Renewable Energy Technologies for Poverty Alleviation: South Africa

Renewable Energy Technology (RET) Working Group
Global Network on Energy for Sustainable Development
(GNESD)

Renewable energy technologies for poverty
alleviation
Initial assessment report: South Africa

FINAL DRAFT

GISELA PRASAD
EUGENE VISAGIE

Energy Research Centre, University of Cape Town
South Africa

June 2005

Executive summary ii

EXECUTIVE SUMMARY

1. Background
South African energy policy priorities have always been closely linked to the prevailing political
situation. Pre-democratic energy policy and planning were characterized by energy security
priorities, excessive secrecy and racially skewed provision of energy services.
Post-apartheid South Africa witnessed substantial revision and a strong focus on energy for
development. In accordance with the Constitution (Act No. 108 of 1996) an inclusive Energy White
Paper (1998) was developed.
Major objectives of government’s Energy White Paper are (DME, 1998):
• Increasing access to affordable energy services;
• Stimulating economic development – encouragement of competition within energy markets;
• Managing energy-related environmental and health effects;
• Securing supply through diversity – increased opportunities for energy trade and diversity in
both supply sources and primary energy carriers.
Renewable energy becomes one of the areas that the government would want to consider pursuing in
managing energy-related environmental impacts and diversifying energy supplies from a coal-
dominated system.
In May 2004, the Department of Minerals and Energy (DME) published the White Paper on
Renewable Energy Policy. This targets the provision of 10 000 GWh (accumulative over a period of
10 years) of electricity from RE resources (mainly biomass, wind, solar and small-scale hydro
projects) by 2013. This is approximately 4 % of the country’s estimated electricity demand or
equivalent to replacing two 660 MW units of Eskom’s combined coal-fired power stations. At
present less than 1% of the 200 000 GWh of electricity generated annually in South Africa originates
from RE sources (DME, 2004).
This study outlines the current use of RE, its potential, and discusses barriers and opportunities in
alleviating poverty. Furthermore, it examines policy options for promoting access to RE as an
affordable, reliable and socially acceptable alternative to grid electricity.

2. Rationale and motivation
South Africa’s fast-dwindling peak electricity generation capacity is expected to run out by 2007 and
given the time needed to build new or refurbish mothballed power stations, the harnessing of
abundant renewable sources has become more urgent.
The government is committed to the diversification of the electricity supply industry, and in doing so
will create an enabling environment to facilitate the introduction of independent power producers to
generate electricity from renewables.
A major challenge facing the government is the provision of energy to remote rural areas where grid
electricity is not likely to reach in the foreseeable future. This, coupled with global concerns around
carbon dioxide emissions, has triggered renewed interest in developing RE technologies.
Achieving the 10 000 GWh for 2013 is based on an evaluation of the macroeconomic impacts on
GDP, improvement in low-income households’ income, capacity for employment creation and the
impact on black economic empowerment (BEE). Pursuing this target (10 000 GWh) more than 35
000 jobs would be created, more than R5 billion would be added to GDP, and R687 million would
be added to the incomes of low-income households.

Executive summary iii

3. Initial Assessment

3.1 Characterisation of population and zones
South Africa has a population of approximately 44 million people and the majority of its citizens live
in urban areas (57.9 %). The country is divided into 9 provinces and has a total area of 1 223 201
square kilometers. By the end of 2002, almost 70 % of households had access to grid electricity.

3.2 Needs and energy requirements:
Table 1 lists the different energy requirements for each of the following sectors: transport,
residential, commercial and industrial. A list of potential RE technologies available to satisfy the
various energy needs is provided.

Table 1: RE requirements and technologies
Source: DME (2004)

Sector/subsector Requirements Technology
Transport Fuels for vehicles ethanol, biodiesel
Residential Fuels for lighting PV solar, wind
Fuels for cooking solar cookers, wind, small hydro, gel fuel,
fuel wood & other biomass
Fuels for space heating
wind, small hydro, biomass, solar water
Fuels for water heating
heaters
wind, small hydro, PV solar, biomass
Fuels for refrigeration
wind, small hydro, PV solar, biomass
Fuels for cooling
passive night cooling
Commercial Fuels for lighting wind, small hydro, hybrid, PV solar
Fuels for commercial activities wind, small hydro, solar
Fuels for water heating wind, small hydro, biomass, solar water
heaters

Industrial Fuels for lighting wind, small hydro
Fuels for industrial activities wind, small hydro, cogeneration, biomass
heaters

3.3 Technologies
Table 5 (see main report) presents the annual GWh production output of each of the 39 RE resource
categories modeled. South Africa has a potential GWh output of 86 843. Although wind has the
highest GWh output, the cost associated with wind generation is generally higher than most of the
other RE resource categories. Sugar bagasse is the most economically viable RE resource with the
highest GWh output (see Table 7).

Executive summary iv

3.4 Renewable energy resources
South Africa’s technically feasible RE production of approximately 87 000 GWh corresponds to
about 49 % of the electricity consumption in 2001 (DME, 2004). In 1999 RE accounted for
approximately 9 % of the total energy consumption (Energy Futures, 2000). Most of the energy is
generated from fuelwood and dung and not from modern RE technologies.
Hydro: Currently there are 8 licensed small hydro facilities less than 50 MW, with a combined
capacity of 68 MW. The power generation potential of small hydro schemes amounts to 9 900 GWh
per year (Mlambo- Ngcuka, 2003).
Solar: Photovoltaic (PV) systems are used in telecommunications networks, small-scale remote
stand alone power supplies for domestic use, game farms and household and community water
pumping schemes. The installed PV capacity is estimated at 12 MW.
The DME has established a concessioning process (fee-for-service) for off-grid rural electrification.
Currently 20 399 solar home systems have been installed in 4 concession areas.
Solar water heating is currently about 1.3 % of the solar energy market in terms of GWh.
Wind: Wind power potential is fairly good along most coastal and escarpment areas with mean
annual speeds above 6 meters per second. It is estimated that wind power could supply at least 1 %
(198 000 GWh) of South Africa’s projected electricity requirements (DME, 2002a). Eskom is
currently generating electricity from the Klipheuwel Wind Farm about 40 km north of Cape Town.
The 3 wind turbines have a combined generation capacity of 3.16 MW.
Phase 1 of the Darling wind farm, a 5 MW power project is to start in 2005. The Oelsner-Group
from Darling will be the first independent power producer.
Biomass: The main sources of biomass are fuelwood used in the rural domestic sector, bagasse in the
sugar industry and pulp and paper waste in commercial forestry industry for in-house heat and
electricity generation. Biomass in the form of fuelwood, wood waste, dung, charcoal and bagasse
accounts for close to 10 % of net energy use at a national level.
The viability of wood as an energy source suitable for electricity generation lies within the wood,
pulp and paper industries. Table 2 below gives the result of the Renewable Resource Database
(RRDB) modeling of the wood and pulp industries energy potential based on availability and energy
content of fuels.

Table 2: Annual fuelwood and pulp energy potential (DME, Eskom, CSIR, 2001)

Type Tonnage (T/Year) Energy potential (GWh/year)
Sawmills 1.57 7 639
Pulp mills 1 million 4 528

Wave energy: The potential wave energy along the Cape coastline is estimated as significant. The
average harvestable potential power along the entire coast is estimated to be 56 800 MW (DME,
2004).

3.5 Case studies
Three case studies on biodiesel, solar water heaters (SWH) and fuelwood, have been selected on the
basis of contributing to poverty alleviation and their feasibility and government policy priority.
Biodiesel: The major contribution to poverty alleviation of a biodiesel programme would be job
creation and economic development in disadvantaged rural areas. Further it would contribute to
energy security and reduce greenhouse gas emissions.
Biodiesel is produced by the process of transesterification. The by-products are a protein-rich oil
cake and glycerol. Four oil crops – sunflower, soy, cotton and groundnuts - are grown for human
consumption and are suited to soil and climatic conditions. These crops are often rotated with the
staple food maize.

