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ANNUAL REPORT 2014/15

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This annual report was printed on Cocoon Silk 100% recycled. By using this recycled paper, SANEDI has reduced its environmental
impact. Smaller solid ink areas are used on the cover and inside text, to increase the recycle properties of this report and
reduce the carbon footprint.

2 SANEDI Annual Report 2014/15


ANNUAL REPORT 2014/15

SANEDI Annual Report 2014/15 3


Contents

Part A: General information------------------------------------------------------------------------------- 6

General information------------------------------------------------------------------------------------- 6

Abbreviations and acronyms-------------------------------------------------------------------------- 7

Foreword by the Chairperson------------------------------------------------------------------------- 9

Board of Directors---------------------------------------------------------------------------------------11

Chief Executive Officers overview------------------------------------------------------------------12

Statement of responsibility and confirmation of the accuracy of the annual report---17

Strategic overview--------------------------------------------------------------------------------------18

Vision--------------------------------------------------------------------------------------------------18

Mission------------------------------------------------------------------------------------------------18

Values--------------------------------------------------------------------------------------------------18

Legislation-------------------------------------------------------------------------------------------------18

Organisational structure-------------------------------------------------------------------------------19

Part B: Performance information-----------------------------------------------------------------------20

Auditor-generals report: predetermined objectives-------------------------------------------20

Strategic outcome orientated goals-----------------------------------------------------------------21

Performance information by programme---------------------------------------------------------22

Applied energy research-------------------------------------------------------------------------------22

Clean energy solutions----------------------------------------------------------------------------24

Smart Grids Programme--------------------------------------------------------------------------32

Working for Energy---------------------------------------------------------------------------------44

Data and knowledge management-------------------------------------------------------------48

Energy Efficiency programme------------------------------------------------------------------------51

Energy Efficiency (12L and 12I) tax incentives-----------------------------------------------51

bigEE---------------------------------------------------------------------------------------------------52

Energy Efficiency and Demand Side Management (EEDSM) Hub-----------------------55

Report on performance against objectives--------------------------------------------------------56

Communications-----------------------------------------------------------------------------------------70

4 SANEDI Annual Report 2014/15


Contents

Part C: Human resource management-----------------------------------------------------------------72

Personnel costs by programme----------------------------------------------------------------------73

Personnel cost by salary band------------------------------------------------------------------------73

Performance rewards----------------------------------------------------------------------------------73

Reasons for staff leaving-------------------------------------------------------------------------------74

Labour relations, misconduct and disciplinary action------------------------------------------74

Staff demographics-------------------------------------------------------------------------------------74

Training costs of personnel----------------------------------------------------------------------------75

Part D: Financial information-----------------------------------------------------------------------------78

Report of the auditor-general to Parliament-----------------------------------------------------79

Annual financial statements

General information------------------------------------------------------------------------------------84

Accounting Authoritys responsibilities and approval-------------------------------------86

Board audit and risk committee report-------------------------------------------------------87

Accounting Authoritys report-------------------------------------------------------------------90

Materiality and significance framework-------------------------------------------------------96

Statement of financial position at 31 March 2015------------------------------------------97

Statement of financial performance-----------------------------------------------------------98

Statement of change in net assets--------------------------------------------------------------99

Cash flow statement----------------------------------------------------------------------------- 100

Accounting policies------------------------------------------------------------------------------- 101

Notes to the annual financial statements--------------------------------------------------- 119

SANEDI Annual Report 2014/15 5


PART A:
General Information

General information

Registered name: South African National Energy Development Institute (SANEDI)


Physical address: Block E, Upper Grayston Office Park, 150 Linden Road, Strathavon, Sandton
Postal address: P O Box 9935, Sandton, 2146
Telephone numbers: 011 0384300
Email address: exec@sanedi.org.za
Website address: www.sanedi.org.za
External auditors: The auditor-general of South Africa
Bankers: ABSA Capital
Company Secretary: CEF Secretariat

6 SANEDI Annual Report 2014/15


Abbreviations and acronyms

AAAMSA Association of Architectural Aluminium EDI Electricity Distribution Industry


Manufacturers of South Africa EE Energy efficiency
AFD French Development Agency EEDSM Energy efficiency and demand side
AGSA auditor-general of South Africa management
ASSA Academy of Science for South Africa EMWG Energy Management Working Group
BEE Black economic empowerment eNaTIS Electronic National Administration Traffic
CCS Carbon capture and storage Information System
CCT Clean coal technologies EPD Energy Performance Database
CEF CEF Group of Companies formerly known EPWP Expanded Public Works Programme
as Central Energy Fund ERC Energy Research Centre
CEM Clean Energy Ministerial ESI Electricity Supply Industry
CES Clean Energy Solutions ETDE Energy Technology Data Exchange
CEO Chief Executive Officer ETDEWEB Energy Technology Data Exchange World
CER Centre of Energy Research Energy Base
CESAR Centre for Energy Systems Analysis and FMPPI Framework for Managing Programme
Research Performance Information
CFT Carbon fuel tablet GAAP Generally Accepted Accounting Practice
CNES Centre of New Energy Systems GEF Global environment facility
CO2 Carbon dioxide GHG Greenhouse gas
COCATE Large-scale CCS transportation GIZ German Agency for International
infrastructure in Europe Cooperation
CoRD Centres of Research and Development GPDRT Gauteng Province Department of Roads
CPI Consumer Price Index and Transport
CPUT Cape Peninsula University of Technology GRAP Generally Recognised Accounting Practice
CPV Concentrator Photovoltaics GSEP Global Superior Energy Performance
CSAG Climate Systems Analysis Group Partnership
CSC Community steering committee HVAC Heating, Ventilation and Cooling
CSP Concentrated solar power IAS International Accounting Standards
CSIR Council for Scientific and Industrial IDC Industrial Development Corporation
Research IEA International Energy Agency
CSIR CSP CSIR Concentrated solar power IEP Integrated energy plan
CSTDI Centre for Solar Technology, Development IFPEN IFP Energies nouvelles
and Innovation IIA Institute of Internal Auditors
DEA Department of Environmental Affairs ipv Institute for Photovoltaics
DID Gauteng Department of Infrastructure ISGAN International Smart Grid Action Network
Development IT Information technology
DKK Danish krone kW Kilowatt
DoT Department of Transport LAN Local area network
DoE Department of Energy M&V Monitoring and verification
DSM Demand side management MEASA Marine Energy Association of South Africa
DST Department of Science and Technology MoU Memorandum of understanding
DTU Technical University of Denmark MTEC Medium-Term Expenditure Committee
DBREV Douglas Banks Renewable Energy Vision MW Megawatt
dti Department of Trade and Industry NAAMSA National Association of Automobile
Dx Distribution grid Manufacturers of South Africa

SANEDI Annual Report 2014/15 7


Abbreviations and acronyms

NBI National Business Initiative SAPVIA South African Photovoltaic Industry


NDA National Development Agency Association
Necsa South African Nuclear Energy Corporation SARS South African Revenue Service
SOC Limited SARETEC South African Renewable Energy
NEEA National Energy Efficiency Agency Technology Centre
NIER Newcastle Institute of Energy Research SASGI South African Smart Grids Initiative
NOK Norwegian krone SASTELA Southern Africa Solar Thermal and
NRF National Research Foundation Electricity Association
NWA Numerical wind atlas SATTIC South African Travel and Tourism Industry
OWA Observational wind atlas Conference
PAA Public Audit Act SAWEA South African Wind Energy Association
PCSP Pilot CO2 Storage Project SAWEP South African Wind Energy Programme
PDI Previously disadvantaged individual SAWS South African Weather Service
PFMA Public Finance Management Act SAYAS South African Young Academy of Science
PPA Power purchase agreement SEA Strategic environmental assessment
PPC Parliament portfolio committee SETRM Solar Energy Technology Road Map
PSA Plataforma Solar de Almera SLA Service level agreement
PV Photovoltaics SMME Small Micro Medium Enterprises
RE Renewable energy SMART Specific, measurable, achievable, realistic
RECORD Renewable Energy Centre for Research and and time-bound
Development SOLTRAIN Southern African Solar Thermal Training
REEEP Renewable Energy and Energy Efficiency and Demonstration Initiative
Partnerships TAF Technical assistance facility
R&D Research and development TIA Technology Innovation Agency
SABS South African Bureau of Standards Tx Transmission grid
SACCCS South African Centre for Carbon Capture UCT University of Cape Town
and Storage UCT CSAG University of Cape Town Climate Systems
SACRM South African Coal Roadmap Analysis Group
SADC Southern African Development Community UNDP United Nations Development Programme
SAfECCS South Africa - Europe Cooperation on URL Uniform Resource Locator
Carbon Capture and Storage VNWA Verified Numerical Wind Atlas
SAGEN South Africa German Energy Programme WASA Wind Atlas of South Africa
SANAS South African National Accreditation WAsP Wind Atlas Analysis and Application
System Programme
SANEDI South African National Energy WITS University of the Witwatersrand
Development Institute WfE Working for Energy programme
SANERI South African National Energy Research WWF World Wildlife Fund
Institute WRI World Resource Institute
SAPIA South African Petroleum Industry WSU Walter Sisulu University
Association

8 SANEDI Annual Report 2014/15


Foreword by the Chairperson

In the quest to meet the governments mandate of


facilitating the countrys transition to a low carbon
society, SANEDI has continued to make strides in
energy innovation and energy conservation. With the
current energy challenges that the country is facing
SANEDIs role has become more critical in ensuring
that South Africa has the necessary information and
planning support to plan for a sustainable and secure
energy future that will satisfy the countrys economic,
social and environmental needs. There is no doubt that
changing the energy mix and making concrete steps
towards energy conservation are critical for meeting
these targets.

With the recent budget cuts which may impact a


great deal on delivering on this very important task,
SANEDI continues to strengthen partnerships with
international funders to ensure that essential financial
support for SANEDI programmes is sustained. One
such support was by the World Bank for the Pilot CO2
Storage Project (PCSP). The pilot monitoring project Ms N Mlonzi
at the Bongwana natural CO2 release was initiated Chairperson
with international interest, while the stakeholder
engagement programme continued with about 40 One of the programmes that has made strides is the
engagements to date. The shale gas investigation work Working for Energy (WfE) programme. The programme
plan was approved by the Department of Energy (DoE). has successfully completed projects in KwaZulu-
Natal (installing 26 biogas digesters coupled to bio-
Another important milestone was the quantification fertiliser production, rain water harvesting and solar
of South Africas renewable energy resources with the PV systems to demonstrate the ability of clean energy
completion of the wind atlas for South Africa (WASA) interventions to provide sustainability), in Limpopo
phase 1 project in March 2014. The data has been (completing over 30 of the 55 biogas digesters),
placed in the public domain for access by all, thus and the greening of schools and early childhood
levelling the playing field for the independent power development centres across the country. The success
producers. The renewable programme also concluded is a result of collaborations and partnerships with
the year with successful projects and collaborations in organisations and various government departments
the renewable energy sector. Some of these include such as the Gauteng Department of Infrastructure
the launch of the first ground verified high-accuracy Development, the National Development Agency
solar resource map for South Africa, the recognition (NDA) and the Department of Environmental Affairs
of renewable energy research excellence through the (DEA). The benefits of these clean energy interventions
RECORD RERE awards (in partnership with SANEA), the will be expanded to other partners in other provinces
launch of the state of energy research in South Africa and sectors, such as agriculture, human resource
report, and the launch of the RECORD waste to energy development, environment and small enterprise
platform. development.

SANEDI Annual Report 2014/15 9


Foreword by the Chairperson

SANEDI was instrumental in working together with to provide a green credit facility to finance small- to
the South African National Treasury, the Department medium-size energy efficiency and renewable energy
of Energy and all interested and affected parties in projects through three commercial banks in South
the country to ensure that the energy efficiency tax Africa has exceeded all expectations, with the entire
incentives (referred to as 12L), were substantially fund having been exhausted within the contract
amended and improved. Furthermore, the South period. This may lead to a second phase of this facility
African component of the internationally-funded for South Africa.
online benchmarking tool (bigEE), went live and is
proving to be a useful tool for local and international In closing, there is no doubt that the new financial year
stakeholders. will yield more successful results in the search for clean
and sustainable energy solutions. I would like to take
Traction has also been gained in meeting South this opportunity to thank all our partners and funders,
Africas commitments to the cool surfaces component without whose support we would not have managed
of the clean energy ministerial (CEM), through the what we have achieved.
establishment of the South African Cool Surfaces
Association (SACSA), with assistance from the United
States of Americas Department of Energy. Lastly, the
technical assistance facility hosted by SANEDI and Ms N Mlonzi
funded by the French Development Agency (AFD) Chairperson

10 SANEDI Annual Report 2014/15


Board of Directors

Ms N Mlonzi (Chairperson), BProc LLB Dr V Munsami, BSc (Hon), MSc, PhD


Mr J Marriott (Deputy Chairperson), BSc Chem Eng Mr G Fourie, Diploma Mech Eng,
Ms M Modise, BSc (Hon), HED, MSc (Eng) BCom Economics, MBA
Dr D Hildebrandt, BSc Chem Eng, MSc Chem Eng, Ms P Motsielwa, B Acc (CA)(SA)
PhD Chem Eng Dr C Sita, MSc Chem Eng (Polymer Engineering)
Ms D Ramalope, BSc (Hon), MSc, MBL PhD Chem Eng (Polymer Engineering)
Mr C Manyungwana, Dip Management, Higher Dip Mr M Gordon (alternate director), BSc, MBA
Public Managmenet and Administration, Post Grad Dr R Maserumule (alternate director), BSc (Applied
Dip Transport Management Mathematics), PhD (Applied Mathematics)

Ms N Mlonzi Mr J Marriott Ms M Modise

Dr D Hildebrandt Ms D Ramalope Mr C Manyungwana

Dr V Munsami Mr G Fourie Ms P Motsielwa

Dr C Sita Mr M Gordon Dr R Maserumule

SANEDI Annual Report 2014/15 11


Chief Executive Officers overview

Adding Value in an Uncertain Market

The 2014/15 year has been characterised by lower than


expected economic growth, due mainly to electricity
supply constraints that have plagued the country of
late. The electricity constraints are largely as a result
of delays in the construction of Medupi and Kusile,
the two new Eskom large coal-fired power plants. The
present electricity shortfall is in the region of 3 000
MW and is exacerbated by the number of Eskoms
power plants that are out of service for planned and
unplanned maintenance. With the first unit of Medupi
only expected to be commissioned in December 2015,
it is likely that load-shedding will continue for the next
two years or so. Compounding the problem is that even
when the two new coal-fired plants are brought on-
line, the expectation is that industrial and commercial
activities will gain momentum, placing further stress
on an already strained electricity supply industry.
Mr K Nassiep
The Renewable Energy Independent Power Producer Chief Executive Officer
Programme, REIPPP, has been responsible for just over
4,000 MW of new renewable energy being added to CO2-equivalent emissions, the programme will target
the grid since 2013/14. This development has offset to large emitters such as Eskom and Sasol. Eskom has
some degree the current shortfall in electricity supply already indicated that it will pass on such a tax to
but is not yet sufficient to mitigate against the impact the consumer, as it doesnt have sufficient funding at
of load-shedding. Eskom could well have benefited present to cover the expected tax. Energy intensive
from an upscaling and acceleration in its Integrated industries such as Sasol may well consider moving
Demand Management Programme, but budget some of their operations offshore, in an attempt
constraints have seriously limited the utilitys ability to to limit their tax liability in South Africa. When one
shift or reduce demand for electricity at peak periods. considers these implications of a carbon tax, it is likely
that government will review the scope and extent of
This dilemma has paved the way for SANEDI to assert its tax policy in this area. Suffice to say, at least half
itself as a key role player in identifying additional supply of the emissions that need to be reduced must come
options as well as initiating energy efficient measures from the energy sector, which creates an opportunity
to assist in reducing the demand for electricity. This for SANEDI to fast-track its Carbon Capture and Storage
report highlights the various programmes of SANEDI programme.
that are assisting the country deal with the challenge
of spurring on economic growth in an electricity- Under the 2DS scenario of the IEA, CCS is expected to
constrained market. contribute at least 14% to the measures designed to
reduce greenhouse gases by 2050 to under 450 ppm
Carbon Capture and Storage panacea or not? and to limit the increase in mean global temperature to
2 degrees Celsius. For CCS to have this impact, it must
National Treasury has announced plans to introduce be commercially viable and in turn, should initially be
a carbon tax as of 2016/17. Estimated at R120/ton of supported by a carbon tax or other fiscal instrument.

12 SANEDI Annual Report 2014/15


Chief Executive Officers overview

SANEDI, through its centre SACCCS (South African


Centre for Carbon Capture and Storage) has made
significant strides in the year towards identifying the
key steps required to take a decision on whether CCS is
a viable option for South Africa, both from a technical
as well as a commercial perspective. The work that is
being done in SANEDI has been recognised in a number
of ways over the past few years, including Cabinet
endorsement of the programme as well as its inclusion
in the National Climate Change Response Strategy
of South Africa. CCS features as a flagship priority
programme of government and therefore it is vital
that accurate and detailed information is presented
to government to enable effective policy-making and
regulation setting.

In the past year, SANEDI has successfully initiated its


Pilot CO2 Carbon Storage Project or PCSP, which will
allow the member organisations and institutions that
comprise the SACCCS Board of Governors to determine
the impact the transportation and injection of carbon
dioxide will have on the environment. Critical to
this pilot projects success will be buy-in from the
communities affected by such activity and SANEDI has
therefore established a comprehensive stakeholder
engagement plan to deal with civil societys concerns
in this area.

Funding remains a major consideration in the design exploration activities in specified areas, such as the
of the pilot project and it is estimated that in excess Zululand basin. In addition, the team will focus on
of R500 million will be required for this project. understanding the movement of carbon dioxide
South Africa has demonstrated its commitment to through a natural reservoir, engaging with traditional
this programme with a grant of over R200 million leaders and their communities and assisting
over the current MTEF period. Using this as leverage, government in developing an appropriate regulatory
the team in SACCCS has secured a major coup with framework.
the announcement this year that the World Bank
has pledged $27 million to this programme. This is Incentivising Energy Efficiency in Industrial and
a remarkable feat, given the nascent nature of the Commercial Sectors
industry and the technical barriers still to be overcome.
It is testament to South Africas commitment and the National Treasury has promulgated regulations in
confidence in the SACCCS team in SANEDI that this November 2013 that introduce a tax incentive for
grant has been secured. companies in industry and the commercial sector
that wish to implement energy saving measures in
In the coming year, SANEDI will focus on geotechnical their plants or buildings. This is Section 12L of the
aspects, particularly securing the permits to conduct Income Tax Act and follows on the implementation of

SANEDI Annual Report 2014/15 13


Chief Executive Officers overview

Section 12I earlier. Section 12I focused on awarding a from the scheme. SANEDI has incorporated these
tax allowance for companies that invested capital in concerns into a report to National Treasury and it was
energy saving measures. The tax benefit is therefore with pleasure that we received news from the Minister
based on the associated capital expenditure. In the of Finance that he was increasing the tariff applicable
case of Section 12L, the focus is on the actual energy from 45 c/kWh to 95 c/kWh in the 2015/16 tax year. In
savings and the allowance is based on the kWh saved. addition, cogeneration has now been included in the
list of applicable technologies and will be eligible for
SANEDI has been appointed in terms of the regulation inclusion as of the 2015/16 tax year. This is pleasing
as the body responsible for verification of the savings indeed, as cogeneration offers shorter-term option
made and for administering the entire application to providing capacity under the current electricity-
process for Section 12L. This follows on the success of constrained conditions.
the efforts on SANEDIs part to administer the energy
component of the Section 12I tax allowance, on behalf Energy Efficiency in the Household reaching
of the dti. SANEDI is mandated through its establishing consumers with state of the art solutions
Act, the National Energy Act, 2008 (Act No. 34 of
2008), to undertake measures to implement energy The only drawback to the current Sections 12I and 12L
efficiency in the country. It is therefore appropriate schemes are that they dont cater for the residential
that SANEDI direct efforts designed to stimulate and sector, where significant saving potential exists.
encourage energy saving, particularly among the large SANEDI has approached the large power users as well
power users in South Africa. as the banks to institute a programme aimed at making
essential energy efficient products available to either
In the absence of an Eskom-led IDM programme, home loan clients or employees of large power users.
Section 12L will form the basis for an incentive for SANEDI has undertaken to provide for a revolving
energy efficiency in the coming years. While Eskom credit facility, subject to funds being made available,
may well receive additional funding for EEDSM in the as well as to source the energy efficient products on a
future, a tax incentive will provide a clear market signal bulk discount basis. To date, the large power users that
to consumers and will allow for appropriate longer- comprise the Electricity Intensive Users Group have
term planning and investment in energy efficiency. expressed their full support for the initiative as has one
of the major banks in South Africa.
With the assistance of the Deutche Gesellschaft
fr Internationale Zusammenarbeit (GIZ) and the The banks will administer the funds and the repayment
University of Pretoria, SANEDI has put in place an of loans on behalf of SANEDI, which reduces the
online application and administrative tool that is resource requirements dramatically. In the course of
assisting applicants in getting their projects registered the year, SANEDI has also developed plans to introduce
and reviewed, as per the mandate of SANEDI under efficient high mast lights in Soshanguve, near Pretoria,
the current regulations. Several roadshows around in an effort to provide for more sustainable lighting
the country have been held thus far, in order to help solutions in these communities. The project is set to
raise awareness of the initiative. Feedback to date commence in the middle of the next financial year
suggests positive support for the scheme, although and will see 840 high mast lights converted to higher
there are concerns regarding the quantum of the efficiency using an e-box solution from Europe. Plans
allowance, which is currently 45 c/kWh before tax, and are already underfoot to initiate manufacturing of the
the exclusion of renewable energy and cogeneration product in SA.

14 SANEDI Annual Report 2014/15


Chief Executive Officers overview

Closer to a Smart Grid solution in South Africa the integration of electricity, communication and ICT
technology to provide a more robust and customer
SANEDI, through its affiliation to the International Smart needs-driven solution.
Grid Action Network (ISGAN), has been instrumental
in establishing a programme of action that will bring We expect to announce more exciting results in this
us closer to upgrading our existing electricity network, area soon, as plans are underway to launch the second
particularly the low voltage network under municipal phase of this project, again with possible support from
control. SANEDI has assisted in the establishment of the EU.
the South African Smart Grid Initiative (SASGI). This
initiative brings together the key stakeholders in Exciting developments in the Working for Energy
the electricity sector, such as AMEU, Eskom and the Programme
electricity distribution entities in local government, to
create a single platform to deliberate on and chart a After a somewhat lengthy delay mainly due to
way forward for the sector. administrative issues in the Working for Energy
Programme, it is now well underway and several
Through SASGI, SANEDI has been successful in notable projects are already nearing completion.
leveraging approximately R180 million from the EU Partnering with the Fort Cox Agricultural College and
for the purposes of introducing smart grid technology the University of Fort Hare, SANEDI has completed
in several municipalities. The initial phase of this demonstration projects in the Melani Village and the
project has now commenced and nine municipalities College and has been able to successfully commence
are on board already. The initial focus has been on construction of well over 100 biogas digesters in the
smart meter technology and aligned to that, the back Nkonkobe District Municipality in the Eastern Cape.
office integration, tariffing and data management Similar projects are underway in KwaZulu-Natal,
associated with the meters. Already, several of these Limpopo and the North West Provinces. Demonstration
municipalities have recorded an increase in revenue as of cool surfaces technologies is also top of the agenda
a result of the identification of previously unmetered since many of the facilities in low income communities
large consumers. The project is not only about are without HVAC.
revenue management though. A smart grid involves

SANEDI Annual Report 2014/15 15


Chief Executive Officers overview

Aside from biogas digesters, SANEDI is also focused SANEDI prides itself on employing individuals of a high
on partnering with municipalities such as eThekwini calibre in terms of their qualifications and experience
Metro to construct power plants that utilise sludge and it is testament to the fact that an organisation
from sewage, together with biomass, as feedstock for does not have to compromise the quality of its
electricity production. service through adherence to an employment equity
programme.
Our long-standing relationship with Working for Water
has now culminated in the efforts to remove invasive Towards better corporate governance and sound
vegetation from farmlands in the Eastern Cape area administration
of Uitenhage. This vegetation, mainly in the form of
black wattle trees, will be used as feedstock for power SANEDI once again has produced an unqualified audit
generation using South African-developed gasifier report in terms of its financial management. There
technology. has been a noticeable improvement in the quality of
service provided by the finance team as well as the
Transformation and Empowerment in the workplace procurement and administrative support staff. It is
testament to their hard work and the support from the
As a responsible corporate citizen and a member of the technical staff that we are able to continue producing
public sector, SANEDI is committed to a programme pleasing results in terms of our external audit. There
of action that seeks to ensure employment equity is is always room for improvement and in the coming
realised in the workplace. During the course of the year, year, the focus will be on improving the quality of our
our Chief Financial Officer was appointed. Ms Lethabo performance management system, ensuring that our
Manamela, a Chartered Accountant, brings with her a key performance indicatives are SMART (Strategic,
wealth of experience from the auditor-general. SANEDI Measurable, Achievable, Realistic and Time-bound).
will continue to identify and recruit people with the Overall though, the company has put in a strong
requisite skills that represent the demographics of the showing in terms of its performance, with over 72% of
country and support employment and gender equity its objectives met or exceeded.
targets.
Once again, this is due to the hard work of the entire
Currently within SANEDI there are 52 employees. The team at SANEDI and I would like to personally thank
breakdown by race and gender is as follows: and congratulate them on another sterling effort this
year.
BLACKS COLOURED WHITE INDIANS
Females

Females

Females

Females
Males

Males

Males

Males

Kadri Nassiep
21 12 2 2 3 6 2 4 Chief Executive Officer

16 SANEDI Annual Report 2014/15


Statement of responsibility and confirmation of the accuracy of the
annual report

To the best of my knowledge and belief, I confirm the information, the human resources information and the
following: annual financial statements.

