1. The 12L Regulations in Relation to the National Energy Efficiency Strategy 25 June 2015 Eskom Tower, Kimberley Presented by Daniel Modise 1

2. 2 PRESENTATION OUTLINE 1.National Energy Efficiency Strategy 2.National Energy Efficiency Strategy (NEES) Objectives 3.Development of Post-2015 NEES Process 4.NEES Implementation Progress: Standards and Regulation 5.National Energy Efficiency Action Plan 6.Energy Efficiency Target Monitoring System 7.Conclusion

3. NATIONAL ENERGY EFFICIENCY STRATEGY (2005) GOALS The 2005 NEES set an overall energy intensity reduction target of 12% by 2015. This target was further disaggregated into sectoral targets as follows: industrial and mining (15%), commercial and public buildings (15%), residential (10%) and transport (9%). 3 Reduction of National Energy Demand of 12% by 2015 Industrial & Mining Sector Final demand reduction of 15% by 2015 Commercial & Public Building Sector Final demand reduction of 15% by 2015 Residential Building Sector Final demand reduction of 10% by 2015 Transport Sector Final demand reduction of 9% by 2015

4. NATIONAL ENERGY EFFICIENCY STRATEGY OBJECTIVES The Vision of the NEES is “Reducing the energy intensity of the economy through energy efficiency”. Achievement of this vision will assist in fulfilling the following national objectives: Enhancing energy security by making better use of existing and new generation capacity. Improving South Africa’s global competitiveness through reduced energy input cost. Decoupling growth in energy consumption (and GHG emissions) from growth in GDP. Improving global competitiveness which in turn will contribute to job creation. 4

5. DEVELOPMENT OF POST-2015 NEES PROCESS A service provider has been appointed to develop a post 2015 NEES strategy Deliverables are follows – Inception report May 2015 Capacity building plan June 2015 Report on energy savings potentialSeptember 2015 Report on proposed energy intensity reduction measuresOctober 2015 Cost benefit analysis of proposed interventionsDecember 2015 Report on proposed energy efficiency targetsDecember 2015 Finalised post 2015 National Energy Efficiency StrategyMarch 2016 5

6. NEES IMPLEMENTATION PROGRESS Standards and Regulations (1) Standard for Energy Management (SANS 50001) – This standard will assist in the continual improvement framework to incorporate energy management into everyday organizational practices. In the context of Energy Management, companies will do the following: –Plan: conduct the energy review and establish the baseline, energy performance indicators (EnPIs), objectives, targets and action plans necessary to deliver results that will improve energy performance in accordance with the organization's energy policy; –Do: implement the energy management action plans; and –Check: monitor and measure processes and the key characteristics of operations that determine energy performance 6

7. NEES IMPLEMENTATION PROGRESS Standards and Regulations (2) Regulations on the Allowance for Energy Efficiency Savings in terms of 12L of the Income Tax Act –Regulations on Section 12L were completed and promulgated by the Minister of Finance as of 01 November 2013. The Regulations were official launched on 09 December 2013. –The regulations were then reviewed after 1 year implementation and some amendments were incorporated and the final amended regulations were gazetted on 6 March 2015 –The regulations are devised to encourage the efficient utilisation of energy, and the implementation will be administered by SANEDI. –The tax incentive has been increased from R0.45 /KWh to R0.95/KWh energy saved –For the administration of the regulations’ implementation a web-based online system has been developed and all registrations and submission of proposals will be through this system. 7

8. NEES IMPLEMENTATION PROGRESS Standards and Regulations(3) Procedure of claiming tax allowance –A person that claims the allowance must in respect of each year of assessment for which the allowance is claimed – Register with SANEDI in the form and manner and at the place determined by SANEDI; Appoint a measurement and verification professional to compile a report containing a computation of the energy efficiency savings in respect of the person for that year of assessment; Submit the report to SANEDI; and Obtain a certificate from SANEDI. Forthcoming presentation by SANEDI will provide more detail of how the energy efficiency tax allowance can accessed and the registration processes and qualifying criteria. 8

9. NEES IMPLEMENTATION PROGRESS Standards and Regulations(3) Draft regulations on registration, reporting on energy management and submission of energy management plans Regulations on the Mandatory Provision of Data (R142) were issued in 2012 stipulating the required data and information that the Minister of Energy might request from data suppliers. Subsequent to the promulgation of these regulations in 2012, data questionnaires and methodologies were developed for the establishment of the Energy Efficiency Target Monitoring System (EETMS). However, due to the nature of the 2012 regulations, new set of regulations on registration, reporting on energy management and submission of energy management plans were drafted and issued for public comment in March 2015. Elements of the Energy Management Plans in accordance with the SANS 50001 with annual consumption equal or exceeding 400 terajoules (TJ): energy baselines calculated by a certified energy auditor or measurement and verification professional in accordance with SANS 50010 and SANS 50002 energy efficiency savings potentials identified by a certified energy auditor energy performance indicators for monitoring energy performance. Reporting on the implementation of the energy management plans, and achieved energy savings 9

