enerbal show

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ENERGY EFFICIENCYWhy is it important to South
Africa?
Randall Spalding-Fecher PPC WORKSHOP ON ENERGY
EFFICIENCY AND DEMAND SIDE MANAGEMENT30 August
2001
Energy Development Research CentreUniversity
of Cape Town
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Overview

• Rationale energy efficiency and development
• South Africas energy intensity
• Barriers to energy efficiency
• Energy efficiency and the White Paper
• Policy instruments and the role of government

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What is energy efficiency?

• People dont want energy, they want energy
  services
• Energy efficiency relates
• energy input (kilowatt hours or litres of fuel)
• to energy services output (passenger-kilometres,
  litres of hot water per minute)

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Only 6 of input energy becomes light!
100
34
31
6
Power station
Transmission distribution
Incandescent lightbulb
5
100
Only 10 of the energy in petrol moves the car
forward!
40
19
15
10
Tyres wind
Braking
Combustion chamber
Engine losses
Trans- mission
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Why bother with energy efficiency?

• Energy money
• More efficient use gtgt
• greater industrial and commercial competitiveness
• more disposal income for households

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Economic benefits from interventions in poor
households
Annual economic benefit (R m, total programme)
60
50
40
30
20
10
0
CFLs
Thermal efficiency
Refrigerators
levelised NPV for programme, including external
costs
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Why bother with energy efficiency?

• Energy has major health and environmental
  impacts
• More efficient use gtgt
• cleaner air (indoors and outdoors) and fewer
  health problems
• fewer accidents (paraffin, coal mines)
• more clean water available

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Reducing health costs through energy efficiency

• Health impacts of wood and coal smoke
• Paraffin poisoning and fires
• Air pollution from coal-fired power plants

Avoided costs
CFLs
Ceilings
Refrigerators
R m/year
0.7
37.6
3.3
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South Africas energy intensity is very high
0.57
Total primary energy supply/GDP, 1998(toe/000
1990 US ppp)
0.39
0.32
0.32
0.26
0.25
0.19
S Africa
Non-OECD
India
Africa
OECD
China
Brazil
Source IEA
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Energy intensity is related to economic structure

• Coal-based energy industries have low conversion
  efficiencies (eg power stations, boilers)
• Energy-intensive resource-based industries are
  large part of economy
• Primary minerals benefication is highly energy
  intensive
• Reliance on coal for electricity generation
  (95)
• Production of liquid fuels from coal and gas

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Barriers to energy efficiency (1)

• Awareness and information - who ever heard of?
• Split incentives
• energy suppliers vs users
• contractor vs owner/tenant

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Barriers to energy efficiency (2)

• Financing the up front cost - new equipment
• Low energy costs - do they reflect real cost?
• Lack of access to clean and efficientfuels and
  appliances

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... more barriers

• Supply side paradigm and bias in regulation
• eg electricity tariffs, petrol pricing
• Lack of policy and departmental co-ordination
• Urban structure - poor planning and transient
  populations

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Energy efficiency and the White Paper (1)

• Promote awareness in commercial and industrial
  sectors
• Establish energy efficiency standards for
  industrial equipment
• Facilitate audits, demonstrations and training
  programmes
• Develop voluntary guidelines on energy efficient
  low cost housing

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Energy efficiency and the White Paper (2)

• Reduce energy consumption in government
  installations
• Education programme for decision makers around
  low cost housing and energy
• Promote appliance-labelling programme

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Electricity restructuring and energy efficiency

• Unbundling means strong disincentive for
  generation utilities to invest in the demand-side
• Even distribution utilities need significant
  tariff reform to provide incentives

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Implementing the White Paper - regulation

• Utility regulation
• Integrated Resource Planning requirements
• Set rate-of-return instead of margin
• Pricing reform leveling the playing field
• Efficiency guidelines and standards mandatory
  to overcome disincentives
• Appliance labellling and standards

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Implementing the White Paper - financing

• Direct incentives tax credits, subsidies,
  concessionary interest rates
• advanced technologies, cogeneration, renewables
• Develop financing models small scale is key for
  consumers energy efficient bonds, refinancing
• Seek international funding and technology
  transfer Global Environmental Facility, Clean
  Development Mechanism

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Implementing the White Paper - information and
policy

• Awareness campaigns always coupled with other
  programmes
• Promote energy service companies
• Cross sectoral/departmental co-ordination -
  Interdepartmental Task Team model

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Conclusions

• Energy efficiency is the cheapest way to supply
  energy needs - it is cheaper to save energy than
  to supply energy
• Government role in removing barriers to socially
  beneficial projects is essential

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although energy intensity has declined
Trend in energy intensity (TPES/GDP)
50
40
MJ TPES/US
30
MJ TPES/US PPP
20
10
0
1993
1994
1995
1996
1997
1998
commercial energy
Source Reserve Bank, DME
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Bringing together role players and programmes in
government

• DME new office for energy efficiency
  (Directorate)
• SABS equipment and material standards
• Dept of Housing housing standards
• Dept of Transport transport regulations, new
  taxi programme, intermodal switching and
  infrastructure
• NER electricity licences and IRP, DSM cost reco
  very
• Local planning, transport and public works
  departments town planning, infrastructure,
  electrification

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The ideal house

• Thermally efficient
• orientation
• construction materials
• ceilings and insulation
• Household best fuel practice
• electricity for lighting, refrigeration and media
• gas for cooking (also electricity and coal)
• coal and gas for space heating
• solar for water heating
• Efficient electrical and non-electrical
  appliances
• Energy-efficient lighting