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Difference between revisions of "NAE Case Study: South Africa, Integrated National Electrification"

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[[File:Back to NAE Overview Page.png|center|800px|NAE Overview Page|alt=NAE Overview Page|link=National Approaches to Electrification – Review of Options]]
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[[File:Back to NAE Overview Page.png|center|800px|NAE Overview Page|alt=NAE Overview Page|link=National Approaches to Electrification – Review of Options]] {{NAE Case Study Table South Africa}}
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<p style="text-align: center;"><span style="color:#003399;">'''<u>Category Dashboard:</u>'''{{NAE Case Study Table South Africa}}</span></p>
 
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= Description<br/> =
 
= Description<br/> =
  
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The Rural Energy Development Programme (REDP) aimed to increase energy access from micro-hydro systems, based on a mobilization process which put the community at the centre of planning and implementation. After its launch in 1996 as a small pilot initiative in five remote hill districts, the programme was scaled-up in response to the national Hydropower Development Policy of 2001. Three phases addressed the cycle of pilot operation, expansion, replication, mainstreaming and institutionalization. The programme expanded from 5 to 40 districts in its third phase from 2007-11. Communities were selected based on technical feasibility and requests from residents willing to implement, manage and partly finance each proposed scheme, thereby ensuring ownership and timely execution. The REDP operated at three levels. At the community level, activities focused on planning, implementation, operation, and maintenance of energy systems. This included establishment of Community Energy Funds where revenues - from grants, subsidies, charity, loans and tariff collection - were deposited, and payments made for operations, repairs and maintenance (done entirely by the community).&nbsp; Tariffs were set at local level, with flat tariffs ranging from RS 0.25-2/W/month applied in most cases,. At the district level, activities focused on building capacity to plan, manage, and monitor the rural energy development process.&nbsp; At the national level, activities focused on policy support and coordination based on lessons learnt from decentralized local operations.<span style="font-size: 0.85em;"></span>
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In 2001 the DoE mandated that not only Eskom but also registered municipalities could receive national funding to roll out the national electrification programme.&nbsp; Remote areas that did not have any electrification plans for the next 3 years were identified and provincial concessions were granted to six consortia of private companies who were given exclusive rights to operate in those areas. The concessionaires acted like small local utilities providing an electricity service to households. The government provided capital and operational cost subsidies for on-going maintenance to support off-grid solar & low-cost technologies. The capital subsidy was 80% of the cost of the system, with the rest being financed by the concessionaire. Free Basic Electricity (FBE) was introduced in 2004, with the national utility and local government funding the remaining connections.&nbsp; This integrated approach to national electrification continues today, with Eskom stating in 2016 that, together with municipalities and the DoE, the utility will spend R17.6bn (US$1.25bn) over the next three years to connect 840,000 households to the grid.&nbsp; An additional 70, 000 households will be connected through non-grid solar electrification programmes countrywide.
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= Context =
 
= Context =
  
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Nepal has no known major oil, gas, or coal reserves, and its position in the Himalayas makes it hard to reach rural communities, many of which&nbsp; are extremely remote. Nepal has one of the world’s lowest rates of per capita electricity consumption, with an average in&nbsp; 2007 of 86 kWh/year rising to 139kWh/year by 2014. Between 2005 and 2014 peak demand more than doubled from 557 to 1200 MW. In the same period of time annual electricity production increased from 2642 GWh to 4631 GWh. Out of these, 3558 GWh were produced domestically, while 1072 GWh were imported from India.&nbsp; 88% of the population relies on traditional biomass fuels for cooking and heating; about 45% of the population has access to electricity (only 8% in rural areas).&nbsp; The National Electricity Authority (NEA) serves only 15&nbsp;% of the total population with electricity supplied from the main grid and, for these customers, average electricity supply is less than eight hours per day, with load shedding accounting for up to 16 hours during winter.&nbsp; (This level of intermittency means that even those consumers who are connected to the national grid may receive electricity for only 8 hours per day, which means at most a Tier 3 energy supply).&nbsp; The remaining 30% of the population with electricity access are served by the thousands of small installations (e.g. diesel gensets, micro-hydro systems, solar home systems, small island mini-grids.) that are mostly installed at the users' premises in Nepal. There are however untapped hydropower resources of about 83,000 MW, with 43,000 MW deemed to be economically viable for development.
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In 2000, the installed electricity capacity in South Africa was 43,650 MW, representing well over a third of the African continent’s total installed capacity. Electricity was produced mainly from coal (94%). Eskom – the national power utility – generated 97% of the electricity. Around 55% of the distribution was managed by Eskom and 45% by municipalities. No new generation capacity had been built since 1994.&nbsp; South Africa had one of the lowest electricity tariffs in the world with an average selling price of around US$0.027 per kWh.&nbsp; Over the next few years, strong economic growth, rapid industrialisation and a massive electrification programme meant that Eskom’s surplus capacity was reduced to below safe production levels. In January 2008, massive power outages occurred nationwide. The integrated resource plan 2010 (IRP 2010) identified the energy sources mix required over a 20 year planning horizon to 2030, of which 17,800 MW should be met from renewable energy, with 5,000 MW to be operational by 2019 and a further 2,000 MW by 2020.&nbsp; The rate of electrification has continued to increased steadily from 77.1% in 2002 to 85.5% in 2015. The current National Development Plan requires the development of 10,000 MW of additional electricity generation capacity by 2020, against the 2013 baseline of about 44,000 MW.&nbsp; In 2016, Eskom (the national power utility) stated that the renewable energy “Independent Power Producer Procurement Programme” was on course to procure 6,925 MW of renewable energy by 2020 from onshore wind (3,500 MW), CSP (600 MW), solar PV (2,700 MW) and small hydro, biomass, biogas and landfill gas (combined 125 MW).&nbsp; Government is hoping to build 9.6 GW of nuclear power by 2030 to address power supply issues, but concerns are mounting over how it will be financed.
  