10. NATIONAL ENERGY EFFICIENCY ACTION PLAN (1) In a view to assessing energy efficiency trends and to accelerate implementation of the NEES, the Department in collaboration with its local and international partners through the support of GIZ embarked on a process of developing the NEEAP. The action plan is aimed at assisting and providing guidance to all stakeholders on the actions required either through voluntary or mandatory nature to enable the achievement of the energy efficiency objectives. The action plan has been designed taking into account international best practices to guide implementation of the identified activities. It is imperative to note that energy efficiency action plans are being adopted internationally to stimulate the translation of energy savings objectives into concrete measurable actions. 10

11. NATIONAL ENERGY EFFICIENCY ACTION PLAN (2) The key purpose and objective of this NEEAP is therefore to: (i)provide detail and guidance about the actions being taken by Government over the short term as it implements the country’s long-term needs and vision set out in, inter alia, the NEES; (ii)assist in prioritising future activities/policies to achieve the EE improvements set out in the NEES; (iii)understand current EE related activities/policies/challenges; and (iv)report on the progress made in implementing the NEES and any other documents that make up/are relevant to the EE policy framework. 11

12. NATIONAL ENERGY EFFICIENCY ACTION PLAN (3) The developed action plan is a key document designed to support the energy efficiency strategy which remains the overall energy efficiency guiding documents. The plan reflects on changes in enabling policies and programmes and also describes interventions that will be implemented with all relevant stakeholders to ensure that an enabling environment is being created for accelerating deployment of energy efficiency in the country. The action plan will also facilitate a robust performance monitoring in respect to the targets contained in the strategic document. 12

13. NATIONAL ENERGY EFFICIENCY ACTION PLAN (4) The NEEAP is a three year plan and every effort has been made to accurately reflect the level at which such actions and measures will take place. This is a realistic plan taking into account the resources limitation that government is confronted with. One of the ultimate objectives of the action plan is to determine adjusted sector or subsector baselines from those developed in the year 2000 and this is in preparation for the post 2015 NEES targets. Other key deliverables of the action plan for the next 18 months is the development and implementation of the energy efficiency monitoring system, energy management systems, measurement and verification of the energy savings, and functional energy efficiency incentive schemes. 13

14. ENERGY EFFICIENCY MONITORING SYSTEM (1) The department has developed and operationalized energy efficiency monitoring system with the overall objective being –  Institutionalize energy efficiency monitoring system and develop energy efficiency management systems within government structures.  Track the developing state of energy efficiency in South Africa using updated energy efficiency indicators.  Identify drivers for, and responses to energy efficiency changes.  Monitor progress towards the targets and goals set in the National Energy Efficiency Strategy.  Inform future energy efficiency policies, financing, regulations and plans. 14

15. ENERGY EFFICIENCY MONITORING SYSTEM (2)  EETMS will provide the following: Clear indication of the progress being made towards achieving the energy efficiency targets in the Energy Efficiency Strategy, Provide a reporting system within the DoE, that will enable monitoring of progress in the achievement of the energy efficiency targets; Provide the basis for developing policies and strategies through an understanding of energy efficiency trends and behaviours.  An annual target monitoring report has been produced through the monitoring system and it will be published after attaining required approvals. 15

16. CONCLUSION Government since the introduction of the National Energy Efficiency Strategy in 2005 has developed and introduced the following standards, regulations and plans in the quest of creating an enabling environment: –Standards for Energy use in new buildings, Energy Management, and Measurement and Verification of energy savings (SANS 10400 XA, SANS 50001 & SANS 50010 respectively –Regulations in terms of Section 12L of the Income Tax Act, 1962, on the allowance for energy efficiency savings which have been reviewed to incorporate changes that will make it beneficial; –Draft regulations on registration, reporting energy data and submission of energy management plans; –National Energy Efficiency Action Plan (NEEAP); and –Energy Efficiency Target Monitoring System (EETMS) to track energy efficiency improvements since 2005 and using the 2000 base year and baselines. 16

17. Thank You Daniel Modise Project Manager: Energy Efficiency Tel: +27 (0) 12 406 7652 Email: daniel.modise@energy.gov.zadaniel.modise@energy.gov.za Website: www.energy.gov.zawww.energy.gov.za 17