is Lusaka, and the country has nine provinces. The Legal system is based on English common law and customary law; judicial review of legislative acts in an ad hoc constitutional council; has not accepted compulsory ICJ jurisdiction. The governance structure comprises the executive, legislative and judiciary branches. The executive head and head of government is the president who in turn appoints a cabinet from elected members of the National Assembly. Election is by popular vote for both the president and members of the national assembly.


43

The legislative branch is the National Assembly and is responsible for enactment of laws and provides check and balance for the executive. The National Assembly has 150 seats. The judiciary is responsible for administering the legal system. It has a Supreme Court (the final court of appeal; justices are appointed by the president); High Court (has unlimited jurisdiction to hear civil and criminal cases), and Local courts (attends to civil cases) (Cabinet Office, GRZ 2006). 3.1.2 Energy Balance The overall and sector energy trends for Zambia’s commercial energy between 1986-2002 are given in figure 2.1 (DoE, 2003) Figure 3.1 Energy Consumption Trends 1986-2002 (PJ)

Source: Department of Energy, Energy Bulletin 1990-2003 There has been a moderate growth in total energy consumption between 1986 and 2002. The increase has mainly been attributed to wood fuel utilization in the household sector as a result of increasing population. However, petroleum and coal consumption trends witnessed a decline due mainly to a corresponding decline in economic activities, especially after 1991, when the country experienced industrial company closures. The latter was influenced mainly by opening of market to international goods and services, thereby making some local goods and services uncompetitive. The overall energy consumption by sector for Zambia is illustrated in Table 3.1 and Figure 3.2 for the year 2000.

-

50.00

100.00

150.00

200.00

250.00

1986 1987 1988 1989 1990* 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

Total EnergyPetroleumElectricityCoalWoodfuel

Peta Joules


44

Table 3.1 Energy consumption by sector

Sector PJ % Agriculture & Forestry 5.75 2.8 Commerce & Industry 17.06 8.3 Government/Services 2.29 1.1 Households 150.56 73 Mining 20.99 10.2 Transport 9.67 4.7 TOTAL 206.33 100

Source: Department of Energy, Energy Bulletin 1990-2003 Figure 3.2 Sectoral Energy Consumption Chart

3% 8%1%

73%

10%

5%Agriculture &ForestryCommerce &IndustryGovernment/ServicesHouseholds

Mining

Transport

The energy consumption pattern in Zambia is dominated by households and mining. As shown in Table 3.1 and Figure 3.2, households account for 73.0% of total final energy consumption in 2000. The largest share of energy consumption by households is attributed to firewood as illustrated in Figure 3.1, which indicates the overall importance of firewood in the provision of energy in Zambia. The mining sector, second in importance in terms of energy consumption, accounted for 10.2% of total final consumption, followed by industry 8.3% and transport 4.7%. Zambia’s sources of energy include hydro-electric power stations with an installed capacity of slightly over 1700 MW, mini-hydro systems and a few diesel powered electricity generating systems also contribute to electricity generation. The country also has large deposits of coal at Maamba in the south of the country, along the Zambezi valley. Deposits of coal are estimated at 30 million tonnes. Other areas where coal deposits have been located are Lwangua North, Luano, Lukusashi, Chunga and Lubaba. These deposits are estimated at several hundred tonnes. Due to production constraints and paucity of investible funds,


45

the design output of 1.2 million tonnes per annum of beneficiated and saleable coal has drastically dropped over the last many years. Coal only contributes about 6% of the country’s energy needs, mainly in the mining and industrial sectors. At domestic sector level, research has been completed aimed at developing suitable appliances that can use coal briquettes. Peat is another potential source of energy in the country. However, there has not been a systematic investigation to date. A general cartographic analysis reveals that there are peatlant areas along the Zambezi and Kafue river valleys. Its use in Zambia can therefore not be quantified (CEEEZ, 1999). Zambia receives a lot of sunshine, such that solar power presents itself as a substitute to other energy sources. It is competitive when remote areas are being considered, especially for water pumping and electrifying village communities and refrigeration in health clinics. The main constraint is the initial investment cost, which is quite prohibitive. The other form of renewable energy source is wind power. Its use is basically limited to water pumping. Woodfuel and charcoal are estimated to meet the energy needs of about 70% of the rural and urban population. The copper mines utilize nearly 2000 tonnes of charcoal annually in the refineries. Petroleum, one of the main sources of energy is not indigenous to Zambia. This has to be imported as crude and refined into petrol, kerosene, diesel, aviation gas, and heavy fuel oil. Petroleum has to imported at international prices, transported through a 1500km pipeline to the refinery in Ndola. The refinery has a processing capacity of 1.0 million tonnes per years. 3.1.3 Electrification Statistics

Zambia is well endowed with hydropower resources. The main river catchment areas that have been developed are Zambezi and Kafue. On the Kafue River, Zambia has developed the Kafue Gorge hydroelectric scheme (900MW) on the Zambezi river, Kariba North Bank (600MW) and Victoria Falls power station (108MW). The country has also developed mini hydro power stations in north-eastern part viz.: Lusiwasi-12 MW, Musonda Falls-5MW, Chishimba Falls -6MW and Lunzua-0.75 MW. The Mini hydro power stations serve the rural areas. The main power stations are interconnected into the main grid via a 330 and 220kV network. The total installed capacity of hydropower is 1632 Mw. There is an untapped hydropower potential of about 6000 MW. Table 3.2 shows total installed capacity (NEP, 2005) Table 3.2 Total installed hydro-power capacity from main stations


46

Power Plant Capacity MW Kariba North Bank 600 Kafue gorge 900 Victoria falls 108 Lusiwasi 12 Musonda falls 5 Chishimba falls 6 Lunzua 0.75 Total

1632

Other rural areas are supplied by diesel power stations. There is about 5MW of diesel power stations for areas that are too far from the national grid to make interconnection economically viable. Despite the relatively large installed capacity in comparison to most African countries, overall electricity rate is low, estimated at 20% with the urban and rural rates given as 48%, and 2%, respectively. The Zambian national power system, grid layout, and interconnections with other countries are shown in Figure 3.3 (OPPI, 2003). Figure 3.3 National Power System, Grid layout and Interconnections


47

The existing Zambian electricity industry is characterized by three main players namely: ZESCO, which is a vertically integrated state-owned utility, the Copperbelt Energy Corporation (CEC), a privately owned Transmission and Distribution Company and the Lunsemfwa Hydro Power Company (LHPC), with a total installed capacity of 38 MW. 3.1.4 Ministries, Agencies, Utilities and Other Players in the Energy Sector The institutional structure of the Energy Sector is illustrated in figure 3.4

Figure 3.4 Institutional Structure of the Energy Sector

The ministry of Energy and Water Development is responsible for Policy Framework and guidance through the Department of Energy. The Energy Sector institutions are described below as follows: i) Energy Regulation Board (ERB):

ERB OPPPI REA Operating Companies

CEC TAZAMA INDENI LHPC ZESCO

Ministry of Energy and Water Development

Department of Energy


48

This is an independent sector regulator responsible for electricity, petroleum and other forms of energy including renewables.

ii) Office for Promoting Private Power Investments (OPPPI): This is a unit (or cell) within the Ministry of Energy which was set up in 1999 to attract private sector funds in generation (including mini-hydros) and transmission projects.

iii) Rural Electrification Authority (REA): Established by the Rural Electrification Act of 2003. Its main mandate is to implement rural electrification.

iv) ZESCO Limited: This is a vertically integrated state-owned public utility that operates Kafue Gorge power station, Kariba North Bank power station, Victoria Falls power station and the majority of Zambia’s transmission and distribution networks. ZESCO also operates small hydro-power stations and a number of diesel powered generators scattered across the country in areas not connected to the main grid. Total installed capacity is about 1,700MW while identified hydro generating potential is in the region of 6,000MW.

v) Copperbelt Energy Corporation (CEC): Is a privately owned utility. CEC purchases bulky power mainly from ZESCO and distributes to the various mines on the Copperbelt. CEC also operates standby gas turbines.

vi) Lunsemfwa & Mulungushi Hydro-Power Stations: Previous state-owned and now in private hands. These power stations currently sell power to ZESCO Limited.

vii) Petroleum sub-sector facilities: The key institutions in the petroleum sub-sector are INDENI Refinery and TAZAMA Pipeline.

3.1.5 Significant RE and Energy Efficient Projects

Hydropower resource potential is estimated at 6000 MW. Current installed capacity is 1715.5 MW representing 92% of installed capacity and accounting for 99% of electricity production. Two power plants account for 93% of total hydropower generation. Virtually all generation is on the ZESCO network.


49

Recently, a private owned company, Lunsemfwa hydro power with an installed capacity of 30MW, is selling electricity to ZESCO. Electricity is the second most important indigenous energy resource after wood fuel. However, accessibility of the majority of the population to electricity still remains low. Extension of the national grid to the rural areas has been hampered by several factors such as long distances and high cost of transmission lines. As shown in figure 1.1, electricity use has decreased from 13% in 1986 to 10% in 2001. The reduction has been attributed to reduced production capacity of the copper mining sector, which is the single largest consumer of electricity pegged at over 70.0% of total electricity use. Electricity consumption is expected to increase due to increased investment currently taking place in the copper mining industry. The distribution infrastructure is mainly limited to main cities. Urban electrification is 48%, and rural electrification is 2% (NEP, 2005). The government is committed to rural electrification, by extending the national grid to supply electricity to rural areas and providing means for enhancing production use mainly through agriculture in rural areas. Rural electrification is now expected to improve following the set up of the Rural Electrification Agency (REA). The main function of REA is mobilizing resources from private sector and public sector in Zambia. The government is also working with the World Bank on the project “Increased Access to Energy Services project (IAES)” aimed at accelerating modern energy services in rural areas for both productive use and social services such as health and education institutions. The IAES project will be implemented during a period of approximately 5 years, starting in 2006. It is envisaged that the project will increase the rate of rural access to electricity from 2% to 10% by 2015. Additionally, SIDA (Swedish International Development Agency) is supporting Government through the Department of Energy and at REA through the formulation of a Rural Electrification Master Plan -REMP). (IAES, 2004). Currently, the utility ZESCO is a vertically integrated and state owned power system. Electricity tariffs are still low and not sufficient for ZESCO to be able to cover all delivery costs. As a result revenues received are insufficient for ZESCO to adequately maintain the network infrastructure and extend the grid to new areas using its own internal resources. Technical losses exceed 15% and non technical losses are estimated to be as high as 18-20%. (Core, 2004). To improve the performance of ZESCO, government has embarked on a commercialization strategy whose main objectives are to run the sector on a commercial basis and enhance ability to attract private capital. In order to improve service delivery under this strategy ZESCO’s responsibility of extending the national grid to uneconomic demand centres has been changed and transferred to REA. Apart from a general policy statement identifying energy management as an important activity leading to significant direct energy savings, there is currently no specific regulation or provision of incentives to companies undertaking energy efficiency practices.


50

Additionally, there are no appliance standards and labeling encouraging distributors to import more efficient appliances, aimed at saving energy, especially at the household level. 3.1.6 Significant Energy Policies and Regulation

The key legislation of the energy sector is: Energy Regulation Act of 1995 (amended 2003): An Act to establish an Energy Regulation Board and to define its functions and powers; to provide for the licensing of undertakings for the production of energy or the production or handling of certain fuels

Electricity Act of 1995 (amended 2003): The act is responsible for the regulation of generation, transmission and distribution of electricity within Zambia. It further considers regulation for the import and export of power from outside Zambia

Petroleum Act of 1995: An Act to make provision for regulating the importation, conveyance and storage of petroleum and other inflammable oils and liquids; and to provide for incidental matters.

Rural Electrification Act of 2003: An Act to establish the Rural Electrification Authority and to define its functions; to establish the Rural Electrification Fund; and to provide for matters connected with or incidental to the foregoing

Energy Sector Regulation: Energy Sector activities in Zambia are regulated by the Energy Regulatory Board (ERB). The ERB was created through the Energy Regulation Act of 1995 to provide fair and transparent oversight for the development of the sector. The regulation of the electricity and petroleum sub-sectors is governed not only by the Energy Regulation Act, but also by the policies set out in the Electricity Act and the Petroleum Act. Power Sector Governance:


51

The 1994 national energy policy and the Electricity Act of 1995 have the following common goal: “To increase access to electricity as well as develop most cost effective generation for domestic and export markets”. (NEP, 1994). In terms of energy sector reform related to the power sector the following actions have been undertaken:

• A framework and package of incentives for private sector participation in hydropower generation and transmission development, and an office for promoting private sector investment is operational in the Ministry of Energy and Water Development.