Executive summary v

SWH: Manufacturing and installing SWHs would create jobs and if suitably subsidised, by including
the subsidy in the existing housing grant for the poor, SWH would increase the welfare of the poor.
SWHs can reduce the peak load of grid electricity and they are GHG emission neutral i.e. less
electricity generated from coal.
Fuelwood is the most commonly used energy source of the rural poor. Even after electrification
many poor households in South Africa still use fuelwood for cooking because they cannot afford the
appliances and the monthly electricity bill. Fuelwood is a valuable national resource and overall the
fuelwood resources in South Africa are adequate but there are shortfalls in several areas and many
woodlands are not sustainably managed. The fuelwood case study has been included because it is the
most important energy source of the poor in Southern Africa and Africa for the next 40 years; the
deficits in other African countries are apparently huge; and no clear policy has yet emerged to
address the situation successfully.

Table 3: Summary of case studies

Potential case studies criteria Case study 1: Case study 2: Solar Case study3:
Biodiesel water heaters Fuelwood

Representativeness Oil crops can be Can be fitted on many Affects all poor
grown in 6 out buildings; suitable for households,
Replicability
of 9 provinces all parts of the country particularly poor
rural households

Potential population 200 000-300 15 million 20% of population
benefited 000

Complexity Highly complex Not complex Complex

3.6 Assessment of capacity
Capacities for the three cases vary greatly. Fuelwood is the oldest energy source used by humans.
SWH are known and the technology is used by some while biodiesel is relatively new and it is not
well known.
Biodiesel: At present there are no fuel crops grown specifically for biodiesel production but oil
crops such as soya and sunflower are grown for human and animal consumption. For example
sunflower is quite widely grown and soya beans are also grown in some areas. There would be
some existing capacity to grow some of the crops but the amount grown would have to be
scaled up. There is no biodiesel being processed, blended and marketed and considerable new
capacity would have to be built. Assisting small-scale producers and cooperatives in
disadvantaged areas would be most effective for poverty alleviation.
Solar Water Heaters: The most urgent capacity is required in developing attractive financing
schemes for prospective customers. SWH companies have to upscale their capacities to manufacture,
install and maintain SWH. This will create additional jobs.
Fuelwood: National fuelwood resources exist and capacity is required to put the provision of
fuelwood on the agenda of government and follow up on the implementation. A dedicated subsector
within DWAF should be created. The fuelwood resources exist but they are spatially variable and
there are local shortfalls of supply; sustainable management is required to supply fuelwood where it
is needed. Capacities have to be built in different departments of government and in local
communities to sustainably manage wood resources providing affordable fuelwood for the poor and
creating jobs at the same time. Capacity to manage fuelwood markets has to be created. The
inclusion of fuelwood into the integrated development plans needs attention by the Department of
Provincial and Local Government.

3.7 Renewable energy niches
The dissemination likelihood for various renewable energy fuels and technologies depends to a large
degree on policy and strategy support, on the willingness of government to subsidise technologies
that cannot yet compete with existing alternative technologies, on interested private producers who

Executive summary vi

are willing to invest, on customer or user acceptance of the new product or service and the ability of
the technology to be self-sustaining financially in future. Table 4 gives an estimate of some of these
factors for biodiesel, SWH and fuelwood.

Table 4: Support for technology

Biodiesel SWH Fuelwood
Specific policy/strategy High Low at the moment Moderate
support
Energy Ministry support High High Moderate
Other ministries’ High Moderate Moderate
support
Government’s High Not yet decided Moderate
willingness to subsidise
Private producers High Very high Low
interested
User/customer Moderate Low High
acceptance

Niches for biodiesel: There are three major market niches for biodiesel. Blending biodiesel with
petroleum diesel for the transport sector is the most common market outlet for biodiesel in other
countries and is estimated to absorb the largest amount of biodiesel in the future. Other niches are
cooperatives with surrounding producers and customers. This model has been successful in some
European countries. The third niche is using biodiesel as an energy source for energising villages in
remote rural areas which have no access to other modern energy. All niches create employment and
the second and third niches have great potential for development of disadvantaged areas and poverty
alleviation.
Niches for solar water heaters: The market provides three niches for the dissemination of SWH.
Better information and access to affordable financing is important for all three niches. The middle-
to-high-income customers are one niche. The recipients of RDP houses for the poor make up the
potential second niche. In this case the SWH could be a part of the existing or an additional grant.
Poor people without piped water could be excluded from this benefit unless alternative systems are
provided. However, poor households might prefer any additional subsidies to be used to increase the
size of the house.The third niche would be in the commercial and institutional sectors, such as in
hotels, offices, hospitals and prisons.
Niches for fuelwood: In the context of energy poverty alleviation two niches for fuelwood have been
identified; the rural and the peri-urban market. Since the poorest people live in rural areas with few
job opportunities they will have to rely on fuelwood for a very long time to come. The peri-urban
market depends on the macroeconomic situation of the country. This market may shrink and
eventually disappear with rising incomes and more employment opportunities, while increasing
unemployment would fuel the peri-urban market.

3.8 Assessment of other experiences
The solar electrification by the concession approach is assessed in the report in order to highlight the
problems, and opportunities associated with the provision of electricity for all.
South Africa is committed to provide universal access to electricity by 2012 (Mlambo-Ngcuka
2004). Grid electricity is the general approach and 70 percent of households are connected to the
grid. For the remaining households the Energy White Paper indicates that Government will
determine an appropriate mix between grid and non-grid technologies (DME 1998) and ‘in remote
rural areas where the lowest capacity grid system cannot be supplied within the capital expenditure
limit, this system will provide a natural opportunity for Remote Area Power Supply (RAPS) systems
to be supplied’ (DME 1998). The South African off-grid electrification programme grants private
companies the rights to establish off-grid energy utilities. This utility service provision is a fee-for-
service model including the maintenance of the system by the utility. The utilities have exclusive
rights to government subsidies to cover most of capital costs for five years. The fee-for-service
agreement will last for 20 years (Afrane-Okese & Thom 2001).

Executive summary vii

Four companies are currently operating on a fee-for-service model in four concession areas and they
have installed about 20 399 SHSs. Assuming an average household size of 4.5, approximately 90
000 people have benefited so far.

Table 4: Concessionaires, concession areas and total number of installations, June 2004
Source: Willemse (2004); Ranninger (2004)

Concessionaire Concession Area Total number of installations
Nuon-Raps (NuRa) Northern Kwa-Zulu 6541
Natal
Solar Vision Northern Limpopo 4758
Shell-Eskom Nortern parts of the 5800
Eastern Cape and
Southern Kwa-Zulu
Natal
EDF-Total (KES) Interior Kwa-Zulu 3300
Natal
Renewable Energy Africa Central Eastern Cape 0
(REA)
Total 20 399

It was clear from the beginning that poor rural households for which the systems were intended
would not be able to afford the initial capital cost and a government subsidy of R3500 for each
installed system was included in the programme for the first five years.
In 2001 the government announced a subsidy for free basic electricity for grid-connected
households, equivalent to 50 kWh per month. SHS users in the concession areas were also intended
to receive a monthly subsidy of R40, reducing the service fee charged by the service providers to
R18 per month.
It is still doubtful if the very poor rural people can afford even this highly subsidised service of PV
just for lighting and media use. There is also a question whether and for how long the government
can afford the high capital subsidy for each system.