All information and amounts disclosed in the The external auditors are engaged to express
annual report is consistent with the annual financial an independent opinion on the annual financial
statements audited by the auditor-general. statements.

The annual report is complete, accurate and is free In our opinion, the annual report fairly reflects the
from any omissions. operations, the performance information, the human
resources information and the financial affairs of the
The annual report has been prepared in accordance public entity for the financial year ended 31 March
with the guidelines on the annual report as issued by 2015.
National Treasury.
Yours faithfully
The Annual Financial Statements (Part D) have been
prepared in accordance with the standards applicable
to the public entity.
Kadri Nassiep
The Accounting Authority is responsible for the Chief Executive Officer
preparation of the annual financial statements and for 21 August 2015
the judgements made in this information.

The Accounting Authority is responsible for establishing


and implementing a system of internal control that Ms N Mlonzi
has been designed to provide reasonable assurance Chairperson of the Board
as to the integrity and reliability of the performance 21 August 2015

SANEDI Annual Report 2014/15 17


Strategic overview Legislation

Vision The National Energy Act, 2008 (Act No. 34 of 2008),


Section 7 (2) gave effect to SANEDIs existence
To serve as a catalyst for sustainable energy innovation, and provides for its primary mandate and specific
transformation and technology diffusion in support of responsibilities. The Act provides for SANEDI to
South Africas sustainable development that benefits direct, monitor and conduct energy research and
our nation. development as well as undertake measures to
promote energy efficiency throughout the economy.

Mission The business case that established SANEDI outlines


the purpose of the entity and incorporates a set of
Advance innovation of clean energy solutions and key activities that SANEDI undertakes on behalf of
rational energy use that effectively supports South the state. As the energy landscape is a continually
Africas national energy objectives and the transition evolving space, it is clear that additional activities and
towards a sustainable, low carbon energy future. responsibilities will be undertaken by SANEDI in line
with its legislative mandate. The underlying principle
remains the same, however, in that SANEDI plays a
catalytic role in the development of the energy sector,
Values
without becoming a player and referee in a particular
sector. SANEDI is mindful of the various role players
Innovation
that are active in the energy efficiency sector and
Accountability
endeavours to create value in the area in which it
Transparency
operates.
Integrity
Professionalism
National interest
Batho Pele

18 SANEDI Annual Report 2014/15


Organisational structure

CHIEF EXECUTIVE
OFFICER

Applied Energy Energy


Administration
Research Efficiency

Clean Energy
Finance
Solutions

Green
Communications
Transport

Cleaner Fossil Human


Fuels Resources

Working for
Secretariat
Energy

Corporate
Smart Grids
Services

Knowledge Information
Management Technology

SANEDI Annual Report 2014/15 19


PART B:
Performance Information

Auditor-generals report: predetermined objectives

The report of the auditor-general on predetermined objectives is on page 79 to 83 of the annual report.

20 SANEDI Annual Report 2014/15


Strategic outcome orientated goals

SANEDI is expected to contribute to governments twelve outcomes, which are based on governments Medium-
Term Strategic Framework (MTSF) that clearly articulates the agenda of the government. SANEDI contributes to
the following three outcomes that the Minister of Energy has committed to:

STRATEGIC OUTCOMES PROGRAMMES STRATEGIC OBJECTIVES

All/Crosscutting 1. Corporate governance Corporate, executive, financial, information,


and administration supply chain management, governance and
compliance support to the Institute
Strong collaborative approach and strategic
international collaboration

Enable well informed 2. Applied energy research Knowledge creation in support of policy
and high confidence and development direction i.e. viable cleaner energy options
energy planning, including subprogrammes Knowledge creation in the energy mobility
decision-making for: and green transport sector in support of
and support policy policy direction
development Cleaner Fossil Fuels Intelligent energy systems infrastructure
including Carbon Capture Demonstrate cleaner energy technology
and Storage opportunities and solutions
Clean Energy Solutions
Support accelerated Smart Grids Due custodianship of knowledge and data
transformation to a Working for Energy developed within SANEDI
less energy and carbon Data and Knowledge
intensive economy Management
Green Transport
Programme

Foster a culture of 3. Energy Efficiency Support the Income Tax Amendment Act
energy efficiency and programme section 12I and 12L relating to the tax
more rational energy rebate for energy efficiency improvements
use Management of the EEDSM Hub and
oversight of the Hub to a CORD
Provide industry support and capacity-
building
Provide a national champion coordinating
service for all energy efficiency awareness
and promotion initiatives
Establish a national measurement and
verification centre

SANEDI Annual Report 2014/15 21


Performance information by programme

Applied energy research 2014/15 saw critical progress in the PCSP, particularly
in the areas of funding, monitoring, permitting
and stakeholder engagement. The funding work
Cleaner Fossil Fuel inputs
theme saw World Bank approval of the first of two
project concept notes (PCNs) for the PCSP and the
Notwithstanding the progress in the application
endorsement of the second. The approval of the PCN
of energy efficiency measures and the roll-out of
for the World Bank executed activities means that
renewable energies, fossil fuels remain the main form
these activities can now commence. Most important
of primary energy in South Africa. Until renewables/
of these is the procurement of the project design and
nuclear comprise a more dominate role in energy
advisory services consultant who is scheduled to lead
supply, it is imperative that cleaner use of fossil fuels is
the development of foundation documentation, the
undertaken. To this end, two major projects are being
finalisation of analysis of existing data, and the planning
undertaken, namely, Carbon Capture and Storage, and
for the geological investigation and site selection stage.
matters pertaining to the production and use of shale
The endorsement of the second PCN means that the
gas.
World Bank can proceed with the recipient appraisal
of SANEDI and the PCSP division to ensure SANEDIs
Carbon Capture and Storage (CCS)
financial management, procurement, environmental
and social policies and procedures adhere to the World
Carbon Capture and Storage (CCS) is a technology
Bank partner requirements. Successful completion of
whereby carbon dioxide (CO2) is captured from an
the recipient appraisal will facilitate the transfer of the
industrial process, such as fossil fuel power generation,
balance of the World Bank funding to SANEDI.
and permanently and safely stored in a deep geological
formation. It is a transition technology between fossil With respect to PCSP permitting, an application for
fuels and renewable/nuclear that has been shown to permission to undertake the basin exploration and
work internationally. The objective of the South Africa site characterisation programme to determine an
CCS programme is to ascertain whether or not such appropriate site for the PCSP has been made to the
technology can be safely applied in the country. Department of Mineral Resources. Commencement of
that phase awaits an appropriate response.
The major deliverable for CCS in SANEDI is the Pilot
CO2 Storage Project (PCSP) that involves the injection, The PCSP monitoring work theme saw progress
storage and monitoring of 10000 to 50000tonnes of made on the scoping of a research programme at
CO2 in South African geology. the Bongwana natural CO2 release near Harding in
KwaZulu-Natal (KZN). This release presents the PCSP
The PCSP aims to: division and South Africa with the opportunity to build
capacity and experience in monitoring processes and
Demonstrate safe and secure CO2 handling, with monitoring equipment directly relevant to the
injection, storage and monitoring; PCSP.
Increase human and technical capacity and raise
the awareness of CCS; and The PCSP stakeholder engagement (SE) programme has
Support government in its development of a CCS continued with consultations with national, provincial
legal and regulatory framework in South Africa. and local governments, environmental NGOs and
organised labour, as well as science and education
The PCSP also involves the development of a research centres. The stakeholder engagement activities
programme at the Bongwana natural CO2 release to moved from a national level to the point where the
build capacity in the area of CO2 monitoring. local municipalities of uMhlabuyalingana in KZN and

22 SANEDI Annual Report 2014/15


Performance information by programme

the Sundays River Valley in Eastern Cape are now being


engaged and familiarised with the PCSP. This progress
in engagement will then support the permitting
programme of the PCSP, which in 2014/15 commenced
the development of environmental management
plans, first in the Zululand basin and subsequently in
the Algoa basin, for the geological investigation and
site selection stage of the PCSP. The SE team was
afforded an opportunity to profile SANEDI/SACCCS
and the SE work internationally at the 2014 SaskPower
(symposium) conference and the 12th greenhouse gas
technology (GHGT) conference, whereby the SACCCS
SE lead as a panelist shared challenges faced by South
Africa in raising awareness on CCS. In preparation
for the PCSP Bongwana research programme,
consultations commenced with key stakeholders such
as the Mbizana local municipality (Eastern Cape) and
Figure 1: Example of bubbles of naturally released CO2 at
Ugu district municipality (KwaZulu-Natal) respectively. Bongwana that will form the basis of the Bongwana natural
CO2 release monitoring research programme. [Photo: BBeck]
The PCSP and the research programme at the Bongwana
natural CO2 release will also form the basis for SANEDIs supply with demand. The impacts of natural gas use
CCS capacity building activities, developing skills at on greenhouse gas emissions are also being evaluated.
student and professional levels that are relevant to An investigation into the option of using pressurised
CCS as well as the extractive industry more generally carbon dioxide for hydraulic fracturing instead of
and any other industry requiring environmental water is underway and a risk assessment of shale
monitoring. The PCSP and the Bongwana programme gas exploitation is planned. The impacts of shale gas
will also offer some training and study, and limited exploitation on water availability and the handling of
employment opportunities to local communities living waste water is also an important part of the study.
adjacent to the projects. The impact of shale gas on road use, existing industry
and farming as well as tourism and national parks is
Shale Gas being addressed, while national capacity-building with
regard to shale gas exploitation is part of the study.
Shale gas has the potential to be a game changer
for energy supply in South Africa. Large potential During 2014/15, and following the approval of the
resources of shale gas, ease of handling and the work plan by the Department of Energy, the project
lesser environmental impact compared with coal are got well underway and is due to be completed
numbered among the aspects that may be considered, during 2016/17. Preliminary results on the effects
along with the associated challenges. of fuel switching from coal and crude oil to natural
gas use in various sectors of the economy have been
The SANEDI Shale Gas project was initiated to obtained. These effects include a substantial decrease
assist the South African government to obtain an in the emissions of greenhouse gases, a reduction in
independent assessment of the feasibility of shale electricity use compared with the baseline, a reduction
gas exploitation in the country. Important aspects of of crude oil imports, and the need for a substantial gas
the study are to develop scenarios on the matching of infrastructure pipeline network.

SANEDI Annual Report 2014/15 23


Performance information by programme

Clean energy solutions

RECORD (Renewable Energy Centre of Research and


Development)

Current collaborative projects

1. Solar measuring station project Solar MET project 2. Renewable energy testing, training and demo
(collaboration team: GIZ, SANEDI, DST, SU, NMMU, facilities (collaboration teams: SANEDI, GIZ, CSIR,
SAWS, USTDA, Eskom) TIA, Green Cape, CPUT, SU, NMMU)

Installation/construction of solar MET stations RECORDs Centre for Solar Technology,


in specific locations in South Africa; Development and Innovation (CSTDI) concept
Ultimate goal is to produce a verified ground has collaborative nodes spread across country
measurement solar map of the resource at centres of excellence viz, Stellenbosch
available in SA; University (SU), Nelson Mandela Metropolitan
This will enable a levelling of the playing field University (NMMU), University of North West
for potential solar installations; and (UNW) and CSIR; and
The first version of this map based on Centre for Energy Research (CER) at NMMU PV
18 months of data is now available at http:// testing and research facility is established and
www.sauran.net. commenced in 2014 with a three year PV yield
project.
Figure 2: DNI map of South Africa showing installed solar measuring stations; there is also one on Reunion Island.

24 SANEDI Annual Report 2014/15


Performance information by programme

South African Renewable Energy Technology


Centre (SARETEC) at CPUT is under way on the
Bellville campus premises:

o Building is almost complete and is on


schedule for opening in May 2015. The
official launch date is 19 May subject
to the availability of the Minister of the
Department of Higher Education and
Training (DHET);
o The wind turbine technician and PV
technician curriculum development is
still in process, but, in the case of wind, is
nearing completion;
o Discussions have begun on the
Figure 3: Instruments at CER at NMMU, jointly funded by
RECORD and GIZ, which record solar impact and performance development of a bio energy training
data in order to model best cases for South Africa. programme and curriculum;
o The 2015 project agreement contract
between SANEDI and CPUT/SARETEC is
in process. This will support three wind
technician student bursaries; and
o A further agreement which will channel
funds from GIZ and the Danish government
towards equipment transport, curriculum
development, training courses and
bursaries through RECORD, is expected
shortly.

Figure 4: Site of SARETEC building construction in January 2015.

SANEDI Annual Report 2014/15 25


Performance information by programme

Figure 5: Delivery of the Nordex donated nacelle at the SARETEC premises on 2 July 2014.

State of energy research study SAIREC 2015 Conference

The state of energy


research study, requested
by RECORD and funded
by GIZ, was launched on
21 May 2014. It focuses
on the state of energy
research in the country The South African International Renewable Energy
with respect to current Conference showcases renewable energy on a global
areas, related funding, scale and South Africa was honoured to win the bid to
needs and resources. host this years conference in Cape Town. It will take
place on 4-7 October 2015. RECORD serves on the
According to Professor Daya Reddy, president of the local organising committee, most subcommittees and
Academy of Science of South Africa: This report can on the international advisory committee.
be regarded as an important baseline assessment that
can inform future energy research investment in South W2E platform launch
Africa. Such an assessment should be conducted on a
regular basis to ensure that it is current and provides
information useful for decision-makers. Although
considerable effort has been expended in trying to
compile a comprehensive report, it must be recognised
that a status report of this nature is heavily dependent
on stakeholder participation to supply data. Hence it is
important to view this report as the first in a potential
series of such reports and an opportunity to place a
peg in the sand.

26 SANEDI Annual Report 2014/15


Performance information by programme

The Waste to Energy (W2E) research study was The award includes two categories of merit: up-
completed in November 2014 and provided an and-coming young researcher, and most promising
overview of current waste to energy research being research leading to commercial application. RECORD
carried out at South African universities, universities was pleased to present the RECORD RERE awards for
of technology and other research institutions. The 2014 on 14 August at the Maslow Hotel in Sandton.
research identifies common themes and priorities, RECORD/SANEDI is proud to acknowledge and reward
as well as possible gaps not being covered by current excellence in the renewable energy sector. The
energy research. This review was then used in the RECORD RERE young researcher award 2014 is Karel
establishment of a waste to energy research platform Malan PhD, a student at the University of Stellenbosch.
(W2EP) in December 2014, formed to look at priorities
in the research area that will be addressed to drive A commendation of excellence in this category was
W2E technologies from a research perspective. awarded to Molelekoa Mosesane, a PhD student at
the Tshwane University of Technology. The RECORD
RECORD RERE (Renewable Energy Research RERE commercial application award 2014 is EcoVest
Excellence) Award Holdings, which was represented by Christiaan
Taljaard.
This competition was again held in partnership with
the South African National Energy Association (SANEA).
These exciting awards recognise the contribution of
upcoming researchers and novel renewable energy
research in South Africa.

Figure 6: Winners of the RECORD RERE young researcher Figure 7: Winners of the RECORD RERE commercial
award 2014: (left to right) Dr Karen Surridge-Talbot, Mr application award 2014: (left to right) Dr Karen Surridge-
Molelekoa Mosesane, Dr Thembakazi Mali, Mr Karel Malan Talbot, Dr Thembakazi Mali, Mr Christiaan Taljaard and Ms
and Ms Marlett Balmer. Marlett Balmer.

SANEDI Annual Report 2014/15 27


Performance information by programme

The RECORD calendar competition create energy access and combat climate change,
often attracting private finance. REEEP monitors
and evaluates projects within their policy, financial
and commercial environments to gain insight into
opportunities and barriers. By continuously feeding
this knowledge back into the projects and programmes
portfolio, as well as the policy framework, REEEP seeks
to grow markets for clean energy.

REEEP has been advancing clean energy in southern


Africa since the first projects in the region were
launched in July 2005. Since then, REEEP, through its
regional and international secretariats, has supported
22 and 20 projects in South Africa and southern Africa
respectively, and helped shape the regions clean
energy progress over the decade.

Energy security is paramount in South Africa in order Knowledge is power


to accommodate a growing economy and sustainable
future. Due to the finite nature of fossil fuel reserves For any country seeking to become sustainable
and excellent renewable energy resources, South through the application of renewable energy and
Africa has forged ahead with tapping into this energy efficiency, one of the initial hurdles for the
environmentally friendly energy source of the future. development and application of sound policy and
The South African government launched the highly regulation is to have an accurate understanding of
acclaimed REIPPPP programme in 2011, which the opportunities and constraints involved. In order
was hailed as global success story. To celebrate the to assist in the overcoming of this hurdle, REEEP has
great achievements towards an environmentally driven the development of various financial models and
friendly future, RECORD/SANEDI and GIZ launched a risk mitigation strategies for projects such as energy
photography competition. The competition called on upgrades in low-income housing. REEEP continues
amateur and professional photographers to submit to play a critical role in knowledge management and
works interpreting the theme REnergy for a green information collection, dissemination and sharing in
future. the region.

The Renewal Energy and Energy Efficiency This function allows the region to use data as part of
Partnership (REEEP) energy development in policy formulation, research
and development, monitoring and evaluation, as well
SANEDI has hosted the regional secretariat of the as more practical implementation of renewable energy
Renewable Energy and Energy Efficiency Partnership and energy efficiency hardware. REEEP works closely
(REEEP) for Southern Africa since 2009. REEEP is an with the Southern African Development Community
international non-profit organisation that advances (SADC) energy thematic group, Southern Africa
markets for clean energy in developing countries, Power Pool (SAPP) and many other organisations
in which scale and replication is built by connecting and committees in supporting energy development
funding to projects, practice to knowledge and and initiatives and their progress in the sector. REEEP
knowledge to policy. REEEP uses donor funding to supports and promotes the engagement of industry,
support a portfolio of high potential ventures that civil society and all levels of government to transfer

28 SANEDI Annual Report 2014/15


Performance information by programme

knowledge of industry best practices and raise distributed energy markets. Focal areas in the region
awareness of the benefits of clean energy. By making currently include the food-energy-water nexus,
useable data and information, solid business models, quantifying the benefits of access to renewable energy
and numerous examples of success stories available, and clean energy in buildings. Each of these initiatives
REEEP has demonstrated that change in the energy has not only been a step in the right direction for the
sector is possible. environment, but also for job creation and poverty
alleviation.
Building a foundation
Focal area: Energy efficient buildings: 1 billion m2
Being able to pinpoint opportunities attracts further
investment and enables market growth for clean REEEP presented its initiative for positive energy
energy. REEEP-funded gold standard workshops buildings, 1 billion m2 at the May 2013 EE Global
have also helped market development and project conference. The effort, in collaboration with the
launches, with certification enabling the sale of carbon Global Buildings Performance Network (GBPN), strives
credits and offsetting key financial schemes for some to bring about the creation of 1 billion square meters
clean energy business models. REEEP has also worked of positive energy buildings buildings that produce
closely with municipal and provincial governments more energy than they consume by 2023.
to help move a legal framework forward to promote
large-scale rollout of solar water heaters and map out In 2013/14 the 1 billion m2 effort focused on South
the road to national legislation. Africa and China, two critical areas for urban-built
environment growth over the next decade. REEEP
Moving forward brought the initiative to South Africa, which faces
unique challenges in the buildings sector, primarily in
REEEP recognises the importance of building local low-income housing. In March, REEEP co-hosted the
capacity to ensure the sustainability and replication first of a series of high-level working groups on energy
of clean energy markets in southern Africa. REEEP efficiency in the housing sector together with SANEDI.
is currently involved in a number of focal areas and Over 30 delegates, from key international and local
projects, including one exploring community-driven hubs, including government representatives, scientists
energy service delivery, aiming to catalyse long-term and researchers, financiers and foundation leaders,
support from municipalities and investors and improve international organisations and the private sector,
local knowledge of the potential of sustainable among others, took part in the working group.

Figure 8: Energy Efficiency in the household sector: REEEP hosted its second EE workshop in Cape Town with a focus on how to
overcome financial and regulatory challenges in implementing EE across various household types.

SANEDI Annual Report 2014/15 29


Performance information by programme

SolarTurtle For their efforts the learners will earn a delivery fee. A
female entrepreneur will be approached and trained
SANEDI is a proud sponsor of the prototype SolarTurtle to operate the SolarTurtle. She will be responsible for
- a renewable energy micro-utility project for rural deploying the solar panels every morning, recharging
electrification. The SolarTurtle functions as an the batteries and managing sales of electricity and
electricity distribution point, neatly packaged in a theft energy efficient devices, amongst others.
resistant shipping container. The shipping container is
fitted with a solar battery charging station, which can The SolarTurtle has already received a lot of attention. In
charge multiple battery packs of different sizes during February 2014 the project was proclaimed as a climate
the day. Micro-grid capabilities are also possible for solver by the WWF1. Established by WWF Sweden in
surrounding businesses and institutes. This small 2008, the climate solver platform is an international
power station is assembled off-site then transported platform that displays the best technologies to reduce
to an off-grid community where it provides an easily carbon emissions and support energy access while
accessible source of electricity to the local community. creating awareness of the value of innovation as a tool
to tackle climate change.
The SolarTurtle prototype project started in July
2014 and the PV system installation was completed The SolarTurtle was also a finalist in the better living
in March 2015. A standard 6m container has been challenge (BLC) in October 2014. The BLC is a call to
converted into a functional solar powered micro-utility designers and innovators, manufacturers and retailers,
(Figure 1). The outside of the container boasts an array students and professionals, self-taught designers,
of twelve300Wp solar panels totalling 3.6kW (Figure tradesmen, architects and engineers to develop home
3). These panels are mounted on a unique panel improvement solutions that support a better quality of
deployment system that is both robust and secure. life for all. Over the course of two weeks hundreds of
The inside of the container holds a 5kW SMA solar people came to see the SolarTurtle and the response
PV system, and a solar battery charging station that was overwhelmingly positive. While the SolarTurtle
can recharge multiple battery packs at once (Figure did not win the overall prize, it was voted as one of the
4). These bottled battery packs are carried home to best projects by the public2. This is very encouraging
provide basic electricity for lighting, phone charging as it shows that the public finds the SolarTurtle both
and other energy efficient devices. The solar battery novel and useful and can make a difference to their
charging station has been tested and the system lives.
operates satisfactory.
In December 2014 the SolarTurtle was named a 110%
The next step is to deploy the SolarTurtle in rural green flagship by the Western Cape government3. A
communities in the Eastern Cape in the next few flagship is an organisation that has made more than
months. At full capacity, the SolarTurtle is expected the usual commitment towards the green economy.
to provide basic electricity for around 300 households The SolarTurtle is proud to be associated with this
plus one or two institutions. The idea is to find a school initiative.
in an off-grid community next to which the SolarTurtle
can be deployed. This would allow the school to feed
electricity directly from the SolarTurtle. Schools also
1 http://www.wwf.org.za/?10381/wwf-sa-awards-
make a natural distribution point. In the morning recognise-climate-innovations
learners can bring discharged batteries packs from 2 http://www.betterlivingchallenge.co.za/community-
public-vote-awards-go/
their area to school for recharging. After school the 3 https://www.westerncape.gov.za/110green/flagships/
recharged batteries can be returned home with them. list/Q%2CR%2CS%2CT

30 SANEDI Annual Report 2014/15


Performance information by programme

This year the SolarTurtle has been invited to the in communities take ownership of these solar
WWFs renewable energy festival hosted at Green franchise businesses to provide a fast and sustainable
Point Stadium on 28 March. The event aims to educate electrification solution. The technology can reduce
the public about the benefits of renewable energy, the use of kerosene, which is a primary energy source
the accessibility of alternative energy sources and in many rural communities, while increasing access
will also focus on offering solutions to South Africas to cheaper, cleaner, safer energy for longer periods.
unemployment, energy and climate crises. The event The first prototype has been built and will soon be
will serve as the unveiling of the completed SolarTurtle deployed in a rural community as a proof of concept.
before it heads to the rural Eastern Cape. Once this prototype has been tested it is expected that
many more of these SolarTurtles will be dotting the
In short, the SolarTurtle is a social business linked to rural landscape of South-Africa, thereby giving power
a renewable energy micro-franchise model. Women to the people.

Figure 9: SolarTurtle with its solar


panels folded away for extra security
and easy transport.

Figure 10: Two large side-frames


unlock and unfold to reveal the solar
panels hidden behind.

Figure 11: Once the two side frames


are open gas struts lift all the panels
up and lock into place.

SANEDI Annual Report 2014/15 31


Performance information by programme

Figure 12: Inside the container is a solar battery charging Figure 13: Unveiling of the SolarTurtle at the WWF Renewable
station that can recharge multiple Khaya Power4 bottled Energy Festival on 28 March 2015.
battery packs.