 
= Objectives =
 
= Objectives =
  
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REDP was launched in 1996 with the aim of expanding energy access to remote rural communities, strengthening capacities of energy institutions and establishing a national rural energy policy framework.&nbsp; The ultimate objectives were:&nbsp; i) develop best practices for rural electrification, bringing new models and continuous learning for rural energy access and poverty alleviation in Nepal; ii) build local capacity to increase energy access through a community management model in 40 districts, iii) develop productive and other end uses, including for women and the socially excluded; iv) support the AEPC for energy planning and the preparation of a Rural Energy Policy; and v) pilot innovative approaches for long-term micro-/mini hydro. There were few quantitative targets, though the aim for phase II was to provide 3MW of increased supply (though the outcome fell 20% short of this aim).
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"Electricity for all“ - the government's Integrated National Electrification Programme (INEP) had a target of access to electricity for&nbsp;all formal households by 2025.&nbsp; At the start of the programme, there were about 8 million formal households in South Africa (housing a population of approximately 40 million).&nbsp; Eskom estimated that about 13 million people were connected to an electricity supply (equivalent to about 3m households).&nbsp; INEP was therefore initially targeting about 5m households over 25 years, though population growth – reaching 60m by 2015 – has meant that this target is now over 10m new connections.
  
 
= Legal Basis =
 
= Legal Basis =
  
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The Renewable Energy Development Programme (REDP) of Nepal was an international co-operation programme supported by the World Bank and United Nations Development Programme, in partnership with the national Government.&nbsp; The Alternative Energy Promotion Centre (AEPC), the managing agency for REDP, is a Government entity. The Department of Electricity Development (DoED), oversees the issuing of licenses for hydropower projects, though no licensing is required for projects of up to 1,000 kW capacity.
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The Energy White Paper of 1998 gave policy direction to establish a National Electrification programme and the Integrated National Electrification Programme (INEP) was established in 2000.&nbsp; It became fully operational in 2001/2. Non-grid electrification become formally part of the National Electrification programme with the establishment of INEP.
  
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= Institutions, Roles and Responsibilities<br/> =
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= Institutions, Roles and Responsibilities =
  