• Private sector power generation policy, including solicitation of proposals, fiscal incentives and tariff for bulk purchases of power at bus bars.

• Pricing policy towards cost recovery. 3.2 Policy and Finance issues Relating to RE and Rational use

of Energy 3.2.1 Policy and Finance Tools

The existing financing plans and programs aimed at increasing access to energy services are as follows: Rural Electricity Authority (REA): The REA will mobilise funds including the rural electrification levy for purpose of financing the electrification programmes. The REA has been established with the following functions:

• Administer and manage the Rural Electrification Fund

• Development, implement and update rural electrification master plans for the systematic electrification of rural areas

• Promote the utilisation of available rural electrification technological options to enhance contribution to the development or agriculture, Industry, mining other economic activities in rural areas.

• Design and offer on a competitive basis, to developers and operators, smart subsidies for capital costs on projects that are designed to supply energy for development of rural areas

• Enhance project preparation studies for rural electrification projects, including power for ICT tele-connectivity.

Although Zambia is endowed with New and Renewable Sources of Energy (NRSE), efforts to harness these resources have been minimal. This is despite the fact that NRSE, particularly solar and wind energy, are available everywhere


52

and have the potential for improving the living standards of rural population. Among other applications, NRSE can be used for water heating, water pumping, lighting, refrigeration, telecommunications, radio/television and drying. The constraints to a wider use of new and renewable sources of energy include: (a) lack of awareness about the NRSE technologies, (b) high initial costs, (c) inadequate adaptive research on NRSE technologies to Zambian situation (d) lack of end user acceptability, (e) inadequate demonstration projects and (f) lack of specialized training. There is need to overcome these constraints in order to realize the wider application of these technologies. The following Policy measures are aimed at addressing this situation (NEP, 1994). Promote NRSE technological development through:

• Systems and components adaptation and/or manufacture;

• Identification or establishment of a specialized agency to undertake: o Research and Development in NRSE technologies; o Evaluation, certification and monitoring of all NRSE technologies being

developed in the country to ensure that they conform to quality, safety, health and environmental standards;

o Training in development and application of NRSE technologies; o Documentation and dissemination of information

• Strengthening the institutional capacity at Department of Energy to spearhead the development of all aspects of NRSE technology.

Promote information dissemination about NRSE through:

• Seminars and workshops in both rural and urban areas. These to include drama in English and in local languages, mass media (print and electronic);

• Practical demonstration and pilot schemes;

• Organizing field days on successful NRSE applications by institutions involved in energy work;

• Organizing energy fairs (national and regional). Promote education and training in NRSE at various levels by • Inclusion of energy subjects in the curricula of educational institutions at

all levels (primary, secondary, college and university);

• Ensuring that training becomes an integral part of all NRSE projects;

• Training of trainers.


53

Although the 1994 NEP mentions renewable energy, it does not explicitly cover rural energy/ electrification. The following sections of the 1994 policy have a bearing and relationship on rural energy and renewable energy; Institutional and Legal Framework, Electricity, New and renewable sources of energy and Energy pricing principles. 3.2.2 Status of Designated National Authority (DNA) DNA formation in Zambia has been delayed due to late ratification of the Kyoto Protocol which only took place in December 2005. Although DNA is not yet functional in Zambia, a lot of preparatory activities have taken place in the last five years which can assist to make it operational. For example, under the CDM SUSAC project, a CDM subcommittee was created among other objectives to develop national climate change policy and define national CDM goals within the context of other national/ regional policy processes, formulate national CDM negotiating position, overseeing and spearheading implementation of CDM projects, define guidelines for the approval of CDM projects, and approve CDM projects based on given guidelines (CDM SUSAC, 2001) In addition the project developed and tested sustainable development criteria, required in assisting the DNA in reviewing and approving CDM projects. The criteria formulated are based on multi-stakeholder approach involving two steps. The first step was an agreement on the overall weightings to be given to economic, environmental and social impacts of the projects. The second step identified indicators related to each of these categories after which projects were given scores for each of given indicators. It is expected that the DNA will be formulated, since one of the objectives under the CF-SEA (Using Carbon Finance to promote Sustainable Energy Services in Africa) project supported by UNEP and World Bank, is to assist Zambia establish the DNA. To this effect the focal point to climate change has been provided with background information on the roles and functions of the DNA, steps required in establishing a DNA, and other country specific DNA entities already established. This information together with he previous experience gained during the CDM SUSAC will greatly contribute and accelerate the establishment of the DNA in Zambia.

REE

PASA

Cou

ntrie

s S

tate

of P

lay

Rev

iew

: Moz

ambi

que,

Zam

bia,

Sw

azila

nd &

Sou

th A

frica

54

3.2.

3 O

ppor

tuni

ties

for R

EEPA

SA

Tabl

e 3.

1 S

tatu

s, A

chie

vem

ents

and

Gap

s

Cat

egor

y M

ilest

ones

A

chie

vem

ents

G

ap/ B

arrie

rs

Way

forw

ard

Ene

rgy

Reg

ulat

ion

Boa

rd (

ER

B)

Em

phas

ises

sol

ar p

ower

as

the

rene

wab

le e

nerg

y

Furth

er s

uppo

rt to

incl

ude

othe

rs li

ke b

iom

ass

OP

PPI –

Offi

ce fo

r pro

mot

ion

of

priv

ate

Pow

er In

vest

men

t

Doe

s no

t inc

lude

rene

wab

le

ener

gy in

the

man

date

In

clud

e re

new

able

ene

rgy

in

the

new

pol

icy

Inst

itutio

nal

and

lega

l fra

mew

ork

Set

ting

up re

leva

nt

Inst

itutio

ns re

late

d to

R

ural

Ene

rgy

and

Ren

ewab

le E

nerg

y

Rur

al E

lect

rific

atio

n A

genc

y

Rec

ently

bec

ame

func

tiona

l, an

d ne

eds

to s

treng

then

te

chni

cal a

nd b

usin

ess

deve

lopm

ent c

apac

ity

• R

equi

res

inte

grat

ed p

roje

ct

impl

emen

tatio

n st

rate

gy

• C

riter

ia fo

r ass

essm

ent a

nd

sele

ctio

n of

pro

ject

s fo

r su

ppor

t and

impl

emen

tatio

n E

lect

ricity

P

rom

otio

n of

E

lect

ricity

of

prod

uctiv

e ar

eas

and

Inst

itutio

ns (

Sch

ools

an

d C

linic

s)

• M

odes

t rur

al a

nd P

eri-u

rban

el

ectri

ficat

ion

achi

evem

ents

•

Som

e sc

hool

s an

d cl

inic

s el

ectri

fied

usin

g PV

sys

tem

s

• Fi

nanc

ial r

esou

rces

•

Mas

ter P

lan

• P

V in

stal

latio

ns n

ot

parti

cula

rly s

ucce

ssfu

l.

• S

cale

up

stra

tegy

•

Mob

ilise

finan

cial

reso

urce

s •

Form

ulat

e m

aste

r pla

n •

Cap

acity

bui

ldin

g

Ene

rgy

Pric

ing

prin

cipl

es

Ene

rgy

pric

ing

base

d on

long

-term

m

argi

nal c

ostin

g

Ach

ieve

d on

pet

role

um in

dust

ry

Stu

dies

com

plet

ed

REE

PASA

Cou

ntrie

s S

tate

of P

lay

Rev

iew

: Moz

ambi

que,

Zam

bia,

Sw

azila

nd &

Sou

th A

frica

55

Not

effe

ctiv

ely

so in

the

elec

trici

ty

indu

stry

• Lo

w ta

riffs

a b

arrie

r to

isol

ated

rene

wab

le e

nerg

y ap

plic

atio

n •

Affo

rdab

ility

Nee

d fo

r attr

activ

e ta

riffs

es

peci

ally

for r

enew

able

s

Cat

egor

y M

ilest

ones

A

chie

vem

ents

G

ap/ B

arrie

rs

Way

forw

ard

P

rom

ote

NR

SE

tech

nolo

gy

equi

pmen

t Li

mite

d ac

hiev

emen

ts

Dut

y on

com

pone

nts

Con

duci

ve F

isca

l pol

icy

Wid

er a

pplic

atio

n of

N

RS

E te

chno

logi

es

Lim

ited

achi

evem

ents

with

the

follo

win

g:

a.

Ele

ctrif

icat

ion

of s

choo

ls a

nd

hosp

itals

b.

S

ettin

g up

PV

ES

CO

s in

E

aste

rn P

rovi

nce

(400

Sol

ar

Hom

es S

yste

ms)

c.

A

RE

ED

Initi

ativ

es in

vest

•

Impr

oved

cha

rcoa

l sto

ves

• C

harc

oal p

rodu

ctio

n fro

m

saw

mills

•

Bio

die

sel

• E

nerg

y ef

ficie

ncy

• M

icro

hyd

ro

• P

V in

stal

latio

ns n

ot

parti

cula

rly s

ucce

ssfu

l •

Affo

rdab

ility

•

Ent

repr

eneu

rs n

ot a

ble

to

prod

uce

bank

able

pro

posa

ls

• P

roje

ct fi

nanc

e •

Man

agem

ent

• C

apac

ity b

uild

ing

•

Inno

vativ

e fin

anci

ng

mec

hani

sms

• In

nova

tive

finan

cing

m

echa

nism

•

Rei

nfor

ce th

e A

REE

D

deliv

ery

syst

em

New

and

R

enew

able

so

urce

s of

en

ergy

(N

RS

E)

Info

rmat

ion

Dis

sem

inat

ion

Lim

ited

info

rmat

ion

on b

enef

its o

f re

new

able

ene

rgy

• N

o ag

gres

sive

aw

aren

ess

prog

ram

me

•

Lack

of i

nfor

mat

ion

on

rene

wab

le e

nerg

y ap

plic

atio

ns

• E

nhan

ced

awar

enes

s pr

omot

ions

•

Dat

a ba

se a

nd w

eb s

ite

REE

PASA

Cou

ntrie

s S

tate

of P

lay

Rev

iew

: Moz

ambi

que,

Zam

bia,

Sw

azila

nd &

Sou

th A

frica

56

E

duca

tion,

Tra

inin

g at

var

ious

leve

ls

Lim

ited

but o

ne c

ours

e on

al

tern

ativ

e en

ergy

sou

rces

in

trodu

ced

at U

NZA

Sch

ool o

f E

ngin

eerin

g

Lack

of t

rain

ing

polic

y

Intro

duce

cur

ricul

um o

n re

new

able

ene

rgy

at s

econ

dary

sc

hool

s, c

olle

ge a

nd U

nive

rsity

le

vels


57

3.3 Rural Energy Access 3.3.1 Major Electrification Programmes Energy Service Companies: The project was a new approach for providing electric light and other basic services to people in rural areas through solar photovoltaic (PV) systems. The approach was based on an Energy Service Company (ESCO). The main objective was to create a sustainable market by which the people in rural areas would access the services that can be provided by solar photovoltaic technology. The project is run by Government of Zambia with the support of SIDA through the Department of Energy and Water Development (SEI, 2005). AREED: The AREED Initiative was established in 2000 by a group of multi-lateral (UNEP), international, E&Co and national partners (Ghana, Mali, Senegal, Tanzania and Zambia). It is being implemented by E & Co of USA seeks to develop new sustainable energy enterprises that use clean, efficient, and renewable energy technologies to meet the energy needs of the poor, thereby reducing the environmental and health consequences of existing energy use patterns (AREED, 2001). The main objectives of AREED are:

• To create rural energy enterprise and to build the capacity of NGOS and institutions to facilitate enterprise development

• To provide early stage funding and enterprise development services to entrepreneurs; builds capacity in African NGOs to work with clean energy enterprises and works with financial institutions to assess the rural energy business sector and integrate enterprise investments into their portfolios

In order to achieve the above objectives, AREED has the following components in its portfolio:

• Training and tools to help entrepreneurs start and develop energy businesses

• Enterprise start-up support in areas such as business planning, structuring and financing

• Seed capital for early stage enterprise development

• Assistance in sourcing second stage financing

• Partnerships with banks and NGOs involved in rural energy development


58

The AREED initiative has begun operations in Senegal, Ghana, Botswana and Zambia. It is working in-country with a number of local partners, including ENDA in Senegal, KITE in Ghana, CEEEZ in Lusaka and the Mali Folkcentre. The implementation of the AREED initiative is based on the model shown in Figure 3.5 Figure 3.5 Linkages between Partners under the AREED Initiative

The AREED approach offers rural energy entrepreneurs a combination of enterprise development ‘hand-holding’ and start-up support. The enterprise development involves training and tools through use of a toolkit, which has been designed to assist entrepreneurs in planning and implementing their projects and enterprises. The tool kit assists entrepreneurs with special tools to bring an idea to implementation through the following three stages:

• Fact-finding is designed to help an entrepreneur to define a project, gather the basic information required to later evaluate the project feasibility and prepare an introductory memorandum and work plan

• Feasibility analysis reviews the main characteristics that determine the feasibility and help translate the information gathered during the fact-finding phase into a completed feasibility analysis, and thereby set the stage for preparing a business plan

• Business plan: a good business plan is undertaken to achieve the following: shows that a proposed energy project is a serious initiative, undertaken by capable entrepreneurs who understand and have control of the essential elements that will assure success; increases the chances that an entrepreneur will be able to attract investors. Lenders, partners,

Entrepreneur

AREED Support

Energy Services

Rural Clients

Enterprise Development Services

Start-up Financing

NGOs Banks


59

strategic allies, supplier and key staff; and forces the entrepreneur to collect, in one place, all of the thinking and research that has gone into the development of a proposed project.

