1

DEPARTMENT OF ENERGY

PRESENTATION ON THE

INTEGRATED NATIONAL

ELECTRFICATION PROGRAM (INEP)

10 September 2013

Annual Report Presentation1. Introduction2. Key focus areas3. Allocation 13/14 financial year 4. Socio-Economic Impact5. Universal access challenges6. New Household Electrification Strategy7. Additional aspects8. Way forward

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Introduction

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INEP’s response to the 12 Government Outcomes and PICC

INEP contributes to the following DoE and Government’s Outcomes Based Planning Approach:

Outcome 4 – Decent employment through inclusive economic growth;

Outcome 6 – An efficient, competitive and responsive economic infrastructure network

Outcome 7 – Vibrant, equitable and sustainable rural communities with food security for all

Outcome 8 – Sustainable human settlement and improved quality of household life and

Outcome 9 – A responsive, accountable, effective and efficient local government system.

INEP is also reporting into SIP 1, 4, 6 and 10 of the PICC process.

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Key Focus Areas for 2012/13

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• Close to 5.7 million households were connected to the grid between 1994 and 2013/14.

• In the period from 2002 to 2013/14 – 68 115 households were supplied with non-grid technology (Solar panels – Renewable Energy)

• Eastern Cape - 13 202• Kwazulu Natal - 44 532• Limpopo - 10 381

Electrification progress

•Non-grid electrification programmes will in future not only be implemented in concessionary areas, but in a limited basis in other areas of the country.

Province

Electrified Houses:

Municipalities & Eskom

Eastern Cape 1 018 398

Free State 363 529

Gauteng 672 320

KwaZulu Natal 925 102

Limpopo 987 835

Mpumalanga 544 327

Northern Cape 133 537

North West 658 209

Western Cape 386 707

Total 5 689 964

MUNIC PROGRAMME 2012/13 – PERFORMANCE APRIL 2013

PROVINCE ALLOCATION R’000

TRANSFERRED R ‘000

EXPENDITURE R’000

PLANNED CONNECTIONS

CONNECTIONS ACHIEVED

YTD Actual Connections INCLUDING ROLLOVERS

EC 279,400 270,420 116,591 16494 2996 7601

FS 79,300 69,300 24,495 3827 932 3258

GP 168,000 188,000 91,328 7859 3874 6216

KZN 234,000 240,000 38,270 16491 549 4684

LIM 125,300 132,500 64,330 13078 4843 10255

MP 74,943 75,823 31,527 5931 2248 5390

NW 49,300 43,300 11,677 3852 546 4292

NC 59,900 60,800 32,019 3590 887 2892

WC 61,300 71,300 39,646 2725 2401 6032

TOTAL R1,151,443 R1,151,443 R449,883 73 847 19 276 50 620

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ESKOM PROGRAMME 2012/13– PERFORMANCE APRIL 2013

PROVINCE ALLOCATION TRANSFERED EXPENDITURE PLANNED CONNECTIONS

CONNECTIONS ACHIEVED

YTD Actual Connections INCLUDING ROLLOVERS

EC R488,340,000 R488,340,000 R 398,287,779 22,227 17151 21480

FS R39,118,000 R39,118,000 R 22,590,440

2,815 3326 3559

GP R104,882,000 R104,882,000 R 86,620,958

9,568 9688 12843

KZN R510,292,000 R510,292,000 R 527,353,057

26,111 17963 20653

LIM R233,028,000 R233,028,000 R 175,898,147

22,198 23553 26812

MP R108,566,000 R108,566,000 R 85,843,897

9,385 10568 12082

NW R246,988,000 R246,988,000 R 123,921,150

12,779 10516 12062

NC R36,108,000 R36,108,000 R 14,871,096

1,338 1511 1643

WC R110,046,000 R110,046,000 R 68,879,182

7,803 8618 9907

TOTAL R1,879,368,000

R1,879,368,000

R 1,504,265,708 114 224 102 894 121 041

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TOTAL ALLOCATION

R’000

Planned Connections

Total Expenditure to date R’000

Connections Achieved to

Date

R 86 400 13 310 R 58 327 9 343

Non grid – Solar home systems

2012/13 Financial year

Target of 180 000 was exceeded Improved efficiencies as a result of being more involved in the

operational activities of implementers.