Smart Grids programme

Background

It is undeniable that South Africas economy is coal with a market failure in securing an adequate supply
intensive. The distribution of electricity is represented of electricity. The financial implications are that the
by a market disequilibrium which is constituted by a costs outweigh the benefits based on the analysis of
high demand-side coupled with a constricted supply economic values.
in power generation. South Africa remains one of the
leading contributor to CO2 emissions. As such, in order Strategic initiatives and technological advancements
to achieve a low carbon future, economic strategic are needed to modernise the electrical system by
planning needs to critically assess environmental urgently addressing the viability of an electrical utility
impacts along with sustainability in terms of the long- in the following ways:
term use of coal.
Revenue management;
In the South African context, infrastructure is the Non-technical and technical losses;
central nerve and a high level priority in ensuring a Effective resource deployment;
secure and stable supply of electricity. However, the Supply quality, availability and reliability; and
ineffectual support of asset management is adversely Customer base and promotion of customer choice.
conditioned by two symptomatic challenges:
The International Energy Agency (IEA) states that by
The acquisition of adequate investment; and 2030 energy demands will have increased by 45%. This
The consistent maintenance of infrastructure and means an even greater dependency for developing
valuable assets. countries such as South Africa, where the adequate
and stable supply of electricity is a national crisis. A
To this end, aging power plants are pushed beyond sustainable energy supply is a critical component in
their capacity to support a rapidly evolving economy, economic growth and development. The development
an increasing population and changing consumer of clean energy strategies and technological
needs. Due to imperfect market conditions, state- advancements are needed to change the status quo
owned entity Eskom is faced with a situation of dealing in the quality of power, the security and efficiency of
energy and minimum cost to maximum benefit output.
4 www.khayapower.co.za

32 SANEDI Annual Report 2014/15


Performance information by programme

Understanding the smart in smart grids The shift towards implementing a smart grid strategy in
South Africa is intended to fast track the development
The effective deployment of technology in the of an adequate electricity supply system or network
electricity supply industry (ESI) is recognised worldwide for two basic reasons, namely the improvement and
as a key business enabler. The implementation of upgrade of the business as usual (BUA) grid, and
appropriate technology contributes, amongst others, the outcome of substantial benefits that come with
to improved customer service, improved business establishing a smart grid. For much that has been
efficiency and improved business sustainability. The gathered, the value application of a smart grid has
desirability of a smart grid project is steadily gaining benefits in the following key areas:
attention in South Africa. As a result, the attractiveness
of this technology is attracting much interest in respect Efficiency: By reducing the cost and improving
of the benefits it produces. Smart grid is an essential the manner in which electricity is produced,
transformative network that facilitates the efficiency distributed and consumed, greater efficiency will
of energy and integration of renewable energy to meet result.
the energy demand of various consumers. Economics: Electricity is an essential commodity
for the economy. Smart grids render their
What is a smart grid? deliverables on a broader scale of benefits.
In comparison with the BUA grid, consumers
The definition articulated by the European Technology will benefit from prices being kept down, jobs
Platform Smart Grid (ETPSG) has been incorporated being created, and positive returns on the gross
into the South African Smart Gird Initiative (SASGI) domestic product (GDP).
documentation framework for smart grids. They define Reliability: By lessening the occurrence of
a smart grid as follows: power cuts and the disadvantage of widespread
load shedding, the electricity supply will be
A smart grid is an electricity network that can more reliable. Smart grids will also contribute
intelligently integrate the actions of all users connected towards minimising the costs of interruption and
to it - generators, consumers and those that do both disturbances to the quality of power.
in order to efficiently deliver sustainable, economic and Security: Greater security will be possible
secure supplies. through reducing risks caused, for example, by
theft or negligence.
Based on the ETPSG definition, smart grid employs Environmental: Integrating renewable energy
innovative products and services together with into the grid will significantly improve the
intelligent monitoring, control, communication, and generation, transmission and consumption of
self-healing technologies to: electricity which will also constitute a reduction
in CO2 emissions in comparison to the BUA grid.
Better facilitate and manage the connection and Safety: There will be a reduction of injuries and
operation of all sources of energy; fatalities related to the grid.
Give consumers more choice so they can optimise
energy use; Shaping the face of smart grids in South Africa
Provide consumers with greater information and
choice of supply; SANEDIs Smart Grid programme aligns with the
Significantly reduce the environmental impact of strategic objectives of the Department of Energy
the whole electricity supply system; and (Electricity Chief Directorate) and is focused on the
Deliver enhanced levels of reliability and security introduction of the various concepts of smart grids
of supply. in the South African electricity distribution industry

SANEDI Annual Report 2014/15 33


Performance information by programme

(EDI). A business plan was developed for rolling out intelligence. Consideration is also given to the design
this programme, which builds into the DoEs policy and implementation of smart grid demonstration
development in the following areas: pilots and evaluation of results and lessons learnt.

Distributed generation; Work groups are also co-opted intermittently and


Municipality revenue enhancement; subject matter experts are called on as and when
Energy efficiency demand side management; and the need arises. SASGI also evaluates and makes
Asset management. recommendations for adopting grid modernisation
and intelligence, thereby promoting smart grids. It
SANEDIs Smart Grid team leading the South African may have a role to play in engaging organised labour,
Smart Grids Initiative depending on the need and discussion issues at hand.

Industry and stakeholder cooperation is regarded It plays a role in the assessment of smart grid
as holding the key to the effective deployment of developments which are unfolding in the South African
technology. To this end, the South African Smart Grid electricity supply industry (ESI), focussing especially
Initiative (SASGI) was established in 2012. SASGI is on technology deployment, setting of standards
an industry forum established under the guidance of and specifications, and identifying local smart grid
SANEDI and chaired by the Department of Energy. The enablers.
main objectives of SASGI are to facilitate cooperation,
to contribute to policy formulation, to provide The South African smart grid vision statement is as
guidance in the establishment of standards, to identify follows;
technology functionality, and to provide leadership in
the deployment of appropriate technology. An economically evolved, technology enabled,
electricity system that is intelligent, interactive,
The following are the achievements of SASGI to date: flexible and efficient and will enable South Africas
energy use to be sustainable for future generations.
Smart grids vision for South Africa (vision
Governance structure
document);
Workgroups that provide technical support to the
The governance structure of SASGI is illustrated in
Smart Grids team;
the figure below. SASGI has three focus areas: policy
Highly technically-competent members serving as
formulation, technology and standards formulation,
subject matter experts; and
and applied research.
Easy access to local case studies.

The three focus areas are supported by higher learning


SASGIs role comprises a number of activities which
institutions, research and development institutions,
include coordinating and facilitating the smart
subject matter experts, solution architects, engineering
grid vision for South Africa. It also coordinates and
bodies, product developers, consultants and electricity
integrates issues relating to smart grids which emerge
retailers.
within the electricity supply industry. It plays a role
in respect of evaluating options pertaining to grid

34 SANEDI Annual Report 2014/15


Performance information by programme

Figure 14: SASGI Governance Structure.

South Africans membership of the International ISGAN is organised as the IIEA implementing
Smart Grid Action Network (ISGAN) agreement for cooperative programme on smart grids.
The institution is managed by its executive committee
South Africa, represented by SANEDI, has been (exco). It is supported by a secretariat which is based at
accepted as a full member of the International the Korea Smart Grid Institute.
Smart Grid Action Network (ISGAN). As a member
of ISGAN, the aim is to promote the requirements The ISGAN community includes representatives of
of South Africa and to leverage the international governments, transmission and distribution system
experience to the benefit of the local ESI. Through operators, national laboratories and research
the SANEDI interventions and SASGI guidance the ESI, institutions, power generators and more. Projects are
and in particular the distribution sector, was able to largely task shared through participation of in-kind
embark, amongst others, on a technology investment contributions, although it does have a common fund
optimisation approach. for certain joint expenses at its secretariat.

In April 2011, ISGAN was formally established as The role of ISGAN


the IEA implementing agreement for a cooperative
programme on smart grids (ISGAN), operating under ISGAN is a mechanism for bringing high level
the IEA framework for internationalenergytechnology government attention and action to accelerate the
co-operation. Participation in ISGAN is voluntary, and development and deployment of smarter electricity
currently includes Australia, Austria, Belgium, Canada, grids around the world and is responsible for the
China, Denmark, the European Commission, Finland, following:
France, Germany, India, Ireland, Italy, Japan, Korea,
Mexico, Norway, the Netherlands, Russia, Singapore, Sponsoring activities which build a global
Spain, South Africa, Sweden, Switzerland, and the understanding of smart grids, address gaps in
United States (25 countries). knowledge and tools, and accelerate smart grid
deployment;

SANEDI Annual Report 2014/15 35


Performance information by programme

Building on the momentum of and knowledge ISGAN recognises that robust, reliable, and
created by the substantial global investments smart electric grids play a key role in enabling
being made in smart grids; greenhouse gas (GHG) emission reductions
Fulfilling a key recommendation in the smart grid through the management of electricity demand,
technology action plan released by the major integration of growing supplies of both utility-
economies forum global partnership in 2009; and scale and distributed, small-scale renewable
Leveraging cooperation with other initiatives and energy systems, accommodation of an increasing
implementing agreements. number of electric and plug-in hybrid electric
vehicles, improvement of operational efficiency,
ISGAN is organised as a task shared IEA Implementing and application of energy efficient technologies to
Agreement (2011) and was launched as an initiative of their full potential.
the clean energy ministerial in 2010.
Our projects
ISGAN objectives
European Donor Funded Smart Grids Programme
These objectives and the associated scope of activities
are described in the ISGAN Annex 1 programme of The European Union (EU) made available a seed funding
work, issue 3.1 (revised August 2012). of R179.4 million to National Treasury over a two-
year period which was intended to accelerate South
ISGAN facilitates dynamic knowledge sharing, Africas journey toward achieving a smarter grid. This
technical assistance, and project coordination, programme was formally initiated in September 2014
where appropriate; with the revised end date being June 2016. It involves
ISGAN participants report periodically on progress two phases which run in parallel: first, the Smart Grid
and projects to the ministers of the clean energy Maturity Model (SGMM) survey and second, the Smart
ministerial, in addition to satisfying all IEA Grid demonstration pilot.
implementing agreement reporting requirements;
Consistent with the IEA framework for The Department of Energy has identified four areas
international energy technology cooperation, within the EDI that require policy and regulatory input.
ISGAN is open to governments of IEA member as These four areas have resulted in the selection of nine
well as non-member countries, on invitation of the municipalities to participate in projects that are aimed
ISGAN executive committee; at addressing issues within the municipality and to
Though the primary focus is on government-to- provide policy and regulatory input.
government cooperation, ISGAN is also open to
entities designated by participating governments, The Electricity Chief Directorate and the Smart Grids
and select private sector and industry associations team strategically want the projects to not only provide
and international organisations; input to national policy and regulation for the industry
To work as efficiently as possible, ISGAN will strive but to develop a guide on how to deploy various smart
to establish collaboration strong cooperative ties grid technologies, business case and lessons learned
with existing smart grid organisations; reports.

36 SANEDI Annual Report 2014/15


Performance information by programme

The table below illustrate the priority areas, projects and participating municipalities:

DoE Priorities Smart grid projects Participating municipalities


Distributed Generation Active Network Management eThekwini

Monitoring and Evaluation of IPPs DoE implemented

Revenue enhancement Revenue enhancement Nala


Naledi
Govan Mbeki
Thabazimbi
Mogale City
Advanced metering infrastructure in City Power
residential and commercial customer base
Asset management Advanced Asset Management Msunduzi
Nelson Mandela Bay
Energy Efficiency Demand Side Energy efficiency in Public buildings DoE Implemented
Management
Table 1: Priorities, projects and municipalities

The Smart Grid Maturity Model Assessment is the An SEI certified navigator is assigned to assess the
second part of the project done in parallel with the smart grid maturity and required framework needed
demonstration projects. It is done to assess the to improve the status of the utility. The SGMM
electricity network and organisational status of a utility. methodology provided below in figure 1 illustrates the
This complements the demonstration projects as it seven steps which are required to achieve a smart grid
addresses root cause issues and provides a strategic journey.
direction for the municipality in the long term.
The smart grid journey comprises a number of
Smart Grid Maturity Model (SGMM) Assessment successive implementation steps:

SGMM methodology Formulating a smart grid vision which sets the


course for the smart grid journey;
The Smart Grid Maturity Model (SGMM) was developed Conducting an as is analysis to determine the
by a collective of electricity distributors (utilities) and is utilitys current organisational and electricity
maintained by Carnegie Mellon Software Engineering network status;
Institute (SEI). The model provides a management tool Performing a gap analysis to assess what
using a common language and framework for defining corrective measures need to be taken to improve
key elements of smart grid transformation, and helps the utilitys smart grid maturity status;
utilities to apply a programmatic approach in tracking Developing a smart grid strategy and roadmap
progress during the smart grid journey. The model also with key stakeholders in the utility who hold
enables utilities to plan, prioritise options and measure various responsibilities in the electricity
progress during implementation. distribution network value chain;

SANEDI Annual Report 2014/15 37


Performance information by programme

Preparing a business case and value proposition


to implement the strategy and roadmap;
Mapping out the required functionalities to
support the vision and strategy roll out; and
Formulating implementation guidelines which
ensure the successful smart grid journey.

The entire SGMM methodology is mapped out below in figure 14.

Figure 15: Smart Grid Road Map (diagram from SEI).

The SGMM survey comprises the following: Sections 5-12 present multiple choice questions
organised by SGMM domain that address each
Sections 1 and 2 capture contact information for expected characteristic in the model.
the responding utility and the person completing
the survey; The survey evaluates each utility in a two by two
Section 3 collects key data about the responding matrix format, comprising eight domains along the
organisation and will be used to normalise survey X axis (as illustrated in Figure 15), and five maturity
data and help to generate meaningful comparative levels along the Y axis (as shown in Figure 15). There
data for users; are over 175 questions in the SGMM survey, each
Section 4 collects grid performance data that is grouped under different domains and measured along
used to correlate the impact of increasing smart the five maturity levels. Some questions are repeated
grid maturity with overall grid performance; and in different domains in order to test the robustness of
previous questions appraised.

38 SANEDI Annual Report 2014/15


Performance information by programme

Figure 16: SGMM domains (diagram from SEI).

Figure 17: Maturity Levels (diagram from SEI).

SANEDI Annual Report 2014/15 39


Performance information by programme

Projects in detail

All projects within the EU Donor funded Smart Grid each of the seven phases, funding is broken down into
programme have the following in common: they have percentages to ensure that the allocated funds are
been divided into seven phases, with approval of optimally used by the municipalities.
deliverables that close out each phase. In completing

Implementation Deliverables Detail


1. Initiation phase Annexure A High-level scope of wor
2. Analysis phase Annexure B Detailed scope of work, design and baseline assessment
3. Design phase
4. Procurement phase Procurement report
Details of all procurement of goods and services carried
out by municipality
5. Implementation phase Implementation report Service level agreements, change control measures and
certificate of completion are documented
6. Integration phase Integration report Change management strategy, capacity development
and skill transfer programme are documented
7. Policy Business case Business cases and how to guides for all four priority
recommendations and How to guide areas are developed. A project close-out report closes
lessons learned Project close-out individual projects.
report

Table 2: Table of project phases and deliverables

Active Network Management Project (one various business units in the electricity department
municipality) to this vision. There are seven phases in this project
and Ethekwini is presently is the third phase (project
The Active Network Management of small scale design).
embedded generation onto the distribution grid and
the implementation of an Advanced Distribution Advanced metering infrastructure in residential
Management System (ADMS). and commercial customer base project (one
municipality)
Ethekwini is tasked with this project, as they have
relatively a good control of their grid. The objective of The advanced metering infrastructure (AMI) in
this project is to document the systems and process residential and commercial customer base project
required by utilities to manage small scale embedded focuses on piloting the systems and processes to:
generators within their grid. Ethekwini has already
identified that there is a growing number of residential Dispense free basic electricity (FBE) to 1000
customers and small businesses that have started indigent customers;
putting up PV roof top panels. Ethekweni completed Implement inclining block tariff (IBT) with the
a full SGMM survey in 2014 and have gone through selected indigent customers;
the entire methodology. They have a draft smart Implement a time of use (TOU) tariff in both
grid vision document and are presently realigning customer bases.

40 SANEDI Annual Report 2014/15


Performance information by programme

City Power, on behalf of the City of Johannesburg, is maintenance and refurbishment of critical assets.
the participating utility. The objectives of this project Workforce management is also automated with a
are far reaching. We have indigent customers within better control of the municipal grid.
the boundaries of every municipality, and it is thus
very important that free basic electricity is provided to Nelson Mandala Bay has concluded the SGMM
them through an efficient and reliable system. In order assessment and has also concluded three phases of
for NERSA to provide for cross-subsidies for low income the demonstration project. The municipality is in the
domestic customers as required by the electricity fourth phase of the programme.
pricing policy (EPP1) the IBT has been introduced.
Revenue enhancement project (five municipalities)
The initiation of the TOU tariff is a very important
element of the use and pricing of electricity in South The revenue enhancement projects are focused
African municipalities. Customers are charged different on using advanced metering infrastructure/smart
prices according to when the electricity is used. The grids concepts to address revenue challenges in
TOU tariff will significantly reduce the demand for municipalities.
electricity in peak periods. The Smart Grids team
intends to document the benefits and savings of this Municipalities have immense problems when it comes
approach, and ultimately make it available to every to revenue collection. They lack proper management
municipality in South Africa. processes and technical capabilities to effectively
manage the distribution of electricity. In order to
City Power has completed the SGMM assessment, and address the technical part, an advanced metering
is presently in the project design phase. infrastructure is required. The Smart Grids team plays
the role of introducing new management processes to
Advanced asset management project (two the municipalities and the supervision of every detail
municipalities) of the project implementation phase.

The advanced asset management (AAM) project The objectives of this project are to give municipalities
originates from the DoEs Electricity Chief Directorate, the technical ability to manage their customer bases
and is intended to address the maintenance and effectively, thereby reducing technical and non-
refurbishment backlogs in the distribution grid of technical losses. As a result, revenue collection will be
municipalities. The smart grids concept addresses improved and remain sustainable over time.
maintenance and refurbishment in a very advanced
way. Sensors and intelligent devices are installed Five municipalities are participating and currently
across assets such as transformers, substation, circuit concluding the project design phase.
breakers and more. These field devices generate data
that is integrated into a back-office for data analytics. Conclusion
Management and technical staffs can take informed
decisions based on what the data analytics provide. Ultimately, there are four deliverables to be achieved
by the implementation of the EU donor funded Smart
The scope of the AAM project at Nelson Mandela Grids programme. These deliverables become the
Bay is to focus on critical grid assets. The sensors basis and foundation on which future projects in this
and intelligent devices are used to monitor, analyse space are determined.
and report. These reports then inform scheduling of

SANEDI Annual Report 2014/15 41


Performance information by programme

The four deliverables are: International Smart Grid Action Network (ISGAN), and
the Global Smart Grid Federation (GSGF). This two-day
Policy and regulatory recommendations global forum focused on two goals:
derived from the projects. The intent of
initiating smart grids projects through the To share international experience and lessons
participating municipalities is to present a in sustainable PV integration with South African
policy recommendation that is applicable and stakeholders; and
appropriate to South African conditions; To facilitate an exchange of stakeholder
How to guides on the various types of Smart viewpoints regarding the technical, regulatory
Grids components deployed. The essence of the and institutional implications of solar PV for South
how to guide is to have a standardised blueprint African consumers, developers, utilities, and
that provides a step-by-step approach to what others.
a smart grid is and how to implement it. The
purpose of this guide is to facilitate the successful Over 200 delegates attended the forum and the
implementation of smart grids projects; programme comprised the key themes:
Business cases outlining the benefit against cost.
The development of business cases will provide Setting the scene;
a detailed outline of the viability of initiating a Regulatory and utility business model frameworks
smart grids project. Business cases will provide for solar photovoltaics;
a comprehensive account of the cost-benefit International perspective; and
analysis of implementing a smart grids project. Experiences in integrating rooftop photovoltaics
The effectiveness of this document is to inform on distribution networks with active distribution
decision makers in their course of action; and network management.
Lessons learned from projects and shared
with industry. The knowledge base is an Setting the Scene
important factor of the success of the smart
grids programme as such lessons will equip all Mr Kadri Nassiep (CEO of SANEDI) provided an
stakeholders to make informed decisions based overview of the programme for the global forum on
on the outcomes of their reports and what past unleashing rooftop photovoltaics in South Africa.
experiences have taught them.
Regulatory and utility business model frameworks for
Continuous efforts of the Smart Grids programme solar photovoltaics

Rooftop photovoltaic workshop The regulatory framework is the central set of


guidelines governing small scale renewable electricity
On 23-24 March 2015, a two-day global forum on the generation (SSREG) interconnection spanning all
outlook of distributed solar power in South Africa was financial, procedural and technical aspects of the
hosted at the Eskom Academy of Learning in Midrand, programme to facilitate controlled and standardised
Johannesburg. The forum was co-hosted by the deployment of distributed renewable generation.
Department of Energy (DoE), South African National Guided by the SSREG regulatory framework, utility
Energy Development Institute (SANEDI), National business models must begin shifting to maintain long-
Energy Regulator of South Africa (NERSA), Eskom Clean term financial viability. This session focused on topics
Energy Regulators Initiative, 21st Power Partnership, at the nexus of regulatory and business models for

42 SANEDI Annual Report 2014/15


Performance information by programme

distributed generation, and how approaches must The transition to ADNM, and in particular ADNM to
evolve to capture SSREG opportunities while mitigating support rooftop PV (RTPV) integration, entails a host
potential adverse impacts. of technical, institutional, policy and regulatory shifts
across the power sector, requiring holistic approaches
International perspective and governing frameworks that bridge the areas of
power engineering, information and communications
A diverse range of international experiences were technology, utility business practices, electricity
presented, eg Spain (feed in tariff (FIT)), Germany (FIT), consumer engagement, and more.
Thailand (FIT Adder), the United States of America
(full retail rate net energy metering (NEM) and shift Global forum wrap-up
toward unbundling), Cape Town City Electricity (rate
unbundling and avoided cost), Tamil Nadu (NEM), Some of the more pressing challenges include the
Australia (NFIT at higher-than-retail-rate). Lessons significant infrastructure investment backlogs which is
learned will be synthesised and key regulatory in the order of R35billion and growing. The impending
principles for SSREG tariff design were enumerated. significant tariff increases in the country will have
a huge impact on consumers. Efforts to place the
Experiences in integrating rooftop photovoltaics customer at the centre remain a serious challenge.
on distribution networks with active distribution
network management As a way forward, we must learn from both international
and local experiences shared on various platforms
Active distribution network management (ADNM) that South Africa is party to. Grid modernisation is a
brings together a range of advanced energy, journey and not a once off event. South Africa must not
communications and control technologies to allow reinvent the wheel but must take advantage of ongoing
more efficient, dynamic operation of electricity collaboration and relationships with institutions such
distribution grids, thereby providing a foundation for as ISGAN, GSGF, and SASGI among others. We must
increasing amounts of distribution generation to be constantly seek to align strategically to established
effectively integrated into power systems. bodies like DoE, SANEDI, SABS, CSIR, NERSA and Eskom
to vigorously drive the technology journey.

SANEDI Annual Report 2014/15 43


Performance information by programme

Research to investigate the sustainability of


decentralised renewable energy systems in South
Africa

The concept of the sustainability of minigrids as an


option for the electricity service delivery in remote
and rural communities in South Africa has not yet
been thoroughly investigated. To this end, SANEDI,
in partnership with the national Department of
Environmental Affairs (DEA) and the Department of
International Development (DFID) through CARDNO
Emerging Markets has initiated a study to determine
challenges impeding the implementation of minigrids
in South Africa. The study will be completed in
the next financial year and will provide proposed
implementation strategies for the implementation of
minigrids in South Africa.

Applied research in rural energy provision

Due to its novelty, most of WfEs projects are at


extensive demonstration stage in terms of clean
energy options, with special emphasis on relevance
energy access, social acceptability, and assessing their
Working for Energy Programme socio-economic impacts on targeted beneficiaries
and communities. The sustainability of the projects
The Working for Energy (WfE) Programme is a has emerged as an area needing attention and the
multi-year renewable energy programme under the number of project increase and need operation and
environment and culture sector of the Expanded Public maintenance capabilities on the ground.
Works Programme (EPWP). It is aimed at delivering
clean energy solutions to rural and urban low income The full roll out will ensue only after the offerings
communities through labour intensive methods where have been refined and the cost benefits are fully
possible, with special emphasis on youth, women and understood. This stage will be followed by sustainable
people with disabilities. fiscus funding for the WfE as part of governments
service delivery interventions to communities on the
WfE is in its sixth year and has gained traction with fringes of service delivery programmes of government.
the roll out of its project pipeline in KwaZulu-Natal,
Limpopo, Gauteng, Eastern Cape and the Northern WfE and EPWP
Cape and the North West. The programme has four
components, namely, Energy Research, Renewable WfE has been fully integrated into the EPWP, where
Energy, Energy Saving and Community Outreach. applicable, and all new and current projects are
subjected to the EPWP protocols, in terms of job
creation, skills development and energy services
delivery.

44 SANEDI Annual Report 2014/15


Performance information by programme

Bio-Energy cluster projects Phase 2 of the Melani project, in partnership with the
University of Fort Hare, commenced in the current year
ILembe biogas project with the signing of the implementation agreement and
the commencement of the stakeholder engagement.
The Ndwedwe rural energy project in the iLembe About 100 households and early childhood
district municipality has been completed, with the development centres under the National Development
implementation of 26 biogas digesters, solar panels Agency (NDA) will benefit from implementation of this
and rain water harvesting tanks in some water deprived project.
families.
Mpfuneko biogas project
Melani and Fort Cox biogas project
Over 30 of 55 biogas digesters were completed during
Phase 1 of the Melani and Fort Cox Agricultural College the reporting period with an additional 15 at various
projects have been completed. stages of completion. The balance will be completed
and commissioned in the next financial year.

Figure 18: Completed biogas digester in Mpfuneko Village, in


Greater Giyani District Municipality in Limpopo.

