South African Business 2018 edition

OVERVIEW Energy

OVERVIEW Energy South Africa’s energy mix is becoming more diverse. Between November 2011 and July 2016, South Africa received commitments of investments to the value of nearly R200- billion through an innovative and efficient programme which encouraged private investment into the South African power generation sector. The Renewable Energy Independent SECTOR INSIGHT Private investors have put nearly R200-billion into renewable energy. SOUTH AFRICA: INSTALLED CAPACITY Eskom: legacy coal plants Eskom: peaking power Decommissioning from 2020 Gas, pumped storage, hydro 37 754MW 5 819MW Eskom: new coal Medupi and Kusile 9 564MW Nuclear Koeberg, Cape Town 1 940MW Eskom: RE 100MW IPP, renewable energy REIPPPP 3 314MW Other IPPs 1 713MW Total 60 204MW SOURCE: ESKOM INTEGRATED ENERGY REPORT, 2017 Private Producers Procurement Programme (REIPPPP) came about in a hurry because the lights went out in South Africa – literally – in 2008. Officials within Treasury were mandated to set up a programme to attract private investors. According to figures released by the Department of Energy, the REIPPPP by 2016 had not only delivered multiple millions in investments, but also created more than 30 000 jobs and benefited local community development to the tune of R256-million. SOUTH AFRICAN BUSINESS 2018 76

OVERVIEW Whereas national utility Eskom’s supply of power was insufficient for a booming South African economy in 2008, the global economic slowdown that kicked in later that year meant that by the time independent producers were selling to the grid (also controlled by Eskom), electricity demand was much reduced. Eskom itself had been adding power to the grid and improving the maintenance of its existing fleet. Eskom is investing heavily in two new coal-fired power stations. Medupi and Kusile power stations will jointly generate 9 564MW. These factors resulted in Eskom refusing to sign any more power purchase agreements with independent producers. Although Eskom’s shareholder, the Minister of Energy, said that the REIPPPP was still government policy, it was not until the third quarter of 2017 that the process was started again, but this time with a limit imposed by the state on how much could be charged for energy in new contracts. Many in the renewable energy sector believe that the price cap of 77 cents per kilowatt-hour (kWh) will deter many possible investors and make small-scale renewable energy projects (such as small-hydro) impossible. One of the consequences of the policy uncertainty of 2016- 2017 was that DCD Group sold its share in the Coega IDZ-based DCD Wind Towers joint venture for R1. South Africa’s electricity comes mainly from Eskom’s coal-fired power stations. The Koeberg WATERPROOFING PROMOTES ENERGY EFFICIENCY With energy efficiency being a vital part of all new building codes, having a cool roof coating pays off in a number of ways. With the surface and the interior of the building being cooler, air-conditioning costs are reduced, the environment is better off, the building is code compliant and incentives and tax breaks could come into play. Roof coatings available from Topps make all of this possible. A cool roof acts like a sunshade in the windshield of a car. The white coating deflects the sun’s rays away from the building. An industrial grade cool roof maintenance coating like Topps Seal® brings the additional benefit of extending the life of the roof. In Knoxville, Tennessee, a retail store recorded 24.5% energy reduction after the application of Topps Seal®. Topps Seal® is triple-certified, by Miami-Dade County (US), CRRC and Energy Star. Energy Star-qualified products can reduce the amount of air conditioning needed in buildings and can reduce peak demand by 10%-15%. A cool roof reduces greenhouse gases and keeps the building cooler inside by deflecting the sun’s rays. Some government and local utilities offer incentives and tax breaks for roofs that qualify as a “cool roof” along with tax deductions for performing roof maintenance. Topps Seal® won’t freeze and it won’t wash off, saving unwanted expenses and mess. Use of the world’s leading repair product, Topps Polyprene®, ensures that what is sealed remains sealed. With roofing materials expanding and contracting at different rates, stresses develop on seams and the areas around penetrations – vents, signs, flashings, pitch pockets, joints and rooftop equipment. Heavily fibred Polyprene won’t crack when it gets cold. It stays pliable permanently and stops leaks from recurring. It has been voted the #1 repair compound among professional roofers. Creating a reliable seal promotes building efficiency by keeping the building’s heat within the envelope, reducing costs by avoiding heating loss. The same is true for cooling systems. A long-lasting seal also contributes to reducing maintenance costs. 77 SOUTH AFRICAN BUSINESS 2018