Transformation of distribution LIZ MCDAID GREEN CONNECTION SAFCEI Earthlife Africa Johburg

Aims of electricity system: Universal access to electricity Sustainable supply to low income at affordable prices Reliable, clean, financially viable electricity system to support economic development

Planning for an intelligent future Generation Transmission Distribution End user Generation Transmission Distribution End user Generation

Poverty Context At least 10% of South Africans live in 2700 urban settlements. (more than 1.2 million households. Proportion of households living in information settlements increased 21% to 22% in metros, despite increase of house –building. (SACN 2011). 40% population earn less than R1000 per month Low income spending 12-20% on energy where high income will spend 6% (SECCP) Eg – equivalent of R4000 out of R20 000 income spend on energy Access does not equal use mixed fuel use : Electricity – lighting Paraffin – cooking “Quality of connections keeps people in poverty” 2 million disconnections – cant find a reference 4 million do not cook with electricity 2 million use candles Women and girls can spend 6 hours on fuelwood gathering and cooking 50kWh not sufficient

Cost of electricity system Rising tariffs due to generation choices mean increasing hardship, increasing disconnections for low income households. Increasing tariffs could mean increasing own generation for industry, reduced customer base. Implies less revenue to maintain distribution network

Child support grant/ mnth Petrol price HH elec rural Rc/kWh HH elec urban Rc/kWh Social grant/ mnth Child support grant/ mnth Petrol price 2003 R0.92 0.407 R700 R160 R3.81 2009 R1.14 0.54 R1010 R240 R7.82 % change 23% 32.4% 44% 50% 105% (2010) – www.thegreenconnection.org.za

Logical spending? $$$ Eskom consumers Treasury $$$ $$$ DPE

Need for integrated approach Benefits of electricity provision impact on other departments: Reduced air pollution – improved respiratory health Improved lighting leads to improved school results – positive impact on education Support small business – improves economic development and reduces burden of social grants

intelligent finance Halt current model of pre-paid meters that limit tariff differentiation Ensure pro-active procurement of appropriate distribution technology – for 21st century Combine energy efficiency and modular approach and ensure differentiated revenue stream and cross subsidise City of Cape Town – strong renewable energy implies 7c/kWh increase but include efficiency and the price increase is only 0.2c/kWh (SEA, 2012)

Distribution Transformation Distribution infrastructure: Mini-grids “smart” technology (net-metering, etc) Flexible, small scale units – modular approach Embedded generation Capital expenditure - Treasury to drive funding backlog infrastructure Operational expenditure – cost recovery with standard network charge FBE increased – 100kWh

Case studies Name description Costs incl. distribution/ kWh capex NuRa solar homes (SA) Solar system plus gas R12.56 Donor Gobabeb (Namibia) Solar, wind, diesel R1.68 Katana (Tanzania) Biomass R1.44 Commercial Nollie-se Kloof tourism (SA) Solar, micro-hydro, wind Poultry farm (SA) Biogas R 0.40 Eskom rural Coal grid R 1.14 Anecdotal – urban network charge R9 per day!! Green Connection – www.thegreenconnection.org.za

Governance challenges Issue Way forward Financial accountability Failure to spend NERSA to use licence claw back Institutional capacity Lack of skills Education, private sector Transparency/ Availability of data Central information base – NERSA/statsSA Coordination Silo based Stakeholder task team Evaluation/Enforcement Growing backlog Parliament oversight of task team Information – use internet based system of reporting – bolster nersa.

Recommendations Treasury to drive funding capex backlog – expand existing programmes Use MYPD for operating costs – ensure cross-sub-subsidisation system to ensure Fbe and cost recovery from wealthy Standard wheeling charge (not to discourage embedded generation but important to identify hidden generators ) Integration/communication re ISMO and distribution to reduce risks Legislation amendments – license to be revoked if not compliant Data collection centrally managed and used for planning Align reporting and budgeting and planning timelines of government silos partnerships to support smaller munics. Specific skill development plan – retraining of retrenched technical staff, bursaries, partnerships with private sector Timeframe – ensure EDI budgeted for in 2013 – parliament to oversee Inter-govermental task team supported but include non-govt. stakeholders – key objectives: to ensure current capex allocation spent. To ensure skills development plan