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Many entities – including the government, non-governmental organizations, international organizations, and private institutions – are involved in promoting renewable and rural energy service delivery in Nepal. Overarching authority for electrification efforts is provided by the Nepal Electricity Authority (NEA), established in 1984, whose primary objective is to generate, transmit, and distribute adequate, reliable, and affordable power by planning, constructing, operating, and maintaining all generation, transmission, and distribution facilities in Nepal’s power system. Thus, NEA’s engagement in rural electrification is primarily through the national grid system. Off-grid, decentralized energy service provision is led by the Alternative Energy Promotion Centre (AEPC), established in 1996 as an autonomous agency within the Ministry of Environment (MoEnv). AEPC presides over various rural energy projects, including the Rural Energy Development Programme (REDP). REDP projects received about 45% grant finance through the programme (from the World Bank and UNDP), a 16% subsidy from the Government of Nepal, and about 10% from Village and District Development Committee (VDC/DDC) funds, representing a total subsidy of approximately 70%.&nbsp; The remainder was paid via the tariffs collected from users.&nbsp; (The total programme cost for the Phase III was USD 35 million, which consisted of&nbsp;: UNDP – USD 3.4 million; World Bank – USD 16 million; GoN – USD 5 million; and community – USD 10.6 million). Private sector firms such as the Rural Energy Services Centre (RESC) provided technical support services to communities for feasibility studies and installation, operation and maintenance of RE systems.
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*The Department of Energy (DoE) is responsible for monitoring the performance of Municipalities regarding electrification, and ensuring that corrective measures are taken in case of poor or non-performance.&nbsp; A DoE department devoted to INEP was established.
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*Eskom is the national electricity utility of South Africa and is the largest producer of electricity in Africa
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*The National Energy Regulator of South Africa (NERSA) has the mandate to regulate the electricity, piped-gas and petroleum pipelines industries in terms of the Electricity Regulation Act (2006), the&nbsp; Gas Act (2001), and Petroleum Pipelines Act (2003).
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*Other Government Departments including Public Enterprises (DPE), Environmental Affairs (DEA), Trade & Industry (DTI) play a significant role with regard to the priorities and focus for national electrification.
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*The Central Energy Fund (CEF) is a state-owned national energy utility entity that reports to DoE.&nbsp; It contributes to national energy security through commercial operations and developmental projects.
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*The&nbsp; South African National Energy Development Institute (SANEDI) is a state-owned entity whose main function is to direct, monitor and conduct applied energy research & development, demonstration & deployment, as well to undertake specific measures to promote the uptake of Green Energy and Energy Efficiency in South Africa.<br/>
  
 
= Interventions<br/> =
 
= Interventions<br/> =
  
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REDP focuses on involving local communities and building institutional capacities and local skills.&nbsp; It created a Rural Energy Fund at the district level (using the grant funds from the WB, UNDP and the Government) that provided subsidies for mini-grid electrification. Micro- and mini-hydropower systems (up to 1,000 kW) were made exempt from certain taxes, royalties, and licensing requirements.&nbsp;&nbsp; Key elements of the REDP interventions included: i) community mobilization to encourage and support them in undertaking productive activities resulting in strong social capital, economic growth, and environmental sustainability. Even the poorest families were made capable to own and use the systems, and pay a tariff for the electricity consumed; ii) broad-based participation to ensure transparency and consensus-based decision-making by all households; iii) support for institution building, helping to create District Energy and Environment Sections in the District Development Committees (DDCs); iv) training for local NGOs, community groups, and the private sector to strengthen their technical and managerial skills to deliver and manage micro-hydro systems.
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Prior to the announcement of the INEP in 2001, electrification was concentrated only in urban areas. In 1993, only around 30% of households were electrified, which has increased to ~85% today. This was initially achieved mainly through extension of the main electricity grid.&nbsp; The introduction of INEP broadened the scope of electrification, with an early focus on off-grid solar PV systems for rural areas.&nbsp; The Department of Minerals and Energy (now the Department of Energy, DoE) appointed concessionaires with defined regional areas of operation equivalent to the country's provinces, and provides a capital subsidy of US$750&nbsp; for each 50Wp Solar Home System installed.&nbsp; Non-grid customers pay a connection fee of about US$15 for each system and a monthly service flat rate fee of about US$10.&nbsp; The concessionaires own each SHS, and maintain the systems for as long as they are installed. The permitted tariffs are regulated by DoE and are set at a “reasonable” level for each concessionaire. The concessionaires have also established energy shops in many towns and villages that supply related energy technologies and bottled Liquid Petroleum Gas (LPG) to meet the needs for hot water and cooking. Municipalities subsidize customers’ monthly maintenance costs through the provision of Free Basic Electricity (50kWh/month).&nbsp; Today, the source of electricity supply has broadened significantly with the Renewable Energy IPPP Program that has run four competitive tenders/auctions since 2011, which have seen US$19 billion in private investment, and a significant drop in the price of electricity sourced from renewable energy.
  
