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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