3.9 Analysis of barriers and problems
The following general barriers to the further implementation of renewable energy have been
identified (DME 2004):
• Many renewable energy technologies remain expensive, on account of higher capital costs,
compared to conventional energy supplies for bulk energy supply to urban areas or major
industries.
• Implementation of renewable energy technologies needs significant initial investment and
may need support for relatively long periods before reaching profitability.
• There is a lack of consumer awareness on benefits and opportunities of renewable energy.
• The economic and social system of energy services is based on centralized development
around conventional sources of energy, specifically electricity generation, gas supplies, and
to some extent, liquid fuel provision.
• Financial, legal, regulatory and organisational barriers need to be overcome in order to
implement renewable energy technologies and develop markets.
• There is a lack of non-discriminatory open access to key energy infrastructure such as the
national electricity grid, certain liquid fuels and gas infrastructure.
• Market power of utilities.

Executive summary viii

Most of these barriers affect the implementation of biodiesel and SWH. Fuelwood being an energy
source of the poor does not compete, to the same extent, with modern fuels and faces different
problems such as sustainability and access for the poor.
Barriers for implementing biodiesel: The technology producing biodiesel is relatively simple but
implementing a biodiesel programme is complex because many ministries have to work together to
make it work. The Department of Agriculture has to provide advice through its extension services,
and this should be particularly addressed to small and subsistence farmers to increase productivity in
disadvantaged areas. The Department of Science and Technology should assist with extracting and
processing technology and transfer of such technologies to disadvantaged areas. The Department of
Minerals and Energy would be concerned with policy, strategy, distribution and regulation.
Infrastructural services will have to be improved in disadvantaged areas and the programme will
have to be included in the current integrated regional and local development plans (Department of
Provincial and Local Government). Taxes or their exemption and subsidies will have to be
determined and approved by the Treasury. The oil companies will have to blend the biodiesel with
petroleum diesel and have to agree to transport the biodiesel in their pipelines and wheeling charges
will have to be negotiated. The motor car industry will have to approve the biodiesel blends as
suitable for their makes of vehicles and extend the engine guarantee to customers under the
conditions that a certain percentage of the diesel mix is biodiesel. The Bureau of Standards will have
to determine fuel specifications and standards. The list of stakeholders may even be longer.

Biodiesel needs substantial initial capital and support for at least ten years before reaching
profitability. At present the projected cost of biodiesel cannot compete with petroleum diesel at the
pump.
There is a lack of information and awareness on the benefits of biodiesel.
Being a new fuel, biodiesel’s entry into the market faces legal and regulatory problems, which have
to be solved. There are also no standards for biodiesel and these have to be agreed upon by all
stakeholders. Also the access to pipelines will have to be negotiated and regulated.
The oil refineries in South Africa produce more diesel than the country needs and have to export
some of it. Biodiesel will therefore not replace oil imports but increases the diesel export. Markets
will have to be found.
Sunflowers are the most common oil crops but the sunflower seed cake has relatively low nutritional
value and does not substantially contribute to the value of the crop. Further research is required on
how to increase the nutritional value of sunflower cake.
There is potential conflict with food crops over land and water resources; national food security and
the limited water resources have to be carefully assessed before large-scale oil crop plantations are
started. If poverty alleviation is to be achieved emergent farmers and farmers in disadvantaged areas
have to be included in the programme as a priority and the lack of infrastructure in disadvantaged
areas has to be addressed.
Starting capital is needed to assist small-scale and community producers to set up biodiesel plants.
SASOL the world’s largest producer of coal-to-oil, has indicated plans to produce biodiesel from soy
beans. There are not enough soy beans grown in South Africa to support the large-scale production
and soy beans would have to be imported at least initially. Poor subsistence and emergent farmers
should be trained to grow soy beans locally for SASOL’s biodiesel plant.

Barriers for implementing solar water heaters: There is not enough information and awareness
about SWH so that the benefits are not appreciated. The initial installation cost of SWH is high and
affordable financing schemes are not offered; electricity tariffs are low so that people perceive the
installation of SWH as not worth the initial expenditure. Potential customers are also not sure about
quality assurance of SWH.
Most poor people live in areas without piped water and therefore cannot benefit from SWH even if
their installation is subsidised.
The potential and the mechanism of accessing CDM credits for financing, is complicated and not
widely known.

Executive summary ix

Summarising the biggest barriers to installing SWH are attractive financing, information availability,
marketing and the perception of being inefficient and unreliable. Affordable financial and service
loans are widely available for buying a car and similar arrangements could be developed for buying
a SWH. Accreditation of manufacturers and installers to a professional association is the obvious
solution for quality assurance. This must be backed up by standards approved by the South African
Bureau of Standards.

Barriers for implementing sustainable fuelwood use: One of the greatest barriers of sustainable
fuelwood supply for the poor is the incorrect understanding of the problem. The fuelwood crisis was
originally thought to be a resource problem; the demand for fuelwood exceeding sustainable yield
resulting in deforestation and land degradation. Woodlots were supposed to solve the supply
problem and efficient stoves, kerosene subsidy and similar measures were the technology remedies
(Gandar 1994). It has now been understood that agricultural practices and land clearing and not
fuelwood collection are the major causes of deforestation. Also the regenerative capacity of
woodland had been underestimated and the coping strategies of rural people had not been considered
The role of trees in the rural economy and environment is not fully understood and insufficient
recognition of the value of woodland and woodland product to rural communities is given. Building
on indigenous knowledge systems in sustainable woodland management may be one of the useful
strategies. Woodland management is not included into the local integrated development plans.
The emphasis on industrial forestry, which creates large-scale employment and export earnings
marginalized the role of community forestry.
There is no clear strategy to address the fuelwood problem.
There is no institutional framework for fuelwood management and it is not integrated into
development plans at national, regional and local level. Government, communities and NGOs are not
closely interacting to address the problem.

4. Objectives and policy outlines

4.1 Problems and objectives
The problems and objectives for each case study are outlined.

4.1.1 Biodiesel
Two different strategies may be pursued in implementing biodiesel, industrial-scale biodiesel
production and small-scale decentralised production.
Industrial scale biodiesel
Sasol Oil is taking up the production of biodiesel at a centralised location and providing the oil
market. Recognising the importance to its long-term sustainability Sasol is considering building a
400 000 t/y soybean-to-diesel plant. Soy appears the most appropriate oil crop because not only can
the pressed oil be used, but the residue oil cake is also a very desirable by-product, either for animal
feed or for human consumption alleviating protein deficiency. In the initial phases production is
limited and biodiesel is being blended with petroleum diesel ranging from 1% to 5% biodiesel and
95% to 99% percent petroleum diesel. No engine modification is required at such low percentages of
biodiesel.
Small-scale production of biodiesel
The objective is to encourage the small-scale production of biodiesel for decentralised consumption.
Small towns and remote rural areas are being energised leading to local development.

Table 5: Identification of problems, opportunities, objectives and policy outlines for biodiesel

Problem and Opportunities Objective Policy outline
1. Implementing a biodiesel All concerned ministries Facilitating the

Executive summary x

programme is complex because cooperate to support the cooperation between
many ministries must work implementation of biodiesel ministries to implement
together to make it succeed biodiesel

2. Global political developments Sustainable production of Producing biodiesel in SA
threaten the continuous supply of biodiesel has been achieved and and increasing security of
oil and, in the long term, reserves has become competitive with supply
of oil and gas will be exhausted. petroleum diesel, which is
gradually being replaced. Greater
security of supply has been
achieved.
3. Developing new technologies Expertise in growing and Facilitating the attraction
and products is a long and capital processing crops for biodiesel is of capital for biodiesel
intensive process. Who will developed and the technology has dvelopment.
advance or fund the development matured and is adapted to small-,
Providing agricultural
until the new products can medium- and industrial scale
extension services to
compete in the market? production. Biodiesel is
farmers growing oil crops.
competing with petroleum diesel
in the market without being Supporting oil plant
supported by incentives. research.
Transferring technologies
and research results.
4. Very high unemployment rates Biodiesel plants have been built Training farmers and other
undermine the government’s in central locations as well as in rural people to grow and
policies aiming at greater rural areas and the extracted and process oil plants.
equality, poverty reduction and processed oil and the residue of
Encouraging the
development of disadvantaged protein cake are fuelling and
establishment of feedlots
rural areas. feeding secondary developments.
for cattle raising
Many jobs are created. The
biodiesel plants in rural areas Promoting black economic
have become development hubs, empowerment
black economic empowerment is
achieved.
5. South Africa has one of the Petroleum diesel is gradually and Reducing GHG emissions
highest per capita GHG emission sustainably replaced by biodiesel by replacing petroleum
rates worldwide. and consequently GHG emissions diesel with biodiesel.
are reduced.
Complying with future
obligations of the Kyoto
Protocol.