Figure 19: Melani Village biogas project

SANEDI Annual Report 2014/15 45


Performance information by programme

Lucingweni renewable energy legacy project Greening of Tygerkloof combined school

An MOA between SANEDI and the Nelson Mandela An MOA between SANEDI and the Tygerkloof
Metropolitan University has been concluded for the combined school regarding the greening of the school
establishment of a renewable energy centre on its in the Dr Ruth Mompati district municipality has been
campus using some of the renewable energy assets concluded. Project implementation will commence in
reclaimed from the Lucingweni minigrid project the next financial year.
under the Renewable Energy Centre of Research and
Development (RECORD). Greening of Gauteng schools

Greening of Tsireleco high school in Kimberley Through the partnership with the Gauteng
Department of Infrastructure Development, four
An MOA between SANEDI and the Tsireleco high school schools (Emmanuel, Lehlasedi, Seliba and Kgomoco
regarding the completion of the greening of the school Primary Schools) in Sharpeville have been identified
in the Sol Plaatjie Municipality has been concluded. for greening using clean energy interventions. These
Project implementation will commence in the next include cool surfacing, biogas, efficient lighting and
financial year. The efficient lighting and water heating solar water heating. All procurement matters have
projects have been concluded. The anaerobic digester been concluded and the implementation will ensue in
will be installed in the next financial year. the next financial year.

Greening of Thusanang early childhood development


centre (ECDC)

An MOA between SANEDI and the Thusanang ECDC


regarding the greening of the ECDC in Tshwane
metropolitan municipality has been concluded. Project
implementation will commence in the next financial
year.

Figure 20: Identified Emmanuel, Lehlasedi, Seliba and


Kgomoco Primary Schools in Sharpeville.

Figure 21: Thusanang Day Care Centre in Hammanskraal,


Gauteng.

46 SANEDI Annual Report 2014/15


Performance information by programme

EPWP reporting Future project pipeline

SANEDI continues to seek partnerships to leverage

Training Days
Beneficiaries

Total No. of
Equivalents
Workdays
resources from other relevant stakeholders that have

Full Time
Total No.

Total No. similar socio-developmental mandates in framing new


of

of initiatives for the future. During this financial year,


SANEDI has been approved to implement waste to
82 140 6 109 energy projects with the Natural Resource Management
branch of the Department of Environmental Affairs.
While the working days derived during the These projects, which will focus on using waste from
construction of the projects seem small relative to the value added industries to various forms of energy,
the capital investments, the real sustainable jobs will will be implemented over the next MTRF.
be created during the operation and maintenance of
these interventions. Identified beneficiaries will need
extensive training to enable them to undertake the
functions.

Figure 22: Woody waste emanating from the


value adding industry which can be used for
various energy forms in Heidelberg.

Figure 23: Waste produce farm which can be used for bioenergy from the Bana Ba Kwale
agricultural farm, in partnership with the national Development Agency in the North West.

SANEDI Annual Report 2014/15 47


Performance information by programme

Data and knowledge management To collaborate with international bodies regarding


research on energy data, energy modelling,
Centre for Energy Systems Analysis and Research planning and policy development;
(CESAR) To develop the necessary skills and resources to
support the following:
A Department of Science and Technology (DST) funded o Energy modelling
programme o Planning
o Analysis
Background o Energy technology innovation; and
To contribute towards the development of a
The Centre for Energy Systems Analysis and Research centralised energy planning database which is
(CESAR) was established in May 2009 with the stated up to date and can support the requirements of
aim of being the authority in the field of energy data multiple government institutions (national and
for the purpose of modelling and planning. CESAR local).
is one of the centres that previously resided with
SANERI, but is incorporated under the South African Energy Research Centre (ERC), University of Cape Town
National Energy Development Institute (SANEDI). The (UCT) collaboration
CESAR programme managed by SANEDI has remained
a Department of Science and Technology (DST) funded Historical (2009 2012)
programme following the restructuring,
The CESAR programme within SANEDI contracted ERC
The CESAR programme was initiated to provide to undertake research during the period 2009 to 2012.
a mechanism for energy modelling and planning The study produced two data-rich working papers
to support the alignment of national and local which were extensively referenced in the transport
government energy objectives. The aim is to develop sections of two major national government reports,
an energy data repository and technical capacity to the 2012 IEP and the 2013 mitigation potential study.
support national and local energy planning and policy. The study input data, assumptions, methodologies
In addition, CESAR aims to provide an energy platform and results were disseminated in presentations to the
where national and local decision makers are assisted South African National Energy Association (SANEA),
in energy planning and to meet the objectives of the the 16th annual IUAPPA world clean air conference and
integrated energy plan (IEP) and national climate to students and staff of the University of Stellenboschs
change response strategy. mechanical engineering faculty as a research lecture.
The second working paper was accepted for the 2013
Objectives international energy workshop in Paris.

To develop technical know-how, knowledge, and The aim of this project was to perform a comprehensive
human capacity in energy modelling and planning; analysis of regional transport demand in South
To collect and maintain an open central database Africa in the medium- to long-term under different
of energy research and related data; scenario assumptions and in addition, considering
To research and develop suitable models for the what the resulting demand for liquid fuels would be
South African energy system; and the associated projected CO2 emissions. The
To provide research support and advice on project focused on the development of a number
government initiatives regarding energy data of models which, when combined, can be used to
collection, energy modelling and planning; develop scenarios around the likely future energy and

48 SANEDI Annual Report 2014/15


Performance information by programme

infrastructure requirements of the transport sector the PHDs has joined the university as a lecturer;
and its major influences in terms of both energy and An open database for energy research data was
emissions. The future energy demand of the transport implemented with data providers Statistics South
sector was calculated in terms of services performed Africa, DoE and NERSA. This initiative is sponsored
(useful energy) as well as the amount of energy by SANEDI, DST and UCT. New user registrations
supplied (final energy). This allows analysis of the are managed by SANEDI and the ERC;
substitution between alternative energy forms and Data-rich working papers and five models were
modes as well as an appraisal of the evolution of the developed in the study: a vehicle parc model (in
technological improvements in vehicles. A number Analytica); a time budget model (spreadsheet);
of modelling techniques were combined to provide a computable general equilibrium model (in
a novel and rigorous methodology for estimating GAMS, used to project income growth and GDP
the current and future vehicle parc as well as the growth in a consistent manner); a freight demand
associated energy demand. In the end five models model (spreadsheet); and a fuel demand model
were developed for this study: (spreadsheet). Data with which to populate
transport sector models is sparse in South Africa,
A vehicle parc model; and a broad range of input assumptions were
A time budget model; discussed in detail;
A computable general equilibrium model; Modelling of regional liquid fuels demand in the
A freight demand model; and transport sector study was completed as a direct
A fuel demand model. input into the IEP process for the transport sector
and the 2013 mitigation potential study;
A detailed report consisting of an executive summary, Provision of research support and advice on
two papers and a report on two stakeholder workshops government initiatives regarding energy data
that were held during the course of the project were collection, energy modelling and planning; and
completed as deliverables. The papers are stand- Support for the DoE and international bodies
alone data-rich documents currently part of the ERC regarding research on energy data, energy
working paper series. The first paper focused on the modelling, planning and policy development.
characterisation of the current vehicle parc of South
Africa by province. The second paper focused on Current (2014 2017)
the projection of the future demand under different
scenario assumptions. The complete data set required In order to meet the mandate of CESAR, a collaboration
to replicate the results of the model are provided in agreement between the ERC, University of Cape Town
spreadsheet format. and SANEDI was concluded in 2014 for the period
2014-2017. The collaboration agreement specifies that
Summary of outputs the ERC will capacitate and train SANEDI-appointed
energy modellers with relevant technology skills and
The international energy workshop (IEW) 2012 knowledge. The long-term vision for the DST is to
held in Cape Town had over 180, 40 of which were develop a fully functioning energy modelling group at
South African participants and over 94 papers CESAR within SANEDI.
were presented, of which 10 were from South
Africa; Transport study phase 2
The ERC programme produced five masters in
2009 and eight masters in 20102011; The transport phase 2 study follows up on the previous
The UP programme produced two PhDs. One of study to build on the foundation that was developed,

SANEDI Annual Report 2014/15 49


Performance information by programme

refine areas that had gaps and focus on a new set of Calibrated model for each of the industrial sectors
aspects that were not covered under the transport in TIMES;
study phase 1. The main question is how to meet the Validated data stored in a database;
energy needs of the transport sector in the future Economic model which can project future
considering the uncertainty in future fuel prices production for key industrial sectors;
and technology costs compared to performance. Light industry study;
Continuing from the previous study an update of the Calibrated model for each of the sectors in TIMES;
current vehicle parc model with key assumptions Validated data stored in a database; and
as user inputs will be published on ERC and SANEDI Economic model which can project future
websites. All datasets will be in compatible form so production for key sectors.
that it can be integrated for IEP purposes or other
public databases (Open Energy Database, Data First, Conclusion
UCT). This will include technology assumptions for
the vehicle parc and future technologies as well as The energy sector is facing serious challenges, such as
more detail in the road freight and rail categories. A climate mitigation, universal access to energy, energy
transport sector link between CGE model and energy security and energy efficiency. These challenges and
system model in SATMGE will also be included. uncertainties in turn threaten the economy, investment
decisions, investor confidence, economic development
The following are potential working papers to be and environmental commitments, amongst others
considered during the period of the study:
The DSTs interest in energy related data and modelling
Update of base year assumptions; relates to the prioritisation of the direction for research
Methodology for projections; and and technology development, the multitudes of science
Transition scenarios, shocks and their implications. and technology related development opportunities
that could potentially stem from the energy sector and
Future projects the enormous opportunity for technology and science
skills incubation within priority focus areas.
Together with CESAR (SANEDI), DoE and ERC (UCT) the
following projects are under consideration: The DST funded programme CESAR aims to provide
this mechanism for energy modelling and planning
Heavy industry study - development of energy to support the alignment of national and local
efficiency targets in heavy industry (nonferrous government energy objectives. These objectives can
metals, iron and steel, non-metallic minerals, only be achieved by an appropriate level of funding,
chemical sector based on the long range analysis dedicated specialised skills and relevant tools.
of technology choices in the industrial sector;

50 SANEDI Annual Report 2014/15


Performance information by programme

Energy Efficiency programme whilst in the case of 12I, energy efficiency forms a
mandatory component in a series of criteria relating to
this industrial manufacturing incentive.
Energy Efficiency (12L and 12I) tax
incentives Section 12L incentives include all energy efficiency
projects that reduce energy use and is claimable
The promulgation of the regulations on the allowance until 2020. A decision of major importance was the
for energy efficiency savings in terms of section 12L of announcement by the Minister of Finance in his
the Income Tax Act as amended came into operation budget vote speech to Parliament on 25 February 2015
on 1 November 2013. that the expected tax relief would be increased from
a 45 cents deduction on taxable income per kilowatt
These particular tax incentives are being introduced hour of energy saved (45c/kWh) to 95c/kWh and
for businesses that can show measurable energy that cogeneration projects would now be eligible for
savings and SANEDI has been tasked with providing this incentive, subject to all the conditions in the 12L
an overall assurance function on behalf of the South regulations being met.
African Revenue Services (SARS) and various national
government departments. These new developments have seen an exponential
increase in the interest shown for these energy
The 12L regulation sets out the process for determining efficiency tax incentives, resulting in a massive stretch
the quantum of energy efficiency savings, and the on the current SANEDI resources allocated to this task.
requirements for claiming the proposed tax deduction,

SANEDI Annual Report 2014/15 51


Performance information by programme

bigEE (Bridging the information gap Since www.bigee.net is an international website, it


on energy efficiency in buildings and provides country-specific information according to its
member countries levels of energy efficiency. To date,
appliances in developing countries)
South Africa has contributed enormously on the best
available technologies in appliances, policies and other
The international bigEE website launched the
energy efficiency factors.
South African page in January 2015 and the site has
since become operational and is upgraded on a
Energy efficiency best available technologies in
continual basis. The page displays data knowledge
appliances
on energy efficiency policies, best available energy
efficient appliances and the best technologies for A substantial body of information about best available
energy efficient buildings. It provides easy access to technologies in appliances was gathered by SANEDI on
information that is up to date and relevant for both the most energy consuming appliances in building and
local and international investors in energy efficiency. households and uploaded on the side. The summary
Furthermore the design, feel and look of the website of the following appliances shows the most energy
is attractive and user friendly. As such the website can intensive and most used appliances and also highlights
be used by any interested party to gather information - the levels of efficiency that can be gained from these
from company CEOs, professors, students writing their appliances.
theses, to school pupils submitting assignments.
In terms of the appliances the following will be the
The website provides user friendly options such as BATs vs non-BAT information dissemination:
suggesting improvement, posing of questions, user
suggestions and any other opinion the user may desire Electric heaters the site includes best available
appropriate to voice out. In addition the user will find technology for electric water heaters in South Africa
national and international energy efficiency news. and an updated standard that governs this appliance.
Also included is a graph showing market penetration
The information on www.bigee.net provides energy of this appliance between 2001 and 2011, as well as
efficiency knowledge in three main categories: country-wide savings potential.
buildings, appliances and policies.

52 SANEDI Annual Report 2014/15


Performance information by programme

Energy efficient ovens (stoves) - website includes the and annual sales from 2000-2011. The comparison
best available oven technology in South Africa. Ovens in energy consumption is explained in the following
are one of the biggest consumers of energy, so the types: LED, LCD, CRT, RPTV, and Plasma. Finally the
website shows those that are very energy efficient and proposed energy label programme, from A+++ (most
those that are not so energy efficient. The contents efficient) to G (less efficient), which will identify the TV
also includes the country-wide savings potential. Also in terms of energy consumption, is shown.
included are graphs showing:
Swimming pool pumps - including best available
Market share of cookers by fuel type (gas, electric technology for these items. Contents also include
and dual fuel); country-wide savings potential, pool pumps energy
Market share of electric ovens by functionality; requirement for different climatic zones in South
Annual sales of all formats (electric stove, gas and Africa (via climatic zone map) in terms of their
coal) from 1999 to 2013, as well as built-in ovens temperatures in summer and winter. Also available are
and non-built in cookers from 1999 to 2013; and market characteristics for residential housing in South
Energy class distribution of ovens (2014). Africa, which are broken down into six categories. The
standard type of pool pump by energy consumption
Energy efficient televisions - includes best available using 1.1kW swimming pool pump is also included.
technology in television in South Africa, country-wide A study by Eskom, used in a national programme to
savings potential, how the global market is transforming promote energy efficiency, found that a 750W pump
from LCD to LED as the new market standard, and how uses at least 232 kWh of electricity per month. The
the LED televisions are more energy efficient than LCD campaign recommended reducing the running time
and CRT. Furthermore the contents include graphs of swimming pool pumsp by four hours per day to
showing penetration rate of TV in SA HH 2000-2013, achieve a 40% saving.

SANEDI Annual Report 2014/15 53


Performance information by programme

Energy efficient dishwashers - contents include best 2013, energy cass distribution of models for front and
available technology on this appliance in SA, country- top loaders (2010) and the proposed energy label from
wide savings potential, graphs showing electricity A+++ to D A+++, with the most efficient and D the least
consumption of dishwashers, baseline scenario efficient, are included.
(A) vs efficiency scenario (B), and annual sales by
subcategory. With the information provided, we are able to deduce
that South Africa is becoming one of the most energy
Energy efficient clothes dryers and washer dryers - efficient countries with innovative energy efficient
website includes best available technologies of this technologies for buildings and appliances. This will
appliance in SA, country-wide savings potential, annual assist in decreasing the demand for electricity from
sales of dryers and washer dryers (1999-2013), forecast the grid, thus mitigating the risk of load shedding
sales (2014-2018), and energy class distribution of which is currently one of the biggest energy challenges
dryers and washer dryer models (2010). in South Africa, and will also assist consumers of
electrical appliances to know what energy efficient
Energy efficient refrigerators - contents include best appliances are available, thus saving them money, as
available technology of this appliance in SA, country- well as what they can do to make their buildings more
wide saving potential and market characteristics energy-efficient.
refrigerators (fridges), freezers and fridge/freezers.
Each sub-category is broken down further into size or Energy efficiency best available technologies in
carrying capacity. These measures are listed below and buildings
for the purposes of categorization these categories
will henceforth be referred to small, medium The following is information on the best available
and large. Penetration rates of refrigerators in SA technologies in buildings. The work on buildings
HH 2000-2011 (in terms of fridge/freezers and free- information is ongoing.
standing freezers), penetration rates in SA HH by sub-
category (freezers, fridges, fridge-freezers) 2000-2013 Lighting best available technology in SA in terms of
and forecast 2014-2018, graphs showing distribution lighting design in buildings, and the types of bulbs that
of models by energy rating (small, medium and large are efficient.
categories) as well as SA energy labeling A (more energy
efficient) to G (least energy efficient) and a proposed HVAC- best available technology in SA in terms of
energy labelling (A+++ to D) are also included. HVAC.

Energy efficient washing machines - contents include Water heating (solar, heat pump, etc) - the use of
best available technology in this appliance in SA, electric geysers is gradually decreasing and the market
country-wide saving potential, and categories of for solar geysers is developing quickly. This indicates
washing machines based on the most popular capacity that energy efficiency is possible, since electric geysers
ranges in the market, organised under small, are one of the biggest consumers of electricity. The
medium and large. Graphs showing penetration demand for electricity from the national grid will
rate by washing machine type (auto front loading, auto decrease as the uptake of solar geysers improves. This
top loading and semi-auto) in SA HH 2003-2013 (%), information therefore indicates the best that South
total number of units in SA HH by sub-category 2009- Africa has with respect to SWH.

54 SANEDI Annual Report 2014/15


Performance information by programme

Building insulation - energy efficiency in buildings Applications on alternative energy resource in


is inevitably linked to building insulation, since this buildings - the website will include the best available
controls the level at which heat is gained in summer technology in terms of applications on alternative
and lost in winter. Building insulation therefore reduces energy resource in buildings.
the need for heating and cooling of buildings, and the
website will include the best available technology in Measurement and verification building energy
building insulation in South Africa. performance - the website will include the best
available technology in terms building measurement
Plug devices (building functionality oriented devices) and verification equipment in South Africa.
upgrade - the website will include the best available
technology in South Africa in terms of plug devices Energy Efficiency and Demand Side
(that promote energy efficiency).
Management (EEDSM) Hub
Building retrofit and maintenance historically, (University of Pretoria)
energy and electricity have been inexpensive, resulting
in many of South Africas buildings having been Although major funding and contractual challenges
constructed inefficiently. The energy efficient response were experienced in finalising the activities for this
is retrofits and maintenance, whereby the building reporting period, the Hub was still able to complete 89
owner removes the energy inefficient features and EEDSM-projects, using external funding. 62 students
components and replaces them with energy efficient are registered at the Hub, with 23 being funded through
equipment and technologies. In this case the website the DST/DoE/SANEDI assistance programme. Of the 23
will include the methodology used by UP when dealing students supported through SANEDI, six are women
with building retrofits and maintenance, known as and 17 are previously disadvantaged individuals (PDIs)
TEOP/POET (technology, equipment, operation and (56.5% are black, 30.4% are Asian and the remainder
performance). white). Fourteen journal papers were published and 22
conference papers were also published and presented.

SANEDI Annual Report 2014/15 55


Performance information by programme

Report on performance against objectives

Programme 1: Administration and corporate governance

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Corporate Annual report Compliance Achieved All corporate
governance Strategic plan to relevant documents were
to comply Annual legislation/ submitted as per the
with relevant performance plan policies/ compliance calendar.
legislation/ Quarterly reports procedures
policies/
procedures
To have Percentage of 100% of creditors Achieved In terms of the
effective creditors paid paid within PFMA, all invoices
financial within 30 days 30 days after must be paid within
processes, after all relevant all relevant 30 days
systems and documentation documentation
procedures have been received have been
received
Effective and Measurable Number of Not achieved The resource She is scheduled to
comprehensive contact with main monthly (lower responsible for the resume duties on
stakeholder stakeholders level) newsletters monthly newsletters 1 June 2015. In the
management through monthly 10 went on maternity interim, an intern has
and quarterly leave and she was been appointed
newsletters, DoE not replaced.
communicators Number of Achieved The quarterly
forum meetings quarterly newsletter was
and reports, newsletters: 4 completed, printed
annual report and distributed.
contribution, The distribution will
participating in continue until the
DoE official events next issue is due.
DoE Achieved All communicator
communicators forum meetings
forum meetings held by the DoE
(and reports were attended and
presented): 6 presentations were
rendered on behalf
of SANEDI
Annual report Achieved Communications
contribution : 1 assisted in the
(editorial and drafting of the
design) Chairpersons report
for the annual report.
DoE official Achieved SANEDI participated
events: 4 and assisted with
arrangements for
the IEA-EE indicators
workshops held in
SA, as well as SAIREC
SteerCo

56 SANEDI Annual Report 2014/15


Programme 2 : Energy Research and Development

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Advanced Fossil Fuels (including Carbon Capture and Storage)

Determination An appraisal of DoE approved Achieved


of the potential shale gas energy workplan
for shale gas matters with Contract in place Achieved Annual target for
in the energy respect to carbon for four tasks four contracts in
economy of dioxide as an place 3 RfPs closed
South Africa extraction agent, and currently under
water and waste evaluation. The 4th
issues, demand task not approved
and supply match, by DoE because of
risk assessment, concern of overlap
geography and with work of PASA
surface issues
The Pilot CO2 Storage Interim PCSP Not achieved Interim PCSP The World Bank
determination Project (PCSP) as a foundation foundation has advertised
of the proof of concept documentation documentation, for expressions of
potential and for CCS in SA Interim pre- Not achieved pre-feasibility interest for project
appropriateness feasibility data (exploration) plan technical advisory
of technologies analyses and results for other services for the Pilot
for the Interim feasibility Not achieved Gate 2 deliverables CO2 Storage Project
geological (exploration) plan not completed due submissions close 20
storage of to delays in World April 2015.
carbon dioxide Bank approval of
in SA the project concept The pilot monitoring
notes and procuring project at Bongwana
processes. natural carbon
dioxide releases
planning commenced
with international
participation
Effective and Support activities Award of Achieved Currently, six bursars
comprehensive bursaries are studying
stakeholder to suitable
management candidates
Clean Energy Solutions

Manage and Coordinate Establish solar Not achieved The report on the The progress report
coordinate renewable energy photovoltaic first year of the PV from NMMU is
Renewable R&D platform at platform which was awaited.
Energy R&D NMMU and the 4th quarter target
through begin yield/ was not achieved.
RECORD performance
measurements
Prefeasibility Not achieved Funding not available Seek funding for
study on due to budgetary ocean energy
compiling an constraints resource map
ocean energy
resource map
Publish the State Achieved
of energy research
in SA study

SANEDI Annual Report 2014/15 57


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Clean Energy Solutions

Facilitate Implement Achieved Some funding


renewable information received
energy research exchange sessions
collaboration with funding
counterparts
Fund and manage Achieved
existing projects
Manage algal Achieved
bioenergy
platform
Initiate State of Achieved
waste to energy
research in SA
study
Contribute to Ongoing support Achieved Ongoing HCD
renewable energy to SARETEC (South collaboration with
skills development African Renewable GIZ
Energy Technology
Centre) and
preparation of
first classes in
South Africa
Renewable energy Achieved
skills development
bursary through
Douglas Banks
Renewable Energy
Vision (DBREV)
Fund
Collaborative Achieved
study/training
conducted
through GIZ
Marketing and Raising Achieved
awareness creation renewable energy
and RECORD
awareness
through events,
conferences,
website, articles,
etc
Present the Achieved
RECORD
Renewable
Energy Research
Excellence Award
in partnership
with SANEA
Facilitation Achieved
and support
of renewable
energy industry
association
knowledge
sharing events

58 SANEDI Annual Report 2014/15


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Clean Energy Solutions

Collaborative Manage and Creation of an Not achieved Care was taken with
projects, pilots, coordinate the observational the site selection
demonstrations WASA programme wind atlas. process that no EIA
Conceptualise a issues were triggered
framework for and the sites to be
WASA phase II. representative of
the WASA 2 domain
which resulted
in that the site
selection process
was only concluded
in November 2014.
The impact of that
is that the mast
selection can only
be completed by
August 2015 after
which the site
description report
can be finalised and
submitted
Facilitate the Building of mobile Partially Mobile plant Talks with DST for
construction and waste to energy achieved construction has collaboration have
operation of the plant delayed due to a late been initiated
mobile waste to start and therefore
energy plant ordering and receipt
of parts.
Support Waste to energy Partially Proposal sent to a
municipalities hub concept achieved number of donors
through document but no support
establishing a produced has been received,
waste to energy However, progress
hub has been made
on the web based
guideline for MSW
for municipalities
Facilitate the Complete and Not achieved Draft roadmap
development of produce road map document with
the SA Solar Energy the DoE and DST
Technology Road waiting for an
Map (SETRM) interdepartmental
consultation
Facilitate the Update and Achieved
development and maintain the
uptake of EE in EE housing
the housing and database on the
building sector SANEDI website
in SA through with current
collaborative information
efforts and
demonstration
Coordinate the Set up two MET Achieved
set- up of solar stations and
measuring stations initiate solar atlas
with DST

SANEDI Annual Report 2014/15 59


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Clean Energy Solutions

Representation of Maintain and Achieved


SA in international manage existing
fora, whereby IEA and REEEP
technical implementation
knowledge is agreements
gained and skills including
are shared and Horizon 2020
transferred and other EU-SA
initiatives with
DST and execute
key objectives
outlined in
the respective
agreements/
contracts
Smartgrids

Stakeholder
engagement
(SASGI)
activities
Steering Industry Four meetings Achieved
Committee participation
meetings and contribution
towards
establishing Smart
Grids in SA
Minutes
Workshops
Seminars
Policy Work Metering code Metering code Partially This target has
Group dealing established guidelines for SA achieved direct relationship
with industry with NRS0409. Had
inputs towards several meetings
developing a with NERSA and
national policy ESKOM to discuss
the way forward to
establish a smart
metering code for SA.
Had a comprehensive
literature review
and came to the
conclusion that
New Zealand and
Australia have a
smart metering code
relevant to SA. NERSA
has the responsibility
to adapt both
standards to relevant
SA standards.

