Communicare Boom Flats Retrofit: Financial Analysis Megan Sager, Consulting for Sustainable Solutions NASHO AGM, 8 November 2017 20 September 2018 - 1

Boom Flats Retrofit Financial analysis One of the key reasons social housing was selected is the high utility burden on the poor Poor households allocate 2-3x as much of their budget to electricity and other household fuel as rich households 3,4% National average Source: Statistics South Africa Living Conditions Survey 2014/15 20 September 2018 - 2

Boom Flats Retrofit Financial analysis At Boom Flats, however, residents spent less on electricity pre intervention: 3-6% household income Baseline consumption per unit averaged 274 kWh pm, reflecting energy poverty 600-1200 kWh Middle class average Source: Meter data, SEMS 20 September 2018 - 3

Boom Flats Retrofit Financial analysis After an initial anomalous spike, the retrofit has led to a measurable decrease in electricity consumption Spike driven by increased geyser element operation due to removal of manual control of geyser controllers & overcast weather 600-1200 kWh Middle class average Source: Own analysis based on SEMS meter data 20 September 2018 - 4

Boom Flats Retrofit Financial analysis Water consumption has decreased by 25% year-on-year post retrofit, from initial 6.4kL per unit pm (May-Sept) The post-retrofit unit average of 4.8 kL pm for the same period is within the free 6kL allocation for indigent households 600-1200 kWh Middle class average Retrofit underway Source: Own analysis based on utility bills 20 September 2018 - 5

Tenant impact has been positive but highly variable Boom Flats Retrofit Financial analysis Tenant impact has been positive but highly variable On average, tenant financial position has improved since the retrofit took place: Electricity expenditure fell by an average 12.2% year-on-year in Q4 2016, from R254 to R223 pm; In real terms (i.e. once inflation is allowed for) saving ~ 17% There is a high degree of variability in these savings, however, with some tenants actually increasing expenditure post retrofit • Possible causes of variability: Fluctuating occupancy levels e.g. increase in dependents living in unit Variation in knowledge of optimal technology use (although tenant training was provided) Variation in use of manual geyser control Variation in efficiency of technology, for example orientation of solar water heater systems on roofs Compensating consumption associated with suppressed demand (energy poverty) Source: Own analysis 20 September 2018 - 6

Boom Flats Retrofit Financial analysis Electricity savings were inversely related to baseline consumption (water not billed for) Highest initial users saved 25% on average, while lowest spent an extra 67% 600-1200 kWh Middle class average Source: Own analysis based on utility bills, City of Cape Town tariffs 20 September 2018 - 7

Savings extend beyond the household level Boom Flats Retrofit Financial analysis Savings extend beyond the household level Landlord Monthly saving of R600+ comprising: Water saving of R20 / day Sewerage saving of R1 / day Municipality Electricity subsidy saving during winter peak: R1.50-1.80/kWh Reduced need for new water infrastructure National + Reduced Eskom peaker plant requirement Reduction in GHG emissions Source: Own analysis 20 September 2018 - 8

While savings may appear small, the impact can be great Boom Flats Retrofit Financial analysis While savings may appear small, the impact can be great For the most vulnerable, energy and water efficiency can mean improved quality of life and free up an extra R100+ pm. Higher occupancy, income and operational knowledge positively influence savings. In water scarce South Africa, a monthly saving of 1.6kL per lower household can substantially improve water security. In Cape Town alone, 821 million litres could be saved annually if all low income HHs received similar retrofits (~1.5 days’ City water demand). With carbon emissions of 1 ton / MWh Eskom electricity produced, and the utility’s current revenue shortfall of R32bn, we cannot afford to rely on expensive, carbon-intensive peaker plants for residential demand. Source: Own analysis 20 September 2018 - 9

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