1. National Energy Efficiency Strategy Parliamentary Portfolio Committee on Energy 04 February 2014 Presenter: Ms Mokgadi Modise Chief Director: Clean Energy 1

2. 2 PRESENTATION OUTLINE 1.National Energy Efficiency Strategy Goals 2.National Energy Efficiency Strategy (NEES) Objectives 3.NEES Review 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: industry and mining (15%), commercial and public buildings (15%), residential (10%) and transport (9%). Implementation plans were drawn up for each of the sectors with forecast targets of energy use reductions based upon assumptions about energy demand over the next 10 years (2005 – 2015 using 2000 year baselines). This included the associated drivers, such as the economic development and population growth. As part of implementing the 2005 NEES, interventions were to be implemented by concentrating on no-cost and low payback options with a high impact. These were to be followed by medium to long-term higher investment interventions. Since the release of the 2005 NEES, several legislative frameworks had to be developed or put in place to support the implementation of the Strategy. 3

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. NEES REVIEW PROCESS (1) The first review of the 2005 NEES was done in 2008. A revised document was then issued for public comments, however the comments received were not favourably, and requested a more radical alterations including clear definition of energy efficiency, monitoring system and baseline information that considers the fact that companies are at different level of achievements of the targets. Parallel to the development of NEES in 2005, an Energy Efficiency Target Monitoring Methodology Handbook was also developed. This EE Monitoring Methodology Handbook provides a detailed input data- streams required, however its review was necessary to ensure that the South African energy efficiency monitoring system take full advantage of the current development and international best practice updates. 5

6. NEES REVIEW PROCESS (2) The second review of the NEES started in 2011, with public and private sector workshops to discuss the scope and elements of the NEES that needs review. Focused engagements/discussions were also held on the development of regulations (i.e. Income Tax Allowance on EE Savings) and standards (SANS 50010 and SANS 50001) interlinked to the NEES. The Department also continued to engage robustly with other government departments such as National Treasury (NT), Department of Environmental Affairs (DEA), Department of Trade and Industry (the dti) and Department of Mineral Resources (DMR). State agencies such as National Regulator for Compulsory Specifications (NRCS), South African National Energy Development Institute (SANEDI) and South African Bureau of Standards (SABS).

7. NEES REVIEW PROCESS (3) The draft reviewed strategy was thus produced subsequent to these engagements and was presented to the Government Infrastructure Development Cluster on the 10th October 2012 and later to the Cabinet by the end of October 2012. Cabinet approved the publication of the draft second NEES review document for public comments, and was then published through the government gazette on the 29 th November 2012. The closing date for the submission of the comments was 30 th January 2013 and later extent to 28 February 2013 to accommodate the requests that were received from stakeholders to be afforded more time for commenting.

8. NEES REVIEW PROCESS (4) During this period more than 30 comments were received, and the comments were grouped into the following themes: (i)The use of year 2000 baselines, (ii)Whether NEES targets are aspirational or mandatory, (iii)The need for an organisational structure; (iv) Definition of energy efficiency as it relates to the mining sector, (v)The use of green procurement; (vi)Energy services company development and support; (vii)The alignment with National Development Plan; (viii)The inclusion of energy efficiency indicators; (ix)The monitoring and verification of energy savings; and (x)The funding mechanism for energy efficiency measures.

9. NEES REVIEW PROCESS (5) Three (3) workshops were also held to discuss comments that were received further with the private and public sector representatives during the month of March 2013. All comments were analysed, and responses provided and this resulted in an adjusted NEES document. Although the 2011 NEES review has been completed, the targets were not revised because the current cycle of the Strategy is ending in 2015. The focus was more of lessons learnt, what were the gaps and how they were and are currently being addressed; last focus on potential areas of improvement and propose recommendations of what can still be done. The review process of the strategy has been finalized and the final strategy document requires to be approved by Cabinet to enable its Gazetting. Cabinet memorandum is being processed in this regard. The reviewed strategy will also be presented at the next Government’s Infrastructure Development Cluster.