Good co-operation from Eskom and Municipalities

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INEP PERFORMANCE (12/13)

Entity MTEF Allocations

Connections INEP (including

roll-overs)

Connections Own funding

Total Connections

Eskom (bn) R 1,879 368 121 041 21 831 142 872Municipalities (bn) R 1,151 443 50 620 50 620Non-grid (mil) R 86 400 9 343 9 343Total R 3,117,211 181 004 21 831 202 835

Allocations 13/14 Financial year

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Allocations 2013/142013/14

(R’000)

MUNICIPALITIES R 1,314,772

PLANNED CONNECTIONS 103,864

ESKOM (NATIONAL) R 2,141,027

PLANNED CONNECTIONS 157,839

NON - GRID R 91,150

PLANNED CONNECTIONS 15 000

TOTAL PLANNED CONNECTIONS

276 703*

TOTAL ALLOCATIONS R 3,546,951

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•Connections might change as projects are moving from design into implementation phase.

Connection and Bulk Allocations for 2013/14

PROVINCE Total Allocation

(R’ 000)

Eskom allocations

(R’ 000)

Munic allocation(R’ 000)

Adam allocation (R’000)

Eastern Cape 1 083 674 697 774 290 900 95 000

Free State 197 882 17 782 95 100 85 000

Gauteng 270 000 97 000 173 000 0

KwaZulu Natal 760 915 399 193 261 722 100 000

Limpopo 460 419 301 119 159 300 0

Mpumalanga 283 429 172 029 111 400 0

Northern Cape 94 270 17 170 57 100 20 000

North West 413 000 343 850 49 150 20 000

Western Cape 212 210 95 110 117 100 0

Total R 3,775,799 R 2,141,027 R 1,314,772 R 320,000

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MUNIC PROGRAMME 2013/14 – PERFORMANCE JULY 2013

PROVINCE ALLOCATION

(R’000) TRANSFERRED

(R ‘000) EXPENDITURE

(R’000)PLANNED

CONNECTIONSCONNECTIONS

ACHIEVED

YTD Actual Connections INCLUDING

ROLLOVERS

EC 290 900 42,000 0 14661 0 2591

FS 95 100 55,500 0 3983 0 939

GP 173 000 123,407 0 11488 0 5279

KZN 261 722 69,222 0 17985 0 2257

LIM 159 300 85,000 0 16541 0 2623

MP 111 400 10,630 0 7671 0 1682

NW 49 150 8,500 0 2385 0 1023

NC 57 10028,300

6,321 3285 0 911

WC 117 100 71,350 19,701 8357 588 1633

TOTAL R 1,314,772 R 493,909 R 26,022 86 356 588 18 938

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ESKOM PROGRAMME 2013/14– PERFORMANCE JULY 2013

PROVINCE ALLOCATION (R’000)

TRANSFERED (R’000)

EXPENDITURE(R’000)

PLANNED CONNECTIONS

CONNECTIONS ACHIEVED

YTD Actual Connections INCLUDING ROLLOVERS

EC 697 774 R202,687,607.28 R 84,330,003.77 35,000 2,979 5,508

FS 17 782 R 9,543,331.06 R 8,325,085.34 1,486 475 475

GP 97 000 R 28,731,343.55 R 15,962,643.27 8,737 1,134 1,936

KZN 399 193 R151,834,369.44 R280,575,238.03 35,119 2,488 9,433

LIM 301 119 R 47,065,702.39 R 48,509,950.06 35,000 4,152 4,203

MP 172 029 R 34,053,376.37 R 53,219,962.82 15,612 3,237 4,263

NW 343 850 R 82,058,350.76 R 28,820,128.04 17,263 923 2,875

NC 17 170 R 1,639,300.63 R 0.00 1,421 130 134

WC 95 110 R 34,059,514.62 R 21,866,831.61 8,201 2,205 2,740

TOTAL R2,141,027 R591,672,896.11 R541,609,842.94 157,839 17,723 31,567

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Bulk allocation 2013/14PROVINCE ESKOM MUNIC R’000