 
= Impacts Achieved<br/> =
 
= Impacts Achieved<br/> =
  
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The impressive performance of the REDP is reflected by its outputs, which included the preparation of pragmatic policy and regulation based upon the lessons learned, and the internalization of rural electrification development at country, district and community levels. 317 micro-hydro mini-grids with a cumulative capacity of 5,814 kW were implemented,&nbsp; benefitting almost 350,000 people living in rural areas unlikely to be grid-connected for at least five years. At the end of the project period, an additional 137 micro hydro systems were at an advanced stage of installation and expected to generate 4,441 kW, providing electricity services to an additional 250,000 people (42,000 households).&nbsp; By 2014, more than 1,000 micro-hydro plants with total generation capacity of 22 MW had been developed, providing off-grid electricity access to 20% of the population, including power for agro-processing and other productive activities. Local governments have integrated the REDP approach into local development planning (rather than leaving isolated, donor-funded projects) and they have supported the capacity development needed for sustainable impact.
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The Integrated National Electrification Plan (INEP) and its implementing partners have made remarkable progress in increasing access to electricity in South Africa. Electrification has more than doubled from 30% of the population in 1993 to 85% of formal housing in 2015. Over 5.2 million households were connected to the grid between 1994 and 2010. More than 12,000 schools were also grid connected and 3,000 schools were electrified with non-grid technology; 345 clinics in rural areas were supplied with non-grid electricity. By 2015, over 100,000 SHS systems were installed countrywide (though only around 60,000 are still operational).
  
 
= Lessons Learned<br/> =
 
= Lessons Learned<br/> =
  
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REDP’s community-based approach to energy planning and managing rural energy systems has proven to be an effective model for decentralized energy solutions, providing an attractive alternative to what had historically been a weak and centralized government approach to rural energy development.&nbsp; Key drivers of success were: national ownership and commitment, local engagement, catalytic finance, community mobilization and local partnerships, and capacity development at all levels.&nbsp; The funding arrangements were particularly significant, including a relatively well-functioning subsidy scheme and the mini-hydro revolving debt fund, with communities financing an increasing proportion of the costs as the programme progressed.
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Rural electrification does not make commercial sense in South Africa – at best it can be a break-even commercial venture. Consumption levels of rural customers is so low that it is impossible to recover capital and operations cost from the tariffs alone.&nbsp; The experience from South Africa has suggested that an effective renewable energy electrification programme needs: rural customers who understand renewable energy technology (and are prepared to use this for their main energy needs; mass roll-out to ensure local acceptability and scale for business; stable and effective electricity and renewable energy industry; ring-fenced 100% initial capital subsidy system – long term and transparent; integrated electrification planning and monitoring unit/agency; efficient project management systems; national/regional technical standards; effective financial and technical monitor systems (against set standards); multi-year funding to provide a guaranteed level of income; pre-paid meters (the most effective revenue collection method for renewable energy electrification customers, and encourages graduation to grid-based technology); customers to make a financial contribution (connection fee) to ensure responsibility for service/infrastructure.
  
 
= Effectiveness<br/> =
 
= Effectiveness<br/> =
  
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The micro-hydro power systems constructed with support from REDP, have a cost range of US$1280-1780 per kW.&nbsp; The investment cost per connected household (cost of micro-hydro infrastructure and&nbsp; village distribution system) is estimated at about US$ 325 of which approximately US$70 is paid by the customer (for internal wiring and a connection charge).&nbsp; This is good value for customers, who have reduced their average annual household spending on energy by US$22 (from US$41 to US$19), which represents a payback period of about 3 years for an improved and far more convenient service.&nbsp; It also reflects well on the government support that has been provided (with input from the United Nations Development Programme), particularly the funding to offset capital costs, which is otherwise a key barrier. The REDP has been recognized as a "best practice" programme, receiving awards in various national and international events for the approach and achievements made. It should however be recognised that REDP is aimed to advance rural households from no electricity supply to the first step on the energy access ladder.&nbsp; Committed finance of US$325 per household at an average of US$1500/kW equates to energy capacity of less than 200W which is enough to provide a tier 2 level of energy access at best.&nbsp; The REDP has made very positive process, but represents just a foundation for the increased power supply required to meet the customers' social and economic development needs.
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The growing number (which continues to increase) of households in South Africa with electricity connections indicates that the national electrification efforts have produced positive results.&nbsp; Recognition of the need to consider alternative approaches to main grid extension has enabled the introduction of different energy sources for electricity generation, and decentralised provision that has certainly been more cost-effective than grid connections to remote areas (though the level of electricity access provided is more limited).&nbsp; However, the goal of "Electricity for All" has proven to be difficult to reach, with the timeframe for this target now being set back from 2012 to 2025.&nbsp; From 2000 the state funded the capital cost of new installations with an annual subsidy of US$ 400 million for grid and off-grid electrification.&nbsp; Between 2002 and 2013, the number of connections rose from 8.3 million households to 12.4 million.&nbsp; Using this to determine an average increased connection rate of 0.37m households per year,&nbsp; the Government subsidy to the&nbsp; connection cost/household has been ~US$1080 (a total cost during this period of about US$4.4bn),&nbsp; which can probably be viewed as a cost-effective result in one of Africa's most developed economies.
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= Overview of Other Country Case Studies =
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{{NAE Case Studies Navigation Table}}
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= References =
 