The stages of the toolkit process are shown in Figure 3.6

Figure 3.6 Stages of the Toolkit Process

Under AREED, enterprise start-up support includes financial analysis, market analysis, refinement of concept, contracts and opened doors, negotiations, board member and financial advisor, and recruiter and promoter. The methodological approach for implementation is as follows:

• Identification of stakeholders involving government ministries and departments, financial institutions, NGO development consultants and entrepreneurs

• Initiation workshop to introduce the AREED programme and introduced some aspects of the toolkit

• Initial proposal preparations by entrepreneurs

• Training on the toolkit for all the stakeholders, in particular entrepreneurs

• Final projects preparations and submission based on AREED proposal guidelines

A R E E D

Proposal

EDS

EDS and $

$$ and 2nd Stage $$$

IIddeeaa

FFaacctt--FFiinnddiinngg

FFeeaassiibbiilliittyy AAnnaallyyssiiss

BBuussiinneessss PPllaannnniinngg

IImmpplleemmeennttaattiioonn

EExxppaannssiioonn

TOOLKIT

E N T R E P R E N E U R


60

• Selection of projects which meet the AREED guidelines

• Enterprise development services for feasibility analysis and business planning

• Financing if project found feasible

• Implementation

• Monitoring and implementation From the successful experience of AREED implementation, it can be observed that enterprise-centered model can be a powerful means for achieving concrete and sustainable solutions to problems in energy and a variety of other development sectors. Growing evidence from the five countries where AREED is active demonstrates that these types of energy enterprises can generate measurable co-benefits beyond the provision of energy services. Table 3.4 shows projects that have been supported in the AREED Zambia since 2000. Table 3.4 Projects Funded under AREED in Zambia

Investment Name

Technology Applied

Description of Business

Financing US$

Investment Type

Investment Status

Chavuma Energy Efficiency

Installation of EE motor control gear $22,300 Debt Repaid/Written-Off

Chavuma2 Energy Efficiency

Installation of EE motor control gear $40,500 Debt Active

KBPS Biomass

Manufacture of charcoal from renewable eucalyptus waste

$75,300 Written-Off

Rasma Engineering

Co.

Energy Efficiency

Manufacture and sale of energy efficient stoves and ovens

$20,000 Equity Written-Off

RCI Biomass

Manufactures and Distributes Nyemba Oil Fuel and its by products "pressed cake/fertiliser"

$8,000 Debt Active

TSADC Solar Thermal Solar Bakery $10,000 Debt Active

Ubwato Enterprises

Energy Efficiency

Manufacture and sale of energy efficient stoves

$15,700 Debt Repaid/Written-Off


61

UNIDO/UNEP GEF Mini-grid project: The thrust of this project is on Renewable Energy Based Electricity Generation for isolated mini-grids, which includes the promotion of mini-hydro units, solar energy services, and biomass (UNIDO, 2004). 3.3.2 Policy Targets to Promote Rural Electrification Given below are the proposed objectives and activities of the Energy Policy related to renewable energy (NEP, 2005) To promote efficient energy use practices in all sectors of the economy through:

i. Publicity campaigns on energy conservation; ii. Encouraging energy suppliers to provide information to clients on the

efficient use of energy technologies that they market; iii. Encouraging institutions to develop energy conservation policies and

programmes; iv. Influencing policy on approval of building design code and construction

that requires less energy for heating, cooling and lighting; v. Encouraging the use of energy efficient equipment and other domestic

appliances through physical demonstrations; and vi. Encouraging research and development in energy efficient equipment.

To substitute, wherever possible, local energy resources for imported ones through:

i. Promoting fuel switching from petroleum to other locally available alternative fuels;

ii. Promoting the blending of petroleum with locally produced ethanol; and iii. Encouraging the use of renewable sources of energy particularly solar, to

meet some industrial, commercial and household energy needs. To popularize energy management through:

i. Liaising with training providers to incorporate energy conservation concepts and practical activities in education curricula;

ii. Influencing of Policy for the Development of appropriate infrastructure for less energy consuming transportation systems; and

iii. Encouraging the use of bicycles, public transport and other less energy consuming transport systems.

To encourage the use of energy efficient equipment through:

i. Promulgation of equipment and appliance standards, provision of appropriate fiscal incentives; and

ii. Provision of technical information on energy savings ad other iii. Benefits.


62

To promote energy efficiency labeling and benchmarking by:

i. Encouraging establishment of guidelines on performance standards; ii. Strengthen consultancy services in the field of energy efficiency; iii. Promote research and development in the field of energy efficiency; iv. Formulate and facilitate implementation of pilot projects and

demonstration projects for promotion of efficient use of energy; v. Prepare education curriculum on efficient use of energy and its

conservation for educational institutions, boards, universities or autonomous bodies and coordinate with them for inclusion of such curriculum in their syllabus.

To ensure availability of data and information on market demand, resource assessment and applicability of renewable energy technologies (RETs) through:

i. Undertaking studies on needs/demand, resource and technology assessments of RETs; and

ii. Undertaking studies on the economic feasibility of using bio fuels (e.g., ethanol and bio-diesel)

To strengthen the institutional framework for research and development through:

i. Establishing a co-ordinating agency for RETs; ii. Development of a mechanism for integration of RETs with institutions

involved in developmental activities; and iii. Strengthening the capacity of the Rural Electrification Authority (REA) in

the application of RETs. To apply appropriate financial and fiscal instruments for stimulating the implementation of RETs through:

i. Formulation of a comprehensive and innovative financing mechanism to include smart subsidies, low interest loans, loan guarantees, Clean Development Mechanism (CDM), etc;

ii. Provision of tax incentives and waiver on duty and VAT on renewable energy capital equipment;

iii. Ensuring of an equitable level of national resources is invested in renewable energy technologies;

iv. Setting of targets for directing of public resources for the implementation of renewable energy technologies; and

v. Integrating RETs policy in poverty reduction programs To promote, enhance, develop and deploy RETs through:

i. Encouragement and support of local systems design, assembly; and ii. Manufacture of components of renewable energy technologies; iii. Promotion of the development and implementation of standards and


63

codes for appropriate use of renewable energy technologies; iv. Promotion of research and development of renewable energy

technologies. v. Identifying key Research and Development institutions; vi. Training of Technical and Scientific personnel; vii. and Provision of sound infrastructure and equipment;

To raise public awareness of the benefits and opportunities of RETs and develop capacity for their implementation through: i. Provision of information to stakeholders (financiers, planners, politicians

and general public) on the benefits and opportunities of renewable energy; ii. Creation of awareness and education about the potential of renewable

energy through dissemination of information regarding the economic, environmental and social benefits of renewable energy technologies and applications;

iii. Supporting training institutions in the area of system design, installation and maintenance;

iv. Project development of renewable energy technologies, and providing agriculture support to farmers wishing to grow energy crops (such as Jatropha, sugar cane and sweet sorghum);

v. Inclusion of basic principles of RETs in school curriculum; To actively involve women in decision making and planning in renewable energy programs and activities. To promote biomass technologies for electricity generation through:

i. Encouraging research on utilization of available technologies encouraging of pilot projects; and;

ii. Build capacity in relevant institutions. To promote appropriate alternatives to wood fuel and reduce its consumption through:

i. Encouraging use of other renewable sources of energy ii. Encouraging the use of LPG and millennium gel as a household and

agricultural fuel for activities such as flue-cured tobacco. It is hoped that this time round, the policies being put in place will be more effective, since Government has deliberately formulated as implementation strategy consisting of an action plan, financing framework and monitoring and evaluation scheme. On the other hand, industry is becoming more conscious of the need for energy efficiency as ZESCO strive to charge economic tariffs, despite protests from industry.


64

3.3.3 Cross-sectoral Focus

Zambia's Poverty Reduction Strategy Paper (PRSP) covering the 2002-2004 period highlights a multi-pronged approach to reducing poverty levels currently estimated at about 70%. In the energy sector, the PRSP recognises the availability and provision of modern energy services as a catalyst for economic growth, poverty reduction and environmental protection. Increased accessibility of the majority of the population to efficient modem energy services and ICT applications will lead to the improvement of standard of living of the Zambian people. The availability of and access to reliable, efficient, and affordable energy by all involved in socio-economic activities is a pre-requisite to sustainable economic growth. The fundamental energy challenge facing the nation is how to fully exploit the energy resource for social and economic development in a systematic way that can lead to sustained growth and employment creation. Limited financial resources and an absence of a clear framework for planning to extend energy services to the population are the main reasons for low energy access and low levels of development in the rural sector (Core International, 2004). The formation of the REA is a major step forward. Also, the establishment of a multi-sectoral consultation process that builds upon ideas such as the Global Village Energy Partnership (GVEP) is another major step by the Government. Other initiatives include the UNIDO/UNEP/GEF project on Renewable Energy Based Electricity Generation for isolated mini-grids, which includes promotion of mini-hydro, solar energy services and biomass. GRZ and other local stakeholders recognize the need for a better integration of Energy Services Delivery (ESD) programs in the rural development plans and programs. This is expected to enhance focus on income generation and employment activities, as well as priority social interventions (in the areas of health, education, and clean water supply). In this way, ESD intervention would be more sustainable and effective. In all these interventions, ICT applications would enhance the service provision. 3.3.4 Projects and Studies on Productive Use of Off-Grid Electricity

The government through the Ministry of Energy and Water Development (MEWD) recognizes the need for increasing the rural and peri-urban access to electricity and information communication technology (ICT) as a strategy to reduce poverty in these areas. As part of the implementation strategy, the government embarked on the Increased Access to Energy Services Project (IAES) financed by World Bank, Global Environmental facility, other donors, and the Prototype Carbon Fund (IAES, 2004). The objective of the project is to provide for investment and technical assistance/ capacity building activities to enable scale up of access to electricity and ICT


65

services in rural and peri-urban areas to maximize development impact: (a) income generation by SMEs through productive uses (farm and non-farm), and (b) improved quality of life emphasizing effectiveness of social services (such as health, education) and administrative service. The underlying approach of the IAES project is to expand access via public-private partnerships in a commercially oriented manner, i.e., with focus on cost recovery. It is recognized that there is a need for “smart’ subsidies that address the up-front capital cost investment requirements and initial transaction costs to encourage entrepreneurial activity while maintaining efficiency of operations and promoting output. The level and terms of capital subsidy may differ according to project characteristics- including underlying prospects for economic growth and investment risks. Further GEF support may be available for developing local hydro and other renewable energy generation for sale to the grid and to independent grids. The scale-up strategy for designing delivery mechanisms and targeting the limited resources (credit and grants) is driven by the consideration of maximizing development impact on growth and poverty within the prevailing sectoral context and taking into account emerging changes that can be characterized as a “break from the past” in Government policies for the sector. This means (see schematic below) geographically targeted introduction of electricity and ICT services at established centers of economic and/ or social activities for the benefit of large numbers of people drawn to those centers from the respective catchment areas. Such concentrations of activity and centers of day to day life for most rural people are missions, farm blocks, trading and administrative centers (including postal centers) and peri-urban townships. As appropriate, they would also include community centers and zonal resource centers. Figure 3.7 Schematic Representation of Targeted Introduction of Electricity