In conclusion, the cooperation of different ministries to implement biodiesel is essential. Strategies
to raise the initial capital for biodiesel production and making the cost of biodiesel competitive with
petroleum diesel have to be addressed. Expertise in growing and processing oil resources has to be
created. Development of biodiesel production in remote rural areas should be given priority because
it leads to poverty alleviation by creating jobs, better livelihoods and rural development.
Replacing petroleum diesel with biodiesel reduces GHG emissions.

4.1.2 Solar water heaters
Seven problems perceived to be most important have been identified. The objectives outline the way
to address the problems.

Executive summary xi

Table 6: Identification of problems, opportunities, objectives and policy outlines for SWH

Problems and opportunities Objective Policy outline
1. High upfront capital cost and SWH companies offer attractive Facilitating attractive
the absence of affordable financing schemes and many financing schemes.
financing schemes discourage the households and the commercial
Expanding markets for
installation of SWH sector are installing SWH
SWH.
2. Many people don’t know about Information, education and Supporting information
or have a negative perception of quality assurance have convinced programmes.
SWH people of the benefits of SWH
Encouraging research on
evaluating the benefits and
limitations of SWH
Implementing quality
assurance.
3. High unemployment rates limit Employment is created in Encouraging and
socio-economic development manufacturing, installing and supporting manufacturing
servicing SWH SWH for employment
generation.
Training in SWH
manufacturing, installation
and maintenance.
4. Electricity peak load demand Installed SWH have reduced peak Reducing peak electricity
will be greater than generation load demand by expanding
capacity by the year 2007 SWH market.
5. The poor live in shacks and SWH are installed in all housing Subsidising capital
houses with insufficient service projects for the poor expenditure on SWH for
provision. Even if they have an the poor.
electricity connection they cannot
Improving quality of live
afford to use it for water heating
by facilitating SWH for
people in social housing.
6. Black economic empowerment A high percentage of SWH Facilitating the training of
is still lacking in the country companies are owned and black entrepreneurs in the
managed by black entrepreneurs SWH sector.
Supporting access to
finances for black
entrepreneurs.
7. South Africa has one of the Solar water heaters replace Facilitating the
highest GHG emission rates electric geysers and water heating replacement of electric
because electricity is generated on stoves reducing GHG geysers by SWH and
from coal-fired power stations emissions supporting the installation
of new SWH.
Reducing GHG emissions
for water heating

Objective 1: SWH companies develop attractive financing schemes together with service contracts
targeting different market niches. It is expected that high income groups are the first to take up the
offers and monthly electricity expenditure will be much reduced when SWH are installed. Particular
schemes are developed for institutions such as clinics, hospitals, prisons, schools and boarding
houses, adjusting their repayment schemes to the saved electricity expenditure. The barriers of initial
up-front costs are lowered and many SWH are installed.

Executive summary xii

Objective 2: An information and education campaign is carried out by government in cooperation
with SWH companies. Information on SWH, their benefits and limitations is widely disseminated in
different media. Easily accessible demonstration sites are set up. The association of SWH
companies, Solarsure, assures quality and dissatisfied customers can complain when they are not
satisfied with the installed product.
Objective 3: Affordable financing schemes and government assistance have facilitated an active
SWH market and have created sustainable employment in manufacturing, installing and servicing
SWH.
Objective 4: Private house and flat owners have replaced their electric geysers with SWH and
people who heated water on electric stoves have switched to SWH. Institutions have installed SWH
and it is estimated that about 2300 GWh (DME 2003) of grid electricity is replaced by SWH thus
reducing the peak load.
Objective 5: Government is implementing housing plans to provide basic housing to improve the
livelihoods of the poor. In addition to the basic housing grant of about R23 000 they receive an
additional amount to install SWH. Part of this amount is to be included as an addition in the housing
grant and the other part to be paid by the customer in affordable instalments. The precise proportions
and the repayment schedule is to be worked out by government, SWH companies and the customer.
SWH are made affordable for the poor and are installed in new RDP houses and retrofitted in old
ones.
Objective 6: Intensive training conducted by the Energy SETA (Sectoral Education and Training
Authority) and other organisations, together with financial incentives for BEE companies, have
encouraged black technicians and entrepreneurs to set up SWH companies. After initial support the
BEE companies have gained technical and managerial experience and successfully compete in the
market without further incentives.
Objective 7: The measures under Objectives 1 to 6 have led to the dissemination of many SWH
replacing water heating that previously used grid electricity from coal-fired power stations. GHG
emission rates have been reduced.
In conclusion, the major objectives are developing proper access to attractive financing,
implementing of technical standards, wider information programmes and increasing the capacity of
the industry to implement together with support for BEE companies. Additional benefits are
lowering of peak loads and the reduction of GHG.

4.1.3 Fuelwood
Five major objectives have been identified. Four are in the fuelwood sector and the fifth emphasises
the importance of disseminating efficient fuelwood stoves. The major objectives are developing
proper access to attractive financing, implementing of technical standards, wider information
programmes and increasing the capacity of the industry to implement SWH together with support for
BEE companies. Additional benefits are lowering of peak loads and the reduction of GHG.

Executive summary xiii

Table 7: Identification of problems, opportunities, objectives and policy outlines for fuelwood

Problem and opportunities Objective Policy outline
1. Fuelwood is becoming scarce A fuelwood strategy is in place Developing a fuelwood
and poor women and children and the poor have easy access to strategy.
have to walk longer and longer affordable fuelwood.
distances to gather fuelwood for Providing affordable access
their cooking and heating needs. to fuelwood for the poor

2. The value of woodlands for the Fuelwood is recognised as a Recognising fuelwood as a
poor is not fully recognised. major national resource and major national resource.
Fuelwood production is not marketed together with other
economically viable. wood products such as bark and Facilitating the marketing
poles and communities are of fuelwood together with
involved in the harvesting and other wood products.
marketing and jobs are created. Involving and supporting
communities in the
harvesting and marketing
of fuelwood.
3. Unsustainable harvesting of Communal woodlands and Facilitating community
wood from communal forests and forests are managed by the management of fuelwood
woodlands and inadequate community and generate a resources.
resource management has sustainable supply of fuelwood.
negative environmental impact. Community members and Generating a sustainable
outsiders respect rules governing supply of fuelwood.
access and harvesting of Creating employment in the
fuelwood. Employment is fuelwood sector.
created.
4. Women and children are Efficient cooking stoves that are Recognising indoor air
exposed to indoor air pollution smokeless and burn efficiently pollution as a major health
when cooking. Smoke from wood using less wood are problem.
fires is particularly bad and leads disseminated, accepted and used.
to a number of diseases. Promoting the
dissemination of efficient
and smokeless stoves.
5. The poor do not have access to Strategies have been Facilitating access to state-
87% of land, which is owned implemented to give the poor owned land for fuelwood
privately or by the state. access to state-owned land for collection.
fuelwood collection.
Developing strategies and
rules for access to state-
owned land for fuelwood
collection