= References =
  
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*[http://www.aepc.gov.np/rerl/uploads/publication/6attachment2.pdf http://www.aepc.gov.np/rerl/uploads/publication/6attachment2.pdf]
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*[http://www.afrepren.org/project/gnesd/esdsi/erc.pdf http://www.afrepren.org/project/gnesd/esdsi/erc.pdf]
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*Bouille et al (2010). Policies For Energy Access [https://pdfs.semanticscholar.org/abc5/eeed05d6f30d72169c29cad7f6f69b8002ad.pdf https://pdfs.semanticscholar.org/abc5/eeed05d6f30d72169c29cad7f6f69b8002ad.pdf]
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*[http://documents.worldbank.org/curated/en/708211498162775424/text/116659-WP-PUBLIC-P150241-37p-Detailed-Case-Study-South-Africa.txt http://documents.worldbank.org/curated/en/708211498162775424/text/116659-WP-PUBLIC-P150241-37p-Detailed-Case-Study-South-Africa.txt]
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*[https://www.climate-eval.org/sites/default/files/evaluations/364 Rural Energy Development Programme.pdf https://www.climate-eval.org/sites/default/files/evaluations/364 Rural Energy Development Programme.pdf]
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*[http://energy-access.gnesd.org/cases/22-south-african-electrification-programme.html http://energy-access.gnesd.org/cases/22-south-african-electrification-programme.html]
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*[https://www.dmu.ac.uk/documents/technology-documents/research-faculties/oasys/project-outputs/working-papers/wp17---nepal-case-study.pdf https://www.dmu.ac.uk/documents/technology-documents/research-faculties/oasys/project-outputs/working-papers/wp17---nepal-case-study.pdf]
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*[http://www.energy.gov.za/files/media/presentations/2011/20111206_WolseyBarnard_RE_electrificationPresentationv2.pdf http://www.energy.gov.za/files/media/presentations/2011/20111206_WolseyBarnard_RE_electrificationPresentationv2.pdf]
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*[[Nepal Energy Situation|https://energypedia.info/wiki/Nepal_Energy_Situation]]
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*[http://www.energy.gov.za/files/aboutus/DoE-Strategic-Plan-2015-2020.pdf http://www.energy.gov.za/files/aboutus/DoE-Strategic-Plan-2015-2020.pdf]
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*EUEI PDF (2014), Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs. Eschborn [http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_MiniGrid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_mini-grid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf]
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*[http://www.engineeringnews.co.za/article/electricity-connections-rise-to-855-stats-sa-2016-06-03 http://www.engineeringnews.co.za/article/electricity-connections-rise-to-855-stats-sa-2016-06-03]
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*[https://www.giz.de/fachexpertise/downloads/2013-en-bhupendra-pep-informationsworkshop-mini-grids.pdf https://www.giz.de/fachexpertise/downloads/2013-en-bhupendra-pep-informationsworkshop-mini-grids.pdf]
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*EUEI PDF (2015), Low Cost Grid Electrification Technologies A Handbook for Electrification Practitioners. Eschborn [http://www.euei-pdf.org/sites/default/files/field_publication_file/150907_euei_low-cost-manual_en_rz_07_web.pdf http://www.euei-pdf.org/sites/default/files/field_publication_file/150907_euei_low-cost-manual_en_rz_07_web.pdf]
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*[http://www.microhydropower.net/download/mhpcosts.pdf http://www.microhydropower.net/download/mhpcosts.pdf]