Missions

Commercial Farms

Trading and Administrative centers

Peri-urban Townships

ZESCO Public Private Partnership (PPP)

Grid Extension

High Impact Users

• Productive use enterprises (including agriculture)

• Health facilities • Secondary & Vocational Training

facilities • Water pumping • Administrative facilities • Households with affordability


66

Isolated Grids Solar PV

Finally, another key aspect of project design is consistent with the GRZ emerging policy thrusts and initiatives to steer a “break from the past”, by opening up key infrastructure sectors of the economy to new entrants while at the same time strengthening existing parastatal players. In keeping with this, the IAES project aims to target a third of the IDA credit for rural electrification investments and the bulk of GEF grant resources for enabling rural electrification and renewable energy investments via public-private partnerships (PPP). Specifically, the project would develop and strengthen two parallel and complementary service delivery modalities and sector players: ZESCO and new entrants that are non-ZESCO sponsors. The latter potentially include sponsors of sub-projects and investments such as mission groups, other private sponsors, and creditworthy NGOs and community-based organizations with bankable business-plans. The Government through the World Bank has secured project preparation funds under the Japan Policy and Human Resources Development (PHRD) grant facility and expects to receive additional funds from GEF Project Development Fund B. a key preparation activity is to prepare and offer on competitive basis, the opportunity to undertake pre-defined rural and peri-urban electrification schemes, or “sub-projects”, designated as Priority Rural Electrification Projects (PREPs). 3.4 Local Authorities’ Electricity Management 3.4.1 Role of LA in Generating and Distributing Electricity

In order to rationalize and improve efficiency of delivery of municipal services for water supply and sewerage treatment, government of the republic of Zambia formulated and implemented a policy on commercialization on water supply and sewerage facilities of local municipalities. As a result of this policy, a number of commercial companies under the municipalities were formed. Notable among them Lusaka, Kafubu, Nkana, and Mulonga Water and Sewerage Companies. The biggest challenge these companies face are the huge electricity bills owed to ZESCO- mainly for water pumping. This is the case because the water tariff charged by these water companies is not economic, due to high poverty levels among the majority of their customers. In attempt to address this issue, this project will engage the municipalities to demonstrate and sensitize them on the need to adopt measures which can go a long way in reducing electricity consumption in the provision of their services. Some of the measures to be explored include; investigation of operational, financial and environmental benefits to emerge from implementation of Energy


67

Efficiency Projects through use of automatic load control devices, which in turn reduce electricity consumption. The other measure will include ascertaining the viability of producing electricity through combustion of methane from municipal sewerage waste in gas generators. 3.4.2 Efforts to Streamline Use of Electricity SADC Energy Management Program: The Canadian International Development Agency (CIDA) sponsored the SADC Energy Management Program (SIEMP) in conjunction with the SADC Energy sector. The program ran from 1994 to December 2002. Initially it was a pilot project which ran from 1987 to 1991. Since 1995 the project had implemented programs in seven countries, namely, Swaziland, Namibia, Zambia, Zimbabwe, Malawi, Tanzania and Mozambique (DoE, 2004). Project objectives were: 1. To deliver professional energy management training in the SADC region

by supporting the development of local training providers as well as appropriate training resources and materials and make them available to training

2. To provide hands-on practical training in energy management to engineers, technicians and managers, working in industry in the SADC region.

The major activities that SIEMP focused on during the implementation of the project are the Core Training Programme and the Institutionalisation of Training. Core Training Programme (CTP): The Core training Programme (CTP) was held in two regions. The first one was in Copperbelt at Copperbelt University and the second one in Lusaka at the University of Zambia The first CTP in Zambia was held on the Copperbelt in Ndola from February to July 1996. The training composed of three classroom sessions and in the plant practical. The participants to this CTP were drawn from eight industrial facilities, two tertiary institutions, National Council for Scientific Research and the Department of Energy. Participants to the CTP were of either electrical or Mechanical engineering background. They all successfully completed the training programme and presented their reports with recommendations to their respective management. The second CTP was held at the University of Zambia Great East Campus from October 1999 to March 2000. There was a total of sixteen participants from the Ministry of Energy and Water development, Chilanga Cement, Zambia Sugar, Nitrogen Chemicals of Zambia, TAP, Consolidated Tyre Services, Coolwell Systems, Copperbelt Energy Corporation and Zambia Railways Ltd. Institutionalization of Training:


68

There were partnership agreements made between SIEMP and Kafue Gorge Regional Training Centre and the Copperbelt University to deliver training programmes on a sustainable basis. Altogether 27 companies participated in the training program involving 46 persons. As the project came to an end it was stressed that the energy management practices are only implemented when the payback and advantages of doing something are attractive. In this regard some suggestions, views and proposals were made from which the following were identified: 1. At the national level Government has to put in place some sort of

strategies/policies framework which promotes and encourage energy conservation practices.

2. Public awareness should aggressively be pursued at national level and regional level

3. Marketing awareness for sustaining the training programmes 4. Implement measures to guaranty continuity of the trained personnel under

SIEMP 5. Develop a proper regulation mechanism to control and coordinate the

Energy Supply Industry, as liberation should not mean increase of tariffs but a mechanism to encourage energy management and promote affordability.

It was noted that the project should have set up at country level a team of local experts to carry out and follow-up activities of SIEMP in each country. This would have been more efficient, practical, and cheaper and would have ensured personnel motivation and greater involvement in the project. By implementing energy conservation projects it was noted that there was an annual saving of financial resources which could have been spent on energy. The case of Zambia Railways provided a success story. The company reported a reduced expenditure on energy during the period they employed energy conservation practices. An annual saving of K28 million was made due to a reduced kVA and kWh and an annual saving of K36 million was made when it was discovered that ZESCO was wrongly multiplying kWh and kVA readings by 2 when one 11kV feeder to the main workshop was defective. Therefore a total of K64 million was saved. 3.4.3 Efforts to Assess and Develop Power Generation ZESCO Demand side management: As part of the World Bank ZESCO rehabilitation projects, a demand side management program was put in place. Under the program ZESCO worked with various companies to ensure that they reduced their electricity consumption


69

through improvement of their power factors and management of maximum demand. The project has been moving on a slow pace as explained earlier due to low tariffs surcharged on industry which does not appreciate the need for energy efficiency. Environmental Council of Zambia (ECZ) Cleaner Production: The main activities of the CP project revolved around delivering quality training to Zambian industry in CP methodology. Two training programs, one in each half of the year, were conducted. The programs were primarily targeted at small and medium enterprises (SMEs). (ECZ, 2005). The 2004 program for SMEs was structured to incorporate three training sessions covering a six-month period. This followed updating and simplifying all CP training materials and delivery methods tailored to suit the nature and size of SMEs undergoing training. The objective of the workshop was to introduce participants to CP concepts such as planning and organization, assessment, feasibility analysis and implementation. In addition the workshop was to enhance participants’ understanding of feasibility and investment analysis as well as highlight environmental and financial benefits of CP An international workshop followed between 17th and 21st of May 2004 in Morocco on sustainable consumption and production. Workshop on Applied Chemistry for wastewater treatment followed from April 4-10 2005, in Cairo, Egypt. The opportunity was used to sell the idea of establishing a National Cleaner Production Centre in Zambia to UNIDO. Preparation to establish a CP Centre in Zambia has been initiated in close cooperation with UNIDO. To this end, a proposal for the establishment of a centre has already been presented to UNIDO and the centre is hoped to strengthen the bonds and contacts with international organizations such as UNIDO and UNEP. The Centre will further sustain and institutionalize CP activities in Zambia and give Zambian industries the opportunity to tap into international experience. In order to capture and disseminate the wealth of Zambian CP experiences and case studies an eight-page brochure was developed and distributed. In order to further document and disseminate information on CP to Zambian industry, a web page on CP was designed as part of the ECZ website and can be accessed on www.necz.org.zm/cp. The web page will be updated as more information on CP is obtained. Marketing CP benefits to new trainee industry is increasingly becoming challenging, resulting in less credible companies registering for CP training. Out of the twelve companies that were present for the sessions, only seven companies finally graduated to the next session. Other SMEs pulled out for various reasons. One other bigger problem was late disbursement of funds as some activities could not be started on time. Additionally, while the project was based at the


70

Copper belt during the first half of the year, disbursement of funds was controlled from the ECZ Lusaka office. The effect was that some activities were not executed according to expectations and plans more. Energy Efficiency Training; Kafue Gorge Regional Centre: As a follow up to the SADC energy management programme a partnership arrangement was made with Kafue Gorge Regional Training Centre to deliver training programmes on a sustainable basis. The training material is based on the material developed under the SIEMP project. The course is demand driven and since industry does not see the importance of energy efficiency / management, the response to this course once advertised has been low. 3.5 Summary of Proposed REEPASA Activities Policy/ Finance Tools:

• Assessment/ Analysis/ recommendations of policies/ finance tools encouraging increased RET and RE for off-grid systems, and household/ SMEs respectively, to include targets for their achievements.

• Financial/ economic assessments/ analysis of selected end-grid extension projects, viz-a-viz, RET decentralized systems. At least four case studies will be considered.

• Effects of financing instruments such as smart subsidies and CDM on tariff settings under grid electricity extension and decentralized RE systems/ projects.

• Barriers inhibiting increased accessibility of modern energy services (such as electricity grid extension and decentralized RE systems/ projects) in rural areas of the country.

Rural Electrification:

• Assessment of impacts of selected rural electrification programs/ projects for education, health and water supply.

• Adoption/ development of criteria for impact assessment for the above, followed by impacts assessment

• Formulation of integrated framework for increased productive use and income generating activities for farmers and SMEs with facilitation and support from business development services, and micro financial institutions. Case studies to focus on irrigation and crop drying for farmers, and niche products such as honey processing, Moringa production and telecentres for SMEs, through use of RETs to include PV, micro hydro, small wind and biomass.

• Assessment of financial sustainability of identified case studies.


71

Local Authorities’ Electricity Management: The major activities involve engagement of local authorities to enhance electricity management through the use of automatic load control devices, which in turn reduce electricity consumption, as well as ascertaining the viability of producing electricity through combustion of methane from municipal sewerage waste in gas generators.


72

4.0 SOUTH AFRICA 4.1 Background 4.1.1 Population, Economy and Governance

The Republic of South Africa occupies the southernmost part of the African continent, stretching latitudinally from 22° to 35° S and longitudinally from 17° to 33° E. Its surface area is 1 219 090 km2. It has common boundaries with the republics of Namibia, Botswana and Zimbabwe, while the Republic of Mozambique and the Kingdom of Swaziland lie to the north-east. Completely enclosed by South African territory in the south-east is the mountain Kingdom of Lesotho. To the west, south and east, South Africa borders on the Atlantic and Indian oceans. Isolated, 1 920 km south-east of Cape Town in the Atlantic, lie the Prince Edward and Marion islands, annexed by South Africa in 1947. Since the start of a truly democratic South Africa the government has set out to dismantle Apartheid social relations and create a society based on equity, non-racialism and non-sexism. New policies and programmes have been put in place to dramatically improve the quality of life of all the people. The Constitution of South Africa stipulates three tiers of Government in South Africa i.e.

• National;

• Provincial; and

• Local. Each of these has different responsibilities in terms of policy and strategy setting as well as implementation. Statistics South Africa is the key source of demographic information in the country (www.statssa.gov.za) and publishes population estimates for the country as a whole, and the nine provinces annually. The latest estimate was undertaken mid-year 2005 and produced a figure for the total population of 46.9 million. Kwa-Zulu Natal has the largest share of the population (20, 6%), followed by Guateng (19,2%) and the Eastern Cape (15,0%).


