IDC’s approach in developing the Green EconomyTowards a green future …
Presented by:
Rentia van Tonder
Head: Green Industries SBU
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Contents
– IDC’s alignment with IPAP2 and NGP;
– Sectoral focus areas;
– The Green Economy in the NGP and IPAP2;
– IDC Green Economy focus areas;
– Non-fuel based green energy;
– Energy Efficiency:
– Fuel based green energy
– Conclusion.
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IDC Aligned its Sectoral Focus Areas with the NGP and IPAP2
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Green and energy saving
industries
Green and energy saving
industriesBio fuelsBio fuels
Agro-processing
Agro-processing
TourismTourismBusiness process
servicesBusiness process
services
Craft and filmCraft and film
ICTICT
HealthcareHealthcareMining related technologiesMining related technologies
BiotechnologyBiotechnology
Downstream mineral beneficiation
Downstream mineral beneficiation
MiningMining
Industrial infrastructure
Industrial infrastructure
LogisticsLogistics
Metals fabrication, capital and transport
equipment
Metals fabrication, capital and transport
equipment
Automotives, components, medium and heavy commercial
vehicles
Automotives, components, medium and heavy commercial
vehicles
Plastics and chemicals
Plastics and chemicalsClothing, textiles,
footwear, leatherClothing, textiles, footwear, leather
Forestry, paper & pulp, furniture
Forestry, paper & pulp, furniture
Advanced manufacturing
Advanced manufacturing
Pharmaceuti-cals
Pharmaceuti-cals
Oil and gasOil and gas
Grreen industry components
Grreen industry components
Other funding areas :Venture CapitalFunding to distressed companies
Other funding areas :Venture CapitalFunding to distressed companies
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Sectoral focus areas (continued)
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Sectoral focus areas (continued)
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The Green Economy in the NGP
• The New Growth Path targets 300 000 additional direct jobs by 2020 to green the economy, with 80 000 in manufacturing and the rest in construction, operations and maintenance of new environmentally friendly infrastructure.
• Additional jobs will be created by expanding the existing public employment schemes to protect the environment, as well as in production of biofuels. The IRP2 targets for renewable energy open up major new opportunities for investment and employment in manufacturing new energy technologies as well as in construction.
• The main strategies to achieve these targets are:– Comprehensive support for energy efficiency and renewable energy as required by the IRP2, including
appropriate pricing policies, combined with programmes to encourage the local production of inputs, starting with solar water heaters;
– Public employment and recycling schemes geared to greening the economy;– Stronger programmes, institutions and systems to diffuse new technologies to SMEs and households;– Greater support for R&D and tertiary education linked to growth potential and developing South Africa as the
higher education hub for the continent; and– Continuing to reduce the cost of and improve access to broadband.
Source: The New Growth Path - The Framework
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The Green Economy in IPAP2
• Key Sectors– Wind power generation– Photovoltaic power generation– Concentrated solar power generation– Industrial energy efficiency– Water efficiency– Waste management– Biomass and waste management– Energy-efficient vehicles
• Key action programmes– Roll-out of national solar-water-heating programme – manufacturing and installation capacity– Solar and wind energy– Development of an industrial energy-efficiency programme– Strengthen water-efficiency standards– Demonstrate viability of Concentrated Solar Thermal (CST) power as a major renewable energy generation source– Biomass Energy– Clean and Multi-Energy Stoves– Water- and Energy-Efficient Appliances– Efficient Motors, Variable-Speed Drives, Energy Metering and Control and Electricity Storage (Batteries and Fuel Cells)– Waste and Waste Water Treatment– The South African Renewables Initiative (SARi)
Source: Industrial Policy Action Plan 2011/12 – 2013/14 – February 2011
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IDC focus areas: Green industries
Energy efficiencyEnergy efficiency
Heat, Electricity & building efficiency
Heat, Electricity & building efficiency
Cleaner production / Industrial Efficiency
Cleaner production / Industrial Efficiency
Transport EfficiencyTransport Efficiency
Waste to Energy Waste to Energy
Fuel Based EnergyFuel Based Energy
Co-generationCo-generation
Emission and pollution mitigationEmission and pollution mitigation
Air pollution controlAir pollution control
Water & treatmentWater & treatment
Waste Management/ Recycling
Waste Management/ Recycling
Clean stovesClean stoves
Bio FuelsBio Fuels
Bio EthanolBio Ethanol Bio DieselBio Diesel
Renewable Energy: Non-Fuel Power Renewable Energy: Non-Fuel Power
Wind Power GenerationWind Power Generation
Concentrated Solar PowerConcentrated Solar Power
Solar Photo Voltaic PowerSolar Photo Voltaic Power
Services related
to renewable
energy & energy
efficiency
Services related
to renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
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Non-fuel based green energy Renewable Energy
– Exciting time for Renewable Energy development in SA and throughout Africa
– Energy Crisis in South Africa and Region
– Opportunities both in South Africa and throughout the Region – significant
investor interest