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*G20 (2015), G20 Energy Access Action Plan: Voluntary Collaboration on Energy Access [https://www.se4all-africa.org/fileadmin/uploads/se4all/Documents/guidelines_policy_and_hub_docs/23.09.2015-G20_Energy_Access_Action_Plan-_Final.pdf https://www.se4all-africa.org/fileadmin/uploads/se4all/Documents/guidelines_policy_and_hub_docs/23.09.2015-G20_Energy_Access_Action_Plan-_Final.pdf]
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*[https://www.researchgate.net/profile/Bikash_Sharma2/publication/237803040 https://www.researchgate.net/profile/Bikash_Sharma2/publication/237803040]
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*IEA, (2010), Comparative Study on Rural Electrification Policies in Emerging Economies [https://www.iea.org/publications/freepublications/publication/rural_elect.pdf https://www.iea.org/publications/freepublications/publication/rural_elect.pdf]
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*[https://www.stimson.org/sites/default/files/file-attachments/Developing_Nepals_Hydroelectric_Resources_-_Policy_Alternatives.pdf https://www.stimson.org/sites/default/files/file-attachments/Developing_Nepals_Hydroelectric_Resources_-_Policy_Alternatives.pdf]
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*[http://onlinelibrary.wiley.com/doi/10.1002/ese3.118/full http://onlinelibrary.wiley.com/doi/10.1002/ese3.118/full]
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*[http://www.undp.org/content/undp/en/home/ourwork/environmentandenergy/projects_and_initiatives/rural-energy-nepal.html http://www.undp.org/content/undp/en/home/ourwork/environmentandenergy/projects_and_initiatives/rural-energy-nepal.html]
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*[https://pmg.org.za/committee-meeting/17448/ https://pmg.org.za/committee-meeting/17448/]
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*[http://www.undp.org/content/dam/undp/library/Poverty Reduction/Participatory Local Development/Nepal_REDP_web.pdf http://www.undp.org/content/dam/undp/library/Poverty Reduction/Participatory Local Development/Nepal_REDP_web.pdf]
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*PWC (2016), Electricity beyond the grid Accelerating access to sustainable power for all [https://www.pwc.com/gx/en/energy-utilities-mining/pdf/electricity-beyond-grid.pdf https://www.pwc.com/gx/en/energy-utilities-mining/pdf/electricity-beyond-grid.pdf]
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*[http://www.worldbank.org/en/news/feature/2015/09/26/ensuring-sustainable-rural-electrification-in-nepal http://www.worldbank.org/en/news/feature/2015/09/26/ensuring-sustainable-rural-electrification-in-nepal]
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*[http://www.sanews.gov.za/south-africa/electricity-connections-50-10-years-–-survey http://www.sanews.gov.za/south-africa/electricity-connections-50-10-years-–-survey]
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*[http://siteresources.worldbank.org/EXTAFRREGTOPENERGY/Resources/717305-1327690230600/8397692-1327691245128/WolseyBarnard_AEI_Presentation11Nov11.pdf http://siteresources.worldbank.org/EXTAFRREGTOPENERGY/Resources/717305-1327690230600/8397692-1327691245128/WolseyBarnard_AEI_Presentation11Nov11.pdf]
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*The World Bank Group, (2012). Institutional Approaches to Electrification: The Experience of Rural Energy Agencies/Rural Energy Funds in Sub-Saharan Africa. November 14–16, 2011 Dakar, Senegal [https://openknowledge.worldbank.org/bitstream/handle/10986/26073/763820WP0P11090s0to0Electrification.pdf?sequence=1&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/26073/763820WP0P11090s0to0Electrification.pdf?sequence=1&isAllowed=y]
  