73

Figure 4.1 Provinces of the Republic of South Africa

4.1.2 Energy Balance

The South African economy is highly energy intensive which is seen as an issue that the South African economy needs to address in terms of its competitiveness. The Energy Outlook for South Africa (DME, 2002) indicated that the South Africa’s final fuel demand of 3054 PJ was provided by the following fuel types. Table 4.1 Fuel Demand by types

Fuel Type Demand (as a %)

Coal 32.1%

Crude Oil 1.5%

Electricity 20.1%

Natural Gas 0.1%

Oil Products 29.2%

Other Fuels 3.4%


74

Biomass 13.6%

Renewables 0.0%

In terms of the residential sector fuels used were as follows: Table 4.2 Energy for the Residential Sector

Energy for the Residential Sector (in PJ, year 2000)

Coal 58.0

Electricity 106.9

LPG 4.7

Natural Gas 0.0

Paraffin 25.3

Solar 0.2

Vegetable Wastes 4.3

Wood 84.7

Total 284.2

In the study five main uses of residential energy were identified i.e. space heating, water heating, cooking, lighting and other (such as refrigerators, radios and TVs).The table below shows the relative use of these sources of residential energy in 2000.

Table 4.3 Residential Energy Use

Residential Energy Use (in PJ, year 2000)

Cooking 113.4

Lighting 15.4

Other 35.1

Space heating 90.8

Water heating 29.5

Total 284.2


75

4.1.3 Electrification Statistics

The South African Government has made electrification one of its key objectives. The latest reporting on its programme of action indicates that the ambitious target the Government set, for each household to have access to electricity by 2012 will be achieved. Currently of the national total of 5 517 090 indigent\poor households, 2 901 134 (52%) have access to Free Basic Electricity. Access to the grid is mostly experienced, not unexpectedly, in the rural areas of the poorer provinces i.e. Eastern Cape, Limpopo, Kwa-Zulu Natal. Concessions for off-grid provision of electricity have been made but their results have been mixed, especially with regards to the long-term sustainability of such interventions. 4.1.4 Ministries, Agencies, Utilities and Other Players in the Energy Sector Key stakeholders in the energy sector include: Department of Minerals and Energy (DME): This is the national government department tasked with taking forward energy policy and strategy in the country. The DME is responsible for the country’s Integrated Energy Planning process and ensuring the renewable energy target is achieved. The country’s DNA is located in the Department of Minerals and Energy. National Energy Regulator (NER): The NER’s role is to regulate the energy industry in accordance with government, laws, policies and standards and international best practises in support of Sustainable Development. One of the key challenges identified by the regulator is its role in addressing energy poverty. ESKOM: This company which is wholly owned by the South African Government (its reporting Ministry is that of Public Enterprises). EDI Holdings: This is the company set up by Government (through the DME) for the sole purpose of restructuring of the National Electricity Distribution Industry in line with South Africa’s Energy White Paper. This to be done by creating six viable Regional Electricity Distributors (REDs). Central Energy Fund (CEF):


76

CEF is another government wholly owned company that has a number of companies under its umbrella assisting the country to meet the future energy needs of the country. This includes the Energy Development Corporation (ERC) which pursues commercially viable investments in renewable energy. The newly formed South African National Energy Institute (SANERI) mandated to engage in energy research and development also falls under the auspices of CEF, as does the recently established National Energy Efficiency Agency (NEEA). The White Paper on Energy Policy clearly recognizes the need for South Africa to make optimum use of the all its energy and implies that the use of renewable resources need to be employed for the benefit of all South African’s. Subsequently the Cabinet became concerned with the proliferation of energy sub sector regulators and as a result the various institutional arrangements were rationalized into the National Energy Regulator (NERSA). NERSA is the regulatory authority established in terms of the National Energy Act 2004 (Act No 40 of 2004) and has its core economic regulation. NERSA’s mandate is further derived from written government policies as well as Regulations issued by the Minister of Minerals and Energy. In terms of renewable energy generation NERSA has the ultimate responsibility of issuing licenses for the generation and provision of energy from renewable resources. Furthermore, NERSA has to ensure the transparency of decisions that affect consumers’ particular those relating to tariffs, access to capacity and quality of supply. In the present climate this applies particularly to renewable energy generation from renewable resources. The National Electrification Strategy (NES) provides for a full integration of the grid and non grid technologies into a single electrification programmes implying that renewable energy distribution must be managed in a manner so at to be incorporated into the National Electrification Programme (NEP). In accordance with the Energy White Paper the National Government assumes political and primary financial responsibility for the NEP. The primary focus of the programme is to provide energy services to historically disadvantaged communities be they urban or rural. In most instances the rural areas have a low grid capacity and the primary option that will be promoted is the use of renewable technologies. In summary the licensing of new renewable technologies will lie with NERSA and the promotion of renewable energy use will be by National Government via the NEP. The arrangements which govern generation and distribution of renewable energy are summarised in Figure 4.2 below.


77

Figure 4.2 Institutional Arrangement for Distribution and Generation of RE

Distribution

Generation Licensing

Access to grid

Tariffs

NERSA

National Government

NERSA

Distribution

Generation Licensing

Access to grid

Tariffs

NERSA

National Government

NERSA

4.1.5 Significant RE and Energy Efficient Projects Energy efficiency has become a key issue in South Africa as a result of the emerging shortage of peak and baseload capacity in the country. An energy efficiency strategy has been developed by the DME, with targets for particular sectors, and is currently being implemented. A Demand Side Management (DSM) programme being managed by ESKOM is supporting project development in this area and the creation of ESCOs in the country. Energy efficiency has been formally incorporated into the country’s Integrated Energy Planning Process and there have been several projects implemented in the industrial sector. A National Energy Efficiency Agency (NEEA) has also been set up to take projects in this area forward. For practical reasons the DSM Fund will in the short-term still be managed by ESKOM. As will be discussed later in this document the South African policy and regulatory environment has become more supportive as regards renewable energy as a result of publication of a White Paper on Renewable Energy Policy in November 2003. However, solar PV projects have not been implemented widely in the country and where they have (e.g. in the concessions) they have achieved mixed results. Solar water heating is seen as an area of great potential and there is a significant solar water industry. The World Bank is intending to implement a GEF project in South Africa that will support and incentivise the development of this industry (Envisaged start – 2007). ESKOM has built a small wind demonstration project in Cape Town and after an extended period getting regulatory approvals the Darling Wind Farm Project is envisaged to start operation during 2007. A number of international wind project developers have approached the South African Government indicating their interest in building large wind farms. A key barrier is the price that such projects would receive for electricity generated. Biomass is a well-known energy source in South Africa. The sugar industry (key players here being Illovo and Tongaat-Hulett) is using bagasse extensively and has been continually looking for opportunities to enhance its use. The key barrier again being the prices being offered for electricity generated from this source.


78

4.1.6 Significant Energy Policies and Regulation The key documents relating to the Energy Sector include:

• The White Paper on the Energy Policy of the Republic of South Africa, 1998 (for document see DME website www.dme.gov.za );

• The Integrated Energy Plan for the Republic of South Africa, March 2003 (see DME website www.dme.gov.za );

• White Paper on Renewable Energy Policy, 2003 (see DME website www.dme.gov.za ).

• Electricity Regulation Act, 2006 (available on government portal www.gov.za).

• National Energy Regulator Act, 2004 (available on government portal www.gov.za).

• The Energy Efficiency Strategy of the Republic of South Africa, Department of Minerals and Energy March 2005 (for document see DME website www.dme.gov.za )

Official policy on renewable energy: The Government policy on Renewable Energy is set out in its White Paper on Renewable Energy Policy, with the key action being the setting of a target i.e. 10 000 GwH renewable energy contribution to final energy consumption by 2013. To support this objective the DME has also set up a renewable energy subsidy office, as well as taking the lead in CDM related activities. However in the emerging crisis that South Africa is facing with regard to generation capacity it is clear that renewables are not seen as a major future contributor to generation capacity, as opposed to other options such as coal-fired and gas power stations and nuclear energy. Official policy on rational use of energy: There is no official policy on the rational use of energy, however the potential use of energy to support productive activities is mentioned in the energy and renewable energy white papers 4.2 Policy and Finance issues Relating to RE and Rational use

of Energy At present in South Africa there are no legal barriers to the establishment of renewable generators and their access to the power market. If two or more willing participants voluntarily agree to the establishment of such an enterprise they are free to do so subject to the normal legislation such as zoning and planning permissions. For example, it is feasible for a renewable energy generator to enter into an agreement with a local authority for the supply of renewable energy to that local authority. However, in practice, there are numerous barriers to the implementation of renewable energy generators.


79

4.2.1 Barriers to Renewable Energy

South Africa has traditionally been supplied with energy derived from non–renewable resources. Less than 1% of the 200 000 GWh of electricity generated in South Africa originates from renewable resources. This practise is posing serious stresses on the remaining resources and there is a concerted effort to move towards renewable energy sources. There is significant potential for renewable electricity generation in South Africa with currently available technologies. The potential energy supply from a range renewable energy sources is shown below: Table 4.4 Estimates of theoretical potential for RE sources in South Africa

DME Howells RE White Paper Resource

PJ/Year PJ/Year PJ/Year

Wind 6 50 21

Bagasse 47 49 18

Wood 44 220

Hydro 40 20 36

Solar 8 500 000

Agricultural waste 20

Wood waste 9

Source: Winkler (2005)

The barriers to implementing renewable energy technologies are:

1. Cost competitiveness 2. Intermittency 3. Scale 4. Governance 5. Legal Framework 6. Environmental and planning approach 7. Implementation capacity 8. Public awareness and entrepreneurship.

Each of these factors is addressed in more detail in the subsequent section.


80

Cost competitiveness: The cost of industrial electricity supplied by Eskom, relative to the international market is shown in Figure 4.3 below. Industrial electricity supplied by Eskom is 83% less than that of Japan and 65% less than the international average (3.75 US$c/KWh). A comparison of average international electricity generation costs is provided below. The average generation cost for energy from traditional sources is 12% that of generating energy from biomass or wind. Figure 4.3 World Industrial Electricity prices, in US$c (1999) Eskom

7.60

5.45

5.13

4.74

4.41

4.44

4.35

4.10

4.03

4.01

4.00

3.92

3.85

3.78

3.65

3.64

3.62

3.60

3.55

3.47

3.43

3.25

3.20

3.05

2.69

2.65

2.54

2.51

2.47

1.33

0

1

2

3

4

5

6

7

8

9

Japa

n

Italy

Aust

ria (1

)

Arge

ntin

a

Sing

apor

e

Indi

a

Belg

ium

UK

(2)

Isra

el

Portu

gal

Irela

nd

Cze

ch R

epub

lic

Spai

n (1

)

Net

herla

nds

(1)

Gre

ece

Taiw

an

Luxe

mbo

urg

Sout

h Ko

rea

Den

mar

k(3)

Ger

man

y (3

)

Fran

ce (1

)

Nor

way

(4)

Aus

tralia

(1)

New

Zea

land

Finl

and

Can

ada

USA

Pol

and

Chi

le

Sout

h Af

rica

Table 4.5 Comparison of average international electricity generation costs

Energy Source Levelised cost (US$c/kWh)

Average traditional generation price in SA 0.83

Gas Turbine 3.3

Steam Turbine Coal 4.7

Heavy Fuel Oil (ST) 4.83

Nuclear 5.2

On-shore wind 5.5

IGCC Coal 5.5


81

IGCC Fuel Oil 3.7

Off-shore Wind 6.7

Biomass 6.8

Source: www.dme.gov.za

Intermittency: Several of the renewable energy technologies, wind, hydro and landfill gas are intermittent generators. The power supply is less reliable than can be expected from conventional generators and consequently has less value in the power system. Furthermore, South Africa’s needs are characterised by peak usage patterns. At present renewable energy technologies are not well suited to generating or distributing energy according in accordance with peak demand curves. Scale: The scale of renewable energy generators currently in operation in South Africa are small in comparison to the energy supplied by from the Eskom grid. Table 4.6 below provides a comparison of the various renewable energy sources with the energy supplied by Eskom. The small scale of the renewable energy technologies can be seen in both a positive and negative light. The primary disadvantage is that the cost of market participation is high as it is a function of unit energy delivered. The disadvantage becomes clearer when it comes to participating in the competitive power market. The voltage at which ESKOM supplies electricity into the nation grid is 400 000 V whereas a renewable energy plant will only be able to produce electricity in orders of magnitude less than that. The municipal grid operates at 11 000 V. Table 4.6 Energy generating capacity in South Africa

Energy generator Scale (MW) (%) of total

Exploited wind energy in SA 0.4

Installed hydropower 600 1.5

Micro hydro 65

Solar water heating 242 0.5

Eskom Grid 39 000 98


82

Total 399074 100

Source DME website Governance: Traditionally the governance of the South African grid is undertaken by ESKOM’s National Control Centre. Consequently renewable energy generators will find it difficult to obtain rule changes and amendments that favour renewables. It is possible that these problems may be offset by the influence of public sector bodies’ governance, and where the public promotes renewables as part of an environmental policy. Legal Framework: Existing legislation is primarily focused on ‘traditional’ forms of energy provision. Often legislation is needed to overcome barriers that cannot be accommodated through voluntary arrangements, the absence of formal arrangements is a very effective barrier to the introduction of renewable energy. Environmental and planning approvals: Renewable energy projects face difficulties with obtaining planning and environmental approval authorisation as the process is still new and unfamiliar to most parties concerned. Implementation capacity: Renewable energy will require support from the public sector if it is to be realised on a reasonable scale, as a result there is still a need to establish the mechanisms and market arrangements that support renewable energy. South Africa does possess the technical capacity to implement the renewable technologies, but the factor hindering their implementation is ‘buy in’.