– SA need is for 50 000MW new generation capacity by 2030
– 19 000 MW to come from renewable technologies
– Launch of South Africa’s REPP
– IDC targets a R14bn investment over 5 years
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IRP2010
33% of new capacity from wind and solar19GW = R500bn
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Wind Other Solar CSP Solar PV Total20112012 4 500 2 000 10 500 17 0002013 6 000 500 10 500 17 0002014 6 000 5 000 10 500 21 5002015 6 000 5 000 10 500 21 5002016 6 000 5 000 10 500 21 500Total R28 500m R2 500m R15 000m R52 500m R98 500m
Investment R'million
IRP2010 - Investment requirement – 5 Years
The total investment up to 2030 = R500bn
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IDC Funding possibilities for RE projects
• Participation and cost sharing of bankable feasibility studies
• Equity participation– Minimum: Meaningful 10% with minority protection
– Maximum: Not majority, 30%
• BEE and BBBEE funding– Lending to Community Trust or BEE shareholder to invest in project
– Repayment with dividends
– Will allow 20-25% cash (trickle dividend) for community trust / BEE shareholders
– Favours community trust concept
• Debt participation– Senior debt with tenure of 15 years post commercial operation date (COD)
– Interest capitalisation during construction
– Construction loan
Target investment of R14bn over 5 years.Projects under consideration: CSP - 4; Wind - 12; PV - 18 ; Hydro - 3
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Current IDC initiatives to respond to demand
Streamline IDC processes;
Resource support – internal REFIT forum;
Panel of technical advisors;
Portfolio approach through partnering with other funders;
Standardised IDC documents
• Senior Debt Term Sheet
• Sub-debt Term Sheet
• Equity Term Sheet
• BBBEE Pref Term Sheet
• BEE Term Sheet
• Trust Deed
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Industry associations
• SAPVIA– Founding member
– NERSA presentations on revised REFIT
– Sponsored launch event
– Elected to Management Board and alternate nominated
– Association has appointed admin manager
• SASTELA– Founding member
– IDC is hosted Special GM
– IDC has Exco Seat
• SAWEA– IDC to become a member
– Association has appointed CEO
• Associations co-operate well especially on liaising with government and legal opinions
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IPP Procurement Programme RfP Highlights
• Up to 5 Phased Bid process pending subscription by Bidders of total allocation of 3 725MW
spread across renewable energy technologies;
• First phase: submission of bids by 4 November 2011;
• Two phased selection process – Qualification and Evaluation;
• Key qualification criteria: Project Structure, Legal, Land, Financial, Environmental, Technical,
Economic Development, Bid Guarantee;
• Proven technology - equipment must have been installed on two previous projects;
• Track record of contractor - must have constructed two similar projects;
• A bid bond of R100k/MW must be provided with the bid, increasing to R200k/MW when the
Project is selected as preferred bidder;
• If Qualification is met the bid will be evaluated mainly against Price (70%) and Economic
Development (30%);
• Price not to exceed price caps for each technology;
• Economic development matrix with focus on Jobs, local content, community and skills
development.
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IPP Procurement Programme RfP Highlights
• Non-negotiable
documentation include:
PPA, Implementation,
Direct and Connection
Agreements;
• Bidders must provide
confirmation that equity is
fully underwritten and
preliminary approval for
debt;
• Bid must be accompanied
by audited Sponsor and
Banker Case Financial
Model.
Gate Keeping
Criteria
Wind
Solar
Photovoltaic
Concentrated
Solar
Hydro
- Project size (min 1MW)
< 140MW < 75MW <100MW <10MW
- Resource measurement
12-month on
site
Satellite data 12-month on site 10-years
Hydrology
Price Caps R1.15/kWh R2.85/kWh R2.85/kWh R1.03/kWh
- Environmental Approval
ROD required ROD required ROD required ROD required
- Commercial Operation Date (COD) for REPP 1
June 2014 June 2014 June 2015 June 2014
- COD for REPP 2-5
Dec 2016 Dec 2016 Dec 2016 Dec 2016
- Local content 25% 35% 25% -Storage
35% - No Storage
25%
- BEE/BBBEE Ownership
12% - 30% 20% - 40% 10% - 30% 20% - 30%
- Community Trust
2.5% - 5.0% 2.5% - 5.0% 2.5% - 5.0% 2.5% - 5.0%
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IDC focus areas: Green industries
Energy efficiencyEnergy efficiency
Heat, Electricity & building efficiency
Heat, Electricity & building efficiency
Cleaner production / Industrial Efficiency
Cleaner production / Industrial Efficiency
Transport EfficiencyTransport Efficiency
Waste to Energy Waste to Energy
Fuel Based EnergyFuel Based Energy
Co-generationCo-generation
Emission and pollution mitigationEmission and pollution mitigation
Air pollution controlAir pollution control
Water & treatmentWater & treatment
Waste Management/ Recycling
Waste Management/ Recycling
Clean stovesClean stoves
Bio FuelsBio Fuels
Bio EthanolBio Ethanol Bio DieselBio Diesel
Renewable Energy: Non-Fuel Power Renewable Energy: Non-Fuel Power
Wind Power GenerationWind Power Generation
Concentrated Solar PowerConcentrated Solar Power
Solar Photo Voltaic PowerSolar Photo Voltaic Power
Services related
to renewable
energy & energy
efficiency
Services related
to renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
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Energy Efficiency KfW facility Opportunity: Facilitate the growth in EE
Energy Efficiency scheme: • R 500 million• Interest Rate at prime -3%• Targeting SME‘s with a 20% energy saving.