Objective 1: A fuelwood strategy is in place. Communities are sustainably managing forests and
woodlands and fuelwood is harvested at a reasonable distance from homesteads.
The objective is to provide easy access to affordable fuelwood for the poor. These issues are under
discussion.
Objective 2: The value of woodlands as a national resource is recognised. Its particular importance
as a fuelwood resource for the poor is appreciated. Fuelwood marketing is facilitated.
Objective 3: Rules have been drafted regulating the harvesting of fuelwood covering such issues as
right of access, season and time of access, species to be harvested, dead or live wood and thickness
of stem to be harvested for which purpose. The rules are known, respected and enforced. It is clear
who has the power to enforce the rules effectively and what the penalties are if they are transgressed.
Fuelwood and other marketable wood products are included in the integrated local development

Executive summary xiv

plans and they do not remain the sole responsibility of DWAF. Local communities, entrepreneurs
and local government develop plans for marketing wood products. When trees are harvested for
commercial use such as bark, poles and paper the small branches of waste wood are used for
fuelwood. Waste wood sources are integrated in the fuelwood management and transport of
fuelwood is minimised.
Objective 4: Efficient and smokeless wood burning stoves have been developed and some new
models such as Vesta stoves are locally manufactured. Micro-lending schemes permit poor
households to buy the improved stoves. Fuelwood is saved and indoor air pollution is reduced.
NGOs and energy centres are promoting and disseminating the improved stoves. Solar cookers,
which are not yet very popular, are also promoted by NGOs and energy centres in order to reduce
indoor air pollution and dependence on wood and other sources of energy.
Objective 5: Strategies have been developed to give the poor greater access to state-owned forests
and woodlands to collect fuelwood resources. Access is well managed and controlled.
In conclusion, woodlands are recognised as a major national fuelwood resource for the poor.
Policies and strategies have been put in place to facilitate affordable access to fuelwood for the poor.
Community woodlands are well managed and women and children walk shorter distances and spend
less time to gather fuelwood for their household needs.
Efficient and smokeless stoves have been introduced and indoor air pollution has been substantially
reduced
In conclusion, woodlands are recognised as a major national fuelwood resource for the poor.
Policies and strategies have been put in place to facilitate affordable access to fuelwood for the poor.
Community woodlands are well managed and women and children walk shorter distances and spend
less time to gather fuelwood for their household needs.
reduced.

4.2 Stakeholder reactions
Two meetings with stakeholders were held, one in Pretoria the capital and one in Cape Town, the
seat of parliament. In Pretoria representatives from the Treasury, the Department of Water Affairs
and Forestry and policy analysts attended the discussion. In Cape Town we addressed the entire
Parliamentary Portfolio Committee on Energy, a representative of the Department of Minerals and
Energy and policy analysts; the presentation was followed by a question-and-answer session.
The Minister of DWAF has requested to draft a policy on fuelwood in order to alleviate the worst
effects of poverty. . A preparatory meeting gathering background information on problems and
objectives was attended in Pretoria on 26 October 2004. The Energy Sector Education and Training
Authority invited us to a meeting discussing training programmes for artisans for the installation of
SWH.
The stakeholder reactions were enriching and in some areas broadened the discussion.
The stakeholder reactions were enriching and in some areas broadened the discussion. Discussing
with stakeholders from the treasury was very useful and contributed to our understanding of the
limitations and opportunities of incentives.

4.2.1 Stakeholders’ reaction: Biodiesel
1 In order to facilitate the implementation of biodiesel the DST convened a joint
implementation committee of stakeholders in biodiesel. This is strategic support
for the development of biodiesel.
The Treasury’s 30% exemption from fuel level is a government incentive for biodiesel.
Depreciation on capital investment for biodiesel plants is suggested.The depreciation on
capital investment for technology projects is normally 4 to 5 years and reducing this period
to 3 years will be a further incentive to make the biodiesel production cost competitive with
petroleum diesel.

Executive summary xv

The effects of new crops on stream flow reduction would have to be monitored and assessed
according to the Water Act of 1998. It might restrict the land on which oil crops are grown.
2 The availability of oil seeds limits the amount of biodiesel in the market. Oil crops for
biodiesel are not yet widely grown and may even have to be imported until such a time that
they are grown locally. For this reason the initial percentage of biodiesel in the petroleum
diesel blend will be 1% rising to 5% in 2010.
3 A recent SADC strategic planning meeting on ‘Farming for Energy for Better Livelihoods
in Southern Africa’ recommends biodiesel, which can be produced in decentralised
locations as an appropriate crop to overcome farmers’ lack of access to markets.
4 The SADC meeting found decentralised small- to medium-scale developments very suitable
for Southern Africa. Definite strategies have to be developed and the capital for the
processing plants has to be raised. It was suggested that a pilot plant be set up as a
demonstration project. It is expected that after an initial period of learning and support the
processing plants be privatised.

4.2.2 Stakeholders’ reaction: SWH
1 The poorest people in urban and rural areas live in housing without piped water and
therefore cannot benefit from SWH that are connected to the piped water system.
2 Some of the stakeholders are aware that the high initial cost is the biggest constraints and
strategies have to be put in place to facilitate financing programmes.
3 Installing SWH increases the value of the building and this may increase the municipal tax
on the property.
4 In the winter rainfall region there is not enough sunshine during the coldest months and a
backup system is required.
5 Hot water is important for hygienic purposes.

4.2.3 Stakeholders’ reaction: Fuelwood
The Department of Water Affairs and Forestry convened an expert workshop on 26 October 2004 to
discuss the opportunities and constraints for intervening in the fuelwood sector to help poverty
alleviation. Stakeholders from different sectors were represented. The workshop proposed the
following strategies for immediate , medium term and the long term intervention (Shackleton et al
2004):
Immediate:
• Creating a sub-directorate in DWAF (Department of Water Affairs and Forestry) regarding
fuelwood initiatives
• Prioritization of local-level hotspots for intervention
• Subsidize fuelwood marketing
• Better cooperation with Working for Water to supply wood
• Advocate for state lands for sustainable harvesting of fuelwood
• Identify and address information gaps
• Examine and treat the issue in a holistic manner
• Differentiate rural requirements from peri-urban/urban ones

Medium term:
• Develop and implement a national biomass conservation stove programme
• Subsidise small-scale industries to manufacture biomass stoves

Executive summary xvi

• Develop and implement a national tree planting incentive programme
• Provide incentives to private land owners to maintain pockets of natural woody vegetation
on their land
• Promote closer cooperation between DWAF and the National Dept. of Agriculture in terms
of maintaining trees in the environment
• Liaise with the Dept. of Housing around fuelwood needs for peri-urban and local-cost
housing programmes
• Amend legislation to facilitate greater ease in establishment of woodlots of fast-growing
alien species
• Increase the capacity of local government

Long term:
• Develop long-term plans for use of fuelwood as a national resource
• Develop an effective woodlands extension service
• Promotion of rehabilitation forestry

Contents
Executive summary ii

Acronyms and abbreviations xvii

1. Background 1

2. Rationale and motivation 2

3. Initial assessment 4
3.1 Characterisation of population and zones 4
3.2 Needs and energy requirements 4
3.3 Technologies 5
3.4 Renewable energy resources 8
3.4.1 Hydro 9
3.4.2 Solar 10
3.4.3 Wind 12
3.4.4 Biomass 12
3.4.5 Wave energy 14
3.5 Case studies 14
3.5.1 Case study: Biodiesel 14
3.5.2 Case study: Solar water heaters 17
3.5.3 Case study: Fuelwood 18
3.6 Assessment of capacities 20
3.6.1 Capacity assessment: Biodiesel 20
3.6.2 Capacity assessment: Solar water heaters (SWH) 22
3.6.3 Conclusion 24
3.6.4 Capacity assessment: fuelwood 24
3.6.5 Conclusion 26
3.7 Renewable energy niches 26
3.7.1 The concept of niche in the context of this project 26
3.7.2 Niches for biodiesel 26
3.7.3 Niches for solar water heaters 28
3.7.4 Niches for fuelwood 30
3.8 Assessment of other experiences 32
3.8.1 Solar electrification by the concession approach 32
3.8.2 Conclusion 36
3.9 Analysis of barriers and problems 36
3.9.1 General 36
3.9.2 Problems and barriers: biodiesel 37
3.9.3 Problems and barriers: Solar water heaters (SWH) 37
3.9.4 Problems and barriers: fuelwood 38

