/ 28 October 2011

Department misses green targets

Green energy initiatives have seemingly withered at the time when they are needed most. And the timing couldn’t be worse as the United Nations climate-change conference, COP17, will be hosted in Durban next month.

The energy department submitted a worrying mid-year progress report as part of its adjusted budget vote within the medium-term budget. An alarming number of unmet targets were detailed, highlighting the challenges in the department. Unfulfilled targets include only 36?775 additional households electrified a year against a target of 180?000. Instead of 4?500 temporary jobs created each year, the number is 521.

The number of additional full-time jobs created through energy projects is 104 instead of 500. Expenditure on black economic empowerment and small, medium and micro enterprises is R18-million as opposed to R933-million. The number of learners working on electrification projects a year should be 800 but is 13. No new bulk substations have been built or upgraded this year. No new green renewable energy certificates were issued in the first half of 2011/2012 because of a decision to put the programme to formalise the trading of green certificates on hold. The department has requested a budget adjustment of more than R111-million.

Sej Motau, the Democratic Alliance’s energy spokesperson, said the mid-year outcome was the result of financial constraints and the latest renewable energy procurement initiative. In August this year, the inde­pendent power producers’ procure­ment programme, known as Rebid, replaced a renewable energy feed-in tariff (Refit) programme. In the latter, bidders were expected to bid for projects based on fixed tariffs.

Motau said the resultant delays and reapplications caused disarray in the department. The other problem was that the department had a staff complement of 52%. “Things are suffering at the department,” Motau said. “Even senior directors in the department have said it is holding them back.” Ultimately, it came down to funds. “Their budget is stretched to the limit,” he said. “Things will become more intensive as the procurement process moves along. We stress that they need to come up with a plan.”

The adjusted budget report said it was not feasible at this stage to invest in the green-energy trading system because of the low volume of renewable energy in the country. “This decision will be revisited once the deployment of renewable energy has been accelerated,” it said. The performance of the department’s renewable energy subsidy scheme has been negatively affected by recent developments and spending has declined from a 100% disbursement in 2008/2009 to 53% in 2009/2010.

In the document, the department said the renewable energy and finance sub­sidy office and Rebid could not operate concurrently because project developers could be overpaid, leading to excessive profit at the expense of consumers and taxpayers. To prevent this, it is proposed that the renewable energy subsidy scheme be adapted to complement the Rebid process. This means that the mandate has to be changed so that the scheme will no longer provide capital subsidies for the construction of renewable energy generation plants. The government said that, over the next three years, it would work to strengthen South Africa’s environmental and climate-change policies and secure global and private-sector funding for green interventions.

Andrew Kenny, an independent energy engineer, said renewable energy was suitable only for small-scale applications. He said nuclear and coal were the only two options for bulk energy generation. Kenny said research had shown that technology such as wind generation actually caused job losses because it was so costly and the money spent on it could be better used to create employment. The medium-term budget policy statement said that trade, industrial and energy policies needed to be aligned to support the transition towards a green economy and the first steps had been taken towards a major investment in renewable energy by the private sector.

“Policies to ensure the sustainable use of resources include the financing of green projects by the Industrial Development Corporation and the Development Bank of Southern Africa, carbon emission reduction through government’s integrated resource plan, the proposed carbon tax, and the introduction of a dedicated fund for green economy initiatives.”

Results still to come
The department of energy’s acting deputy-director general, Ompi Aphane, said the mid-year progress report did not show poor performance and did not mean targets would not be met. “A project life cycle does not have a linear relationship with time,” he said. The preparatory work being done on the ground could not yet be measured as an output. But come January or February, Aphane said, the work would come to fruition and more results would be seen. He also said that the financial year of some service providers, such as municipalities, began on July 1 and not in April and this also affected the figures.

Aphane said there were budgetary constraints in some areas but he said the independent power producers’ procurement programme had freed up funds intended for the renewable energy and finance subsidy office, which was no longer relevant. The change from the renewable energy feed-in tariff (Refit) to Rebid, he said, had not put additional strain on the department as it had leveraged support for this.