EC R 266,513,230 R 28,000,000

FS - R 27,000,000

GP R 291,042 R 41,000,000

KZN - R 26,000,000

LIM R 7,068,000 R 7,000,000

MP R 6,583,500 R 17,620,000

NW - R 25,000,000

NC - R 13,500,000

WC R 36,920,062 R 23,000,000

TOTAL R 317,375,834 R 208,120,000

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ADAM allocation 2013/14Once off infrastructure allocations

PROVINCE MUNICIPALITIES ALLOCATIONS

EC KING SEBATA DALINDYEBO 60,000,000

EC NELSON MANDELA 35,000,000

FS NGWATHE 20,000,000

FS MOQHAKA 20,000,000

FS NALA 20,000,000

FS MANGAUNG 25,000,000

KZN MSUNDUZI 100,000,000

NC SOL PLATJIE 20,000,000

NW TLOKWE 20,000,000

TOTAL 320,000,000

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Socio–Economic Impact • Job creation (e.g. local labour) – about 1 permanent

job = R800 000 to R1 mil spend on electrification.• Training (e.g. municipal engineer interns and project

manager) – 700 interns been trained at INEP and munics/metro,

• Community upliftment (e.g. business opportunities)• Poverty elevation• Access to basic services (e.g. electricity) • ..\..\Electrification general\Survey of Energy related

behaviour and perception in SA - Residential Sector - 2012.pdf

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Universal access challenge

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Universal access challenge

•Households without electricity: ~3.3 million (Informal 1.2 mil and formal 2.1 mil) •75 % in Eskom supply area and 25% in municipalities supply area.

Universal access challenge (cont.) • INEP established in 2001/02 - address backlogs of households in

line with Energy White Paper (1998) recommendations. • Newly built households to be electrified by the restructured

Electricity Distribution Industry (EDI) - due to serious inefficiencies in the EDI over the last 10 years, INEP had to address not only backlogs, but also newly built houses and informal households.

• Not only connections had to be funded, but also ‘back bone’ network infrastructure.

• In addition to the above challenges, escalating electrification costs and limited funding, as well as the high growth rate of houses (formal and informal), resulted in a serious thread to reach universal access in the country.

• Despite its successes to date, the electrification programme will fall short in meeting its target of electrifying 92% of formal households by 2014, as defined as backlogs in 2001/02. It is expected that 84% of all formal households and 78% of all households in the country will be electrified by 2014.

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Households electrified in South Africa • 2011 Census: ±12,24 mil households out of ± 14,45 mil households are

utilizing electricity as a lighting source; ± 85% of households have access to electricity for lighting purposes.

• Different types of households included into the total household figure (built on the same stand as the formal household):

• Houses/flats/rooms in backyard 423 000 • Informal dwellings in backyards (shacks in backyard) 713 000• Room/flatlet on a property or larger dwelling/servants quarters/granny flat

120 000Total 1,256 000

• Majority of these households (about 90% plus) are not metered, estimated to be ± 1.1 mil .

• Network designs were not done to accommodate these additional households, hence will have to be upgraded.

• These households also do not qualify for inclining block tariff and FBE.• About 2.2 mil households according to Census 2011 stats are without

electricity, if the 1,1 mil households that are not metered are been added, total figure of about 3,3 mil.

• In line with the INEP stats for households that are not formally electrified (metered), hence ±77% households have a metered supply.

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Universal access challenge (cont.)• If universal access to electricity by 2014 is not practical, what is

the most effective and realistic timeframe to reach universal access, given the various challenges in the electricity industry, raising cost of electrification, etc.?

• Hence a new approach to electrification is required - New Electrification Roadmap (Implementation plan) for South Africa was developed.

• In March 2012, DoE held an Electrification Indaba where all the relevant sector departments and stakeholders were invited to participate and agreed on the need for a new Electrification Roadmap.

• The Indaba resulted in a consultative working group process which the following relevent stakeholders were involved in defining the new Roadmap:

Eskom, DHS, DRDLR, DPE, SALGA, AMEU, CoGTA, MISA, NERSA, SANEDI, DBSA, National Planning Commision, National Treasury, MinMEC, NPC, PICC Secretariat, Commercial financial institutions and current non-grid concessionnaires.

