(Ed) 2006. Energy policies for sustainable development in South Africa

20 ENERGY POLICIES FOR SUSTAINABLE DEVELOPMENT IN SOUTH AFRICA
In the residential sector, for example, the savings to households from greater energy
efficiency can directly contribute to alleviating energy poverty. Turning current voluntary
guidelines for new housing into mandatory standards (especially in middle- and upperincome
housing) would facilitate this. But even before this happens, building codes in the
commercial sector, which has greater financial capacity, should become mandatory.
Government is taking the lead in some of its own buildings in this regard, but more could
be done. Government procurement could impose energy efficiency standards on a wider
range of equipment. Standards for a diversity of equipment (such as variable speed drives,
air compression, heating, ventilation and cooling (HVAC) systems) can help increase
industrial energy efficiency. Appliance labelling and mandatory energy performance
standards are other measures that should be considered. All efforts to improve industrial
energy efficiency would contribute to economic development.
The transport sector is a large sector of energy consumption at municipal level, with large
emissions of both local and global pollutants. Improved fuel efficiency standards would
increase the energy efficiency of the national fleet. Vehicle emissions standards are
currently being considered by the Department of Environmental Affairs and Tourism.
Implementing efficiency measures requires institutional support. The institutional
framework needs to be strengthened, both within and outside government. A national
agency championing energy efficiency would consolidate efforts, possibly working in
collaboration with energy service companies. Research, development and demonstration
would be of particular importance.
2.4.3 Renewable energy
At present, the commercial exploitation of South Africa’s renewable energy sources is
limited, but it is clear that the cost of renewable energy will continue to decline as the
technologies mature. Increased use of renewables will require the introduction of new
policies. The White Paper on Renewable Energy (2003) set a target of 4% of projected
electricity demand for 2013 (DME 2003b). A strategy for implementing this target needs to
be formulated, focussing on specific projects and their financing.
The government has often stated its intention to improve the local content of renewable
energy technologies used in South Africa. Hence a policy should be set up for progressively
increasing local content in the local manufacture of renewable technologies. Such a policy
should be accompanied by government-sponsored enabling conditions for local technology
development.
Strengthening the regulatory framework for promotion of these technologies within the
NER will help their development. Financial support for renewables in the form of subsidies
and tax incentives should be considered, targeted for a limited period. Initially, it appears
that the national Treasury will set aside funds on a once-off basis, but in the longer term,
financing schemes will have to be considered. They could include:
• feed-in tariff mechanisms;
• portfolio quotas with or without tradable certificates;
• tax incentives;
• green pricing.
In late 2005, the Renewable Energy Finance and Subsidy Office was established. The
Office’s mandate includes the management of renewable energy subsidies and provision of
advice to developers and other stakeholders on renewable energy finance and subsidies,
including size of awards, eligibility, and procedural requirements (www.dme.gov.za/dme/
energy/refso.htm).