4. Objectives and policy outlines 39
4.1 Problems, opportunities, objectives and policy outlines 39
4.1.1 Strategic objectives and policy outlines: Biodiesel 39
4.1.2 Conclusion 41

xvii

4.1.3 Strategy objectives and policy outlines: Solar Water Heaters 41
4.1.4 Conclusion 43
4.1.5 Strategy objectives for fuelwood 43
4.1.6 Conclusion 45
4.2 Stakeholder reactions 45
4.2.1 Stakeholders’ reaction: Biodiesel 45
4.2.2 Stakeholders’ reaction: SWH 46
4.2.3 Stakeholders’ reaction: Fuelwood 46

5. Key findings and Recommendations 47
5.1 Key findings: 47
5.2 Recommendations 47

References 46

Appendices 48

xviii

Acronyms and abbreviations

ANC African National Congress
BEE Black economic empowerment
CaBEERE Capacity Building Project in Energy Efficiency and Renewable Energy
CD Capacity Development
CSIR Centre for Scientific and Industrial Research
DANCED Danish Co-operation for Environment and Development
DANIDA Danish International Development Agency
DEAT Department of Environmental Affairs and Tourism
DFA Department of Foreign Affairs
DME Department of Minerals and Energy
DPLG Department of Provincial and Local Government
DST Department of Science and Technology
DTI Department of Trade and Industry
DWAF Department of Water Affairs and Forestry
EPWP Expanded Public Works Programme
ERC Energy Research Centre
GHG Greenhouse gas
IDP Integrated Development Plan
IKS Indigenous knowledge systems
NER National Electricity Regulator
RAPS Rural area power supply
RDP Reconstruction and Development Programme
R&D Research and Development
SADC Southern African Development Community
SAPP Southern African Power Pool
SELF Solar Electric Light Fund
SESSA Sustainable Energy Society of Southern Africa
SETA Sector Education and Training Authority
SF Social forestry
SHS Solar home system
SME Small and medium enterprises
SWH Solar water heating/heaters

xix

Renewable energy technologies for poverty alleviation
Initial assessment report: South Africa 1

1. Background
South Africa is a developing country with a population of 44 million people. The 2003 annual GDP
amounted to R1 234 billion (National Treasury, 2003). A first world and a third world economy exist
side by side reflected in a highly unequal income distribution. Income inequality is similar to Brazil
– one of the highest in the world as measured by the Gini coefficient. After democratic elections in
1994 social spending increased considerably and income inequality was reduced, which resulted in a
pre-tax Gini of 0.57 and – taking taxes and social transfer into account – a post-transfer Gini of 0.35
in 2000 (Netshitenzhe, 2003).
An integrated political and socio-economic policy framework determining policy priorities was
published as the Reconstruction and Development Programme (RDP) in 1994, to meet the objectives
of freedom and an improved standard of living and quality of life for all South Africans within a
peaceful and stable society. The key programmes of the RDP are
• meeting basic needs;
• developing the human resources;
• building the economy;
• democratising the state and society;
• implementing the RDP.
Poverty is the single greatest burden, shaped by the apartheid system and the unequal business and
industrial development which accompanied it. The first priority was to meet basic needs of people
and these include jobs, land, housing, electricity, telecommunication, transport, a clean and healthy
environment, nutrition, health care and social welfare. Electrifying 2.5 million homes was included
under meeting basic needs.
Detailed sectoral policies and legislative programmes including capacity building took direction
from the RDP.
During the political campaigning for the April 2004 general elections, many political leaders realised
that the livelihoods of the poor had hardly improved in the last ten years. This led the new
government to put poverty reduction at the top of their agenda with clearly defined timeframes for
delivery in all sectors. President Mbeki in his State of the Nation address on the 21 May 2004 stated
that: “At the core of our response to all these challenges is the struggle against poverty and
underdevelopment.”
A massive Expanded Public Works Programme will be launched in September 2004 with the
objectives of developing the social and economic infrastructure, human resource development,
enterprise development, and poverty alleviation (DFA, 2004).
South African energy policy priorities have always been closely linked to the prevailing political
situation. Pre-democratic South African energy policy and planning were characterized by energy
security priorities, excessive secrecy and racially skewed provision of energy services. Access to
electricity and other forms of commercial energy for black and poor households was very limited, in
particular in rural areas and townships. Investment, research and development focused mainly on
energy supply and the energy demands of the white minority.
Subsequently, energy policy has undergone substantial revision and now has a strong focus on
energy for development. 1994 saw a shift in energy policy priorities and the inclusive development
of an Energy White Paper (1998). The Constitution (Act No. 108 of 1996) requires that government
establish a national energy policy to ensure that national energy resources are adequately tapped and
delivered to cater for the needs of the nation; further, the production and distribution of energy
should be sustainable and lead to an improvement in the standard of living of citizens (DME, 1998).
One of the government’s most ambitious RDP programmes since 1994 has been the launch of the
national electrification programme which saw the electrification of an additional 2.5 million
households by 2000 – thereby increasing access from about 36% (1994) to about 70% (NER, 2001).
Major objectives of government policy for the energy sector are spelled out in the 1998 Energy
White Paper as (DME, 1998):

ENERGY RESEARCH CENTRE


i) Increasing access to affordable energy services.
ii) Improving energy governance – clarification of the relative roles and functions of various
energy institutions within the context of accountability, transparency and inclusive
membership, particularly participation by the previously disadvantaged.
iii) Stimulating economic development – encouragement of competition within energy markets.
iv) Managing energy-related environmental and health effects – promotion of access to basic
energy services for poor households while reducing negative health impacts arising from
energy activities.
v) Securing supply through diversity – increased opportunities for energy trade, particularly
within the Southern African region, and diversity of both supply sources and primary energy
carriers.
Imperatively, renewable energy becomes one of the areas that the government would want to
consider pursuing in managing energy-related environmental impacts and diversifying energy
supplies from a coal-dominated system. Government’s overall vision for the role of renewable
energy in its energy economy is an “energy economy in which modern renewable energy increases
its share of energy consumed and provides affordable access to energy throughout South Africa, thus
contributing to sustainable development and environmental conservation (DME, 2004).”
In May 2004, the DME published the White Paper on Renewable Energy Policy. This targets the
provision of 10 000 GWh of electricity from renewable resources (mainly biomass, wind, solar and
small-scale hydro projects) by 2013. This is approximately 4% of the country’s estimated electricity
demand or equivalent to replacing 660 MW units of Eskom’s combined coal-fired power stations. At
present less than 1% of the 200 000 GWh of electricity generated annually in South Africa originates
from renewable sources (DME, 2004).
This study outlines the current use of renewable energy, its potential, and discusses barriers and
opportunities in alleviating poverty. Furthermore, it examines policy options for promoting access to
renewable energy as an affordable, reliable and socially acceptable alternative to grid electrification.