60 SANEDI Annual Report 2014/15


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Smart Grids

Investigate the role Investigate the Partially The ToR has been
of the DSO role of the DSO achieved developed. Delays
report can be attributed to
the formal project
approval being
received from the
DoE in Sept 2014.
Collaboration
agreement with
University of Pretoria
to produce first draft.
Technology Smart meter Develop an Not achieved Met with the NRS049
and standards functionality industry approved team they have
workgroup guideline report guideline a document that
that deals with covers the electricity
industry inputs smart metering
towards the functionality. It is
development their mandate to
of national produce the report
smartgrid and not SANEDIs.
standards
AMI security AMI security Partially The ToR has been
guideline guideline report achieved developed for the
University of Pretoria
to carry out the
evaluation using the
NIST (USA) guideline
as reference. Delays
can be attributed to
the formal project
approval being
received from the
DoE in Sept 2014.
Applied SGMM assessment Five SGMM Achieved
Research of EU donor reports
Workgroup is funded projects
established to Documenting of Four case studies Achieved
get industry industry existing document
inputs and case studies
share project
knowledge with
the industry
Marketing and Establish the SASGI minutes Achieved
awareness SASGI website ISGAN information
workgroup is for information presentations
established to clearing for the
deal with the industry
development Attend conferences Utility week and Achieved
of the and share AMEU
standardised knowledge
message for the
industry
Training and Establish a smart Establish a smart Achieved The value proposition
development meter test and meter test and was demonstrated
workgroups evaluation centre evaluation centre to industry. Industry
is established at the University of at the University advised that it is not
to deal with Pretoria of Pretoria necessary at present
industry to establish a smart
SG skills meter test and
development evaluation centre.

SANEDI Annual Report 2014/15 61


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Smart Grids

ISGAN Participate in Attend two Exco Achieved SANEDI hosted the


ISGAN Exco meetings 9th ISGAN EXCO and
meetings public workshop at
Participate in the Radisson Hotel
Annexure 3 in Sandton. There
activities was representation
Participate in from the DoE,
Annexure 6 the municipalities
meetings and international
communities.
EU donor To demonstrate Create the Not achieved The DoE has yet to
funded that IPPs can be infrastructure for define this project as
programme : net metered and billing and net it requires input from
IPP net net billed metering with its IPP office
metering study a chosen utility.
Monitor and
evaluate outputs
AMI integration To demonstrate Create the Partially City Power has
(FBE, IBT, systems, process necessary achieved completed its
EEDSM) to implement AMI infrastructure, project approval
in a utility systems and phase. Delays can
Assess process to do best be attributed to
Design practice AMI the formal project
Procure FBE approval being
Development TOU, IBT received from the
Installation EEDSM DoE in Sept 2014.
Training
Monitoring in commercial
and buildings
verification
Handover
Revenue To demonstrate Create Partially All five municipalities
enhancement systems, process infrastructure, achieved have completed the
study to improve systems and project approval
municipal process to do best phase. Outstanding
electricity revenue practice AMI, FBE, are six other
collection TOU, IBT, EEDSM phases. Delays can
Assess in commercial be attributed to
Design buildings the formal project
Procure approval being
Development received from the
Installation DoE in Sept 2014.
Training
Monitoring
and
verification
Handover
Public buildings Demonstrate that Installation of Not achieved This is a DoE Energy
(EEDSM) energy efficiency a smart meter Efficiency Directorate
and demand in DoE chosen (Mr Mabusela)
management can buildings responsibility
be optimized by Installation
incorporating of a building
smart grid management
technology. system in DoE
chosen public
buildings
Installation of
control sensors
in DoE chosen
buildings

62 SANEDI Annual Report 2014/15


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Smart Grids

Active network To demonstrate Create the Partially The target addresses


management Active network necessary achieved imbedded
(IPP integrationmanagement infrastructure, generation. The IPP
onto the systems in a DSO. systems and element in it has
distribution Assess process to do been removed.
grid) Design best practice
Procure ANM in a DSO
Development
Installation
Training
Monitoring
and
verification
Handover
Asset To demonstrate Create Partially Nelson Mandela
Management systems, process infrastructure, achieved Municipality is
(ADAM) to improve systems and making good
utility asset process to do best progress whilst
management practice asset Mzundusi is going
Assess management to be dropped
Design from the project
Procure due to internal
Development challenges. Delays
Installation can be attributed to
Training the formal project
Monitoring approval being
and received from the
verification DoE in Sept 2014.
Handover
Working for Energy

Renewable Melani village 55 biogas Not achieved Implementation Mass
Energy biogas project digesters agreement finalised implementation to
Provision Phase 2 implementated between the ensue in the next
(University of Fort and handed over University of Fort quarter.
Hare) Hare with the service
provider. Stakeholder
engagement process
commenced. Site
selection is in
process.
Gauteng DID Five biogas Not achieved Negotiation with Alternative delivery
greening of schools digesters preferred service method has been
project completed provider in process, contemplated
since all received
RFPs were extremely
high priced.
Negotiation process
is unfolding.
NDA greening of Five biogas Not achieved Negotiation with Alternative delivery
facilities project digesters preferred service method has been
completed provider in process, contemplated
since all received
RFPs were extremely
high priced.
Negotiation process
is unfolding.

SANEDI Annual Report 2014/15 63


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Working for Energy

Mpfuneko biomass Complete Partially Construction is at
project implementation achieved the level of 49 biogas
of 20 biogas digesters. Balance
digesters project of six digesters will
and hand over be completed in the
next two quarters
and commission,
M&V, hand over is
expected at the end
of the financial year.
Illembe rural biogas Project hand Not achieved Process awaiting
project over to response from the
Ndwedwe district Ministry in respect
municipality of the launch of the
project. Continuous
engagement with
SoE oversight branch
and the Office of the
Minister
Lucingweni Complete Not achieved Contract has been
community ECDC implementation of concluded with
conversion project community ECDC Nelson Mandela
conversion project Metropolitan
and hand over University to remove
obsolete equipment
in the facility and
clear the site for
conversion, establish
a clean energy centre
under the RECORD
and safekeeping of
balance of material
for Walter Sisulu
University and Cape
Peninsula University
of Technology.
School and clinic Implementation Partially Two solar water WFE is currently
renewable energy of a achieved heaters have looking at alternative
demonstration demonstration been installed and costs effective
centre project centre for commissioned and processes for
renewable the energy efficiency digesters
energy and lighting has been
energy partially done.
efficiency under
the department
of science
within the
school
Greening of Complete Not achieved Delays were
Tshireleco high implementation encountered
school of a biogas soliciting RFQs
digester project
and hand over

64 SANEDI Annual Report 2014/15


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Working for Energy

Tygerkloof high Scoping and Not achieved Alternative turnkey
school planning contract has been
completed concluded with
the school to
source specified
technologies from
the OEM. Water
quality assessment,
water purification
system, low pressure
biogas digester
installation envisaged
by the end of quarter
2 in the 2015/16
financial year
Working for Implementation Not achieved Awaiting dates from
Outreach of the outreach Ministry regarding
Programme programme for the launch of
the Working the program as
for Energy requested by the
Programme Chairperson
NDA greening of Scoping and Not achieved Project completion
schools project planning envisaged by the end
completed of of Quarter 2 of the
SWH Projects 2015/16 financial
year.
Gauteng DID Scoping and Not Achieved Baseline studies
greening of schools planning completed. RFQ are
project completed of being evaluated.
SWH Projects Installation envisaged
by the end of Quarter
2of the 2015/16
financial year

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Data and Knowledge Management

Integrated EE Functional, Database fully Achieved


data respository accurate, developed and
integrated and populated
user- friendly
database

SANEDI Annual Report 2014/15 65


Report on performance against objectives

Programme 3: Energy Efficiency



Objective Indicator Target Performance Reasons for variance Interventions put
result in place to address
non-achievement
Support the Successfully Second annual Not achieved The procurement
dti and SARS support tax review/ report restrictions did
with the energy processes as completed for 12I not allow for the
efficiency measured by publishing of the
component of annual review report
the Income Tax and to customer Launch and Achieved Seven applications
Amendment satisfaction implement processed and 57
Act (Sections online system new applications
12l and 12L) to accurately received
relating to process 12L
tax rebates applications
for energy
efficiency Fully process 5 Partially 12i delays
improvements 12I and 10 12L achieved experienced due
applications to pressures on
improving 12L
Regulations with
four 12l applications
evaluated and seven
12L applications
processed
EEDSM Hub Continue the Number of journal Achieved Number of journal
(Research Energy Efficiency publications: 15; publications:
Centre) Hub initiative to Number of 10; Number of
strengthen energy conference conference papers: 3;
related research, papers: 24; Number of registered
human capacity Number of students: 54;
development, registered Number of modules/
and market students: 100; short courses
transformation Number of offered: 7;
and enterprise graduates: 23; Number of externally
development Number of funded projects: 86;
initiatives that will modules/short External funding:
be tracked against courses offered: R0.5m;
a comprehensive 45; Number of Female student ratio:
existing set of KPIs. externally funded 19%;
projects: 37; PDI ratio: 50%;
External funding: Black and 26% Asian
R2.5m;
Female student It should be noted
ratio: 19%; that the funding
PDI ratio: 35%. agreement between
SANEDI, DST
and UP was only
finalised fairly late
in the 2014/15
financial year which
created a vacuum
in the continued
performance of the
EEDSM Hub

66 SANEDI Annual Report 2014/15


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Industry Support industry Complete Achieved It is important to
support stakeholders bigEE project note the launch of
towards achieving successfully the South Africa page
improved energy and continual up
efficiency in dating of information
collaboration as new data is
with international collected. Browsers
partners are continually
encouraged to leave
comments for the
improvement of the
website. Since there
was no initial target
work is upgraded on
a continual basis.
Best available Achieved The appliances
technologies and aspect of the project
non-best available has been completed
technologies actor and uploaded on the
constellation website, data has
been collected in the
form of documents
containing the
technical aspect
of the technology
appliance in
question. The
appliance sub-
project will sign off
in the close of May
2015
With regards to the
buildings, a contract
with the University
of Pretoria has
been entered into
objectives outlined.
Best available Achieved Unstructured data
technologies with regards to
and non appliances is in the
best available process of analysis.
technologies With regards to
buildings, data has
been collected,
analysed and
adopted.
With regards to best
practices, 20 best
practice examples
are to be submitted.
20 residential best
practice and 10
commercial best
practices gathered
and submitted. 10
extra buildings were
gathered. Data on the
industrial buildings
still necessary.

SANEDI Annual Report 2014/15 67


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
Actor Achieved With regards to best
constellation practices, 20 best
practice examples
are to be submitted.
20 residential best
practice and 10
commercial best
practices gathered
and submitted. 10
extra buildings were
gathered. Data on the
industrial buildings
still necessary.
EE policies Achieved The EE policies covers
both appliances and
buildings. There
are no considerable
differences.
Climatic zone map Achieved The climatic zone
map was developed
and is constantly
being updated by the
CSIR
Provide TAF Achieved The entire facility is
function, as almost completely
per contracted committed to RE/
outputs EE projects with the
three participating
banks
National M&V Partially Document completed
position paper achieved but not yet uploaded
developed on the international
platform

68 SANEDI Annual Report 2014/15


Report on performance against objectives

Objective Indicator Target Performance Reasons for variance Interventions put


result in place to address
non-achievement
National M&V Establish a national Consolidate all Partially Longer-term activity This is an ongoing
Centre consolidated existing energy achieved requiring detailed activity, involving
independent M&V (electricity and interaction with the the shareholder and
function other energy shareholder and multiple external
where relevant) other stakeholders. stakeholders.
efficiency However, the basic
activities building blocks are in
place and the activity
is now regarded as
urgent by all the
key role-players,
including the DoE.
National Join and Join and Not achieved Due to budgetary
Champion for participate in participate in constraints, SANEDI
EE IEA-DSM task IEA-DSM Task exco decided to not
24 relating to 24 relating to formally participate
the study and the study and in this IEA task
benchmarking benchmarking
of consumer of consumer
behaviour impacts behaviour
on the efficient use impacts on the
of energy amongst efficient use of
all participating energy amongst
countries all participating
countries
National M & V Establish a national Consolidate all Partially All systems and the
Centre consolidated, existing energy achieved M&V process are in
independent M&V (electricity and place with SANAS for
function other energy tax related incentives
where relevant)
efficiency activities
National M&V Achieved Awaiting DoEs input/
position paper decision on taking
developed this proposal forward

SANEDI Annual Report 2014/15 69


Report on performance against objectives

Communications

Communications is a fundamental element One of the vehicles that has been very successful in
contributing towards the direct success of SANEDI in marketing SANEDI activities is participation in various
the field of energy and its role in contributing to cleaner conferences by means of presentations and exhibitions.
and smarter energy in South Africa. The operative One of these conferences was Sustainability Week and
function of communications contributes effectively Africa Energy Indaba.
to SANEDIs business activities, both internally and
externally. SANEDIs communications team has been
A quarterly
hard at work advancing SANEDI through upholding an
newsletter was
excellent standard of promoting the institution to its
introduced,
stakeholders. This has been achieved by solidifying its structured to
relationships and continuously forging more mutually- produce a current
beneficial relationships that will contribute to its and up-to-date
credibility in the public eye. In 2014/15, the team has report of SANEDIs
taken significant steps in circulating accurate and activities and keep
consistent information to the public and achieving its stakeholders
informed about
maximum exposure of its programmes and as an
what is happening
organisation. Many of the initiatives set SANEDI on
in the organisation.
a platform to earn it much deserved attention in the
energy space and showcase some of the excellent
work it does in this country.

70 SANEDI Annual Report 2014/15


Report on performance against objectives

Mandela Day 2014 centre. After realising that the centre is in desperate
need for improvement, the partners agreed on a
SANEDI joined hands with the Department of Energy second phase of the project, which was to provide
and Soweto TV to bring a better life to the babies and the day care centre with a new temporary structure,
toddlers of the Kidos Educare Centre in Protea South, water harvesting tanks, fencing and mini kitchen. The
Soweto. team was joined by the Deputy Minister of Energy, Ms
Thembisile Majola, and the staff from the Ministry. The
This was the second time SANEDI had visited the success of Mandela Day 2015 was a team effort by all
centre. Last year SANEDI partnered with Soweto TV three organisations - Department of Energy, SANEDI
and St Gobain to donate some basic necessities to the and Soweto TV.

SANEDI Annual Report 2014/15 71


PART C:
Human resource management

Human resources management (HRM) in organisations system, and a healthy and safe work environment
is designed to maximise employee performance of as well as skills development through an internship
an employers strategic objectives. HR, or people programme.
management, as it is known in private companies is
concerned with the management of people within SANEDI has a performance management system
an organisation within the parameters of policies, that provides standards by which the performance
procedures and systems. The HR department, in of individual employees is monitored and measured
partnership with line departments in an organisation, to allow for management of performance and the
undertake a number of activities which include rewarding of deserving employees.
employee recruitment, training and development and
performance appraisal. Labour relations also plays a The following policies have been developed for
critical role in the management of staff. SANEDI:

SANEDIs HR function is contracted to the CEF Group Performance management policy;


of Companies and is managed through a service level Internship policy;
agreement. It is envisaged that a human resources Leave policy and procedure;
manager will be appointed Study assistance for employees policy; and
HIV/AIDS and other life threatening diseases.
SANEDI is still dependent on CEFs human resources
policies, procedures, programmes, systems and The performance management policy of SANEDI
processes to attract, develop and retain requisite recognises the value of a performance based
skills within SANEDI through effective recruitment institutional culture that promotes employee
and selection processes, facilitation of training and productivity, engagement, and development by
development, transparent performance management aligning individual performance goals with the entitiys
processes, attractive remuneration, an effective payroll mission, strategic goals, and objectives.

72 SANEDI Annual Report 2014/15


Human resource management

The internship programme is aimed at giving students The study assistance policy for employees is designed
the opportunity to apply their knowledge in real world to encourage personal and professional development
environments. At the same time, they will develop of staff thereby benefitting the organisation.
skills which will help them perform better at their Employees are encouraged to take responsibility for
jobs. They are provided with experience that will make their own development. The purpose of the policy
them stronger and more confident in their abilities. is to provide assistance to all permanent employees
The experience also helps develop their work ethic. By for part time study in order to obtain appropriate
effectively being engaged in the internship programme, academic qualifications. The field of study embarked
students will increase their skills and make themselves on must be related to the employees position or the
valuable in the job market. Their employers are likely general objectives of the company.
to benefit as well.

Personnel costs by programme

Personnel Personnel
expenditure (TCTC) expenditure
Total expenditure as a % of total No of Average personnel
Programme for the entity expenditure employees cost per employee
Corporate
governance and
administration R45 456 606 R15 484 707 34% 22 R703 850
Energy Research
and Development R58 222 924 R20 062 110 34% 33 R607 943
Energy Efficiency R9 088 457 R2 599 695 29% 2 R1 299 848

Personnel cost by salary band

% personnel
Personnel expenditure to total Average personnel
Level expenditure personnel cost No of employees cost per employee
Top management /senior
management (P1-4) R4 039 441 11% 2 R2058466
Middle management
(P5-7) R24 009 278 64% 18 R1348848
Junior staff (P8-12) R9 700 300 26% 37 R263521

Performance rewards

% of performance rewards
Level Performance rewards Personnel expenditure to total personnel cost
Top management /
Senior management
(P1-4) R717 042 R4 039 441 17%
Middle management
(P5-7) R4 921 096 R24 009 278 20%
Junior staff (P8-12) R1 507 860 R9 700 300 15%

SANEDI Annual Report 2014/15 73


Human resource management

Reasons for staff leaving

Reason Number % of total no of staff leaving


Death 0 0%
Resignation 2 67%
Dismissal 0 0%
Retirement 0 0%
Ill Health 0 0%
Expiry of contract 0 0%
Other 1 33%
TOTAL 3 100%

Labour relations, misconduct and disciplinary action

Nature of disciplinary action Number


Verbal warning 0
Written warning 0
Final written warning 0
Dismissal 0

Staff demographics

SANEDI has a staff complement of 52. The profile is as follows:

Category WM IM CM BM WF IF CF BF
CEO 0 0 1 0 0 0 0 0
CFO 0 0 0 0 0 0 0 1
Senior managers 4 1 0 1 0 0 0 1
Financial manager 0 0 0 0 0 0 1 0
Manager: CS/Office of
the CEO 0 0 0 0 0 1 0 0
IT manager 0 1 0 0 0 0 0 0
System administrator 0 0 0 0 0 0 0 1
Accountants 0 0 0 2 0 0 0 1
Centre managers 0 0 0 0 2 0 0 0
Project managers 0 1 1 1 0 0 0 0
Geologist 0 0 0 0 0 0 0 1
Public awareness officer 0 0 0 1 0 0 0 2
Project officers 0 1 0 3 0 0 0 0
Project coordinators 0 0 0 0 1 0 0 2
Procurement officer 0 0 0 0 0 0 0 1
Admin officer 0 0 0 0 0 1 0 2
Research assistants 0 0 0 0 1 0 0 0
Personal assistant 0 0 0 0 0 0 1 1

74 SANEDI Annual Report 2014/15


Human resource management

Category WM IM CM BM WF IF CF BF
Consultants 4 0 0 0 0 0 0 0
Receptionist 0 0 0 0 0 0 0 1
Driver 0 0 0 1 0 0 0 0
Interns 0 0 0 3 0 0 0 2
Refreshment officers 0 0 0 0 0 0 0 2
Total 8 4 2 12 4 2 2 18

There is 79% black representation and 55% women representation.

Training costs of personnel

Training
expenditure as
a percentage Number of Average
Programme/activity/ Personnel Training of personnel employees training cost
objective expenditure expenditure cost trained per employee
Corporate governance
and administration R15 087 215 R291 334 2% 11 R26 484
Energy research and
development R20 062 109 R293 192 1% 15 R19 546
Energy efficiency R2 599 695 R78 068 3% 2 R39 034

SANEDI Annual Report 2014/15 75


Human resource management

B Beck
Dr S Hietkamp
A Otto S Jumba
J Schaffler S Nyathi C Snyman
K Nassiep
CEO N Algio
Dr AD Surridge W Ingcobo
L Smith W Jali Dr T Mali

K Mpheqeke

E Nyandoro
D Batte

Dr M Bipath

T Mokoena N Faleni

R Raselavhe

L Radebe
P Modiko
S Tshivhase
F Manganyi
The following staff were not at the photoshoot:
R Abrahamse
J Nankoo
E Nkile
R Hamid
S Sekoa

76 SANEDI Annual Report 2014/15


Human resource management

D Coetzer S Msweli C Borchard


D Mahlangu
T Yusuf B Kamaki

K Modingoana Dr K Surridge-Talbot N Garane T Snyer


E Dees T Soci S Nxumalo M Monewe D Phakula

L Manamela T Benuka
D Lundall N Cassim B Bredenkamp
D Mahuma
D Govender B Xakaza

SANEDI Annual Report 2014/15 77


Report of the auditor-general to Parliament on the
South African National Energy Development Institute

PART D:
Financial Information

78 SANEDI Annual Report 2014/15


Report of the auditor-general to Parliament on the
South African National Energy Development Institute

Report on the financial statements

Introduction
1. I have audited the financial statements of the South African National Energy Development Institute (SANEDI)
set out on pages 97 to 134, which comprise the statement of financial position as at 31March2015, the
statement of financial performance , statement of changes in net assets and cash flow statement and the
statement of comparative and actual information for the year then ended, as well as the notes, comprising
a summary of significant accounting policies and other explanatory information.

Accounting Authoritys responsibility for the financial statements


2. The Accounting Authority is responsible for the preparation and fair presentation of these financial
statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA
Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act
No. 1 of 1999) (PFMA), and for such internal control as the Accounting Authority determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.

Auditor-generals responsibility
3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my
audit in accordance with International Standards on Auditing. Those standards require that I comply with
ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgement, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
audit opinion.

Opinion
6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the
South African National Energy Development Institute as at 31March2015 and its financial performance
and cash flows for the year then ended, in accordance with SA Standards of GRAP and the requirements
of the PFMA.

Emphasis of matter
7. I draw attention to the matter below. My opinion is not modified in respect of this matter.

SANEDI Annual Report 2014/15 79


Report of the auditor-general to Parliament on the
South African National Energy Development Institute

Restatement of corresponding figures


8. As disclosed in note 19 to the annual financial statements, the corresponding figures for 31 March 2014
have been restated as a result of a correction of error discovered during 2014 in the financial statements
of the South African National Energy Development Institute for the year ended, 31 March 2014.

Report on other legal and regulatory requirements


9. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general
notice issued in terms thereof, I have a responsibility to report findings on the reported performance
information against predetermined objectives for selected programmes presented in the annual
performance report, non-compliance with legislation and internal control. The objective of my tests was
to identify reportable findings as described under each subheading but not to gather evidence to express
assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives
10. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance
information for the following selected programmes presented in the annual performance report of the
public entity for the year ended 31March2015:

Programme 2: Applied Energy Research on page 57 to 65


Programme 3: Energy Efficiency on page 66 to 69

11. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

12. I evaluated the usefulness of the reported performance information to determine whether it was
presented in accordance with the National Treasurys annual reporting principles and whether the
reported performance was consistent with the planned programmes. I further performed tests to
determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound
and relevant, as required by the National Treasurys Framework for managing programme performance
information (FMPPI).

13. I assessed the reliability of the reported performance information to determine whether it was valid,
accurate and complete.

14. The material findings in respect of the selected programmes are as follows:

Programme 2: Applied Energy Research


Usefulness of reported performance information

Measurability of indicators and/or targets


Performance targets not specific
The National Treasury Framework for managing programme performance information (FMPPI) requires
that performance targets be specific in clearly identifying the nature and required level of performance.
A total of 28% of the targets were not specific in clearly identifying the nature and the required level of
performance. This was due to the fact that management was aware of the requirements of the FMPPI but
did not receive the necessary training to enable application of the principles.

80 SANEDI Annual Report 2014/15


Report of the auditor-general to Parliament on the
South African National Energy Development Institute

Performance targets not measurable


The National Treasury Framework for managing programme performance information (FMPPI) requires
that performance targets be measurable. The required performance could not be measured for a total of
21% of the targets. This was due to the fact that management was aware of the requirements of the FMPPI
but did not receive the necessary training to enable application of the principles.

Performance indicators not well-defined


The National Treasury Framework for managing programme performance information (FMPPI) requires
that indicators/measures should have clear unambiguous data definitions so that data is collected
consistently and is easy to understand and use. A total of 100% of the indicators were not well defined in
that clear, unambiguous data definitions were not available to allow for data to be collected consistently.
This was due to the fact that management was aware of the requirements of the FMPPI but did not receive
the necessary training to enable application of the principles.

Indicators not verifiable


The National Treasury Framework for managing programme performance information (FMPPI) requires
that it must be possible to validate the processes and systems that produce the indicator. A total of 100%
of the indicators were not verifiable in that valid processes and systems that produce the information on
actual performance did not exist. This was due to the fact that management was aware of the requirements
of the FMPPI but did not receive the necessary training to enable application of the principles.

Reliability of reported performance information


The National Treasury Framework for managing programme performance information (FMPPI) requires
that institutions should have appropriate systems to collect, collate, verify and store performance
information to ensure valid, accurate and complete reporting of actual achievements against planned
objectives, indicators and targets.

The information presented with respect to Programme 2: Applied Energy Research was not reliable when
compared to the source information and/or evidence provided.

This was due to the lack of standard operating procedures for the accurate recording of actual achievements.