Support to IDC through implementing agents:• 2 years of Technical Assistance• Resident Team Leader• Pool of 15 international experts and local experts to provide Technical Assitance to IDC (through KfW grant)• GFA & other local consultants
- Energy Audits- Business Plans- Marketing Materials- ESCO business know-how
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Energy Efficiency: Example of SWH project
• Solar Academy of Sub-Saharan Africa– The IDC approved funding for the roll-out of 200 000 solar water
heaters to the South African market. The company has a diversified portfolio of projects including the mass roll out of the low pressure SWH, high pressure SWH and investigating opportunities within the renewable energy space.
– The low pressure SWH project is the first programmatic CDM SWH Carbon Project globally to be registered at the UNFCCC.
– The project has rolled out 60,000 LPSWH units to the impoverished RDP Communities, uplifting their standards of living by providing them with hot water on tap, benefiting at least 240,000 individuals.
– The project supports localisation and in doing so is currently establishing a local manufacturing plant. The manufacturing facility would allow the local content of the product offering and service, creating 535 local job opportunities. The second phase of training will see 10% of all installers being trained to become qualified plumbers.
Sustaining and creating jobs
Building a new industry
Green industry
Gauteng
North West
Eastern Cape
KwaZulu-Natal
Western Cape
Free State
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IDC focus areas: Green industries
Energy efficiencyEnergy efficiency
Heat, Electricity & building efficiency
Heat, Electricity & building efficiency
Cleaner production / Industrial Efficiency
Cleaner production / Industrial Efficiency
Transport EfficiencyTransport Efficiency
Waste to Energy Waste to Energy
Fuel Based EnergyFuel Based Energy
Co-generationCo-generation
Emission and pollution mitigationEmission and pollution mitigation
Air pollution controlAir pollution control
Water & treatmentWater & treatment
Waste Management/ Recycling
Waste Management/ Recycling
Clean stovesClean stoves
Bio FuelsBio Fuels
Bio EthanolBio Ethanol Bio DieselBio Diesel
Renewable Energy: Non-Fuel Power Renewable Energy: Non-Fuel Power
Wind Power GenerationWind Power Generation
Concentrated Solar PowerConcentrated Solar Power
Solar Photo Voltaic PowerSolar Photo Voltaic Power
Services related
to renewable
energy & energy
efficiency
Services related
to renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
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Fuel Based Green Energy (including hydro)
To achieve TARGET ZONE:1. FEEDSTOCK (FUEL) SECURITY!
– No Feedstock security, no start!
– Feedstock security means quantity, quality, price, period!
2. PROCESS/INVESTMENT options– largely driven by FEEDSTOCK
QUALITIES, QUANTITIES, TERM and OFFTAKE OPTIONS
– Typical R 15-35 mil per MW
– High load factors eg 90 % (base load), or peaking for gas, hydro
3. High RATIO of OFFTAKE:FEEDSTOCK pricesProject
- Low O&M, so capital can be repaid if Scale sufficient & Offtake/Feedstock price ratio strong
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Fuel type Feedstock and Processes
Agricultural Origin Industrial Origin Municipal Origin ProcessTechnologies
-Livestock manure-Agricultural residues-Animal mortalities-Energy crops
-Wastewater (organic)-Industrial sludge (organic)-Industrial by-products (organic)-Spent beverages-Biosolids
-Sewage sludge-Municipal solid waste (MSW) organic/wet-Food residues
Anaerobic digestion- Methane for power gen (mid-merit) with heat, or as transport fuel
-Alien vegetation removal-Forestry waste-Grown biomass
-Timber mills residue-Sugar mill residues
-Green waste, cuttings- MSW dry & mixed
Combustion for heat for steam turbinesGasification for syngas for engine gensets
-Waste gas (fuel)-Waste gas heat-Solid waste (coal fines dumps)
Cogen-steam turbines -direct firing in gas engines
-Run of river (farmers, communities)
-Dams (DWEA) and irrigation
-Dams Hydro
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Example of Co-generation project
• SA Calcium Carbide– SA Calcium Carbide is the only producer of calcium carbide in Africa,
through the beneficiation of local limestone and coal mineral resources.
– The company uses a large portion of the electricity supplied to the town of Newcastle.
– Apart from the strain put on the electricity supply, recent tariff hikes will result in significantly higher production costs.
– IDC will provide funding to assist with the installation of a co-generation facility, utilising furnace off-gas currently being flared, to reduce the company’s reliance on the national grid for electricity.
– Co-generation promotes energy efficiency and reduces the use of coal in power stations and hence qualifies for carbon emissions reductions.
Green industry KwaZulu-Natal
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