SOUTH AFRICAS OFF GRID PROGRAMME

POLICY FRAMEWORK FOR ENABLING ACCESS

South Africa: Energy Environment

Long history of electrification
Eskom established 1923 Largest Utility in Africa Electricity for all programme post-Apartheid 3 million households connected in 10 years But still 25% of households or 3.4 million without electricity

RE Policy in South Africa

Two RE policy initiatives Grid connect; over $300 billion investment over next 20 years (19,000 MW) Off-grid Concession Programme started in 2001 focusing on distributed SHS in rural areas

Off-grid concession programme

Conceived 1998 launched 2001 Competitive tender for rights to service designated concession areas with government subsidy Technology 50Wp SHS (12v system) Target 300,000 households by 2006

Off-grid concessions

Off-grid market

Current status
Three out of five still operating 50,000 systems out of proposed 300,000 installed Concession businesses now social enterprises rather than commercial

Programme evaluation: policy

Supportive: Concession programme launched, awarded and over 50,000 SHS installed A subsidy provided by central government to reduce capital costs A level of operating subsidy also made available FBAE grant

Policy (Cont.)
Disruptive: No off-grid champion in central government very pro-grid with Eskom leading Delays in concession contracts created uncertainty particularly for investors No firm and practical criteria for determining offgrid Vs grid = churn and uncertainty Politicisation of electricity access undermined programme votes linked to grid expansion Subsidy lower than grid ($580 Vs $1460)

Business evaluation
Supportive; Over 300 jobs created in off-grid market and local component manufacturing opportunity International investors (Nuon, EdF, Total) involved Disruptive; No product diversification/integration still 50Wp single product Is the fee-for-service model right?

Market evaluation
Market not content with 50Wp 12v system increased demand for colour TVs. Business model not responding Increasing household energy costs should translate into new product opportunities (like solar lanterns, etc.) Households treated like beneficiaries and not consumers with different needs, pockets and aspirations

Yet the outlook is positive

Government acknowledges increased electricity costs will create diversified HH fuel demand SHS will meet electricity demand Larger systems offered with greater subsidy achieve parity with grid service offer IFC working with Department of Energy on new electrification model KfW investing considerable resources in Offgrid programme in SA

Thank-you!