There is considerable opportunity and potential to be unlocked in energy efficiency projects in South Africa, but more needs to be done with regard to financial solutions to catalyse a take-up of opportunities, speakers said during a webinar hosted by industry organisation the South African Energy Efficiency Confederation on May 20.
Carbon Trust Southern Africa head Benjamin Curnier said the organisation was working with the South African National Energy Development Institute and the Department of Minerals Resources and Energy, along with the World Bank, to see what kind of financial interventions could be deployed in the market to drive energy efficiency.
He noted that energy efficiency was not seeing substantial uptake in South Africa, despite the considerable opportunities it presents, with much investment yet to be unlocked.
He mentioned opportunities in applications such as motors, drives, lighting, heating and cooling.
He added that energy efficiency was commercially attractive, with the portfolio of identified opportunities typically showing a payback of less than two to three years.
Moreover, the average capital expenditure for these projects is relatively low, Curnier pointed out.
While there is obviously variability with these numbers, even the top-end capital expenditure is not that high, he noted.
However, these opportunities are not translating into demand in the South African context, Curnier said, adding that there were several reasons for this.
Firstly, energy in South Africa is still cheap, especially compared to other developing and developed economies. Therefore, energy efficiency is not at the forefront of many operations, with business as usual being more financially appealing.
Moreover, there is a lack of awareness, with a lack of identified opportunities.
Also, there is often not technical capacity in organisations, even the big ones, to identify and then assess these opportunities in terms of their merits, and weigh them up again business as usual capital outlay, indicated Curnier.
He pointed out that the enabling environment and policy was not especially persuasive currently, as, for example, there is the National Energy Efficiency Strategy which is still in draft form and, therefore, does not translate into any regulations or drive behavioural changes.
Curnier posited that the supply side of energy efficiency in South Africa is very good, with sufficient availability of energy auditors, as well as energy efficiency suppliers.
He mentioned that there had been a good history of tailored funds for energy efficiency and renewable energy, but problems arose in struggling to disburse these, in that funds were more often directed at renewable energy projects than energy efficiency.
In terms of its work with the World Bank and other organisations, he stated that the parties had to revisit many funding barriers, and understand why historically, energy efficiency funds had not been successfully disbursed, especially in the South African context.
He said the parties were now at a stage where they could start looking at what other potential energy efficiency or financial instruments could be used to catalyse this market in South Africa.
Following this would be selecting subsets of these and testing these in the marketplace.
Curnier said the work involved exploring how to get institutions to preferentially fund energy efficiency; and how to encourage end-users to take on debt for energy efficiency projects.
He indicated that there were challenges in how to implement, scale and undertake it sustainably.
BANKABLE SOLUTION
Meanwhile, finance institution Standard Bank of South Africa power and sustainable solutions senior manager Deerosh Maharaj said the bank had explored global and local drivers of sustainable power and that this had shaped its approach towards finding solutions.
In 2019, the bank undertook research, and industry challenges were gleaned, with regulation, funding and education being the most prominent.
The research also indicated lots of potential energy supply, with R20-billion in investment required to meet private energy demand.
The bank’s clients experienced electricity users’ challenges of funding; technical; and legal and regulatory. For funding, this had high levels of complexity, causing clients to give up in frustration, Maharaj indicated.
Therefore, the bank aimed to support sustainability by getting clients access to reliable supply, and affordable, predictable costs.
It has therefore developed the Power Pulse platform, which is currently in beta phase and available to selected clients only.
When fully operational, it will be a digital platform that facilitates, funds, manages and optimises Africa’s decentralised energy supply, informed Maharaj.
Users will have access to the digital platform; access to accredited engineering, procurement and construction (EPC) partners; assistance with shortlisting of EPC partners; access to a specialist concierge team; a detailed needs analysis and feasibility score; coordination of site visits; and assistance with documentation uploading and storage.
Moreover, there would be standardisation of proposals; specialised funding solutions; simplified legal agreements; access to a solar photovoltaic knowledge base; and assistance with compliance checklists.