Programme 3: Energy Efficiency

Measurability of indicators and targets


Performance target not specific
The National Treasury Framework for managing programme performance information (FMPPI) requires
that performance targets be specific in clearly identifying the nature and required level of performance.
A total of 69% of the targets were not specific in clearly identifying the nature and the required level of
performance. This was due to the fact that management was aware of the requirements of the FMPPI but
did not receive the necessary training to enable application of the principles.

SANEDI Annual Report 2014/15 81


Report of the auditor-general to Parliament on the
South African National Energy Development Institute

Performance targets not measurable


The National Treasury Framework for managing programme performance information (FMPPI) requires
that performance targets be measurable. The required performance could not be measured for a total of
85% of the targets. This was due to the fact that management was aware of the requirements of the FMPPI
but did not receive the necessary training to enable application of the principles.

Performance indicators not well-defined


The National Treasury Framework for managing programme performance information (FMPPI) requires
that indicators/measures should have clear unambiguous data definitions so that data is collected
consistently and is easy to understand and use. A total of 100% of the indicators were not well defined in
that clear, unambiguous data definitions were not available to allow for data to be collected consistently.
This was due to the fact that management was aware of the requirements of the FMPPI but did not receive
the necessary training to enable application of the principles.

Performance indicators not verifiable


The National Treasury Framework for managing programme performance information (FMPPI) requires
that it must be possible to validate the processes and systems that produce the indicator. A total of 100%
of the indicators were not verifiable in that valid processes and systems that produce the information on
actual performance did not exist. This was due to the fact that management was aware of the requirements
of the FMPPI but did not receive the necessary training to enable application of the principles.

Reliability of reported performance information


The National Treasury Framework for managing programme performance information (FMPPI) requires
that institutions should have appropriate systems to collect, collate, verify and store performance
information to ensure valid, accurate and complete reporting of actual achievements against planned
objectives, indicators and targets.

I was unable to obtain the information and explanations I considered necessary to satisfy myself as to the
reliability of information presented with respect to Programme 3: Energy efficiency. This was due to the
fact that the annual performance report, contrary to the requirements of the FMPPI, was presented in
such a manner that the nature and level of actual performance was not clearly identified. Consequently,
the actual performance could not be measured. The institutions records did not permit the application of
alternative audit procedures.

Additional matter
15. I draw attention to the following matter:

Achievement of planned targets


16. Refer to the annual performance report on page(s) 56 to 69 for information on the achievement of the
planned targets for the year. This information should be considered in the context of the material findings
on the usefulness and reliability of the reported performance information for the selected programmes
reported in paragraph 14 of this report.

82 SANEDI Annual Report 2014/15


Report of the auditor-general to Parliament on the
South African National Energy Development Institute

Compliance with legislation


17. I performed procedures to obtain evidence that the public entity had complied with applicable legislation
regarding financial matters, financial management and other related matters. My findings on material
non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of
the PAA, are as follows:

Annual financial statements


18. The financial statements submitted for auditing were not prepared in all material respects in accordance
with the requirements of section 55(1)(b) of the PFMA. Material misstatements identified by the AGSA
relating to valuation of conditional grants, accuracy of revenue from exchange transactions, valuation of
property, plant and equipment, notes on prior period errors and changes in accounting policies, were
subsequently corrected resulting in the financial statements receiving an unqualified audit opinion.

Expenditure management
19. The Accounting Authority did not take effective steps to prevent irregular expenditure, as required by
section 51(1)(b)(ii) of the Public Finance Management Act.

Internal control
20. I considered internal control relevant to my audit of the financial statements, annual report on performance
against predetermined objectives and compliance with legislation. The matters reported below are
limited to the significant internal control deficiencies that resulted in the findings on the annual report
on performance against predetermined objectives and the findings on non-compliance with legislation
included in this report.

Leadership
21. Management did not exercise adequate oversight responsibility regarding financial and performance
reporting and compliance as well as related internal controls.

Financial and performance management


22. Non-compliances with laws and regulations could have been avoided had the Accounting Authority
implemented proper controls over monitoring of compliance with laws and regulations.

23. The financial statements contained misstatements that were corrected. This was mainly due to staff
members not fully understanding the requirements and the application of the financial reporting
framework.

Pretoria
31 July 2015

SANEDI Annual Report 2014/15 83


annual financial statements
for the year ended 31 March 2015

General information

Country of incorporation and domicile South Africa

Nature of business and principal activities Energy research and development

Registered office Block C, Upper Grayston Office Park


150 Linden Street
Strathavon
Sandton
2199

Business address Block E, Upper Grayston Office Park


150 Linden Street
Strathavon
Sandton
2199

Postal address PO Box 9935 Sandton 2146

Bankers ABSA

Auditors Auditor-general of South Africa

Secretary Vacant

84 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015

Index
Accounting Authoritys responsibilities and approval 86

Board audit and risk committee report 87

Accounting Authoritys report 90

Materiality and significance framework 96

Annual financial statements:

Statement of financial position 97

Statement of financial performance 98

Statement of changes in net assets 99

Cash flow statement 100

Accounting policies 101

Notes to the annual financial statements 119

SANEDI Annual Report 2014/15 85


annual financial statements
for the year ended 31 March 2015
Accounting Authoritys responsibilities and approval
Accounting Authoritys responsibilities and approval

In terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999), the SANEDI Board of Directors (the
board) are required to maintain adequate accounting records and are responsible for the content and integrity of
the annual financial statements and related financial information included in this report. It is the responsibility of
the board to ensure that the annual financial statements fairly represent the state of affairs of the entity, as at the
end of the financial year, including the results of its operations and cash flows for the reporting period.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised
Accounting Practice (GRAP), including any interpretations, guidelines and directives issued by the Accounting
Standards Board.

The annual financial statements are based on appropriate accounting policies, consistently applied and supported
by reasonable and prudent judgments and estimates.

The board acknowledges that it is ultimately responsible for overall internal financial controls established by
the entity and places considerable importance on maintaining a strong control environment. To enable the
board to meet these responsibilities, the Accounting Authority has set standards for internal controls, aimed at
reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of
responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation
of duties, to reduce and/ or avoid risk to the entity. These controls are monitored throughout the entity and all
employees are required to maintain the highest ethical standards, in ensuring the entitys business is conducted
in a manner that, in all reasonable circumstances, is above reproach. The focus of risk management in the entity
is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating
risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure,
controls, systems and ethical behaviour are applied and managed within predetermined policies and procedures.

The board is of the opinion that, based on the information and explanations given by management, the internal
controls in place provide reasonable assurance that the financial records can be relied on for the preparation of
the annual financial statements. Although extreme diligence is applied, these internal financial controls can only
provide reasonable, and not absolute assurance against material misstatement or deficit.

The Accounting Authority is primarily responsible for the financial affairs of the entity.

The external auditors were engaged to express an independent opinion on the annual financial statements and
have been given unrestricted access to all financial records and related data.

The audited annual financial statements set out on pages 97 to 134 which have been prepared on a going concern
basis, were approved by the Accounting Authority on 31 July 2015 and were signed on its behalf by:

Ms Rosette Nothemba Mlonzi


Chairperson
SANEDI Board of Directors

86 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Board audit and risk committee report
Board audit and risk committee report

We are pleased to present our report for the financial year ended 31 March 2015.

Charter
The audit and risk committee (the committee) has adopted a formal terms of reference as its audit committee
charter. The charter is reviewed and approved on an annual basis. The committee has regulated its affairs in
compliance with this charter and has discharged all its responsibilities as contained therein.

Membership
The committee members were appointed by the Board of Directors. The committee comprises three independent
non-executive members, two of whom are experts in the field of finance with the other members being
representatives of the shareholder. The committee is required to meet on a minimum of four occasions per
annum, as per the charter.

Board audit committee and board risk committee


Name Appointed Re-appointed Resigned
Ms P Motsielwa (Chairperson) 23 October 2013
Mr V Magan 1 January 2008 1 January 2011
Dr C Sita 23 October 2013
Ms M Modise 23 October 2013
Dr R Maserumule (alternate member) 23 October 2013
Dr D Hildebrandt 23 October 2013

During the financial year, four meetings were held and attendance was as follows:
24 April 26 May 27 May 28 July 22 October
2014 2014 2014 2014 2014
Ms P Motsielwa (Chairperson) Y Y Y Y Y
Mr V Magan Y Y Y Y N
Dr C Sita N Y Y Y Y
Ms M Modise N Y N Y Y
Dr R Maserumule (alternate member) Y N N N Y
Dr D Hildebrandt Y N Y N Y
Y = Attended meeting
N = Apology received

Internal audit
The committee considered and approved the internal audit charter and approved the annual work plan for the
internal audit function. The internal audit function is responsible for reviewing and providing assurance on the
adequacy and effectiveness of the internal control environment across operations. The chief audit executive is
responsible for reporting the findings of the internal audit work against the agreed audit plan to the committee
on a quarterly basis.

The chief audit executive has direct access to the committees, primarily through its chairperson. The audit
committee is also responsible for the assessment of the performance of the internal audit function. The internal
audit function is required to undergo a quality review by an independent reviewer every four years. This was

SANEDI Annual Report 2014/15 87


annual financial statements
for the year ended 31 March 2015
Board audit and risk committee report
undertaken in April 2013 and the review reported positive results and rated the internal audit function as general
conformance, in accordance with the IIA Standards.

The internal audit function is independent and had the necessary resources, budget, standing and authority within
the entity to enable it to discharge its functions. The chief audit executive, through a service level agreement,
reports functionally to the chairperson of the audit committee and administratively to CEF SOC Limited.

We are satisfied that the internal audit function is operating effectively and that it has addressed the risks
pertinent to the entity in its audits. We believe that internal audit contributes to the improvement of internal
controls within the entity.

Internal control effectiveness


The system of internal controls is designed to provide costeffective assurance that assets are safeguarded and
that liabilities are effectively managed. In line with PFMA requirements, internal audit and the AuditorGeneral
of South Africa (AGSA) provide the audit committee and management with assurance that the internal controls
are adequate and effective. This is achieved by means of evaluating the effectiveness of the management of
identified risks, as well as the identification of corrective actions and suggested enhancements to the controls
and processes.

Internal and external audit provides the audit committee with reasonable assurance that the majority of internal
controls are appropriate and effective. This is achieved by means of the risk management process, as well as the
identification of corrective actions and suggested enhancements to the controls and processes.

The system of internal control was not entirely effective during the year under review, as several instances of
noncompliance with internal controls were reported by both internal audit and AGSA. From the various reports
of the internal and external auditors, we noted deficiencies with various internal controls which were brought to
the attention of management. Corrective measures have been undertaken to rectify these deficiencies. We also
take note of the improvement in the control environment as noted from the reduction in the number of issues
raised by the internal and external auditors.

Corporate governance
We acknowledge that the entity continues to strive towards applying sound principles of good corporate
governance. To this extent the entity has endeavoured to ensure that oversight sub-committees aimed at assisting
the board to advance its strategic direction are established and operational with all respective charters reviewed
on an annual basis.

There were, however, challenges with the operational effectiveness of the committees for the year under review.
This was mainly caused by inability of the committee meetings to quorate as some departmental representatives
do not have alternates for the committee. The matter has been escalated to the office of the Minister of Energy
and is receiving urgent attention.

Overall we are satisfied with advancements made by the entity towards applying best practice on corporate
governance in the interest of the entity and its stakeholders.

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annual financial statements
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Board audit and risk committee report
Risk management
The Board assigned the oversight responsibility of the risk management function to the committee. The entity
implemented a risk management strategy, which includes a fraud prevention plan. A formal risk assessment
was undertaken for the year ended 31 March 2015 with quarterly reviews, updates and reports. Consequently,
internal audit used this data to prepare the three-year rolling strategic plan and an annual operating audit plan.
The risk committee monitored the significant risks faced by the entity through risk reporting, evaluation of the
reports and participation in risk assessment workshop. We are satisfied that significant risks have been managed
to an acceptable level.

Appointment of auditors
The AGSA continues to serve as the independent external auditors of the public entity as mandated by the Public
Audit Act, 2004 (Act No. 25 of 2004). We have reviewed the audit strategy and audit fees and we are satisfied that
the audit strategy adopted is adequate for an organisation of this nature and size. We are also satisfied as to the
independence, skill and competence of the auditor.

The auditors continue to have unrestricted access to the committee and we are satisfied that they have had
unrestricted access to systems and records to enable them to arrive at their opinion.

Annual financial statements

We have:
Reviewed and discussed the unaudited annual financial statements to be included in the annual report,
with the AGSA and the accounting officer;
Reviewed the entitys compliance with legal and regulatory provisions;
Reviewed the AGSA management report and management responses thereto;
Reviewed accounting policies and practices;
Reviewed information on pre-determined objectives to be included in the annual report; and
Reviewed the annual financial statements for any significant adjustments resulting from the audit.

Auditor-generals report
The audit committee has met the auditorgeneral of South Africa and discussed its report to ensure that there
are no unresolved issues. We have also reviewed SANEDIs implementation plan for the audit issues raised in the
AGSA management report and continuous oversight will be exercised to ensure that all matters are adequately
addressed.

Conclusion

The committee expresses its sincere appreciation to the board, chief executive officer, management, internal
audit and the AGSA for their ongoing support. The committee also congratulates SANEDI for achieving another
unqualified audit report.

Ms P Motsielwa (Chairperson)
31 July 2015

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Accounting Authoritys report
Accounting Authoritys report

The directors present the Accounting Authority report that forms part of the audited annual financial statements
for the year ended 31 March 2015.

The South African National Energy Development Institute (SANEDI) is incorporated in terms of section 7 of the
National Energy Act 2008 (Act No. 34 of 2008), and is listed as a national public entity in terms of schedule 3 of
the Public Finance Management Act, 1999 (Act No 1 of 1999) (PFMA), as amended.

1. The Board of Directors acts as the Accounting Authority in terms of the PFMA.

Name Appointed Resigned/term


ended
Ms N Mlonzi 1 September 2011
Mr J Marriott 1 September 2011
Mr M Vilana 1 September 2011
Ms D Ramalope 17 October 2011
Mr M Gordon (alternate director) 17 October 2011
Dr D Hildebrandt 1 September 2011
Dr R Maserumule (alternate director) 26 June 2012
Ms P Motsielwa 23 October 2013
Ms M Modise 1 September 2011
Mr C Manyungwane (alternate director) 3 September 2013
Dr V Munsami 1 February 2013
Mr G Fourie 1 January 2013

Attendance at meetings
Name 11 June 2014 29 July 2014 8 October 2014
Ms M Mlonzi Y Y Y
Mr J Marriott Y Y N
Mr M Vilana N N N
Ms D Ramalope Y Y N
Mr M Gordon (alternate director) N N N
Dr D Hildebrandt Y Y N
Dr R Maserumule (alternate director) N N N
Ms M Modise N Y Y
Dr C Sita N N Y
Mr C Manyungwane (alternate director) N N N
Ms P Motsielwa Y Y Y
Mr G Fourie N Y Y
Y = Attended meeting
N = Apology received

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2. Board audit committee and board risk committee

Name Appointed Re-appointed Resigned


Mr V Magan 1 January 2008 1 January 2011
Ms P Motsielwa 23 October 2013
Dr C Sita 23 October 2013
Dr R Maserumule (alternate director) 23 October 2013
Dr D Hildebrandt 23 October 2013

Attendance at meetings
Name 25 April 26 May 27 May 28 July 22 October
2014 2015 2015 2014 2014
Mr V Magan Y Y Y Y N
Ms P Motsielwa Y Y Y Y Y
Dr C Sita Y N Y Y Y
Ms M Modise N Y N Y Y
Dr R Maserumule (alternate member) Y N N N Y
Dr D Hildebrandt Y N Y N Y
Y = Attended meeting
N = Apology received

3. Nature of business

Main business and operations


The main business and operations for the South African National Energy Development Institute (SANEDI)
are defined in Chapter 4 of the Energy Act, 2008 (Act No. 34 of 2008). In terms of the Act, the main
business and operations of SANEDI are:

Energy research and development; and


Energy efficiency.

The principal activities of the South African National Energy Development Institute are outlined below:

Undertake energy efficiency measures as directed by the Minister;


Increase energy efficiency throughout the economy;
Increase the gross domestic product per unit of energy consumed;
Optimise the utilisation of finite energy resources;
Direct, monitor, conduct and implement energy research and technology development in all fields
of energy, other than nuclear energy; and
Promote energy research and technology innovation.

In addition to the above, SANEDI is expected to provide the following:

Training and development in the field of energy research and technology development;
Establishment and expansion of industries in the field of energy;

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Commercialisation of energy technologies resulting from energy research and development
programmes;
Register patents and intellectual property in its name resulting from its activities;
Issue licenses to other persons for the use of its patents and intellectual property;
Publish information concerning its objectives and core functions;
Establish facilities for the collection and dissemination of information in connection with research,
development and innovation;
Undertake any other energy technology development related activity, as directed by the Minister,
with the concurrence of the Minister of Science and Technology;
Promote relevant energy research through cooperation with any entity, institution or person
equipped with the relevant skills and expertise within and outside the Republic;
Make grants to educational and scientific institutions in aid of research, by promoting the training
of research workers by granting bursaries or grants in aid of research;
Undertake the investigations or research that the Minister, after consultation with the Minister of
Science and Technology, may assign to it; and
Advise the Minister and the Minister of Science and Technology on research in the field of energy
technology.

4. Review of financial position


The entitys business and operations and the results thereof are clearly reflected in the accompanying
annual financial statements. All material subsequent events have also been adequately disclosed in the
financial statements note 20.

The entitys assets continue to exceed liabilities, with a positive cash balance being maintained in respect
of third party funding earmarked for research projects.

The overall allocation for the financial year under review was R168million. We continue to allocate a large
percentage of the overall budget towards funding research programmes with a total of 64% allocated for
projects and 36% for administrative activities as we strive towards the achievement of set targets.

There were no unspent administrative allocation funds at the end of the financial year. All other programme
funding is being spent as agreed with the relevant third parties.

5. Going concern
SANEDIs assets exceed its liabilities by R15million. SANEDI has applied for approval of the current surplus
funds of R0.035million from the National Treasury in terms of section 53(3) of the PFMA.

The directors believe that the entity will operate for the next foreseeable 12 months given the revised
allocation received from MTEC for the next financial year.

6. Review of operations
Government Gazette No. 34175, dated 1 April 2011 states that in terms of section 21 of the National
Energy Act, 2008 (Act No. 34 of 2008):

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I (The President of the Republic of South Africa), hereby fix 01 April 2011 as the date on which Chapter 4
of the said Act shall come into operation.

Chapter 4 of the National Energy Act, 2008 (No. 34 of 2008) provides for the establishment of the South
African National Energy Development Institute (SANEDI) as a successor to the previously created South
African National Energy Research Institute (Pty) Ltd (SANERI) and the National Energy Efficiency Agency
(NEEA) (a division of CEF SOC (Ltd). All assets, liabilities, and staff of SANERI and NEEA are legislated to be
vested in SANEDI.

The establishment of SANEDI therefore comprises the incorporation of two functioning bodies into one.

The relevant sections of the National Energy Act (sections 7 to 15) are operationalised. All employees
(including board members) of SANERI and NEEA are transferred to SANEDI and all assets and liabilities are
transferred to SANEDI. Funding which is currently allocated to SANERI through the science vote should be
budgeted for within the DoE budget and allocated to SANEDI through transfers and subsidies. Mechanisms
to ensure that CEF continues to provide support services and systems for SANEDI are in place.

Below are summaries of the highlights of the year:



Centre for Carbon Capture and Storage
The World Bank has advertised for expressions of interest for project technical advisory services for
the pilot CO2 storage project (PCSP) - submissions closed 20 April 2015. The pilot monitoring project at
Bongwana natural CO2 releases planning commenced with international participation. The South African
shale gas delegation (SANEDI, DoE, DST, DSW, PetroSA, PASA) to the USA took place in March,2015. The
first shale gas task (task 7 COs emission reductions due to fuel switching from coal to gas) was completed
and the draft report is being addressed by the shale gas steering committee.

Energy efficiency
bigEE (Bridging information gap on energy efficiency in buildings and appliances)
The international bigEE website launched the South Africa page in late January 2015 and the page has since
been operational and upgraded on continual basis. The page displays data knowledge on energy efficiency
policies, best available energy efficient appliances and the best technologies for energy efficient buildings.
It provides easy access to information that is up to date and relevant for both local and international
investors of energy efficiency. Furthermore the design, feel and look of the website is attractive and user
friendly. As such the website can be used by any interested party to gather information - from company
CEOs, professors, students writing their theses, to school pupils submitting assignments.

Since the launch of the bigEE project to date, 70% of the funds have been utilised and about 80% of the
work completed. The remaining objectives to be achieved are related to energy efficient buildings. The
appliances data has been collected, analysed and uploaded and will be closing in the coming months. All
additional aspects such as climatic zone map, actor constellation in both appliances and buildings have
been completed and will in future only be updated with time.

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Accounting Authoritys report
Appliances
The appliances part of the project has been completed and the subproject sign off will be end of May
2015. The data that can be expected on the web has been collected in the form of documents relating
to refrigerators and freezers, washing machine, tumble dryers, TVs and other electrical appliances. The
documents are specifically outline the technical aspect of the captured appliance technology. In addition
to the appliances, five policy documents have been developed as well. The following documents outline
the policy position of South Africa regarding the appliances and the topics that have been covered:

Template 8 (policy package in South Africa);


Template 7 for SWH/HP programme;
Template 7 for residential mass rollout programme/CFL programme;
Template 7 for SANS 10400XA; and
Template 7 12L tax incentive.

The information is available on www.bigEE.net/ (select South Africa).

Buildings
On the building aspect of the project, seemingly insurmountable challenges were encountered, and it
was only in the third quarter that solutions started to emerge. The project has leverages on the EEDSM
partnership between SANEDI and the University of Pretoria. The EEDSM head has been contracted to
assist in collecting data on best available technologies in buildings.

Wind Atlas of South Africa (WASA)


A WASA presentation was made to the Danish Minister for Climate, Energy and Buildings, the Danish
ambassador and delegation on 2 Sept 2014 at the University of Cape Town (UCT).

The Danish Minister encouraged the application of WASA to enhance the wind data and analysis in the
revised and future revisions of the independent resource plan (IRP). The issue of awareness raising and
training of the WASA phase 1 results was also raised with the Danish ambassador, who indicated that his
office could assist with this endeavour.

While an environmental impact assessment (EIA) is no longer required for wind met masts, any other
EIA listed activities that are triggered can result in a full EIA having to be done which could take up to six
months and more to complete. Therefore, special care was taken in the selection of the wind met masts
sites so that they will not trigger a full EIA and can still meet the input requirements for the WASA 2
modelling to be representative of the WASA 2 domain.

The WASA 2 wind measurements work package (WP22) CSIR team improvised and a rapid environmental
screening study was undertaken that confirmed that no other environmental issues were triggered at the
identified sites. This resulted in the masts site selection only being completed at the end of November
2014. The masts, installation and equipment tenders, that are dependent on the site selection, were
published in January 2015. Contracting of service providers is taking place with the masts and equipment
installation envisaged to be completed by June or July 2015 and with wind measurements, data capturing
and display to start July or August 2015.

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7. Subsequent events
The directors are not aware of any other matters or circumstances arising since the end of the financial
year, not otherwise dealt with in the annual financial statements which significantly affect the financial
position of the entity or the results of the operations.

8. Approval
The audited annual financial statements set out on pages 97 to 134 which have been prepared on the
going concern basis, were approved by the Accounting Authority on 31 July 2015 and were signed on its
behalf by:

Ms Rosette Nothemba Mlonzi


Chairperson - SANEDI Board

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Materiality and significance framework
Materiality and significance framework

For purposes of materiality (as per PFMA sections 50(1) and 55 (2)) and significance (as per PFMA sections 54(2))
framework the following acceptable levels were agreed with the Executive Authority in consultation with the
Auditor- General of South Africa:

Section 50(1): Material facts to be disclosed to the Minister of Energy are considered to be facts that may
influence the decisions or actions of the Stakeholders of the Public Entity.
Section 55(2): Disclosure of material losses in the annual financial statements will be for all losses through
criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred
during the year.
Section 54(2): The criteria to determine the level of significance was based on the guiding principles as
set out in the Practice Note on applications under Section 54 of the PFMA No. 1 of 1999 (as amended)
by Public Entities as published by National Treasury during 2006 subject to adjustments for any Section
54(4) exemptions.

