Power utility Eskom has placed its energy efficiency rebates for businesses and homes on hold, pending a review of the incentive programmes in light of financial constraints, integrated demand management (IDM) senior GM Andrew Etzinger has confirmed.
This applies to the residential mass roll-out, the standard offer, standard product and performance contracting programmes, as well as the Esco model.
Etzinger explained that Eskom was reprioritising its IDM interventions to assess the benefits that would materialise from each, adding that the board of directors would discuss a new list of programmes in February next year. The review would help Eskom ensure that it was getting “the very best bang for its buck”, he stated.
On September 30, Eskom announced that there will be changes to its IDM programmes owing to funding restrictions and on October 18, it announced that the programmes were placed on hold, leaving industry will a short notice period.
The utility was left with a shortfall of R7.9-billion for its IDM programmes, after National Energy Regulator of South Africa only granted the utility funding of R5.18-billion for energy efficiency incentives in the third Multi-Year Price Determination (MYPD) period, which runs from 2013 to 2018, compared with the R13.09-billion sought.
The lower-than-applied for funding meant that Eskom could not sustain the “very aggressive programme” at the same levels, Etzinger said, adding that the utility was in discussions with government on alternative funding models.
He stated that the benefits of the IDM programmes were clear and that the interventions had made a material difference in the country’s power situation. With verified savings of about 3 600 MW since inception, the IDM programmes have established capacity (so-called negawatts) equivalent to that of an average power station. Without those savings, South Africa would have been in daily load shedding since 2008, Etzinger said.
In MYPD2 period, Eskom spent R5.4-billion on IDM interventions and achieved savings of 1 200 MW over the three-year period. For the current financial year, Eskom is aiming to achieve savings of 379 MW through energy efficiency interventions and is targeting 240 MW in the next financial year.
The residential mass roll-out was the largest contributor to demand savings in the 2013 financial year. The programme is based on a free bulk roll-out of a “basket of technologies”, focusing on replacing inefficient lighting and implementing energy saving technologies and load control devices in the residential sector. It was started in the 2011/12 financial year to complement the compact fluorescent light project, which has facilitated the installation of about 60-million lamps on an exchange basis.
For businesses, Eskom designed the standard offer and standard product programmes to financially reward companies for achieving energy savings. Since inception in October 2011, about 245 projects have been registered for the standard offer, realising demand savings of 118 MW and energy savings of 478.6 GWh. More than 4 800 projects have been registered for the standard product programme, which started in January 2012, realising demand savings of 122.7 MW and energy savings of 555 GWh.
The Esco model uses energy service companies to submit proposals to Eskom on potential savings at customer premises. Under the performance contracting programme, the utility purchases bulk verified energy savings across multiple sites and technologies by contracting with a single project developer. The minimum project size under this programme is substantially larger than the average demand-side management project submissions – it has to be more than 30 GWh of savings over a three-year sustainability period.
Etzinger said that the rebate programme review was not only about electricity considerations, but also about investigating opportunities for localisation in the IDM programmes. The government-funded solar water heater (SWH) programme – which is not affected by the Eskom review and is continuing – is, for instance, stipulating local content of 70%.
The SWH programme is targeting one-million installations by the end of the 2014/15 financial year, and has so far seen the successful implementation of more than 370 000 solar water geysers. The Department of Energy has allocated R4.7-billion to speed up the project.
Etzinger stressed, however, that while the IDM interventions were temporarily on hold, Eskom would continue to benefit from the savings achieved through the projects that are implemented on an ongoing basis. The review would affect new projects that were to be implemented in the next financial year.