 
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Latest revision as of 13:25, 16 July 2018

NAE Overview Page
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Description

In 2001 the DoE mandated that not only Eskom but also registered municipalities could receive national funding to roll out the national electrification programme.  Remote areas that did not have any electrification plans for the next 3 years were identified and provincial concessions were granted to six consortia of private companies who were given exclusive rights to operate in those areas. The concessionaires acted like small local utilities providing an electricity service to households. The government provided capital and operational cost subsidies for on-going maintenance to support off-grid solar & low-cost technologies. The capital subsidy was 80% of the cost of the system, with the rest being financed by the concessionaire. Free Basic Electricity (FBE) was introduced in 2004, with the national utility and local government funding the remaining connections.  This integrated approach to national electrification continues today, with Eskom stating in 2016 that, together with municipalities and the DoE, the utility will spend R17.6bn (US$1.25bn) over the next three years to connect 840,000 households to the grid.  An additional 70, 000 households will be connected through non-grid solar electrification programmes countrywide.

Context

In 2000, the installed electricity capacity in South Africa was 43,650 MW, representing well over a third of the African continent’s total installed capacity. Electricity was produced mainly from coal (94%). Eskom – the national power utility – generated 97% of the electricity. Around 55% of the distribution was managed by Eskom and 45% by municipalities. No new generation capacity had been built since 1994.  South Africa had one of the lowest electricity tariffs in the world with an average selling price of around US$0.027 per kWh.  Over the next few years, strong economic growth, rapid industrialisation and a massive electrification programme meant that Eskom’s surplus capacity was reduced to below safe production levels. In January 2008, massive power outages occurred nationwide. The integrated resource plan 2010 (IRP 2010) identified the energy sources mix required over a 20 year planning horizon to 2030, of which 17,800 MW should be met from renewable energy, with 5,000 MW to be operational by 2019 and a further 2,000 MW by 2020.  The rate of electrification has continued to increased steadily from 77.1% in 2002 to 85.5% in 2015. The current National Development Plan requires the development of 10,000 MW of additional electricity generation capacity by 2020, against the 2013 baseline of about 44,000 MW.  In 2016, Eskom (the national power utility) stated that the renewable energy “Independent Power Producer Procurement Programme” was on course to procure 6,925 MW of renewable energy by 2020 from onshore wind (3,500 MW), CSP (600 MW), solar PV (2,700 MW) and small hydro, biomass, biogas and landfill gas (combined 125 MW).  Government is hoping to build 9.6 GW of nuclear power by 2030 to address power supply issues, but concerns are mounting over how it will be financed.

Objectives

"Electricity for all“ - the government's Integrated National Electrification Programme (INEP) had a target of access to electricity for all formal households by 2025.  At the start of the programme, there were about 8 million formal households in South Africa (housing a population of approximately 40 million).  Eskom estimated that about 13 million people were connected to an electricity supply (equivalent to about 3m households).  INEP was therefore initially targeting about 5m households over 25 years, though population growth – reaching 60m by 2015 – has meant that this target is now over 10m new connections.

Legal Basis

The Energy White Paper of 1998 gave policy direction to establish a National Electrification programme and the Integrated National Electrification Programme (INEP) was established in 2000.  It became fully operational in 2001/2. Non-grid electrification become formally part of the National Electrification programme with the establishment of INEP.

Institutions, Roles and Responsibilities

  • The Department of Energy (DoE) is responsible for monitoring the performance of Municipalities regarding electrification, and ensuring that corrective measures are taken in case of poor or non-performance.  A DoE department devoted to INEP was established.
  • Eskom is the national electricity utility of South Africa and is the largest producer of electricity in Africa
  • The National Energy Regulator of South Africa (NERSA) has the mandate to regulate the electricity, piped-gas and petroleum pipelines industries in terms of the Electricity Regulation Act (2006), the  Gas Act (2001), and Petroleum Pipelines Act (2003).
  • Other Government Departments including Public Enterprises (DPE), Environmental Affairs (DEA), Trade & Industry (DTI) play a significant role with regard to the priorities and focus for national electrification.
  • The Central Energy Fund (CEF) is a state-owned national energy utility entity that reports to DoE.  It contributes to national energy security through commercial operations and developmental projects.
  • The  South African National Energy Development Institute (SANEDI) is a state-owned entity whose main function is to direct, monitor and conduct applied energy research & development, demonstration & deployment, as well to undertake specific measures to promote the uptake of Green Energy and Energy Efficiency in South Africa.

Interventions

Prior to the announcement of the INEP in 2001, electrification was concentrated only in urban areas. In 1993, only around 30% of households were electrified, which has increased to ~85% today. This was initially achieved mainly through extension of the main electricity grid.  The introduction of INEP broadened the scope of electrification, with an early focus on off-grid solar PV systems for rural areas.  The Department of Minerals and Energy (now the Department of Energy, DoE) appointed concessionaires with defined regional areas of operation equivalent to the country's provinces, and provides a capital subsidy of US$750  for each 50Wp Solar Home System installed.  Non-grid customers pay a connection fee of about US$15 for each system and a monthly service flat rate fee of about US$10.  The concessionaires own each SHS, and maintain the systems for as long as they are installed. The permitted tariffs are regulated by DoE and are set at a “reasonable” level for each concessionaire. The concessionaires have also established energy shops in many towns and villages that supply related energy technologies and bottled Liquid Petroleum Gas (LPG) to meet the needs for hot water and cooking. Municipalities subsidize customers’ monthly maintenance costs through the provision of Free Basic Electricity (50kWh/month).  Today, the source of electricity supply has broadened significantly with the Renewable Energy IPPP Program that has run four competitive tenders/auctions since 2011, which have seen US$19 billion in private investment, and a significant drop in the price of electricity sourced from renewable energy.

Impacts Achieved

The Integrated National Electrification Plan (INEP) and its implementing partners have made remarkable progress in increasing access to electricity in South Africa. Electrification has more than doubled from 30% of the population in 1993 to 85% of formal housing in 2015. Over 5.2 million households were connected to the grid between 1994 and 2010. More than 12,000 schools were also grid connected and 3,000 schools were electrified with non-grid technology; 345 clinics in rural areas were supplied with non-grid electricity. By 2015, over 100,000 SHS systems were installed countrywide (though only around 60,000 are still operational).