The significant Rand level was determined as being 1% of revenue as follows:

APPROVAL LEVELS IN TERMS OF SECTION 54


Public Entitys board approval levels < 1 134 500
Obtain DoE approval and inform National Treasury > 1 134500

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Statement of financial position
Statement of financial position at 31 March 2015
Restated
2015 2014
Notes R000 R000
Assets

Non-current assets 5 107 8 292


Property, plant and equipment 2 2 781 3 926
Intangible assets 3 2 326 4 366

Current assets 371 802 154 155


Receivables from exchange transactions 4 6 743 2 893
VAT receivable 207 -
Cash and cash equivalents 5 364 852 151 262

Total assets 376 909 162 447

Liabilities
Current liabilities (361 369) (146 942)
Payables from exchange transactions 8 (14 901) (10 058)
Unspent conditional grants and receipts 6 (338 957) (129 618)
Provisions 7 (7 511) (7 266)

Total liabilities (361 369) (146 942)

Net assets
Accumulated surplus (15 540) (15 505)

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Statement of financial performance
Statement of financial performance
Restated
2015 2014
Notes R000 R000
Revenue
Revenue from non-exchange transactions 9 106 965 84 091
Revenue from exchange transactions 9 6 421 9 520

Total revenue 113 386 93 611

Expenditure

Employee related costs 11 (39 955) (34 032)


Project costs (51 770) (16 573)
Depreciation and amortisation 2,3 (4 846) (3 040)
Repairs and maintenance (342) (163)
Bad debts (538) -
Operating expenses 10 (15 868) (30 363)
(Loss)/Gain on foreign exchange (39) (53)
Impairments 2 7 (819)

Total expenditure (113 351) (85 043)

Surplus for the year 35 8 568

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Statement of changes in net assets
Statement of change in net assets
Accumulated Total net assets
surplus R000
Notes R000

Opening balance as at 31 March 2014 8 402 8 402

Prior period errors 19 (1 465) (1 465)

Surplus for the year 8 568 8 568

Restated opening balance as at 31 March 2014 15 505 15 505

Surplus for the year 35 35

Balance at 31 March 2015 15 540 15 540

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Cash flow statement
Cash flow statement
Restated
2015 2014
Notes R000 R000
Cash flows from operating activities

Receipts 321 660 161 998


Grants 301 478 145 481
Interest income 17 640 9 298
Membership fees and sponsorships 2 542 7 219

Payments (106 290) (149 527)


Employee costs (29 954) (32 744)
Suppliers (72 048) (44 983)
Transfers of funds (4 288) (71 800)

Net cash flows from operating activities 12 215 370 12 471

Cash flows from investing activities


Purchase of property, plant and equipment (419) (3 133)
Proceeds from sale of property, plant and equipment 14 58
Purchase of other intangible assets (1 375) (4 213)

Net cash flows from investing activities (1 780) (7 288)

Net increase in cash and cash equivalents 213 590 5 183

Cash and cash equivalents at the beginning of the year 5 151 262 146 079

Cash and cash equivalents at end of the year 5 364 852 151 262

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Accounting policies
Accounting policies

1. Presentation of annual financial statements

1.1. Basis of preparation

The annual financial statements have been prepared in accordance with the effective Standards of
Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives
issued by the Accounting Standards Board.

These annual financial statements have been prepared on an accrual basis of accounting and are in
accordance with historical cost convention unless specified otherwise. They are presented in South African
Rand.

The financial statements have been prepared on a going concern basis and the accounting policies have
been applied consistently throughout the period.

1.2. Translation of foreign currencies

Foreign currency transactions


A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign
currency amount the spot exchange rate between the functional currency and the foreign currency at the
date of the transaction. At each reporting date:
Foreign currency monetary items are translated using the closing rate;
Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction; and
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at
rates different from those at which they were translated on initial recognition during the period or in
previous annual financial statements are recognised in surplus or deficit in the period in which they arise.

When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component
of that gain or loss is recognised directly in net assets. When a gain or loss on a non-monetary item is
recognised in surplus or deficit, any exchange component of that gain or loss is recognised in surplus or
deficit.

Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign
currency amount the exchange rate between the Rand and the foreign currency at the date of the cash
flow.

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Accounting policies
1.3. Events after the reporting date

Recognised amounts in the annual financial statements are adjusted to reflect events arising after the
reporting date that provide evidence of conditions that existed at the reporting date. Events after the
reporting date that are indicative of conditions that arose after the reporting are dealt with by way of a
note.

1.4. Property, plant and equipment

Property, plant and equipment are tangible non-current assets that are held for use in the supply of goods
or services or for administrative purposes, and are expected to be used during more than one period.

Carrying amounts
All property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.

The cost of an item of property, plant and equipment is recognised as an asset when:
It is probable that future economic benefits or service potential associated with the item will flow
to the entity; or
The cost or fair value of the item can be measured reliably.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable
to bring the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an item of property, plant and equipment is acquired at no cost, or for a nominal cost, its cost is its
fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or
monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially
measured at fair value (the cost). If the acquired non-monetary assets fair value is not determinable, its
deemed cost is the carrying amount of the asset given up.

Cost includes costs incurred initially to acquire or construct an item of property, plant and equipment
and costs incurred subsequently to add to, or to replace a part of, or service it. If a replacement cost is
recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of
the replaced part is derecognised.

Finance costs directly associated with the construction or acquisition of major assets are capitalised at
interest rates relating to loans specifically raised for that purpose, or at the average borrowing rate where
the general pool of borrowings is utilised.

Derecognition
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no
future economic benefits are expected from its use.

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The gain or loss arising from the derecognition of an item of property, plant and equipment is determined
as the difference between the net disposal proceeds, if any, and the carrying amount of the item. Such
difference is recognised in the surplus or deficit when the item is derecognised.

Depreciation
Depreciation is charged so as to write off the depreciable amount of the assets, other than land, over their
estimated useful lives to estimated residual values, using the straight line method to write off the cost
of each asset that reflects the pattern in which the assets future economic benefits are expected to be
consumed by the entity.

Where significant parts of an item have different useful lives to the item itself, these parts are depreciated
over their estimated useful lives.

The following methods and rates are used during the year to depreciate property, plant and equipment to
estimated residual values:

Item Average useful life


Furniture, fittings and communication equipment 2 15 years
Office equipment 5 years
Computer equipment 3 years
Leasehold improvements Over the period of the lease

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total
cost of the item is depreciated separately.

The methods of depreciation, useful lives and residual values are reviewed annually.

1.5 Intangible assets



An asset is identified as an intangible asset when it:
Is capable of being separated or divided from an entity and sold, transferred, licensed, rented or
exchanged, either individually or together with a related contract, assets or liability; or
Arises from contractual rights or other legal rights, regardless whether those rights are transferable
or separate from the entity or from other rights and obligations. An intangible asset is an identifiable
non-monetary asset without physical substance.

Initial recognition
An intangible asset is recognised when:
It is probable that the expected future economic benefits or service potential that are attributable
to the asset will flow to the entity and
The cost or fair value of the asset can be measured reliably.

Cost
Intangible assets are initially recognised at cost if acquired separately or internally generated or at fair
value if acquired as part of a business combination. If assessed as having an indefinite useful life, the

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Accounting policies
intangible asset is not amortised but tested for impairment annually and impaired if necessary. If assessed
as having a finite useful life, it is amortised over its useful life using a straight line basis and tested for
impairment if there is an indication that it may be impaired.

Research
Expenditure on research (or on the research phase of an internal project) is recognised as an expense
when it is incurred.

Development costs
Development costs are capitalised only if they result in an asset that can be identified, and it is probable
that the asset will generate future economic benefits and the development cost can be reliably measured.
Otherwise it is recognised in surplus or deficit.

Derecognition
Intangible assets are derecognised on disposal, or when no future economic benefits or service potential
are expected from its use or disposal.

The gain or loss arising from the derecognition of an intangible asset is determined as the difference
between the net disposal proceeds, if any, and the carrying amount of the intangible asset. Such a
difference is recognised in surplus or deficit when the intangible asset is derecognised.

Amortisation is recognised in profit and loss, on a straight line basis, to their residual values as follows:

Item Useful life


Computer software 2 years

1.6 Non-current assets held for sale and disposal groups

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use. This condition is
regarded as met only when the sale is highly probable and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held for sale (or disposal group) are measured at the lower of their carrying amount
and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part
of a disposal group classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are
recognised in surplus or deficit.

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Accounting policies
1.7 Impairment of non-cash-generating assets

Cash-generating assets are those assets held by the entity with the primary objective of generating a
commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-
orientated entity, it generates a commercial return.

Non-cash-generating assets are assets other than cash-generating assets.

Identification
The entity assesses at each reporting date whether there is any indication that a non-cash-generating
asset may be impaired. If any such indication exists, the entity estimates the recoverable service amount
of the asset.

Recoverable service amount is the higher of a non-cash-generating assets fair value less costs to sell and
its value in use.

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is
impaired.

Irrespective of whether there is any indication of impairment, the entity also tests a non-cash-generating
intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for
use for impairment annually by comparing its carrying amount with its recoverable service amount. This
impairment test is performed at the same time every year. If an intangible asset was initially recognised
during the current reporting period, that intangible asset is tested for impairment before the end of the
current reporting period.

Value in use
Value in use of an asset is the present value of the assets remaining service potential.

The present value of the remaining service potential of an asset is determined using the following
approaches:

Depreciated replacement cost approach


The present value of the remaining service potential of a non-cash-generating asset is determined as the
depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the
assets gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset
may be replaced either through reproduction (replication) of the existing asset or through replacement
of its gross service potential. The depreciated replacement cost is measured as the reproduction or
replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis
of such cost, to reflect the already consumed or expired service potential of the asset.

The replacement cost and reproduction cost of an asset is determined on an optimised basis. The
rationale is that the entity would not replace or reproduce the asset with a like asset if the asset to be
replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features
which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that

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Accounting policies
have a greater capacity than is necessary to meet the demand for goods or services the asset provides.
The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus
reflects the service potential required of the asset.

Restoration cost approach


Restoration cost is the cost of restoring the service potential of an asset to its pre-impaired level. The
present value of the remaining service potential of the asset is determined by subtracting the estimated
restoration cost of the asset from the current cost of replacing the remaining service potential of the asset
before impairment. The latter cost is determined as the depreciated reproduction or replacement cost of
the asset, whichever is lower.

Recognition and measurement


If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment
loss.

An impairment loss is recognised immediately in surplus or deficit.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-
generating asset is adjusted in future periods to allocate the non-cash-generating assets revised carrying
amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Reversal of an impairment loss


The entity assesses at each reporting date whether there is any indication that an impairment loss
recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If
any such indication exists, the entity estimates the recoverable service amount of that asset.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has
been a change in the estimates used to determine the assets recoverable service amount since the last
impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service
amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset
attributable to a reversal of an impairment loss does not exceed the carrying amount that would have
been determined (net of depreciation or amortisation) had no impairment loss been recognised for the
asset in prior periods.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or


deficit.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-
cash-generating asset is adjusted in future periods to allocate the non-cash-generating assets revised
carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

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Accounting policies
Re-designation
The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-
cash-generating asset to a cash-generating asset only occurs when there is clear evidence that such a
redesignation is appropriate.

1.8 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to
ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and
rewards incidental to ownership.

Operating lease payments are recognised as an expense on a straight line basis over the lease term. The
difference between the amounts recognised as an expense and the contractual payments are recognised
as an operating lease asset or liability.

The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on
a straight line basis over the lease term.

Any contingent rent is recognised separately as an expense when paid or payable and is not straight lined
over the lease term.

1.9 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or a residual interest of another entity. A financial asset is:
Cash;
A residual interest of another entity; or
A contractual right to:
Receive cash or another financial asset from another entity; and
Exchange financial assets or financial liabilities with another entity under conditions that are
potentially favourable to the entity.

A financial liability is any liability that is a contractual obligation to:
Deliver cash or another financial asset to another entity; or
Exchange financial assets or financial liabilities under conditions that are potentially unfavourable
to the entity.

Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial
liabilities that have fixed or determinable payments, excluding those instruments that:
The entity designates at fair value at initial recognition; or
Are held for trading.

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Accounting policies
Financial instruments at fair value comprise financial assets or financial liabilities that are:
Derivatives;
Combined instruments that are designated at fair value; and
Instruments held for trading.

A financial instrument is held for trading if:


It is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or
On initial recognition is part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual pattern of short term profit-taking;
Non-derivative financial assets or financial liabilities with fixed or determinable payments that are
designated at fair value at initial recognition; and
Financial instruments that do not meet the definition of financial instruments at amortised cost or
financial instruments at cost. Financial assets and financial liabilities are recognised on the entitys
statement of financial position when the entity becomes a party to the contractual provisions of
the instrument.

Financial assets
The entitys principal financial assets are accounts receivable as cash and cash equivalents.

The entity has the following types of financial assets (classes and category) as reflected on the face of the
statement of financial position or in the notes thereto:

Class Category
Loans receivable Financial asset measured at amortised cost
Trade and other receivables Financial asset measured at amortised cost
Cash and cash equivalents Financial asset measured at amortised cost
Investments Financial asset measured at amortised cost

Financial liabilities
The entity has the following types of financial liabilities (classes and category) as reflected on the face of
the statement of financial position or in the notes thereto:

Class Category
Trade and other payables Financial liability measured at amortised cost

Initial recognition
The entity recognises a financial asset or a financial liability in its statement of financial position when the
entity becomes a party to the contractual provisions of the instrument.

Initial measurement
The entity measures a financial asset and financial liability at amortised cost initially at its fair value, plus
transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial
liability.

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Subsequent measurement
The entity measures all financial assets and financial liabilities after initial recognition using the following
category:
Financial instruments at amortised cost.

All financial assets measured at amortised cost, or cost, are subject to an impairment review.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset
or financial liability is measured at initial recognition, minus principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between that initial amount
and the maturity amount, and minus any reduction (directly or through the use of an allowance account)
for impairment or uncollectability.

Gains and losses


For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised
in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through
the amortisation process.

Trade and other receivables


Trade receivables are measured at initial recognition at fair value, and are subsequently measured at
amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable
amounts are recognised in profit or loss when there is objective evidence that the asset is impaired.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 30 days overdue) are considered
indicators that the trade receivable is impaired. The allowance recognised is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows discounted at
the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount
of the loss is recognised in the income statement within operating expenses. When a trade receivable is
uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited against operating expenses in the income statement.

Trade and other receivables are classified as loans and receivables.

Trade and other payables


All financial liabilities are measured at amortised cost, comprising original debt less principal payments
and amortisations.

Cash and cash equivalents


Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk
of changes in value. These are initially and subsequently recorded at fair value.

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Accounting policies
Derecognition
The entity derecognises financial assets using trade date accounting. The entity derecognises a financial
asset only when:
The contractual rights to the cash flows from the financial asset expire, are settled or waived;
The entity transfers to another party substantially all of the risks and rewards of ownership of the
financial asset; or
The entity despite having retained some significant risks and rewards of ownership of the financial
asset, has transferred control of the asset to another party and the other party has the practical
ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability
unilaterally and without needing to impose additional restrictions on the transfer.

In this abovementioned case, the entity:


Derecognises the asset and
Recognises separately any rights and obligations created or retained in the transfer.

The carrying amounts of the transferred asset are allocated between the rights or obligations retained
and those transferred on the basis of their relative fair values at the transfer date. Newly created rights
and obligations are measured at their fair values at that date. Any difference between the consideration
received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of
the transfer.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the
sum of the consideration received is recognised in surplus or deficit.

Financial liabilities
The entity removes a financial liability (or a part of a financial liability) from its statement of financial
position when it is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled,
expires or is waived.

The difference between the carrying amount of a financial liability (or part of a financial liability)
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven
or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with
the Standard of GRAP on revenue from non-exchange transactions (taxes and transfers).

Fair value measurement considerations


The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument
is not active, the entity establishes fair value by using a valuation technique. Valuation techniques include
using recent arms length market transactions between knowledgeable, willing parties, if available,
reference to the current fair value of another instrument that is substantially the same, discounted cash
flow analysis and option pricing models. If there is a valuation technique commonly used by market
participants to price the instrument and that technique has been demonstrated to provide reliable
estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen
valuation technique makes maximum use of market inputs and relies as little as possible on entity-

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specific inputs. It incorporates all factors that market participants would consider in setting a price and is
consistent with accepted economic methodologies for pricing financial instruments. Periodically, an entity
calibrates the valuation technique and tests it for validity using prices from any observable current market
transactions in the same instrument (i.e. without modification or repackaging) or based on any available
observable market data.

Provisions
Provisions are recognised when:
The entity has a present obligation as a result of a past event;
It is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; and
A reliable estimate can be made of the obligation

The amount of a provision is the best estimate of the expenditure expected to be required to settle the
present obligation at the reporting date. Where the effect of time value of money is material, the amount
of a provision is the present value of the expenditures expected to be required to settle the obligation. The
discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another
party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement
will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The
amount recognised for the reimbursement does not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions
are reversed if it is no longer probable that an outflow of resources embodying economic benefits or
service potential will be required to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the
passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised. Provisions
are not recognised for future operating deficits.If an entity has a contract that is onerous, the present
obligation (net of recoveries) under the contract is recognised and measured as a provision.

Contingent assets and contingent liabilities


Contingent assets and contingent liabilities are not recognised, but disclosed in the notes.

1.10 Revenue

1.10.1 Revenue from exchange transactions exchange



Exchange transactions are transactions in which one entity receives assets or services, or has liabilities
extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services,
or use of assets) to another entity in exchange.

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Accounting policies
Measurement revenue is measured at the fair value of the consideration received or receivable, net of
trade discounts and volume rebates.

Sale of goods
Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

The entity has transferred to the purchaser the significant risks and rewards of ownership of the
goods;
The entity retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits or service potential associated with the transaction will
flow to the entity; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably

Rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue
associated with the transaction is recognised by reference to the stage of completion of the transaction
at the reporting date. The outcome of a transaction can be estimated reliably when all the following
conditions are satisfied:
The amount of revenue can be measured reliably;
It is probable that the economic benefits or service potential associated with the transaction will
flow to the entity;
The stage of completion of the transaction at the reporting date can be measured reliably; and
The costs incurred for the transaction and the costs to complete the transaction can be measured
reliably.

When services are performed by an indeterminate number of acts over a specified time frame, revenue is
recognised on a straight line basis over the specified time frame unless there is evidence that some other
method better represents the stage of completion. When a specific act is much more significant than any
other acts, the recognition of revenue is postponed until the significant act is executed.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably,
revenue is recognised only to the extent of the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at the reporting
date. Stage of completion is determined by services performed to date as a percentage of total services to
be performed.

Interest, royalties and dividends


Revenue arising from the use by others of entity assets yielding interest, royalties and dividends is
recognised when:

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Accounting policies
It is probable that the economic benefits or service potential associated with the transaction will
flow to the entity; and
The amount of the revenue can be measured reliably.

Interest is recognised in surplus or deficit, using the effective interest rate method.

1.10.2 Revenue from non-exchange transactions

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange
transaction, an entity either receives value from another entity without directly giving approximately
equal value in exchange, or gives value to another entity without directly receiving approximately equal
value in exchange.

Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement imposed upon
the use of a transferred asset by entities external to the reporting entity.

Conditions on transferred assets are stipulations that specify that the future economic benefits or service
potential embodied in the asset is required to be consumed by the recipient as specified or future
economic benefits or service potential must be returned to the transferor.

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred
asset may be used, but do not specify that future economic benefits or service potential is required to be
returned to the transferor if not deployed as specified.

Recognition
An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue,
except to the extent that a liability is also recognised in respect of the same inflow.

As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources
from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability
recognised and recognises an amount of revenue equal to that reduction.

Measurement
Revenue from a non-exchange transaction is measured at the amount of the increase in net assets
recognised by the entity.

When, as a result of a non-exchange transaction, the entity recognises an asset, it also recognises revenue
equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is
also required to recognise a liability. Where a liability is required to be recognised it will be measured as
the best estimate of the amount required to settle the obligation at the reporting date, and the amount
of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced,
because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is
recognised as revenue.

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Accounting policies
Gifts and donations, including goods and services in-kind, including goods in-kind, are recognised as assets
and revenue when it is probable that the future economic benefits or service potential will flow to the
entity and the fair value of the assets can be measured reliably.

Services in-kind are not recognised.

Membership fees
Revenue from membership fees are recognised as revenue from non-exchange revenue and are recognised
and measured in accordance with GRAP 23.

Conditional grants and receipts


Revenue received from conditional grants, donations and funding are recognised as revenue to the extent
that the entity has complied with any of the conditions embodied in the agreement. To the extent that the
conditions have not been met a liability is recognised.

1.11. Irregular, fruitless and wasteful expenditure and unauthorised expenditure



Irregular expenditure as defined in section 1 of the PFMA is expenditure incurred in contravention of, or
that is not in accordance with:
A requirement of the Public Finance Management Act, 1999 (Act No. 29 of 1999) (PFMA); or
A requirement of the State Tender Board Act, 1986 (Act No.86 of 1986), or any regulations made in
terms of the Act; or
A requirement in any provincial legislation providing for procurement procedures in that provincial
government.

All expenditure relating to irregular expenditure is recognised as an expense in the statement of financial
performance in the year that the expenditure was incurred. The expenditure is classified in accordance
with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the
statement of financial performance.

Fruitless expenditure means expenditure which was made in vain and would have been avoided had
reasonable care been exercised. All expenditure relating to fruitless and wasteful expenditure is recognised
as an expense in the statement of financial performance in the year that the expenditure was incurred.
The expenditure is classified in accordance with the nature of the expense, and where recovered, it is
subsequently accounted for as revenue in the statement of financial performance.

Unauthorised expenditure means:


Overspending of a vote or a main division within a vote; and
Expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in
accordance with the purpose of the main division.

All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of


financial performance in the year that the expenditure was incurred. The expenditure is classified in
accordance with the nature of the expense, and where recovered, is subsequently accounted for as
revenue in the statement of financial performance.

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Accounting policies
When the Accounting Authority determines the appropriateness of disciplinary steps against an official,
the Accounting Authority must take into account:
The circumstances of the transgression;
The extent of the expenditure involved, and
The nature and seriousness of the transgressio

All unauthorised, irregular or fruitless and wasteful expenditures are disclosed as a note to the annual
financial statements of the entity.

1.12. Borrowing costs



Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets
are added to the cost of those assets, until the assets are substantially ready for their intended use or
sale. Qualifying assets are assets that necessarily take a substantial period to get ready for their intended
use or sale. Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the cost of those assets.

Other borrowing costs are recognised as an expense in the period in which they are incurred.

1.13. Key accounting judgments and key sources of estimation uncertainty



In preparing the annual financial statements, management is required to make estimates and assumptions
that affect the amounts represented in the annual financial statements and related disclosures. Use of
available information and the application of judgment are inherent in the formation of estimates. Actual
results in the future could differ from these estimates which may be material to the annual financial
statements.

Significant judgment includes:

Going concern
Management considers key financial metrics in its approved medium-term budgets, together with its
existing term facilities, to conclude that the going concern assumption used in the compiling of its annual
financial statements is relevant.

Other provisions
For other provisions, estimates are made of legal or constructive obligations resulting in the raising
of provisions, and the expected date of probable outflow of economic benefits to assess whether the
provision should be discounted.

Impairment testing
The recoverable (service) amounts of individual assets and cash-generating units have been determined
based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require
the use of estimates and assumptions.

The entity reviews and tests the carrying value of assets when events or changes in circumstances suggest
that the carrying amount may not be recoverable. If there are indications that impairment may have
occurred, estimates are prepared of expected future cash flows for each group of assets.

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Accounting policies
Useful lives of property, plant and equipment and intangible assets
The entitys management determines the estimated useful lives and related depreciation charges for
property, plant and equipment and intangible assets. This estimate is based on the condition and use of
the individual assets, in order to determine the remaining period over which the asset can and will be
used.

Fair value estimation


The fair value of financial instruments traded in active markets (such as trading and available-for-sale
securities) is based on quoted market prices at the end of the reporting period. The quoted market price
used for financial assets held by the entity is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over-the
counter derivatives) is determined by using valuation techniques. The entity uses a variety of methods
and makes assumptions that are based on market conditions existing at the end of each reporting
period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other
techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining
financial instruments. The carrying values of trade receivables and payables are assumed to approximate
their fair values.

1.14 Employee benefits



Short-term employee benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are due to
be settled within twelve months after the end of the period in which the employees render the related
service. Short-term employee benefits include items such as:
wages, salaries and social security contributions;
short-term compensated absences (such as paid annual leave and paid sick leave) where the
compensation for the absences is due to be settled within twelve months after the end of the
reporting period in which the employees render the related employee service;
bonus, incentive and performance related payments payable within twelve months after the end
of the reporting period in which the employees render the related service and non-monetary
benefits (for example, medical care, and free or subsidised goods or services such as housing, cars
and cellphones) for current employees.

When an employee has rendered service to the entity during a reporting period, the entity recognises the
undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:
as a liability (accrued expense), after deducting any amount already paid. If the amount already
paid exceeds the undiscounted amount of the benefits, the entity recognises that excess as an
asset (prepaid expense) to the extent that the prepayment will lead to for example, a reduction in
future payments or
a cash refund and
as an expense, unless another Standard requires or permits the inclusion of the benefits in the
cost of an asset.

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The expected cost of compensated absences is recognised as an expense as the employees render services
that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.
The entity measures the expected cost of accumulating compensated absences as the additional amount
that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting
date.

The entity recognises the expected cost of bonus, incentive and performance related payments when the
entity has a present legal or constructive obligation to make such payments as a result of past events and a
reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic
alternative but to make the payments.

Post-employment benefits: Defined contribution plans
When an employee has rendered service to the entity during a reporting period, the entity recognises
the contribution payable to a defined contribution plan in exchange for that service: as a liability (accrued
expense), after deducting any contribution already paid. If the contribution already paid exceeds the
contribution due for service before the reporting date, an entity recognise that excess as an asset (prepaid
expense) to the extent that the prepayment will lead to, for example, a reduction in future payments
or a cash refund; and as an expense, unless another Standard requires or permits the inclusion of the
contribution in the cost of an asset.

1.15 Related parties



The entity operates in an economic sector currently dominated by entities directly or indirectly owned by
the South African Government. As a consequence of the constitutional independence of the three spheres
of government in South Africa, only entities within the national sphere of government are considered to
be related parties.

Key management are those persons responsible for planning, directing and controlling the activities of
the entity, including those charged with the governance of the entity in accordance with legislation, in
instances where they are required to perform such functions.

Close members of the family of a person are considered to be those family members who may be expected
to influence, or be influenced by, that management in their dealings with the entity.
Only transactions with related parties not at arms length or not in the ordinary course of business are
disclosed.

1.16 Budget information



A reconciliation between the statement of financial performance and the budget has been included in the
annual financial statements, as the recommended disclosure as determined by National Treasury, as the
annual financial statements and the budget are not on the same basis of accounting. Refer to note 23 -
Reconciliation between budget and statement of financial performance.

