Kuyasa and its scale-upto a National Sustainable Settlements Facility

Structures under UNFCCC Flexible Mechanisms

14th March 2011

Contents

• Kuyasa intro• Kuyasa implementation • National Sustainable Housing Facility Programme• Conclusions

General Information

South African Export Development Fund (SAEDF) August 2007Kuyasacdm@telkomsa.net

• 2309 RDP houses

• Solar Water Heaters

• Insulated ceilings

• Energy efficient lighting

The Kuyasa CDM Project: First Gold Standard and African CDM project registered. Currently being implemented in Khayelitsha, Cape Town

The Kuyasa CDM Pilot

7

Overall view of light and SWH interventions

8

Sectional view of ceiling installation

9

Ceiling installation - Public Works

steps in design and preparation for implementation

• Selection retrofit of technologies (lighting, water heating and thermal performance improvements)

• Selection of study sample (10 houses)• Retrofitting and monitoring housing through winter• 15 community based meetings• Project design drafting (using small scale CDM methods)• Minimum monitoring (are the technologies in place?)• Validation – good experience• Project registration• Fund raising for implementation• Business plan and transfer to implementers

Implementation and verification

• Trained teams from the community installed• 50% women in the work force• Local monitoring (are the SWHs providing warm water?

are the roofs on? Are the CFLs in place?)• Initial batch of SWHs had mild steel tanks – problem with

the chlorinated water quality• Verification took long time• Issues related to extension of the structures which did not

include ceilings

Technology (and cost excl. infrastructure)

Tonnes/hh/year

Value Euro/hh/year

Solar water heating (100l)(Euro 250)

1.3 20

Insulated ceilings (30 square metres)(Euro 125)

1.3 20

Efficient lamps (2 lamps)(Euro 30)

0.2 3

Suppressed demand• Energy demand is constrained as a result of poverty or

lack of infrastructure• Suppressed demand can be included if proof of livelihoods

improving can be shown • Paragraph 46 of the Modalities and Procedures: “The

baseline may include a scenario where future anthropogenic emissions by sources are projected to rise above current levels, due to the specific circumstances of the host Party.”

• Restated in the COP 15 outcomes: para 35 of “Further guidance related to the CDM.” Encourages the EB to further explore

• Precedent AMS ID and Kuyasa CDM project #0079

Energy services and energy consumption – business-as-usual

ener

gy s

ervi

ce

GH

G E

mis

sion

s

___ Energy Service

___ Baseline Energy

time

SUPPRESSED DEMAND INTERVENTIONS en

ergy

ser

vice

GH

G e

mis

sion

s

___ Energy Service

___ Baseline Emissions

___ Energy Service Intervention___ Project emissions

time

Energy Services and Consumption that take Suppressed Demand for service into account

ener

gy s

ervi

ce

GH

G E

mis

sion

s

___ Energy Service

___ Baseline Carbon emissions

___ Energy Service intervention

___ GHG emission after clean energy service intervention

time

A

B

A are Existing Emissions

B are Existing Emissions + Future Avoided Emissions

Suppressed Demand: An example of space Suppressed Demand: An example of space heating in low income housingheating in low income housing

Morning Evening

Th

erm

al p

ower

req

uir

ed t

o re

ach

21o

C

Thermal energy required without ceilings and ceiling insulation

Outdoor ambient winter’s day temperature profile

Current level of space heating

Suppressed demand for thermal energy

Thermal energy required in houses with ceilings and ceiling insulation

Key methodological issue

• Taking account of poverty by including suppressed demand for energy service

• What does this mean?• How was it argued?• Difficulty – real and measurable emissions reductions• Difficulty – rigour versus simplicity

Some notes on Kuyasa

• Many small sources of emissions make transaction costs high

• Cost R30m in implementation costs• R200 000 for verification (awaiting completion)• 100% completion awaiting final DEA payment – moving to

2nd phase• Suppressed demand needs to be included in

methodological approach for replication• NAMAs may be more appropriate (perhaps in

combination with CDM)

VISION: A clearing house which enables and incentivises access to financing for clean energy services in all low income housing in South

Africa

MISSION: To establish a Facility which 1) administers a CDM programme, and 2) leverages and manages access to the additional

upfront financing required for the incremental capital costs of sustainable energy interventions in low income housing

The National Sustainable Housing Facility

NSHF progress to date (led by consortium Genesis Analytics and SouthSouthNorth Africa

1. SSN together with the CTCC developed Kuyasa as a pilot

2. REEEP funding to explore viable models for replication at scale, with a focus on financing

3. Programmatic CDM approved, providing avenue for carbon finance

4. Drafting Group established to provide guidance and legitimacy

5. Kuyasa being implement with DEAT grant finance, by SAEDF

6. Danida funded development of a Business Plan for the NSHF

7. South African Export Development Fund (SAEDF) and Energy Development Corp. funding the development of a SWH programmatic methodology

8. DBSA funding the development of thermal efficiency methodology and programme/s

9. Danida funding a work plan to achieve government endorsement and appointment of an incubator

National Sustainable Housing Facility

• Institutional and Financial architecture• Methodological and Programmatic issues• Interface with housing developers

Institutional and financial issues

• Currently leadership through a drafting Group established to provide guidance and legitimacy.

• Includes: DBSA, SANERI, DHS, DoE, Eskom, NHFC, DNA, SSN, municipalities

• Where should the Facility be situated institutionally?• The income from carbon, demand side management,

Renewable energy certificates, other externality interests..

A Low Income Housing Programme for South Africa

Assumptions

Carbon price €15

Ongoing 50% equity investment

R1000 beneficiary contribution

Only Greenfield housing included

No financing

How to bring intervention costs down?

How to bring carbon finance forward?

25

National Sustainable Housing Facility

International Carbon Markets

SWH Methodology

Thermal Efficiency

Methodology

Energy Efficient Lighting

Methodology

CDM Programme of Activities

Housing Project

Housing Project

Housing Project

Housing Project

Equity Loan

Facility

Carbon Collatoral?

The National Sustainable Housing Facility

Methodological approach

• Two new large scale methods • Solar Water Heating• Thermal Performance improvements (retrofit and “green

field”) for publicly funded structures

Solar Water Heater Method

• Small Scale <45MW equivalent

• Problems with monitoring

• Current submitted method includes:

• Monitoring water temperatures, water flow rates, back-up heating, or

• Establishing SWH efficiency and solar radiation

• Second option simple monitoring only whether system is in use

• Emissions from fuel to provide same amount of warm water

The logic of the thermal performance approach

29

High level Benefits

Social• Respiratory health burden reduced• Provision of hot water – health / comfort• Household cost savings due to energy efficiency • Employment opportunities (EPWP)

Economic• Peak demand reduced – defers new installed

capacity • Leadership for low cost housing / energy industry• Entrepreneurial opportunities

Environmental• Largest project of its kind in Africa - Leadership• City SWH target – 10% by 2010 (ie 80 000

houses) Project assists this target• Implementing global commitments

Governance• Local participation and decision-making

National Sustainable Housing Facility (NSHF) Key Conclusions

• Carbon finance for low income housing requires a long term investment view

• But the returns to a programme are highly significant, both carbon revenues and co-benefits

• Risks are manageable• The issue is around availability of upfront financing for

capital interventions and identifying an entity to drive the programme

• There is strong interest from CC community internationally, especially in Gold Standard programme

Conclusions into the future

• NSHF Model is replicable for other sub-sectoral mitigation approaches using projects to head to programmes to sub-sectors to future developing country commitments

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