2. Rationale and motivation
The South African economy is largely based on mineral extraction and processing, which is by its
nature very energy-intensive. It is heavily dependent on coal for power generation (coal provides
75% of the country’s primary energy). The country has developed an efficient coal-based power
generation system that provides low-cost electricity and coal is likely to remain a financially
attractive source of energy in the long term. About 40% of the country’s liquid fuels requirement is
supplied by Sasol and Mossgas synthetic fuel plants producing liquid fuel from coal and gas. As a
result South Africa ranks amongst one of the highest with regard to carbon dioxide emissions on a
per capita basis.
South Africa’s fast-dwindling peak electricity generation capacity is expected to run out by 2007 and
given the time needed to build new or refurbish mothballed power stations, the harnessing of
abundant (especially solar) renewable sources has become more urgent. The government is
committed to the introduction of greater levels of competition in electricity markets which would
contribute to the diversification of electricity supply and energy security, and in doing so will create
an enabling environment to facilitate the introduction of independent power producers to generate
electricity from renewable resources.
A major challenge facing the government is to supply energy to remote and rural areas where grid
electricity is not likely to reach in the foreseeable future. This, coupled with global concerns around
carbon dioxide emissions, has triggered renewed interest in developing renewable energy
technologies.
The White Paper on Renewable Energy was developed in the context of national and international
driving forces. International developments around the United Nations Framework Convention on
Climate Change, South Africa’s integration into the global economy, the Johannesburg World
Summit on Sustainable Development and government’s White Paper on Energy Policy (1998).



Achieving the 10 000 GWh target from renewables for 2013 is based on an evaluation of the
macroeconomic impacts on GDP, improvement in low-income household incomes, capacity for
employment creation and the impact on black economic empowerment (BEE) (Table 1). Wind as a
resource category is excluded because of costs.

Table 1: Macroeconomic- impact on GDP, income of low-income households and employment.
Source: DME (2004)

Resource categories GWh GDP Low-income Labour
R millions households requirements
income Numbers
R millions
Hydro: Large-refurbishment 273 123 16 430
Hydro: Large-inter-basin transfer 526 305 38 1 407
Hydro: Large-ROR-LH 310 180 23 961
Biomass Pulp and paper: Mill 1 65 28 4 76
Biomass Pulp and paper: Mill 2 39 20 3 80
Landfill gas: Micro 191 96 12 443
Landfill gas: Small 160 67 9 237
Landfill gas: Medium 215 89 12 306
Landfill gas: Large 32 13 2 43
Sugar bagasse: Reduced process steam 570 301 39 1 209
Sugar bagasse: Including high pressure 1 483 897 113 3 894
boilers
Sugar bagasse: Including tops & trash 3 795 1 840 240 20 214
SWH Residential – High income households 930 578 73 2 589
SWH Commercial – Office & banking space 224 119 15 449
SWH Commercial – Hospitals 267 154 20 646
SWH Commercial – Hostels – Education 581 336 43 1 405
SWH Commercial – Security services 339 196 25 820
Total 10 000 5 342 687 35 209

Pursuing this target (10 000 GWh) more than 35 000 jobs would be created, more than R5 billion
would be added to GDP and R687 million would be added to the incomes of low-income
households. More job opportunities will be created as a result of RE technologies than in coal-fired
power stations. Especially in the case of bagasse (including tops and trash) a significant number of
unskilled labourers will be employed, mostly black farm workers employed on the sugar farms.
Table 2 provides a qualitative evaluation of BEE opportunities that exist within individual
technologies.

Table 2: An evaluation of BEE opportunities for renewable energy resources
Source: DME (2004)

Opportunity Entrepreneurial Employment
Resource category potential opportunity
Good Fair Small Good Fair Small
Biomass pulp and paper x x
Sugar bagasse x x
Landfill gas x x
Hydro x x
SWH - residential x x
SWH - commercial & industrial x x
Wind x x



As part of the presidential lead programmes promoting integrated sustainable rural development,
renewable energy is seen as having the potential to assume a significant role in supporting economic
development. The government is also introducing decentralised mini-grids and hybrid systems in
rural areas in order to promote the development of small medium and micro enterprises (Shabangu,
2003).

3. Initial assessment

3.1 Characterisation of population and zones
South Africa is divided into nine provinces and has a total area of 1 223 201 square kilometers. The
majority of its citizens live in urban areas (57.9%). Provinces with the highest poverty rate (% of
persons in poverty) are: Eastern Cape (63.3 %), Limpopo (64.2 %), KwaZulu-Natal (53.1 %) and for
South Africa (47.3%). Table 3 shows the status of electrification at the end of 2002.

Table 3: Status of electrification at the end of 2002
Source: NER (2002)

Province Type of Households Households Percentage Percentage not
area electrified not electrified electrified electrified
Eastern Cape Rural 351 856 568 889 38.2 61.8
Urban 553 293 27 885 95.2 4.8
Free State Rural 122 231 118 756 50.7 49.3
Urban 436 796 87 771 83.3 16.7
Gauteng Rural 38 466 95 576 28.7 71.3
Urban 1 649 705 605 813 73.1 26.9
KwaZulu Rural 365 252 575 061 38.8 61.2
Natal Urban 816 084 371 168 68.7 31.3
Limpopo Rural 610 581 385 803 61.3 38.7
Urban 157 970 3 290 98.0 2.0
Mpumalanga Rural 294 937 144 166 67.2 32.8
Urban 261 161 52 450 83.3 16.7
Northern Rural 57 448 31 990 64.2 35.8
Cape Urban 121 417 30 276 80.0 20.0
North West Rural 305 669 239 015 56.1 43.9
Urban 358 464 37 100.0 0.0
Western Rural 85 484 45 425 65.3 34.7
Cape Urban 870 173 143 292 85.9 14.1
Total Rural 2 231 924 2 204 680 50.3 49.7
Urban 5 225 063 1 321 982 79.8 20.2
Total 7 456 987 3 526 663 67.9 32.1

The National Electrification Programme (NEP) Phase 1 (1994-1999) provided 2.5 million grid
electricity connections at a total cost of about R7 billion. Phase 2 of the National Electrification
Programme was started in 2000 and the target to provide 300 000 additional households with
electricity every year has to date been achieved (Prasad, 2003).

3.2 Needs and energy requirements
Table 4 lists the different energy requirements for each of the following sectors: transport,
residential, commercial and industrial. A list of potential RE technologies available to satisfy the
various energy needs is provided.



Table 4: RE requirements and technologies
Source: DME (2004)

Sector/subsector Requirements Technology
Transport Fuels for vehicles Ethanol, biodiesel
Residential Fuels for lighting PV solar, wind
Fuels for cooking Solar cookers, wind, small hydro, gel fuel,
Fuels for space heating fuel wood & other biomass
heaters
Fuels for refrigeration wind, small hydro, PV solar, biomass
Fuels for cooling wind, small hydro, PV solar, biomass
passive night cooling
Commercial Fuels for lighting wind, small hydro, hybrid, PV solar
Fuels for commercial activities wind, small hydro, solar
heaters

Industrial Fuels for lighting wind, small hydro
Fuels industrial activities wind, small hydro, cogeneration, biomass
heaters

3.3 Technologies
There are a large number of technologies available to harness renewable energy for different
purposes. Table 5 presents the annual GWh production output of each of the 39 resource categories
modeled. It also reflects the different costs-per-kWh statistics for the static and dynamic supply
curves broken down into financial, economic and socio-economic costs (DME, 2004). Although
wind has potentially the highest GWh output the cost associated with wind generation is generally
higher than most of the other RE resource categories. See table 5A below for explanation of terms.