Public awareness and entrepreneurship: At present the value and importance of renewable energy to the general South African public is low. 4.2.2 Status of Designated National Authority (DNA)

The DNA has been operational since the last quarter of 2004 and is located within the Department of Minerals and Energy. It has developed a set of operational procedures to assess projects in terms of the sustainable development criteria agreed by the Government, and assessed and approved a number of projects. Currently, only two South African projects have been registered by the CDM Executive Board.


83

The DNA is overseen by a Steering Committee made up of a number of national departments including the DME, and the Departments of Environmental Affairs and Tourism, Trade and Industry, Science and Technology, Water Affairs and Forestry, Agriculture and Transport. The DNA has recently established a Promotions Committee, which includes non-governmental representatives. The aims of the Promotions Committee is to support and encourage the development of the CDM in South Africa, with a particular emphasis on CDM projects that have a strong public and sustainable development benefit. A number of local authorities and parastatals have begun to investigate CDM project development and there is clear intention from these organisations to use the CDM to support renewable energy, energy efficiency, sustainable waste management and other objectives of government. 4.2.3 Areas with weak grids Currently the areas the areas that are experiencing the most problems with outages are the western cape and the southern cape regions. The Southern Cape region will probably provide the best opportunities for REEPASA analysis. 4.2.4 Opportunities for REEPASA in the areas above

It has been reported that one of the key barriers to ongoing and larger scale support to the renewable energy sector (e.g. supporting a feed in tariff) has been Treasury’s lack of support for such an option. This is being linked to a lack of predictably with regard to the ongoing financial burdens Government may face if such a tariff were to be implemented. A possible area that REEPASA could investigate further would be Treasury’s position in this regard and develop options on how these budgets could be assessed and managed with more certainty. Other Areas of Work Could Include:

• Evaluation of capital funding requirements for meeting the RE targets and possibly further targets;

• Evaluation of operating subsidy requirements for the same targets;

• Understanding of the potential contribution to financial requirements by National Treasury, cross-subsidies, carbon finance and other sources;

• Evaluation of preferred options for RE promotion: such as feed-in-tariffs vs. RE obligations. Including lessons from other country experiences. Consideration of other approaches, such as tax exemptions for RE. Linkages to the Environmental Fiscal Reform process of National Treasury and potential for carbon or other taxation; and,

• Understanding of benefits of RE and valuation of these benefits.


84

4.3 Rural Energy Access 4.3.1 Role of Renewable Energy in Meeting the Country’s Energy Needs

It is quite clear that the future role of renewables in meeting the country’s energy needs is seen as a minor one when one looks at the support been given to the ESKOM’s new investment in coal and gas fired technology. One renewable area that is being given significant support is that of biofuels which is specifically mentioned in Government’s new Accelerated and Shared Growth Initiative (ASGISA). The Government intends to grow the biofuels industry with a specific intent to target job creation. A biofuels strategy is being developed and should be completed by the end of 2006. Electrification is the responsibility of national government and is being implemented by ESKOM and local authority structures. There is little donor involvement in this area, though there have been donors involve in school and clinic electrification programmes involving PV. However the German Development Bank KfW is funding the most recent off-grid concession. As mentioned there have been school and clinic electrification programmes but there results have been mixed and the perennial concern around sustainability (especially with regard to maintenance) has raised its head. DME have initiated the establishment of Integrated Energy Centres (IeCs) that are intended to promote accessibility to affordable energy sources and services. A number have been established so far in the Northern Cape and KwaZulu Natal. An IeC is a one-stop energy shop owned and operated by the community cooperative. The intention is that through the provision of sustainable energy services that it other development activities will flow, including business development and job creation. In terms of the ASGISA the Government has identified targeting the “Second Economy” as a clear area of intervention to address unemployment and ensure the country reaches its target of halve poverty and unemployment by 2012. ASGISA has specifically mentioned the provision of subsidies to encourage the establishment of telecommunications and labour-intensive businesses in poor areas. This could be a possible route for more productive use interventions. In terms of geographic areas that REEPASA should look at the Eastern Cape, KwaZulu Natal and Northern Cape offer the best opportunities for further analysis. 4.3.2 Major Electrification Programmes There are a large number of technologies available to harness renewable energy for different purposes. Table 4.7 below presents the annual energy production as modelled by Prasad and Visagie (2005).


85

Table 4.7 Potential of renewable energy technologies

Renewable Resource GWh output

Hydro 9 245

Pulp and Paper 110

Landfill gas 598

Sugar bagasse 5 848

Wind 64 102

Slow water heating 6 940

Total 86 843

Hydro: Figure 4.4 below presents the significant potential for the development of hydropower in the short and medium term in specific areas of the country. The Eastern Cape and KwaZulu Natal provinces have the best potential for the development of small (less than 10 MW) hydropower plants.

Figure 4.4 Potential for Hydropower generation


86

Solar: South African has the highest level of solar radiation in the world (ERC, 2005). The average daily radiation varies between 4.5 and 6.5 kWh/m2, making the use of PV systems a very attractive option (Figure 4.5).

Figure 4.5 Annual direct and diffuse solar radiation in South Africa

Wind: Wind power potential is fairly good along the coastal and escarpment areas with mean average wind speeds of 4 m/s (Figure 4.6.). It is estimated by DME (2002) that wind power could supply at least 1 % (198 000 GWh) of South Africa’s projected electricity requirements.


87

Figure 4.6 Map of wind power on South Africa

Biomass: The potential for the production of energy from biomass is shown in Figure 4.7. The following woody biomass resources have been identified as having potential as a source of energy in rural households:

• Commercial plantations;

• Indigenous woodlands;

• Alien vegetation;

• Deciduous fruit tree off cuts from pruning;

• Sawmills;

• Pulp mills.


88

Figure 4.7 Total biomass energy potential in South Africa

4.3.3 Policy Targets to Promote Rural Electrification Policy on renewable energy is based on the 1998 White Paper on Energy Policy. More recently the White Paper on the Promotion of Renewable Energy and Clean Energy Development was gazetted in March 2004 and sets a target for renewable energy. Additionally the White Paper concludes that the target can be achieved by controlling the quantity and price as well as providing incentives to companies to make the investments in renewable energy. In the transition before renewable technologies become common place in South Africa limited capital subsidies are being offered by DME. The renewable energy target and ways to achieve this as well as the subsidy schemes are discussed in the subsequent sections. Setting a target for renewable energy generation: The idea behind setting a target for renewable energy generation is that a certain quantity of South Africa’s energy supply should come from renewable resources. The draft White Paper on Renewable Energy (DME, 2003) recommends that an additional 10 000 GWh of renewable energy be contributed to the final energy demand by 2013. This implies that 1 000 GWh/year of energy be supplied from biomass, wind, solar and small scale hydro (DME, 2003). A study carried out by the EDRC (2003) examined a range of targets for feasibility and recommended a target of 15% renewables by 2020. The Sustainable Energy and Climate Change Partnership has called for a South African commitment to ’10% of electricity generation by renewable energy technology by 2012 and 20% by 2020’ (SECCP,


89

2002). The draft legislation on renewable energy published in November 2004 presents a short-term strategy to achieve the renewable energy targets viz:

• The DME requests current green energy licensees to cooperate voluntary with willing buyers and sellers.

• Bilateral agreements between suppliers of green energy and network operators are encouraged to allow them access to existing customers and their networks. ESKOM has agreed to allow full access to their networks (Morris, 2002).

The DME is currently developing a framework within which the renewable industry can grow and this involves policy instruments as shown in figure 4.8 below. These policy instruments include economic (taxation, subsidies and tradable permits) and/or regulatory policy (standards, codes and targets). The two possible points for national intervention is by regulating the quantity of renewable energy produced or by fixing the prices by regulating tariffs. The setting of targets can be achieved by one of the following methods:

• Feed-in tariffs

• Renewable energy portfolio standard

• Renewable obligations Another attractive intermediate method of financing renewable energy, outside of the DME, is by the Tradable Renewable Energy Certificates (TRECS).

Figure 4.8 Categorization of policy instruments

Generation based (MWh)

Feed-in tariffsFiscal measuresBidding systems(Subsidies)

Supply side Demand side

Capacity based (MW)

Investment subsidies(Fiscal measures)

Quota obligations(Fiscal measures)

Quota obligations




Capacity based (MW)



Quota obligations




Capacity based (MW)



Quota obligations

Generic policy options: This section discusses the generic policy options with regards to quantity versus price. Price options: Feed-in Tariffs:


90

The feed-in tariff uses price as the policy instrument, whereby a price is set for renewable energy, usually differentiating between the different technologies. The tariffs are set by an energy feed-in law and guaranteed for a specific period of time. The energy distributor in the area is required to buy any renewable energy in the area. An example of the FIT in operation is the power purchase agreement that the Mbombela Municipality has in that it sells any excess energy generated at the Friedenheim hydro plant at a tariff that is set at 12% below Eskom’s bulk supplier tariff (note that this differs from the national feed-in tariff that would be required to support renewable energy as such a tariff would need to be higher than current Eskom bulk supply tariffs). Quantity options: Renewable Energy Portfolio Standard: The policy instrument that could be used here is a portfolio standard which directly sets the quantity of renewable energy. Government sets a target through a renewable energy portfolio standard (REPS), giving the energy distributors the choice as to how the standards will be met. A REPS involves:

• Government setting a target for the share of energy to be distributed, as a percentage of sales to each distributor. o With a single utility, the REPS would amount to the same as the

renewable set-aside capacity of renewable power, e.g. 200 MW annually for five years (DME, 2000).

• Defining which resources are eligible renewable energy technologies. These should typically include: solar, thermal, wind, small hydro, solar PV, landfill gas, biomass, wave, tidal. Furthermore it is appropriate that only domestic renewable resources would be eligible, since the increase in costs are paid for by the local consumers through increased electricity prices.

• Economic instruments can be used to allow distributors to achieve the target at least cost, by trading credits. As the energy sector is restructured into several regional distributors individual distributors can achieve their target by doing it individually or buying credits from other distributors who achieve more than their target. This concept links into the TRECS, discussed below.

From Government’s perspective the REPS requires no upfront government expenditure. Furthermore if the trading aspect is introduced the policy instrument becomes comparable to a system of ‘green certificates’.


91

Renewables Obligation: Renewable obligation is a method that can be used to fix the quantity of energy generated using renewable resources. The obligation differs from the ‘feed-in tariff’ in that a quantity of energy is put to tender and the price of the energy determined through bidding (Menanteau, 2003) or by legislative fiat. Options under consideration by the DME: The options that are actively being considered by the DME are those based on approaches that explicitly fix the quantity of renewable energy. Of the two quantities based options discussed above the REPS option is the one that is receiving most attention. DME has recognized that setting the quantity alone will not be sufficient and efforts are underway to create enabling conditions for the development of renewable energy, these include subsidising renewable energy projects. Options being implemented by the DME: Currently DME is actively involved in subsiding renewable energy projects. Given the historically low tariffs for electricity in South Africa, the subsidy required to make renewable energy competitive is substantial. The tariff paid by municipalities to Eskom is 11 c/kWh compared to 50 c/kWh for energy supplied by the Darling wind farm (Spalding-Fecher, 2002). The large expenditure on renewable energy that is required to make renewable energy affordable is likely to be prohibitive to Government, unless capital and production subsides are viewed separately. Capital subsidies are a once off expenditure for Government whereas the production subsidy would be paid out on the unit of renewable energy generated. Capital subsidies: At present the DME has established the Renewable Energy Finance and Subsidy Office (REFSO) whose mandates include:

• The management of renewable energy subsidies;

• The provision of advice to developers and other stakeholders on renewable energy finance and subsidies, as well as opportunities for accessing finance from other sources.