Lessons Learned

Rural electrification does not make commercial sense in South Africa – at best it can be a break-even commercial venture. Consumption levels of rural customers is so low that it is impossible to recover capital and operations cost from the tariffs alone.  The experience from South Africa has suggested that an effective renewable energy electrification programme needs: rural customers who understand renewable energy technology (and are prepared to use this for their main energy needs; mass roll-out to ensure local acceptability and scale for business; stable and effective electricity and renewable energy industry; ring-fenced 100% initial capital subsidy system – long term and transparent; integrated electrification planning and monitoring unit/agency; efficient project management systems; national/regional technical standards; effective financial and technical monitor systems (against set standards); multi-year funding to provide a guaranteed level of income; pre-paid meters (the most effective revenue collection method for renewable energy electrification customers, and encourages graduation to grid-based technology); customers to make a financial contribution (connection fee) to ensure responsibility for service/infrastructure.

Effectiveness

The growing number (which continues to increase) of households in South Africa with electricity connections indicates that the national electrification efforts have produced positive results.  Recognition of the need to consider alternative approaches to main grid extension has enabled the introduction of different energy sources for electricity generation, and decentralised provision that has certainly been more cost-effective than grid connections to remote areas (though the level of electricity access provided is more limited).  However, the goal of "Electricity for All" has proven to be difficult to reach, with the timeframe for this target now being set back from 2012 to 2025.  From 2000 the state funded the capital cost of new installations with an annual subsidy of US$ 400 million for grid and off-grid electrification.  Between 2002 and 2013, the number of connections rose from 8.3 million households to 12.4 million.  Using this to determine an average increased connection rate of 0.37m households per year,  the Government subsidy to the  connection cost/household has been ~US$1080 (a total cost during this period of about US$4.4bn),  which can probably be viewed as a cost-effective result in one of Africa's most developed economies.

Overview of Other Country Case Studies

Bangladesh, IDCOL Solar Home SystemsBrazil, Luz para Todos (Light for All)NAE Case Study: Cambodia “Light Touch” RegulationCosta Rica, Distribution CooperativesEthiopia, Solar Market DevelopmentKenya, Off-Grid for Vision 2030Mali, Rural Electrification ProgrammeNepal, Rural Energy Development ProgrammePeru, Concession Model for Standalone SystemsPhilippines, Islanded Distribution by CooperativesRwanda, Sector-Wide Approach to PlanningSouth Africa, Integrated National ElectrificationTanzania, Mini-Grids Regulatory FrameworkTunisia, Low Cost Distribution TechnologyVietnam, Rapid Grid ExpansionNAE Case Studies Navigation Table.png]]


References


Authors

Authors: Mary Willcox, Dean Cooper

Acknowledgements

The Review was prepared by Mary Willcox and Dean Cooper of Practical Action Consulting working with Hadley Taylor, Silvia Cabriolu-Poddu and Christina Stuart of the EU Energy Initiative Partnership Dialogue Facility (EUEIPDF) and Michael Koeberlein and Caspar Priesemann of the Energising Development Programme (EnDev). It is based on a literature review, stakeholder consultations. The categorization framework in the review tool is based on the EUEI/PDF / Practical Action publication "Building Energy Access Markets - A Value Chain Analysis of Key Energy Market Systems".

A wider range of stakeholders were consulted during its preparation and we would particularly like to thank the following for their valuable contributions and insights: - Jeff Felten, AfDB - Marcus Wiemann and other members, ARE - Guilherme Collares Pereira, EdP - David Otieno Ochieng, EUEI-PDF - Silvia Luisa Escudero Santos Ascarza, EUEI-PDF - Nico Peterschmidt, Inensus - John Tkacik, REEEP - Khorommbi Bongwe, South Africa: Department of Energy - Rashid Ali Abdallah, African Union Commission - Nicola Bugatti, ECREEE - Getahun Moges Kifle, Ethiopian Energy Authority - Mario Merchan Andres, EUEI-PDF - Tatjana Walter-Breidenstein, EUEI-PDF - Rebecca Symington, Mlinda Foundation - Marcel Raats, RVO.NL - Nico Tyabji, Sunfunder -


NAE Overview Page

Any feedback would be very welcome. If you have any comments or enquires please contact: mary.willcox@practicalaction.org.uk, benjamin.attigah@euei-pdf.org, or caspar.priesemann@giz.de.

Download the Tool as a Power Point: https://energypedia.info/images/a/aa/National_Approaches_to_Electrification_-_Review_of_Options.pptx

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