10. NEES IMPLEMENTATION PROGRESS Standards & Regulations (1) Standards for Energy use in new buildings, Energy Management, and Measurement and Verification of energy savings (SANS 10400 XA, SANS 50001 & SANS 50010 respectively) were developed with South African Bureau of Standards (SABS) through the dti. SANS 50010 will be of use to local industries in four ways, namely to: (i) enable industries to accurately quantify the true benefits as a result of energy savings measures; (ii) provide consistent feedback regarding the typical performance of the various energy savings opportunities available to industry; (iii) let companies improve their monitoring against targets; and (iv) allow companies to claim any tax benefits available to them from energy-saving programmes. Minimum Energy Performance Specifications (MEPS) of household electricity appliances are being developed. Mandatory reporting and provision of energy management plans regulation has been developed and is being discussed with key stakeholders before it can be published for public comments 10

11. NEES IMPLEMENTATION PROGRESS Standards and Regulations (2) 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 11

12. NEES IMPLEMENTATION PROGRESS Energy Efficiency Savings Regulations (3) Income Tax Allowance on Energy Efficiency Savings (12L of the Income Tax Act). –Regulations on Section 12L have been completed and were promulgated by the Minister of Finance as of 01 November 2013. The Regulations were officially launched on 04 December 2013. –The regulation is devised to encourage the efficient utilisation of energy. –The regulation will be implemented through SANEDI and ultimately with SARS to finalise the tax claim. –A person generating energy from renewable sources may not receive the allowance. –A person generating energy through a captive power plant may not receive the allowance unless the energy output of that captive power in respect of a year of assessment is more than 35 per cent of the kilowatt hours of energy input in respect of that year of assessment. 12

13. NEES IMPLEMENTATION PROGRESS Energy Efficiency 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. 13

14. 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. 14

15. 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. 15

16. 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. 16

17. 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. 17

18. ENERGY EFFICIENCY MONITORING SYSTEM (1) The project is being implemented together with South African Local Government Association (SALGA) and South African National Energy Development Institute (SANEDI). The project management is through a Project Steering Committee (PSC) with representatives from other government departments. Overall objectives are to: 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 18

19. ENERGY EFFICIENCY MONITORING SYSTEM (2)  The goal:  To establish a functional context-appropriate system for the purposes of routine monitoring of energy efficiency.  Key features:  Relevance  Keeping it simple  Using simple tools  A clear resource strategy  Identifying long term, sustainable, routine data collection system 19

20. ENERGY EFFICIENCY MONITORING SYSTEM (3)  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; and Provide the basis for developing policies and strategies through an understanding of energy efficiency trends and behaviours 20

21. ENERGY EFFICIENCY MONITORING SYSTEM (4)  The Methodology: Top down as opposed to bottom up; Using decomposition approach; Analysing changes in total energy consumption; and Identifies the effect of structure, activity and efficiency  Sectors covered and analyzed: Industrial Commercial Public Residential Transport 21

22. ENERGY EFFICIENCY MONITORING SYSTEM (5)  Progress to date: Energy Efficiency Target Monitoring Methodology Handbook developed in 2005 was updated and indicators were agreed with representatives of all the sectors. A pilot project was conducted between January – April 2013 to test mainly the data collection methodology and the system and this was successfully done. Small samples were used in all sectors and were not statistically representatives of all sectors. This means we were not able to draw conclusions based on representation. The results of the pilot resulted in refining data collection methodologies in preparation of the scale-up of implementing the system. The implementation of the system is being scaled-up and is planned that the first monitoring report indicating the energy trends should be produced by April 2014. In the last quarter of 2013/14 financial year, R23 m (Donor funds) has been allocated to intensify the EE in public building programme. 22

23. CONCLUSION It is recommended that the Parliamentary Portfolio Committee (PPC) notes progress on the: –Review of the National Energy Efficiency Strategy (NEES); –Development of standards and regulations on energy efficiency; –Development of the Regulation in terms of Section 12L of the Income Tax Act, 1962, on the allowance for energy efficiency savings; –Development of the National Energy Efficiency Action Plan (NEEAP); and –Development of the Energy Efficiency Target Monitoring System (EETMS) to track energy efficiency improvements since 2005 and using the 2000 base year and baselines. 23

24. Thank You 24