Key features of the renewable energy subsidy scheme are:

• It is a once-off capital grant for new renewable energy projects;

• Projects must be employing commercially proven renewable energy technologies;

• The maximum capital cost of the project must be less than R100 million;


92

• The maximum subsidy amount will be capped at 20 % of the total project capital cost;

• The minimum project size is: o 1 MW for electricity; o 914 kl/year for bio-diesel; o 1 495 kl/year for bio-ethanol or equivalents.

• The developer must comply with the PFMA (written undertaking must be provided that the applicant has financial and risk management systems and internal controls);

• There must be a minimum BEE equity participation. A schematic of the subsidisation scheme process flow and the allocation methodology is shown below as Figure 4.9 and Figure 4.10 respectively.

Figure 4.9 Illustration of the subsidy process

Actions by DeveloperProject

Identification

Submit Eol to Pre-qualify

Project Development

Submit applicationFor Subsidy

Project Financial Closure

Project Implementation

EolSubmission

Subsidyapplication

Proof of Fin closure

Proof of milestones

REFSO actions

Invitation to Submit Expressions of Interest (Eol)

Evaluate of Eols & Award Letters of Registration

Evaluate submission & award contract

Verification of financial Closure

Monitoring & Subsidy Disbursement

Actions by DeveloperProject

Identification

Submit Eol to Pre-qualify

Project Development

Submit applicationFor Subsidy

Project Financial Closure

Project Implementation

EolSubmission

Subsidyapplication

Proof of Fin closure

Proof of milestones

REFSO actions

Invitation to Submit Expressions of Interest (Eol)

Evaluate of Eols & Award Letters of Registration

Evaluate submission & award contract

Verification of financial Closure

Monitoring & Subsidy Disbursement


93

Figure 4.10 Schematic of the subsidy allocation method for 2005/2006

Total CapitalR14.2 million over 3 years R4.5 million in 2005/2006

Capital / TechnologyNot in use for 2005/ 2006 to promote all RE technologies

Sugar Bagass

Landfill Biomass Bio - fuels

Project 1

Project 2

Project n

Project 1

Project 2

Project n

Project 1

Project 2

Project n

Project 1

Project 2

Project n

Project 1

Project 2

Project n

Max Cap/Project . Total project capex less than R100 million. Subsidy can never be more than 20% of total capital cost of project to reduce chance of over - subsidization.Min Cap / Project

Prevent high overall transaction costs. Min of project size (installed cap > 1MW,R250 000 / project

Cap/Installed CapacitySubsidy in proportion to size (prevent very small projects from being over subsidised)250 R/kW or 273 R/kl/ year for bio-diesel. or 167 R/k/year for bio-ethanol (or equivalent)

Other

Subsidy Amount

In the event that there are more qualifying applications than available finds the projects are ranked according to the criteria shown in Table 4.8.

Table 4.8 Ranking of renewable energy projects (DME, REFSO)

1 Point 2 Points 3 Points 4 Points 5 Points

Electricity

(MWh)

≤ 17 520

> 17 520

≤ 35 040

> 35 040

≤ 70 080

> 70 080

≤ 140 160

>140 160

Bio-diesel

(kl/year)

≤ 1 828 > 1 828

≤ 3 656

> 3 656

≤ 7 313

> 7 313

≤ 14 625

> 14 625

Contribution to Target

Bio-ethanol

(kl/year)

≤ 2 989 > 2 989

≤ 3 656

> 5 978

≤ 11 957

> 11 957

≤ 23 914

> 23 914

Electricity

(R/kW)

≥ 17 500

< 17 500

≥ 14 000

< 14 000

≥ 10 500

< 10 500

≥ 7 000

< 7 000

Capital Cost

Bio-diesel

(R/kl/year)

≥ 19.14 < 19.14

≥ 15.32

< 15.32

≥ 11.49

< 11.49

≥ 7.66

< 7.66


94

Bio-ethanol

(R/kl/year)

≥ 11.71 < 11.71

≥ 9.37

< 9.37

≥ 7.03

< 7.03

≥ 4.68

< 4.68

Direct Jobs ≤ 14 > 15

< 34

> 34

< 74

> 74

< 149

> 150

The REFSO will perform ongoing monitoring and reporting of projects to track progress. Production Subsidies: Production subsidies are based on energy production and thereby provide an incentive to use capital efficiently. The subsidy would be offered as a rebate per kWh of renewable energy produced (c/kWh) and would be sufficient to make the renewable energy technology competitive with conventional power supply technologies. An example of a production subsidy is the “Green Electricity” tariff which was implemented at the World Summit on Sustainable Development (2002) this was set at 50 c/kWh (Morris, 2002). Option being explored outside government: There are options that are being explored that are outside the ambit of national government. These include the following:

• Tradable renewable energy certificates

• Direct purchases by local government

• International subsidization.

TRECS: The catalysts for the green power market in South Africa was the 845 MWh of

‘green electricity’ supplied to the two main venues (Ubuntu Village and NASREC)

of the WSSD in 2002 which was endorsed and supported by the NER and based

on TREC’s.


95

Figure below provides a graphical representation of how the TREC system works. TREC’s are viewed as an instrument to facilitate the implementation of renewable energy policy instruments but do not substitute them.

Figure 4.11 Purchasing and using green power by TRECS

A TREC roll-out plan for South Africa has been proposed by Agama Energy and includes 4 phases: 1. The Green Power for the WSSD Project (2003) 2. A voluntary scheme supported by existing utilities (2003 to 2007) 3. Establishment and participation of the RED’s (2004 to 2009) 4. A mandatory scheme (2006 to 2010) Pilot projects that have been used to study the feasibility of TREC’s are:

• Green Power for WSSD.

• Solar water heating which includes the potential for over 2 million TREC’s as an anticipated price of R167/TREC.


96

• The 19.2 MW Luderitz wind farm which generates 54 000 TRECS per annum at R159/TREC.

At present there are two ‘green power’ traders in South Africa GeenX and Amatola Green Power (AGP) operating from Stellenbsoch and East London respectively. AGP will be investing primarily in bagasse and landfill projects which produce methane and GreenX in bagasse and mico-hydro. 4.3.4 Projects and Studies on Productive Use of Off-Grid Electricity

In 1999 renewable energy accounted for approximately 9 % of the total energy consumption (Energy Futures, 2000) with most of the energy generated from fuelwood and dung and not modern renewable energy technologies. Less than 15 of the total electrical energy used in South Africa derives from renewable energy resources. An assessment done by the ERC in 2005 has summarised renewable energy projects currently in operation as follows:

• Hydro Currently there are 8 licensed small hydro facilities less than 50 MW, with a combined capacity of 68 MW.

• Solar Photovoltaic (PV) cells have been in telecommunications networks, small-scale remote stand alone power supplies for domestic use, game farms and household and community water pumping schemes for some time already. The installed PV capacity is 12 MV.

• Wind ESKOM is currently generating electricity from Klipheuwel Wind Farm about 40 km north of Cape Town. The three wind turbines together have a combined generation capacity of 3.16 MW. Phase 1 of the Darling wind farm, a 5 MW power project, started in 2005.

• Biomass Biomass in the form of fuelwood, wood waste, dung, charcoal and bagasse accounts for close to 10 % of net energy use at a national level.

The renewable energy projects mentioned above will now be discussed with attention being paid to the technology employed as well financial arrangements (limited to the availability of information). Hydro projects: Of the 8 licensed small hydro facilities 4 are operated by ESKOM, 3 by municipal generators and 1 is a privately owned facility (summarised in Table 4.9). The


97

energy generated by the ESKOM and municipal facilities is fed directly into the grid. The Friedenheim Hydro project is located on the Crocodile River and has been in operation since 1998. The 2.5 MW plant was developed by the Friedenheim Irrigation Board and is recognised as the first Independent Power Producer (IPP) in South Africa. Income is generated from the sale of excess power generated to the Mbombela Municipality through power purchase agreement (PPA) that sets the tariff at 12 % below the price at which the local authority buys power from ESKOM. The capital cost of the project at 1998 values was R3.25 million. The equity contribution of R1 million was paid back over a period of 7 years and the annual power sales in 2004 was R1.5 million. Table 1.9 Hydro projects currently in operation

Licensee Facility Capacity (MW)

ESKOM First Falls 6

ESKOM Ncora 2

ESKOM Second Falls 11

ESKOM Collywobbles 42

Municipal Lydenburg 2

Municipal Ceres 1

Municipal Piet Retief 1

Friedenheim Irrigation Board Friedenheim 3

Solar: The installed photovoltaic (PV) is estimated at 12 MW. Off-grid systems include a wide range of applications and sizes, with the majority being solar home systems (SHS). Grid connected PV capacity amounts to 150 kW (seven BP filling stations, Moshoeshoe Eco-Village, the Novalis Institute, the Green building and the new BP head office in Cape Town). Off-grid systems: Folovhodwe solar village project This was a village in the Limpopo Province where 580 solar home systems where installed at households in 1997/8. This project failed. Maphephetheni solar village project This is a small project initiated by the Solar Electric Light Fund and Solar Engineering Services in KwaZulu/Natal over the period 1996 to 2001. Overall, 52


98

households and a school (27 computers) were equipped with PV systems. Consequently some of the households have defaulted on payments or decided to opt out of the project. At present 33 of the households are still equipped with solar home systems and the Embuyeni Clinic is supplied with key electricity services. Kuyasa low-cost urban housing energy upgrade project The Kuyasa is a low scale CDM project which aims to reduce the consumption of fossil fuel by introducing three interventions. Two of these interventions are energy efficiency interventions (retrofitting CFCs and the introduction of ceiling and ceiling insulations) and one is the use of renewable energy by employing solar water heaters. 2300 households in Khayelitsha, Cape Town were supplied with solar water heaters. The project was facilitated via a partnership between the City of Cape Town and SouthSouthNorth (an NGO). The project was fully commissioned at the beginning of 2006 and is the first CDM Gold Label Standard project validated and registered internationally. A summary of the off-grid solar systems as provided by DME as at the end of 2002 is given in Table 4.10 below. Table 4.10 Installed capacity and off grid PV systems (ERC, 2005)

System DescriptionInstalled Capacity

(kWp)

Energy Production

(MWh/year)

Pre-1992 SHS 1 125 1 971

Of-grid concessions 350 613

Mephephethe SHS 5 9

Free State farm workers SHS 40 70

Folovhodwe solar village 29 51

Hluleka mini-grid 50 88

Solar schools 1 460 2 558

Solar clinics 100 175

Telecommunications 7 000 12 264

PV pumping 1 000 1 752

Game lodges 500 876


99

Total 11 759 20 602

Wind: At present wind farms are being used for demonstration purposes only. They include the Darling wind farm and research plants run by ESKOM to investigate the potential of large-scale wind energy for bulk electricity generation in South Africa. Darling wind farm The South African Government has recognized the importance of wind energy as a renewable energy source and has declared the wind farm a national demonstration plant. The project comprises two phases. Phase 1 consists of four 1.3 MW wind turbines producing 5.2 MW of energy and Phase 2 will consist of a further six 1.3 MW wind turbines resulting in a total installed capacity of 13 MW. The Oelsner Group is the main shareholder of Darling Independent Power Producer (Darling IPP). The renewable energy will be injected into the national grid managed by ESKOM. A favourable PPA has been reached with the Cape Town Metropolitan Council who will pay a premium for the purchase of the renewable energy. The energy will be sold by the City of Cape Town to customers at a premium of 25 c/kWh. Biomass: The main sources of biomass energy are fuel wood in the rural domestic sector, bagasse in the sugar industry and pulp and paper waste in the commercial forestry industry for in-house heat and energy generation. South Africa has traditionally been supplied with energy derived from non–renewable resources. Less than 1% of the 200 000 GWh of electricity generated in South Africa originates from renewable resources. This practise is posing serious stresses on the remaining resources and there is a concerted effort to move towards renewable energy sources. There is significant potential for renewable electricity generation in South Africa with currently available technologies. The potential energy supply from a range renewable energy sources is shown below:

