2017-2018 – Energy – Parliament
The Department of Energy is mandated to ensure the secure and sustainable provision of energy, in support of socioeconomic development. It aims to achieve this by developing an integrated energy plan for the entire energy sector and regulating energy industries, and promoting investment in accordance with the integrated resource plan for electricity.
A number of acts regulate the energy sector and reflect the legislative measures the department has instituted to govern the energy sector. The department is also mandated to regulate the petroleum industry at the manufacturing, wholesale and retail evels through the implementation of the Petroleum Products Act (1977). The Petroleum and Liquid Fuels Charter is annexed to the Petroleum Products Amendment Act (2003), and outlines the department’s strategy to effect transformation in the industry.
In terms of its policy mandate, the department is working with a range of documents and legislation that support the long-term vision for South Africa to use as much renewable energy as possible; create the necessary conditions to stimulate an efficient electricity market; and position South Africa to become globally competitive in the use of innovative technology for the design, manufacture and deployment of state-of-the-art nuclear energy systems, power reactors and nuclear fuel cycle systems.
• Key among these are:
‒ the National Energy Act (2008)
‒ the Petroleum Products Act (1977)
‒ the Electricity Regulation Act (2006).
• The National Energy Act (2008) sets out the core aspects of the department’s mandate and is the enabling legislation that empowers the Minister of Energy to:
‒ ensure that diverse energy resources are available in sustainable quantities and at affordable prices in the South African economy to support economic growth and poverty alleviation, while taking into account environmental considerations
‒ plan for the increased generation and consumption of renewable energy, a contingency energy supply, the holding of strategic energy feedstock and carriers, adequate investment in appropriate upkeep, and access to energy infrastructure
‒ collect data and information regarding energy demand, supply and generation
‒ promote electricity regulation, energy research and the efficient generation and consumption of energy.
Increasing household access to electricity
The department’s spending focus over the medium term is set to remain largely on household electrification. To this end, an additional R1 billion has been allocated in 2019/20 to support the Integrated National Electrification Programme subprogramme, which electrifies households through grid and non-grid connections, and builds and upgrades substations and electricity networks.
An estimated 723 000 grid and 60 000 non-grid connections to households are expected to be made over the medium term, funded by transfers to implementing municipalities, non-grid service providers and Eskom. Due to the additional allocation, transfers to municipalities are expected to increase from R2.1 billion in 2017/18 to R3.3 billion in 2019/20, and transfers to Eskom from R3.8 billion in 2017/18 to R4.2 billion in 2019/20. The cost of connections is expected to increase over the medium term as the integrated national electrification programme shifts to deep rural areas, requiring more expensive hardware and covering larger geographic areas. Spending on household electrification, budgeted for in the Integrated National Electrification Programme sub programme in the Electrification and Energy Programme and Project Management programme, is expected to increase from R5.7 billion in 2016/17 to R7.7 billion by 2019/20, at an average annual rate of 11 per cent.
Non-grid electrification projects using solar energy will be extended countrywide, and will be implemented in areas where extending the grid would not be cost-effective. This method of delivery provides better value for money and, over time, allows for a greater number of connections to be made due to the relative lower cost per connection.
To provide more non-grid connections, spending on non-grid electrification projects is expected to increase from R171.8 million in 2016/17 to R212.9 million in 2019/20, at an average annual rate of 7.4 per cent, in the Integrated National Electrification Programme subprogramme. Over the medium term, funding of R13.4 million in this subprogramme has been earmarked for the oversight, monitoring and evaluation of nongrid electrification projects.
Enhancing energy efficiency
Over the medium term, the department will accelerate the implementation of the revised solar water heater programme as part of the load reduction strategy to reduce reliance on the national grid.
Recent changes to the programme will allow the industry value chain to mature through revised localisation targets and the development of small businesses. Spending on the solar water heater programme is set to increase from R478 million in 2017/18 to R534.1 million in 2019/20, and 141 000 solar water heater units are expected to be produced and installed. This includes spending on the transportation and warehousing of solar water heating systems. The initiative is funded through the Energy Efficiency subprogramme in the Clean Energy programme.
The department’s energy efficiency and demand side management conditional grant provides subsidies to municipalities to reduce energy consumption through energy efficient public lighting, and the retrofitting of energy efficient technologies in municipal buildings. Over the medium term, subsidies of R645.3 million are set be transferred to municipalities, saving an estimated 0.5 TWh of energy per year.
Establishing the National Radioactive Waste Disposal Institute
An amount of R99.3 million over the medium term has been reprioritised from the Integrated National Electrification Programme subprogramme to provide operational funding for the National Radioactive Waste Disposal Institute, which has a mandate to manage the disposal of radioactive waste nationally. The institute has signed a service-level agreement with the South African Nuclear Energy Corporation. It will adopt the
corporation’s policies, procedures and internal controls, as well as finance, payroll and supply chain management systems, to ensure it operates within an effective, efficient and transparent system of financial and risk management, and internal control.
Improving the quality and security of petroleum fuels
The department plans to undertake 4 500 inspections of petroleum retail sites over the medium term to ensure that petroleum fuel meets regulated quality standards. Spending in the Petroleum and Petroleum Products Regulation programme is expected to increase from R81.8 million in 2017/18 to R90.9 million in 2019/20,
mostly driven by inflation-related adjustments.
An allocation of R956 000 was reprioritised to the Petroleum and Petroleum Products Regulation programme in 2017/18 for the development and implementation of the fuel supply monitoring system. The department manages the export and import of petroleum products, monitors fuel stock levels, and coordinates corrective actions to avoid distribution shortages. The system will allow for the monitoring and verification of information from the industry, providing the department with access to the status of fuel levels and fuel availability at any given time across the country. This will assist the department in being proactive in ensuring that fuel disruptions are kept to a minimum.