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Accounting policies
1.17 Prior period error

Prior period errorsare omissions from, and misstatements in, the entitys financial statements for one or
more prior periods arising from a failure to use, or misuse of, reliable information that was available and
could reasonably be expected to have been obtained and taken into account in preparing these financial
statements. Such errors result from mathematical mistakes, mistakes in applying accounting policies,
oversights and/or misinterpretations of facts.

A prior period error shall be corrected by retrospective restatement except to the extent that it is
impracticable to determine either the period-specific effects or the cumulative effect of the error.

Any prior period error affecting the third set of comparable financial statements shall be disclosed as a
narrative note to the prior period error note. The statement of changes in net assets will be amended in
the prior year comparative financial statements as one line item.

1.18 New standards and interpretations



Standards and interpretations effective and adopted in the current year
In the current year, the entity has adopted the following standards and interpretations that are effective
for the current financial year and that are relevant to its operations:

Standards and interpretations not yet effective or relevant


The following approved Standards of GRAP that have been issued, but are not yet effective, are likely
to affect the annual financial statements when they are adopted as these Standards have been used to
formulate and inform the current accounting policies and disclosures:
1. GRAP 20: Related party disclosures
2. GRAP 32: Service concession arrangements: grantor; and
3. GRAP 108: Statutory receivables

Adoption of the amendments to the Standards of GRAP issued in 2012 and various interpretations of the
Standards of GRAP did not have a significant effect on the financial statements.

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Notes to the annual financial statements
Notes to the annual financial statements

2. Property, plant and equipment

2015 2014
Accumulated Carrying Accumulated Carrying
Cost depreciation values Cost depreciation values
Furniture and fixtures 1 630 (674) 956 1 626 (407) 1 219
Office equipment 223 (79) 144 156 (48) 108
Computer equipment 3 601 (2 123) 1 478 3 413 (1 075) 2 338
Leasehold improvements 74 (50) 24 74 (32) 42
Communication equipment 288 (109) 179 273 (54) 219
Total 5 816 (3 035) 2 781 5 542 (1 616) 3 926

Reconciliation of property, plant and equipment 2015


Opening Disposals/
balance Additions impairments Depreciation Total
Furniture and fixtures 1 219 4 - (267) 956
Office equipment 108 67 - (31) 144
Computer equipment 2 338 333 (133) (1 060) 1 478
Leasehold improvements 42 - - (18) 24
Communication equipment 219 15 - (55) 179
Total 3 926 419 (133) (1 431) 2 781

Reconciliation of property, plant and equipment 2014


Opening Disposals/
balance Additions impairments Depreciation Total
Furniture and fixtures 1 297 183 (3) (258) 1 219
Office equipment 133 2 - (27) 108
Computer equipment 456 2 776 (19) (875) 2 338
Leasehold improvements 890 - (749) (99) 42
Communication equipment 172 172 (68) (57) 219
Total 2 948 3 133 (839) (1 316) 3 926

Management has reviewed useful lives at 31 March 2015 and concluded that they fairly reflect the expected
usage of assets. Proceeds, amounting to R13 727 were received from the company insurance for a stolen laptop.

3. Intangibles assets

31 March 2015
2015 2014
Accumulated Carrying Accumulated Carrying
Cost depreciation values Cost depreciation values

Computer software 7 840 (5 514) 2 326 6 465 (2 099) 4 366

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Notes to the annual financial statements
3. Intangibles assets (continued)

Reconciliation of intangibles assets 2015


Opening
balance Additions Amortisation Total

Computer software 4 366 1 375 (3 415) 2 326

Reconciliation of intangibles assets 2014


Opening
balance Additions Amortisation Total

Computer software 1 877 4 213 (1 724) 4 366

4. Receivables from exchange transactions

Financial assets at amortised cost


Restated
2015 2014
R000 R000
Receivables from exchange transactions 7 883 7 021
Employee costs in advance 15
Prepayments 32 98
Project prepayments 2 883
PAYE control 34
UIF control 3
Provision for bad debts (5 180) (4 646)
Recoverable fruitless and wasteful expenditure 12
Interest receivable 1 076 405
6 743 2 893

Trade and other receivables are not pledged as security. The entity does not hold any collateral as security.

Trade and other receivables past due but not impaired

Trade and other receivables which are less than 3 months past due are not considered to be impaired; however,
conditions should not exist that indicate impairment.

At 31 March 2015 R1.7 million (2014: R1.8 million) were past due but not impaired.

The ageing of amounts past due but not impaired is as follows:


1 3 months past due - 1 162
3 6 months past due 1 131 638
6 12 months past due 538 -

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Notes to the annual financial statements
Trade and other receivables impaired
The amount of the provision was R5.2 million as of 31 March 2015 (2014: Restated
R4.7 million) 2015 2014
R000 R000
The ageing of these receivables is as follows:
Over 6 months 5 180 4 646

Reconciliation of provision for impairment of trade and other receivables:


Opening balance 4 646 6 821
Amounts written off as uncollectable (2 175)
Additional provision 534
Provision for doubtful debts 5 180 4 646

The creation and release of provision for impaired receivables have been included in operating expenses in
surplus. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable
mentioned above.

5. Cash and cash equivalents

Cash and cash equivalents consist of:


Cash on hand 15 10
Bank balances 364 837 151 252
364 852 151 262

There are no restrictions placed on the realisation or usability of cash balances. The entity does not have access
to any additional undrawn facilities.

6. Unspent conditional grants and third party funds

Unspent conditional grants and receipts comprises:


Unspent grants and third party funds 338 957 129 618

Movement during the year


Balance at the beginning of the year 129 618 125 248
Prior period error - 417
Additions during the year and interest 264 619 95 202
Income recognition during the year (55 280) (19 449)
Transfers* - (71 800)
338 957 129 618

*An amount of R106 million was repaid, on 30 April 2015, to the RDP Fund for the EU AID demo project and the
Danish renewable energy programme.

These amounts are invested in money market accounts and interest accrues to the invested money.

SANEDI Annual Report 2014/15 121


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
6. Unspent conditional grants and third party funds (continued) Restated
2015 2014
R000 R000
Unspent conditional grants and receipts comprises:
Danish commercial building project 460 472
European Union project (COCATE) 457 524
FP7 135 67
SA Carbon Capture and Storage centre 190,693 85 736
Centre for energy systems and research 4,984 4 110
SA road map 755 734
SDC EE monitoring and Implementation project 1 380 940
Working for energy programme 19,755 25 137
EU AID demo project 94,343 4 288
REEEP 431 797
Wind resource mapping 2 331 4 221
Shale gas 9 134 1 627
Danish renewable energy programme 13 545 -
EEDSM 179 1 024
Energy efficiency - (51)
SASGI - (8)
Green transport 375 -
338 957 129 618

7. Provisions

Reconciliation of provisions 2015


Opening
balance Utilised Additions Closing
R000 R000 R000 R000
Bonus provision 7 266 (7 266) 7 511 7 511

Reconciliation of provisions 2014


Opening Utilised Additions Bonus
balance R000 R000 provision
R000 R000
Bonus provision 7 921 (7 921) 7 266 7 266

The bonus provision is calculated based on a percentage of the entitys performance and the individual
performance ratings of staff members.

122 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
8. Payables from exchange transactions
Restated
2015 2014
R000 R000
Trade payables 745 889
Accruals 11 630 6 695
PAYE control - 7
WCA 93 -
UIF control 6 11
SDL control - 21
Salary control 28 144
Garnishee control 29 -
Medical aid fund control 20 38
Leave provision 2 350 2 253
14 901 10 058

9. Revenue

9.1 Revenue non exchange is made up as follows:


MTEF allocation 51 685 61 374
Recognition of unspent conditional grants 55 280 22 717
106 965 84 091

9.2 Revenue from exchange transactions is made up as follows:


Interest received 832 225
Membership fees and sponsorships 5 512 7 260
Other income 77 2 035
6 421 9 520
113 386 93 611

Interest is earned on monies in invested in money market accounts with various banks through CEF (SOC) Limited
per the service level agreement.

9.2.1 Other Income


Income from tenders 19 67
Other debtors written-off - (66)
Income from current account - 9
Profit on sale of assets - 25
Refund - 2 000
PV of creditors 58
77 2 035

SANEDI Annual Report 2014/15 123


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
10. Operating expenses
Restated
2015 2014
R000 R000
Advertising 258 1 092
Bank charges 30 23
Audit fees 818 715
Consulting and legal fees 228 6 792
IT licence fees 363 -
Entertainment 186 114
Electricity 505 -
Insurance 283 205
Conferences and seminars 1 364 70
Lease rentals on operating lease 3 251 3 949
Marketing and promotional expenditure 1 512 5 420
Postage and courier 3 16
Printing and stationery 658 489
Subscriptions and membership fees 1 931 451
Telephone and fax 563 384
Travel local 1 380 3 199
Travel overseas 678 2 496
Administration expenses 1 857 4 948
15 868 30 363
11. Employee related costs
Basic 29 135 25 396
Bonus 7 796 5 090
Medical aid entity contributions 450 438
UIF 77 68
WCA 51 45
SDL 358 320
Other payroll levies 6 5
Leave pay provision charge 164 1 145
Employee welfare and training 425 154
Recruitment and relocation costs 96 -
Provident and pension contributions 1 144 1 156
Travel, motor car, accommodation, subsistence and other allowances 253 215
39 955 34 032

In terms of SANEDIs leave pay policy, employees are entitled to accumulated vested leave pay benefits not taken
within a leave cycle, provided that any leave pay benefits not taken within a period of one year after the end of
the leave cycle are forfeited.

124 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
12. Cash generated from operations
Restated
2015 2014
R000 R000
Surplus 35 8 568
adjustments for:
Depreciation and amortisation 4 846 3 040
Impairments (7) 819
Foreign exchange transactions - 53
Accrued expenses (82) (1,496)
Movement on bonus provision 245 655
Provision for bad debts reversal - (2 175)

Changes in working capital:


210 333 3 007
Trade and other receivables (3 849) (632)
Payables from exchange transactions 4 843 (731)
Unspent conditional grants and receipts 209 339 4 370
215 370 12 471

13. Commitments

Operating lease commitments: CEF (SOC) Limited


Minimum lease payments due
Within one year 408 339

Block C, Upper Grayston Office Park, 152 Ann Crescent, Strathavon, Sandton. The entity has leased Portion 13,
remaining Extent of Erf 14, Portion 1 of Erf 14 Simba Township, together with the building erected thereon
from CEF (SOC) Limited. The agreement commenced on 1 April 2012 and the rent payable shall annually, on the
anniversary date, escalate by 10% or alternatively, shall escalate in accordance with the CPI, whichever is greater.
Either party shall be entitled to terminate this lease on six months written notice to the other party.

Operating lease commitments: City Square Trading 522 (Pty) Ltd


Minimum lease payments due
Within one year 2 589 2 369
Second to fifth year inclusive 3 567 6 451
6 156 8 820

Block E, Upper Grayston Office Park, Erf 20 Simba Township, Sandton. SANEDI leased units 9 12 on the second
floor of Block E, Upper Grayston Office Park, located at Erf 20 Simba Township, Sandton, from City Square Trading
522 (Pty) Ltd. The lease commenced on 1 May 2012 and the rent payable shall annually, on the anniversary date,
escalate by 8.25%. The lease terminates on 30 April 2017. SANEDI has the option to extend the lease for another
5 years.

SANEDI also leased unit 1 on the ground floor of Block E, Upper Grayston Office Park, located at Erf 20 Simba
Township, Sandton, from City Square Trading 522 (Pty) Ltd. The lease commenced on 1 January 2013 and the rent
payable shall annually, on the anniversary date, escalate by 8.25%. The lease terminates on 31 December 2017.
SANEDI has the option to extend the lease for another five years.

SANEDI Annual Report 2014/15 125


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
13. Commitments (continued) Restated
2015 2014
R000 R000
Printing equipment
Operating lease commitments for printing equipment
Minimum lease payments due
Within one year 59 72
Second to fifth year inclusive 5
0 181
109 253

SANEDI has entered into a 36 months lease for photocopiers. The lease has no escalation clause and is payable
monthly in advance.

Defaults and breaches


There was no default during the period of principal, interest, sinking fund or redemption terms of loans payable.
No terms were renegotiated before the financial statements were authorised for issue.

Contractual commitments

Within one year 149 647 21 886


Second to fifth year inclusive 5 786 -
155 433 21 886

SANEDI has entered into various contracts with service providers for the achievement of its key deliverables for
the Danish renewable energy programme; Working for Energy (WfE) programme; the Centre for Energy Systems
Research, the Hub for energy efficiency and demand side management and various projects under the clean
energy programme.

Capital commitments approved not contracted for

Within one year 840 1 080

These are capex commitments budgeted for and approved by the board but not contracted for.

14. Contingencies

Surplus funds
SANEDI has a surplus for the year ended 31 March 2015 amounting to R0.035 million (Surplus 2014:
R8.6 million). A request has been submitted to National Treasury to retain the surplus, in terms of Section
53 of the Public Finance Management Act.

126 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
15. Related parties

Compensation to key management 31 March 2015


Basic Performance Subsistence Entity 2015
Salary Allowances Bonus and travel Leave contributions R000
Mr KM Nassiep -
chief executive officer 1 825 132 717 97 182 32 2 985
Ms L Manamela -
chief financial officer 1 064 24 - - 29 15 1 132
Dr AD Surridge 1 191 108 537 2 45 92 1 975
Mr D Batte 1 242 24 426 - 136 21 1 849
Dr M Bipath 1 122 84 499 - 51 183 1 939
Dr T Mali 1 141 66 423 51 (44) 181 1 818
Mr C Snyman 1 068 24 310 32 61 18 1 513
Mr D Mahuma 1 242 24 356 7 118 20 1 767
Mr B Bredenkamp 1 183 24 499 85 88 182 2 061
Total 11 078 510 3 767 274 666 744 17 039

31 March 2014
Basic Performance Subsistence Entity 2014
Salary Allowances Bonus and travel Leave contributions R000
Mr KM Nassiep -
chief executive officer 1 719 132 769 75 71 206 2 972
Ms L Manamela - chief
84 2 - - - 10 96
financial officer
Dr AD Surridge 1 123 108 465 7 - 204 1 907
Mr D Batte 1 174 24 397 - - 86 1 681
Dr M Bipath 1 058 84 500 15 49 200 1 906
Dr T Mali 1 076 66 429 46 46 222 1 885
Mr C Snyman 905 21 - 0 - 75 1 001
Mr D Mahuma 1 174 24 247 35 - 77 1 557
Mr B Bredenkamp 1 118 24 465 85 224 1 916
Total 9 431 485 3 272 263 166 1 304 14 921

Members emoluments
Committee fees Restated
2015 2014
R000 R000
Mr J Marriott 7 32
Ms N Mlonzi 23 24
Ms M Modise* - -
Mr M Vilana* - -
Dr D Hilderbrant 6 24
Mr M Gordan* - -
Prof E Meyer* - -
Ms D Ramalope* - -
Dr R Maserumule * (alternate director) - -
Ms P Motsielwa 25 8

SANEDI Annual Report 2014/15 127


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
Committee fees (continued) Restated
2015 2014
R000 R000
Mr G Fourie* - -
Mr C Manyungwana* - -
Dr C Sita* - -
Dr V Munsami* - -
61 88
* These members are not remunerated in their personal capacity

Board audit committee


Committee fees
Ms P Motsielwa 25 -
Mr V Magan 15 27
Ms M Thomani - -
Ms M Nyathi - 12
Dr C Sita* - -
Dr R Maserumule - -
Dr D Hildebrandt 15 4
55 43
* These members are not remunerated in their personal capacity.

SANEDI has been established by the Department of Energy and in terms of national legislation. SANEDI is
ultimately controlled by the Department of Energy.

Grants Received
Department of Energy 162 685 134 344
Department of Science and Technology 5 100 6 000

All transactions with related parties are arms length and will not be disclosed separately.

16. Financial instruments



Introduction
The entity has a risk management and central treasury function that manages the financial risks relating to
the entitys operations. The entitys liquidity, credit, foreign exchange and interest rate risks are monitored
continually. Approved policies exist for managing these risks.

Risk profile
The entity utilises the services of risk management and the treasury department in CEF (SOC) Limited to
manage the financial risks relating to the entitys operations.

128 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
Risk management objectives and policies
The entitys objective in using financial instruments is to reduce the uncertainty over future cash flows
arising from movements in foreign exchange and interest rates. Throughout the year under review it has
been, and remains, the entitys policy that no speculative trading in derivative instruments be undertaken.

Credit risk
Financial assets, which potentially subject the entity to concentrations of credit risk, pertain principally to
trade receivables and investments in the South African money market. Trade receivables are presented
net of the allowance for doubtful debts.

The exposure to credit risk with respect to trade receivables is not concentrated due to a large customer
base.

The entity manages counter party exposures arising from money market and derivative financial
instruments by only dealing with well-established financial institutions of a high credit rating. Losses are
not expected as a result of non-performance by these counter parties.

Credit limits with financial institutions are revised and approved by the board quarterly.

Fair value
The entitys financial instruments consist mainly of cash and cash equivalents, trade receivables and trade
payables.

As at 31 March 2014 no financial asset was carried at an amount in excess of its fair value and fair values
could be reliably measured for all financial assets that are available for sale or held for trading.

The following methods and assumptions are used to determine the fair value of each class of financial
instrument:

Cash and cash equivalents


The carrying amounts of cash and cash equivalents approximates fair value due to the relatively short term
maturity of these financial assets.

Trade receivables
The carrying amounts of trade receivables net of provision for bad debt, approximates fair value due to the
relatively short term maturity of this financial asset.

Trade payables
The carrying amounts of trade payables approximates fair value due to the relatively short-term maturity
of these liabilities.

The carrying value of short-term borrowings approximates fair value due to the relatively short-term
maturity of these liabilities. The fair values of other long term borrowings are not materially different from
the carrying amounts.

SANEDI Annual Report 2014/15 129


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
Maturity profile
The maturity profiles of financial assets and liabilities at the statement of financial position date are as follows:

At 31 March 2015
Less than 1 Between 1 and
year 5 years Over 5 years Non-interest Total
Cash and cash equivalents 364 852 - - - 364 852
Trade and other receivables 6 743 - - - 6 743
VAT receivable 207 - - - 207
Total financial assets 371 802 - - - 371 802

Liabilities
Trade and other payables 14 901 - - - 14 901

At 31 March 2014
Held to
Less than 1 Between 1 and maturity
year 5 years Over 5 years Investments Total
Cash and cash equivalents 151 262 - - - 151 262
Trade and other receivables 2 893 - - - 2 893
Loans receivable
Total financial assets 154 155 - - - 154 155

Liabilities
Trade and other payables 10 058 - - - 10 058

Financial instruments by category:

31 March 2015
Fair value Fair value
through Profit through Profit
Loans and and loss held and loss des-
receivables for trading ignated Non-interest Total
Cash and cash equivalents 364 852 - - - 364 852
Trade and other receivables 6 743 - - - 6 743
VAT receivable 207 - - - 207
Total financial assets 371 802 - - - 371 802

Liabilities
Trade and other payables 14 901 - - - 14 901

130 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
At 31 March 2014
Fair value Fair value
through Profit through Profit
Loans and and loss held and loss des-
receivables for trading ignated Non-interest Total
Cash and cash equivalents 151 262 - - - 151 262
Trade and other receivables 2 893 - - - 2 893
Loans receivable
Total financial assets 154 155 - - - 154 155

Liabilities
Trade and other payables 10 058 - - - 10 058

Liquidity risk
The entity manages liquidity risk through proper management of working capital, capital expenditure and actual
versus forecasted cash flows. Adequate reserves and liquid resources are also maintained. The table below
analyses SANEDIs financial liabilities based on the remaining period at the statement of financial position to
the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

At 31 March 2015
Less than 1 Between 1 and
year 5 years Over 5 years Non-interest Total
Liabilities
Trade and other payables 14 901 - - - 14 901
Commitments 149 647 5 786 - - 155 433
Total financial liabilities 164 548 5 786 - - 170 334

At 31 March 2014
Less than 1 Between 1 and Over 5 years Held to Total
year 5 years maturity
investments
Liabilities
Trade and other payables 10 058 - - - 10 058
Commitments 21 886 - - - 21 886
Total financial liabilities 31 944 - - - 31 944

17. Fruitless and wasteful expenditure


Restated
2015 2014
R000 R000
Reconciliation of fruitless and wasteful expenditure

Opening balance 2 -
Fruitless and wasteful expenditure relating to current year 34 2
Less: Amounts condoned by the Board of Directors - -

Fruitless and wasteful expenditure awaiting condonation 36 2

SANEDI Annual Report 2014/15 131


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
Current year fruitless and wasteful expenditure is as a result of:
Interest caused by delays with interbank transfers, resulting in payments being allocated late; and
Two late payments to supplier. Amount will be recovered from the employee who caused the irregular
expenditure.

The necessary steps have been taken to recover the money from the individual staff. Staff have signed an
acknowledgement of debt.

Prior year fruitless and wasteful expenditure was incurred as a result of late payments made to a supplier. All
fruitless and wasteful expenditure was condoned by the Board after the financial year.

18. Irregular expenditure


Restated
2015 2014
R000 R000
Reconciliation of irregular expenditure

Opening balance 19 102 12 644


Irregular expenditure relating to current year 426 6 458
Less: Amounts condoned by Board (19 102) -

Irregular expenditure awaiting condonation 426 19 102



Condonation of irregular expenditure
At the board meetings held on 11 June 2014 and 29 June 2015, the Board of Directors approved the condonation
of irregular expenditure.

As at the 31 March 2015, none of the irregular expenditure had been condoned by the National Treasury.
Contravention of legislation (Preferential Procurement Policy Framework Act).

No tax clearance certificates

Goods and services were procured from suppliers without obtaining confirmation that that their tax
matters were in good order resulting in irregular expenditure of R0.098 million. (2014: R1 211 million).
BEEE scores not considered
Goods and services were procured from suppliers without taking into account the BEEE score of the
subcontractor resulting in irregular expenditure of R0.151 million. (2014: R0.726 million).
Deviation not approved by appropriate authority
Goods and services were procured from suppliers without deviation from open procurement process
being approved by the Accounting Authority resulting in irregular expenditure of R0.177 million. (2014:
R1.377 million).

132 SANEDI Annual Report 2014/15


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
19. Prior period errors

Trade and other receivables

Prepayments relating to straight-lining of operating lease were corrected.



Trade and other payable/revenue from exchange transactions

Uncleared balances relating to travel and subsistence, salary advances and PAYE were incorrectly accounted
for, resulting in duplicate entries in the clearing accounts. The balances for clearing accounts were written
off to the statement of financial performance.

Deferred income/revenue from non-exchange

SACCCS, REEEP, Coal Roadmap and CESAR deferred income balance was corrected with monies incorrectly
accounted for under SANEDI.

Operating expenditure

Invoices relating to the prior year were corrected with monies incorrectly accounted for under the current
financial year.

The correction of the error(s) results in adjustments as follows:



Statement of financial position Restated
2014
R000
Property, plant and equipment 5
Receivables from exchange (963)
Trade and other payable (528)
Deferred Income (417)

Statement of financial performance


Revenue from non-exchange transactions (849)
Revenue from exchange transactions 936
Personnel costs (4)
Depreciation 2
Operating expenses 130
Repairs and maintenance 1
Project costs 222

Prior period errors, amounting to R1.5 million, affecting the 2012/13 financial year impacts directly on the
accumulated surplus.

SANEDI Annual Report 2014/15 133


annual financial statements
for the year ended 31 March 2015
Notes to the annual financial statements
20. Events after balance sheet date

Subsequent to the financial year, on 30 April 2015, an amount of R106 million was repaid to the RDP fund
for the EU AID demo project and the Danish renewable energy programme.

21. Statement of comparative and actual information

Actual Actual
outcome outcome
as a as a
percentage percentage
Original Budget Final Final of original of final
Notes budget adjustments budget outcome Variance budget budget
Financial
performance
Grants and other
receipts 1 319 684 - 319 684 113 386 206 298 35% 35%

Total income 319 684 - 319 684 113 386 206 298 35% 35%

Employee costs 2 43 439 - 43 439 39 955 3 484 92% 92%


Depreciation and
asset impairment - - - 4 846 (4 846) -100% -100%
Project costs 3 259 549 - 259 549 51 770 207 779 20% 20%
Operating
expenditure 4 16 696 - 16 696 16 780 (84) 101% 101%
-
Total expenditure 319 684 - 319 684 113 351 206 333 35% 35%

Surplus for the year 35

Notes
1. Additional Grants from the RDP funds were received for the EU smart metering projects. Moreover
interest that was not budgeted for was earned on grants from money market investments.
2. The increase in employee costs is due to new project related vacancies which arose as a result of new
projects undertaken during the year. These vacancies were not additionally budgeted for. Key vacancies
such as the one for the company secretary and the HR manager were not filled during the year.
3. The variance in projects expenses was as a result of delays in the approval of project plans and finalisation
of project agreements with affected parties. Further details are provided in the performance report.
4. Operating expenditure is in line with the budget and the variance was as a result of cost saving measures
that were applied by the entity during the year.

134 SANEDI Annual Report 2014/15


SANEDI Annual Report 2014/15 135
A state-owned entity established under Section 7 of the National Energy Act 2008, (Act No. 34 of 2008).

Telephone: 011 038 4300


Physical Address: BLOCK E,
Upper Grayston Office Park,
150 Linden Road, Strathavon, Sandton
Postal Address: PO Box 9935, Sandton, 2146
Email: exec@sanedi.org.za
Website: www.sanedi.org.za

RP244/2015
ISBN: 978-0-621-43838-3

ANNUAL REPORT 2014/15

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