Table 4.11 presents the energy produces annually from biomass. Table 4.11 Energy derived from biomass (ERC, 2005)

Type Energy production

Bagasse 210 GWh

Manure and litter 5 600 GWh


100

Waste 36 MWh

Numerous pilot projects are underway to investigate options of energy production from municipal dumps. The eThekweni landfill project is one that is furthest down the line. eThekwini landfill This project aims to capture methane rich landfill gas from three landfill sites to provide fuel for the production of 10 MW of energy. The project has been approved by the DNA and construction will begin. The energy generated from this project will be sold under a long term PPA to eThekwini electricity department at 13 c/kWh. The capital financing of the project has been secured through the normal municipal budgeting arrangements. 4.4 Local Authorities’ Electricity Management 4.4.1 Role of LA in Generating and Distributing Electricity Electricity is mentioned in the constitution which implies a narrow responsibility for municipalities with regard to ensuring that households have energy. In the Municipal Systems Amendment Act, the purpose of supply, transmission, distribution and, where applicable, generation is the function of the District Municipality. In many cases this function has been delegated to the Local Municipalities and the Metros. Structure of the Sector: South Africa’s electricity distribution industry is highly fragmented, with electricity being provided by Eskom and 187 local authorities. The municipal distribution system is not homogenous, with the twelve largest municipalities accounting for about 75% of all electricity sold in the municipal sector. It is further estimated that there are at least 200 tariff regimes, leading to great inequality and inefficiency in the provision of electricity across South Africa. Some of the chief problems facing the sector relate to asset depletion as a result of under-investment in assets, high administrative costs due to duplication, uneven distribution of electricity, with the poor being worst affected and high staff turnover and an ability to attract highly skilled professionals due to low wage offers in the sector. Some metros have indicated vacancies as high as 43% in their electricity departments. The current system is not sustainable and government has identified the need to appropriately address the widespread inefficiency and poor financial viability observed in the sector, with a major restructuring exercise. Electricity Distribution Industry restructuring:


101

The restructuring of the electricity distribution industry has been under investigation for over a decade and the electricity sector has been characterised by great uncertainty as to the form that the restructuring that will take and exactly what its implications for local government will be. This uncertainty can mainly be attributed to the lack of a final decision on whether to establish the six Regional Electricity Distributors (REDs), as originally recommended in the Blueprint Report and consequently agreed upon by Cabinet3 , or the more recently proposed ‘six plus one’ RED option. Where the originally planned six REDs would each incorporate a metro and a number of surrounding local municipalities, the ‘six plus one’ option refers to the six metro REDs with the exclusion of surrounding local municipalities, all of which would then fall under the belt of a seventh national or local RED. Either option will see Eskom and the electricity distributing municipalities transfer their electricity reticulation functions and thus all their assets, liabilities, obligations and staff to the REDs. But, the implications of this process are likely to differ substantially depending on whether it is the six or the ‘six plus one’ RED option that is adopted. The decision to explore the ‘six plus one’ option has raised a number of questions, and there is little information available to explain this shift in vision. While no final decision has been taken on establishing the ‘six plus one’ option, and the six REDs remains the status quo at present, there is a need to examine problems in the restructuring process to date as well as explore the reasoning and implications of the latter option which is currently under consideration. The Six REDs model: Milestones in the restructuring process include the establishment of EDI Holdings in 2003 and the 2005 launch of the first RED in Cape Town. Apart from these achievements, progress in establishing the six REDs has been somewhat slow with the most significant challenge relating to the constitutionally allocated authority over the electricity reticulation function. The South African Constitution allocates executive and legislative authority for electricity reticulation to local government. Consequently, compliance with the EDI restructuring can not be enforced and compliance is entirely voluntary on the part of municipalities. Thus, while national government plays a regulatory role over municipalities, it holds no Constitutional grounds for compelling municipalities to transfer their assets and liabilities to the REDs. It is possible, if enough municipalities favoured the restructuring proposal, that a voluntary restructuring could take place. However, in reality the situation has played out quite differently and the establishment of the six REDs has been hindered by the lack of voluntary restructuring in the industry. 3 The Blue Print Report was produced by the appointed consultant, PriceWaterhouseCoopers and concluded that the maximum number of financially viable and independent REDs feasible in South Africa is six. This total of six REDs was agreed upon and in 2003, the Electricity Distribution Industry (EDI) Holdings was established to conceptualise, implement and monitor these metro-based REDs, namely: Johannesburg, Tshwane (Pretoria), Ekurhuleni (East Rand), eThekwini (Durban), Nelson Mandela Metro (Port Elizabeth) and Cape Town.


102

Provincial to local interface: Provinces do not have any electricity related functions. 4.4.2 Efforts to Streamline Use of Electricity

A number of municipalities have been considering renewable energy projects, and in some cases are close to commissioning them, for example:

• Cape Town with regard to solar water heating interventions;

• eThekwini is on the process of developing landfill gas to energy projects, elements of which should be commissioned by the end of 2006 (other municipalities are at various stage of developing such projects e.g. Tshwane, Msunduzi and Ekurhuleni).

Nelson Mandela Bay Municipality recently put out a tender to develop a renewable energy programme looking at possible wind, solar ware heating and landfill gas interventions.

4.5 Summary of Proposed REEPASA Activities The following opportunities and suggestions for the proposed activities are made for the various areas: Policy \ Finance Tools: It has been reported that one of the key barriers to ongoing and larger scale support to the renewable energy sector (e.g. supporting a feed in tariff) has been Treasury’s lack of support for such an option. This is being linked to a lack of predictably with regard to the ongoing financial burdens Government may face if such a tariff were to be implemented. A possible area that REEPASA could investigate further would be Treasury’s position in this regard and develop options on how these budgets could be assessed and managed with more certainty. Other areas of work under this focus area could include: Understanding of the regulatory framework for embedded generation (on the municipal or RED’s side of the distribution network); Understanding of the financial merits/demerits of embedded generation;


103

Consideration of the non-financial merits/demerits of RE embedded generation, such as security of supply, employment creation, environmental quality, use of local assets and others; Impact of the REDs on the RE target and implications for RE policies and incentives of the REDs; Review of the solar homes initiative and lessons from this program Simple guidance to local authorities on the establishment of local RE generation capacity; and, Use of RE at the home or mini-grid scale as an option for the rural/off-grid areas in municipalities. It may be worth looking at high capacity and well resourced municipalities that also have rural areas with inadequate access to electricity. Rural Electrification: Focus on the Eastern Cape, Kwa-Zulu Natal and Northern Cape to look at opportunities for further work on productive use in these areas. Discussions with existing concessions holders on how REEPASA could interact with their work would be a possible route for project identification. Local Authority Electricity Management: Assessing the rationale behind particular municipalities getting involved with renewable energy projects. This would go beyond the feel-good aspects of climate change and sustainable development that several municipalities have indicated have been the key driver for their involvement. The intention is to look at the more technical aspects of grid stability and security of supply for example, and trying as far as possible to quantify these benefits. The findings of such analysis to be used as a basis for a workshop to advocate that other municipalities should get involved in developing such projects. Other areas of work under this focus area could include:

• Understanding of the regulatory framework for embedded generation (on the municipal or RED’s side of the distribution network);

• Understanding of the financial merits/demerits of embedded generation;

• Consideration of the non-financial merits/demerits of RE embedded generation, such as security of supply, employment creation, environmental quality, use of local assets and others;

• Impact of the REDs on the RE target and implications for RE policies and incentives of the REDs;

• Review of the solar homes initiative and lessons from this programme;

• Simple guidance to local authorities on the establishment of local RE generation capacity; and,


104

• Use of RE at the home or mini-grid scale as an option for the rural/off-grid areas in municipalities. It may be worth looking at high capacity and well resourced municipalities that also have rural areas with inadequate access to electricity.

Issues Regarding for Further Discussion: It would be worthwhile to assess whether there is any opportunity to link with the Integrated Sustainable Development Program being implemented by the IDT, as there have targeted several municipalities for attention and could have structures in place that REEPASA could piggy-back on.


105

References Air Quality Act, February 2005 AREED, 2000. www.areeed.org Cabinet Office, GRZ 2006. CDM SUSAC, 2001: CDM Capacity Building Initiative. CEEEZ, 1999: Zambia Country Study: “Climate Change Mitigations in Africa”. UNEP, Risoe. ISBN 87-550-2430-0 CEEEZ, 2004: Rural Energy and Renewable Energy Component: Paper presented at the CIA, World Factbook- Zambia, 2004. Core International, 2004: Energy Services Delivery in Zambia.; Status and Opportunities for enhancement in the context of the Global Village Energy Partnership Initiative (GVEP) Department of Energy, Zambia, 2003: “Energy bulletin 1990-2003” Ministry of Energy and Water Development. DoE, 2004: Status Report on the SADC Energy Management Programme in Conjunction with SADC Energy Sector. ECZ, 2004: Status Report on the project Cleaner Production. Environmental Council of Zambia. Electricity Act, 2003: Ministry of Energy and Water Development. Electricity Basic Services Support Tariff (Free Basic Electricity): Policy, July 2003


106

Electricity Distribution Industry Restructuring Draft Bill April 2003 Energy Balance 1999, Ministry of Natural Resources and Energy www.eia.doe.gov/emeu/international/swazilnd.html Energy Efficiency Strategy of the Republic of South Africa, March 2005 Energy Policy White Paper, December 1998 Energy Regulation Board Act, 2003. Ministry of Energy and Water Development First National Stakeholders Consultative Workshop, Mulungushi International Conference Centre IAES, 2004: World Bank Report on increased access to electricity. Integrated Energy Plan, March 2003 National Energy Draft Bill, September 2004 NEP- 2005: “National Energy Policy”. Ministry of Energy and Water Development. NEP-1994: “National Energy Policy”. Ministry of Energy and Water Development. OPPPI, 2003: Zambian Power System. Ministry of Energy and Water Development. Petroleum Act, 1995: Ministry of Energy and Water Development. Promotion of Renewable Energy and Clean Energy Development White Paper: Part One: Promotion of Renewable Energy, August 2002


107

Renewable Energy Policy of South Africa White Paper May 2004 Rural Electrification Act, 2003: Ministry of Energy and Water Development SEI, 2005. “Private Energy Service Delivery in Areas; experience from the Zambian PV ESCO project. Swaziland Electricity Bill 2005, Ministry of Natural Resources and Energy Swaziland Electricity Company Bill 2005, Ministry of Natural Resources and Energy Swaziland Energy regulatory Authority 2005, Ministry of Natural Resources and Energy Swaziland Human Development Report 2000, United Nation Development Programme www.undp.org.sz/publications1.htm Swaziland Utilisation of Renewable Energy; Action Plan, January 1997. Commonwealth Secretariat. The National Energy Policy; 2003. Ministry of Natural Resources and Energy. www.ecs.co.sz/energy/energy_chapter_6.htm - www.dme.gov.za, Department of Minerals and Energy www.earthlife.org.za, Earthlife Africa www.environment.gov.za, Department of Environmental Affairs and Tourism www.erc.uct.ac.za, Energy Research Centre, University of Cape Town www.eskom.co.za, Eskom


108

www.gov.sz/home.asp?pid=1124 www.gvep.org, Global Village Energy Partnership www.hedon.info, HEDON Household Energy Network www.housing.gov.za, Department of Housing www.iclei.org, International Council for Local Environmental Initiatives www.ieabioenergy.com, IEA Bioenergy (South Africa has full membership of Task 39, and observer status for Task 29) www.localpower.org, World Alliance for Decentralised Energy www.ner.org, National Electricity Regulator www.nnr.co.za, National Nuclear Regulator www.pasasa.org, Paraffin Safety Association of Southern Africa www.reeep.org, Renewable Energy and Energy Efficiency Partnership www.sapia.org.za, South African Petroleum Industry Association www.seb.co.sz www.sessa.org.za, Sustainable Energy Society of South Africa www.southsouthnorth.org, SouthSouthNorth www.sparknet.info, www.sparknet.info Knowledge Network on Energy for Low-income Households in Southern and East Africa


109

www.sustainable.org.za, Sustainable Energy Africa