Renewable Energy and SA GHG Emission Reduction System Portfolio Committee 25 October 2016

Background In 2015, Cabinet approved South Africa’s climate change mitigation system framework. The system includes the following key elements: A carbon budget for each company; Desired emissions reduction outcomes for key economic sectors Pollution prevention plans by companies with carbon budgets; A reporting system, to gather information on the actual emissions of users; A variety of other measures to be applied to support and/or complement the carbon budget system including a carbon tax. The system was introduced in phases. Phase one (2016-2020) will be voluntary as there is no legal basis to set emission limits for sectors or companies. Phase 2 (post-2020 period) will only become mandatory when climate change response legislation is in place.

WHAT IS THE SA GHG EMISSION REDUCTION SYSTEM? An organized structure that consists of interrelated and interdependent elements that are critical for the country’s greenhouse gas emission reduction These elements directly and indirectly influence one another to maintain the existence of the system, and will include a range of measures as contemplated in the National Climate Change Response White Paper (NCCRWP), aimed at achieving the overall national goal

FRAMEWORK WAS APPROVED BY CABINET IN 2015 Phase 1 2016 to 2020 AQA Provisions

Phase 2 Beyond 2020 Climate Change Act

Key Mitigation Sectors

Summary of mitigation potential for the RE energy measures and installed capacity required Abatement measure 2020 2030 2050 ktco2e MW Renewable Energy Onshore wind 12,524 5,600 33,396 13,600 78,794 32,000 Solar photovoltaic (concentrated) 8,921 3,700 20,977 8,700 54,227 22,500 Concentrated solar power (parabolic trough) 1,966 700 5,897 1,700 11,009 3,000 Biomass 900 250 2,699 750 11,471 1,500 Import (hydro) - 1,695 3,489 8,947 Domestic (hydro) Total RE   24,311 10,250 64,664 28,239 164,448 62, 489

EMISSION REDUCTION SYSTEM PHASE 1 Phase 1 carbon budget design document consulted with business. Carbon budgets finalised for 18 companies Pollution Prevention Plan Regulations to be promulgated soon Interface of carbon tax and carbon budgets: Carbon Budget companies gets 5% tax allowance in the current Carbon Tax design

EMISSION REDUCTION SYSTEM FOR THE SECOND AND SUBSEQUENT PHASES Key issue: phase 2 of GHG mitigation system requires a legal basis. Key elements below: Step 1: GHG Inventory Step 2: Mitigation Potential Analysis Step 3: Policies and Measures Step 4: National emissions trajectory Step 5: Desired Emission Reduction Outcomes Step 6: Carbon Budgets Step 7: Mitigation Plans Step 8: Monitoring and Evaluation

International commitments 2021 GHG Inventory 2000 - 2019 Policies and Measures 2 STEP 9 Compliance Review of DEROs, Carbon budgets 2022 Mitigation Potential Analysis 3 DEROs 3 Carbon Budgets 3 Global stocktaking 2023 2024 Review of LEDs 2025 Policies and Measures 3 INDC Submission 2 Web-based M&E System 2 2027 2000 - 2025 2030 Submission 3 Web-based M&E System Update 3 2028 DEROs 4 National Emissions Trajectory 4 Mitigation Potential Analysis 4 Carbon Budgets 4 2029 Policies and Measures 4 Mitigation Plans 4 2000 - 2027 National Com BUR BUR STEP 3 Policies and Measures Assessment 1 GHG Inventory 2000 - 2015 STEP 6 Carbon Budgets STEP 5 DEROs 2 STEP 4 National Emissions Trajectory STEP 2 Mitigation Potential Analysis 2 STEP 1 2000 – 2012 GHG Inventory Management System - GHG Emissions Reporting System (via NAEIS) 2000 - 2017 STEP 7 Mitigation Plans 2 STEP 8 Web-Based M&E 1 National Emissions Trajectory 3 2016 2017 2018 2019 2020 2026 Compliance Review of DEROs, Carbon budgets Mitigation Plans 3 BUR National Com BUR International commitments 2009 Pledge Assessment LEDs National Com BUR GHG Inventory 2000 - 2023 GHG Inventory 2000 - 2021 BUR Note: red boxes not necessarily part of the system. They represent international commitments Mitigation System Elements

Renewable Energy Developments South Africa has significant solar and wind resources Renewable energy technology costs have dropped dramatically and this presents an opportunity for the scale up of solar and wind technologies RE implementation - REIPPPP since 2011: 8.1 GW of RE allocated for procurement in all bid windows Approx 2.5GW operational 2014: PV and wind production -1% of electricity supply 2015: PV and wind production – 2% of electricity supply First half of 2016: PV and wind – 2.2% electricity supply

Summary of the REIPPP programme in terms of Ministerial Determinations (as of 31 March 2016) Bid window Capacity Bid window 1 1 423.80 MW Bid window 2 1 043.86 MW Bid window 3 1 451.56 MW Bid window 3.5 200 MW CSP Bid window 4 and 4 additional 2 205 MW

Summary of the REIPPP programme in terms of Ministerial Determinations (as of 31 March 2016) cont… Bid window Capacity Bid window Expedited 1 800 MW Bid window 5 1 566 MW Small renewables First Stage Two 49 MW Small renewables Second Stage Two 51 MW Small Renewables Bid Window 3 100 MW

CSIR Analysis of REIPPPP tariffs All tariffs in R/kWh Base Month/Year REIPPPP BW 1 BW 2 BW 3 BW 4 BW 4 additional Coal IPP BW1 BW 4 expedited Bid submission 4 Nov 2011 5 March 2012 19 Aug 2013 18 Aug 2014 2 Nov 2015 11 Nov 2015 Solar PV 632 MW 417 MW 435 MW 415MW 398 MW 520 MW April 2014 3.29 1.96 1.05 0.79 0.85 0.56 April 2015 3.44 2.05 1.10 0.82 0.89 0.58 April 2016 3.65 2.18 1.17 0.87 0.95 0.62 Wind 634 MW 563 MW 787 MW 676 MW 686 MW 650 MW 1.36 1.07 0.78 0.72 1.42 1.12 0.65 0.75 1.51 1.19 0.69 0.80 Coal 863 MW 0.93 0.97 1.03

Emission reduction from the REIPPPP Energy produced and supplied to the grid- 5 003 GWh Emission reduction realised from the programme - , 8.4 Mton CO2 equivalent