Challenges Facing the City of Cape Town in Meeting Renewable Energy Targets Dr Bulumko Msengana Executive Director: Utility Services City of Cape Town Organised by
International Perspective Greenhouse gas emissions driving up world temperatures resulting in global climate change Kyoto Protocol 1997 Industrialized countries to reduce greenhouse gas emissions by at least 5% compared to 1990 levels by 2012 RSA has no binding targets, but must report on voluntary adaptation and mitigation measures taken RSA can access CDM finance
National Perspective-Electricity RSA s electricity sector primarily fuelled by coal 95% of electricity generated by Eskom Rapid economic growth has resulted in 15% p.a. growth in electricity demand Lagging increase in generating capacity Peak winter demand cannot always be met Widespread power blackouts last winter in Western Cape due to Koeberg shut down Base load supply to run out by 2010 Number of projects in pipeline to address the shortage
National Perspective-Electricity cont d Fast track OCGT gas (diesel) fired power stations being built at Atlantis and Mossel Bay in Western Cape Coal fired moth-balled power stations being recommissioned New coal fired power stations to be built Announcements made regarding 2 nd nuclear power station Electricity price expected to increase rapidly
Fossil Fuel Reliance High percentage of RSA s overall energy is sourced from fossil fuels 95% of electricity generated from coal Due to high reliance on fossil fuels, RSA one of largest proportional GHG emitters in the world
White Paper on Renewable Energy Policy 2003 Goal: R.E. industry offering sustainable, fully non-subsidised alternative to fossil fuel National target of 10 000 GWh energy annually from renewable sources by 2013 Equates to 4% of electricity demand for 2013 or two of Eskom s 660 MW generating units
White Paper Strategy White paper envisages: Financial incentives Appropriate policies and frameworks Phased flexible strategy with manageable subsidy requirements while coal based electricity costs are low Sees funding being more available from 2009 to 2014 as coal based electricity costs increase and subsidy requirements reduce
Current state of National Progress Limited number of R.E. Projects-all small scale Darling Wind Farm Bethlehem hydro ethekwini (Durban) landfill gas to electricity and others Nelson Mandela (PE) wind and SWH projects Non-electrical-limited SWH initiatives investigating subsidy arrangement National strategy recently released by DME on bio-fuels
Current state of National Progress cont d Legislation and alternative financing mechanisms National working group being established to formalise voluntary Trec system Draft terms of reference issued by NERSA in February 2007 for a Request for proposals for Development of a Renewable Energy Regulatory Environment including a feed-in tariff top-up system in support of 10 000GWh target
Cape Town s Energy and Climate Change Strategy Recognizes global concerns about climate change Acknowledges responsibility of all players, including local authorities Identifies sources and consumers of energy Sets visions and associated goals and measures
Cape Town s Energy Consumption Spread Total Energy Consumption by Energy Source Diesel 18% HFO 4% Wood 1% Electricity 33% Petrol 38% Paraffin 2% Coal LPG 3% 1%
Cape Town s Energy and Climate Change Strategy cont d 10% of energy to be sourced from renewable sources by 2020 10% of houses fitted with solar water heaters by 2013 Primary role of City is to be facilitative Create enabling framework for investment and project development
Current City Initiatives-Wind Darling wind farm: DWF is a pilot project funded by National Government, private funding and Danish Government grant City has signed a 20 year contract to purchase all green electricity generated by the farm at a premium Green Electricity to be sold to voluntary purchasers willing to pay premium Market for green electricity to be developed Farm to become operational in Spring 2007
Current City Initiatives-Solar Solar water heater by law: In investigative stage Will require new houses to be fitted with SWH s Business models supporting role out of Solar Water Heaters being investigated
Challenges regarding Renewable Energy (R.E) Low cost of coal sourced electricity- approximately 13c per kwh R.E. generally much more expensive- large scale wind sourced electricity costs 50c to 60c per kwh Without financial support, R.E. projects will not happen on a large scale Need clear regulatory framework Inhibiting legislation governs Local Government procurement and expenditure Carbon financing is beginning to make some projects more viable
Challenges regarding (R.E) cont d R.E. and the power shortage crisis R.E. generally does not have high availabilitytherefore needs costly energy storage in order to meet base load requirements Must compare R.E. costs with marginal cost of new generation of Eskom, not historical/present day cost of electricity. Eskom price to rise rapidly in near future - double- digit increases
Challenges regarding (R.E) cont d Further Challenges: R.E. projects should be market driven Is Public Sector s role that of Project Implementer? Restricting legislation governs public expenditure and investment wrt. R.E.
Other Barriers Lack of co-ordination and integration amongst government stakeholders wrt. policy implementation Lack of technical and implementation skills in public sector Project management is not a core business of government stakeholders.
Energy Efficiency and R.E. E.E. in RSA historically poor Huge potential for energy saving Last winter Western Cape reduced peak demand by > 500 MW due to ESKOM DSM programme Challenge is to maintain savings in a sustainable way E.E. MUST be the starting point for any sustainability initiative
Summary For meaningful R.E. progress, need government to create the right market conditions: Sufficient financial support Supportive legislation Closer-co-ordination between main Government stakeholders Government to take stronger action in facilitating project development
Next Steps Cape Town s focus will be on: Developing a market for and selling Green Electricity generated by the Darling wind Farm Wider use of Solar Water Heaters Keeping abreast of industry developments and increasing its renewable energy mix as appropriate opportunities arise
Challenges Facing the City of Cape Town in Meeting Renewable Energy Targets Thank you!