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Universal Access is function of Electrification Technology options and funding

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Technology mix

(bas

e ca

se)

+R

1 b

illi

on

+R

2 b

illio

n

Ad

dit

ion

al f

un

din

g p

er y

ear

2031

2027

2037

Option 1All grid

100100

2022

Base case2028

Option 3(base case)

Option 2, but non-grid

within 3km

9090

2019

2023

2030

Option 4Option 3, but grid replaces

mini-grids

8787

2017

2020

2023

Option 2Most cost efficient

technology Option

7070

2017

2021

2026

Option 5Option 3, grid connection for

informal households

7878

2018

% of current un-electrified formal households to be connected to the grid

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Provincial non-grid potential

Using these rules, it is expected to deploy around 300,000 solar home systems and reach universal access for formal

households in 2025South Africa

Time to electrify formal households

Total connections 2013 – 2025Million households

Grid

Non-grid

90%

10%

2025120251

84

73

19

28

16

37

4 26

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The highest potential for Non-grid is in KZN and Eastern CapeThe highest potential for Non-grid is in KZN and Eastern Cape

0.3

3.1

1 Assumes existing INEP annual funding and DoHS contribution of R2,000 per household for new RDP houses (40,000 houses per annum); assumes total of 50,000 new formal households per year from DoHS formalization process

Thousand households

New Household Electrification Strategy

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The Cabinet Approved (26 June 2013) the implementation of the new

Household Electrification Strategy based on the following focus areas:

a)The defining of universal access as 97% of households, as full electrification

is unlikely to be possible due to growth and delays in the process of

formalising informal settlements;

b)The electrification of about 90% of households through grid connection and

the rest with high-quality non-grid solar home systems or other possible

technologies based on cost effective options in order to address current and

future backlogs;

c)The development of a master plan to increase efficiency in planning and the

delivery process to ensure more connections, including a workshop on the

Plan to which all members of cabinet would be invited to; and

New Household Electrification Strategy

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Grid and Non – Grid Opportunities

•Least cost approach (benchmark) • cost per connection R12000 – Urban setup• cost per connection R17000 – Rural setup

•Critically analysing major infrastructure need/cost vs the IPP establishment and acceptance

•Generation Capacity vs available network capacity – time frames to electrify outstanding households

•Universal Access per Ward/Municipality in the next 2-3 years

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New Household Electrification Strategy – Example Western Cape

New Household Electrification Strategy –Example West Coast District - Bergrivier

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Additional aspects

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Eskom has progressed very well with addressing the so-called “island electrification” in KZN. 14 959 households identified falling into this category

in 2011/12 – 10 186 been electrified (4773 outstanding)

Master plan development – DoE in collaboration with Eskom.

DBSA “front loading” process to fast track certain high backlog Municipalities as part of INEP long term planning. Experiencing some challenge with this programme

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Additional aspects

Sustainable Energy for All (SE4ALL) The targets set for 2030 by the UN’s "Sustainable Energy for All"

initiative are as follows

•ensuring universal access to modern energy services;

•doubling the global rate of improvement in energy efficiency; and

•doubling the share of renewable energy in the global energy mix.  

The SE4All objectives within a South African framework

This UN initiative is fully in line with South Africa’s energy policies

and goals as outlined in policy and regulatory frameworks such as

the Energy Policy (1998), the Energy Efficiency Strategy (2005),

and the IRP-2 2011.

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Way forward

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Way forward• If universal access to electricity is to be reach by 2025, the

following is needed:– Adequate funding for capital projects,– Implementation in line with the Master Plan.– Need to solve the serious challenges in the EDI - difficult to run a

electrification programme where network upgrading of billions of rands are required,

– To solve some serious network constrains – can’t roll out connections in majority parts of KZN and EC,

– Improvement of the turn around time for IEA approvals, vast areas in EC and KZN have land claims on them, tribal vs municipal land rules, house not build as planned, etc

– Good co-operation between National Government and other spheres of government,

– Resources wrt municipalities to be improved, political intervention, long procurement processes, lack of responsibility and accountability,

– Clean and good administration for delivering infrastructure projects requires about 40% additional staff, while additional staff allocations of this level in public sector is not allow, therefore this function has to be fulfil by operational staff and hence productive time for delivering a service is been lost and

– INEP to be resourced effectively.

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Electrification in perspective

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Thank you