Table 5: Potential of RE technologies and associated costs
RE Resource Categories GWh Static Static Static socio- Dynamic Dynamic Dynamic
output financial economic economic financial economic socio-
1
cost cost cost cost cost econ cost
R/kWh R/kWh R/kWh R/kWh R/kWh R/kWh
1 Hydro: Small: Refurbishment 19 0.58 0.46 0.45 0.57 0.45 0.43
2 Hydro: Small: Inter-basin Transfer 95 0.47 0.37 0.36 0.46 0.36 0.35
3 Hydro: Small: ROR – HH 77 0.48 0.38 0.36 0.47 0.37 0.36
4 Hydro: Small: ROR-LH 108 0.56 0.46 0.44 0.55 0.45 0.43
5 Hydro: Small Unconventional 205 0.34 0.25 0.25 0.33 0.25 0.24
6 Hydro: Large: Refurbishment 273 0.11 0.07 0.07 0.07 0.11 0.06
7 Hydro: Large: Inter-basin Transfer 526 0.30 0.26 0.25 0.30 0.25 0.25
8 Hydro: ROR-LH 820 0.34 0.29 0.28 0.33 0.28 0.28
9 Hydro: Diversion 6 964 0.43 0.39 0.37 0.42 0.38 0.37
1 Hydro: Storage 158 0.51 0.48 0.46 0.49 0.46 0.45
0
SUB TOTAL HYDRO 9 245
1 Biomass Pulp & Paper: Mill 1 65 0.10 0.06 0.06 0.10 0.06 0.06
1
2
3



SUB TOTAL PULP & PAPER 110
1 Landfill Gas: Micro 191 0.30 0.10 0.10 0.29 0.09 0.09
4
1 Landfill Gas: Small 160 0.19 0.05 0.05 0.19 0.05 0.05
5
1 Landfill Gas: Medium 215 0.18 0.04 0.04 0.18 0.04 0.04
6
1 Landfill Gas: Large 32 0.17 0.03 0.03 0.17 0.03 0.03
7
SUB TOTAL LANDFILL GAS 598
1 Sugar Bagasse: Reduced Process 570 0.24 0.19 0.19 0.23 0.19 0.18
8 Steam
1 Sugar Bagasse: High Pressure 1 483 0.29 0.25 0.24 0.27 0.23 0.23
9 Boilers
2 Sugar Bagasse: Include Tops & 3 795 0.22 0.18 0.18 0.22 0.17 0.17
0 Trash
SUB TOTAL SUGAR BAGASSE 5 848
2
2 Wind generation: Class 1 63 0.38 0.33 0.32 0.33 0.28 0.27
1
2
3
2 Wind generation: Class 4 5 109 0.51 0.47 0.45 0.45 0.40 0.38
4
5
6
7
SUB TOTAL WIND 64 102
2 Solar Water Heating Residential 2 232 0.50 0.46 0.45 0.46 0.42 0.41
8 Housing: Low-income houses
2 Solar Water Heating Residential 1 339 0.42 0.38 0.37 0.38 0.34 0.33
9 Housing: Medium-income houses
3 Solar Water Heating Residential 930 0.35 0.31 0.30 0.32 0.28 0.27
0 Housing: High-income houses
1 Housing: Cluster Housing
2 Housing: Traditional Houses
SUB TOTAL RESIDENTIAL SOLAR 4 914
WATER HEATING
3 Solar Water Heating Commercial 224 0.23 0.19 0.19 0.22 0.17 0.17
3 and Industrial Buildings: Office &
Banking Space
4 and Industrial Buildings: Shopping
Space
5 and Industrial Buildings: Industrial &
Warehouse Space
6 and Industrial Buildings: Hospitals
7 and Industrial Buildings: Hostels:
Education
8 and Industrial Buildings: Security
Services



9 and Industrial Buildings: Hotels
SUB TOTAL COMMERCIAL SOLAR 2 026
WATER HEATING
GRAND TOTAL 86 843

2
See Table 5b in Appendix A for wind class descriptions

Table 5a: Explanation of cost terms
Static financial cost (R/kWh) – All costs (capital, operating and maintenance) costs priced at 2003
market prices. Capital costs are annualised, using a formula that incorporates the lifespan of the
capital equipment, and a discount rate of 10%.
Static economic cost (R/kWh) – Based on the data used in deriving financial curves. Adjustments are
made in 2 categories of inputs: input data for fuels, labour and the exchange rate are shadow priced
to reflect the opportunity cost to the economy rather than the market price and carbon dioxide
emission offset data is included, valued with certified emission credits of the Clean Development
Mechanism (CDM).
Static socio economic cost (R/kWh) – Apart from direct labour, additional indirect and induced
employment effects are also accounted for.
Dynamic financial cost (R/kWh) – Takes into consideration the likely impact that ‘technology
improvements’ and ‘economies of scale’ will have on individual Re technology production outputs,
and the costs associated with constructing, operating and maintaining them in 2013.
Dynamic economic cost (R/kWh) – Future RE technology development will make improvements in
effectiveness and efficiency of electricity generation. For technologies undergoing rapid change,
capital costs are likely to decrease.
Dynamic socio- economic cost (R/kWh) – As a result of the achievement of economies of scale,
discounts are included in the dynamic socio economic costs.

The table below presents the financial and socio-economic costs per kWh for each of the nineteen
RE technologies, using a least-cost basis for ranking the RE technologies. The financial cost per
kWh indicates the subsidies that would be required to make each qualifying RE technology
financially viable, whilst the socio-economic cost per kWh indicates the macroeconomic impact
these subsidies would have on the South African economy. Solar PV is excluded, as it would not be
economically feasible (Table 6).

Table 6: Economically viable RE technologies
Source: DME (2004)

Resource categories GWh output Cumulative GWh Dynamic financial Dynamic socio-
output cost economic cost
R/kWh R/kWh
Landfill gas: large 32 32 0.17 0.03
Landfill gas: medium 215 247 0.18 0.04
Landfill gas: small 160 407 0.19 0.05
Biomass pulp & paper: mill 1 65 472 0.10 0.06
Hydro: large: refurbishment 273 746 0.11 0.07
Landfill gas: micro 191 936 0.30 0.09
SWH commercial: office & banking space 224 1 160 0.23 0.17
Sugar bagasse: include high pressure boilers 3 795 4 955 0.22 0.17
Biomass pulp & paper: mill 2 39 4 995 0.23 0.18
Sugar bagasse: reduced process steam 570 5 565 0.24 0.18
SWH commercial: hostels-education 581 61 468 0.30 0.23
SWH commercial: hospitals 267 6 413 0.30 0.23



SWH commercial: Hostels-security services 339 6 753 0.30 0.23
Sugar bagasse: including high tops & trash 1 483 8 236 0.29 0.23
Hydro: small-unconventional 205 8 441 0.34 0.24
Hydro: large-inter-basin transfer 526 8 966 0.30 0.25
Wind energy: class 1 63 9 029 0.38 0.27
Solar residential: low income households 930 9 959 0.35 0.27
Hydro: large-ROR-LH (Run of River-Low 41 10 000 0.34 0.28
Head)

A study (DST 2003) was recently conducted to give a preliminary estimate of what the financial
costs of meeting various RE targets for the electricity sector would be. It was done by comparing the
costs of a non-renewable reference scenario with the costs of scenarios with renewable targets, using
the Long Range Energy Alternatives Planning (LEAP) model.
Figure 1 shows the difference in electricity generation by technology between the non-renewable
reference case and the different RE scenarios. Positive values indicate additional generation while
negative values indicate less generation. It is clear that RE technologies can reduce the load factor of
existing coal fired power stations, thus delaying the construction of new coal fired fluidised bed
combustion stations and will consequently lead to substantial reductions in green house gas
emissions (Alfstadt, 2004).

15

10

5
TWh

0

-5

-10

-15
Renewables Renewables Renewables Renewables Renewables Renewables Renewables Renewables
4 TWh 2013 6 TWh 2013 8 TWh 2013 10 TWh 4 TWh 2020 6 TWh 2020 8 TWh 2020 10 TWh
2013 2020

Coal existing Coal new Wind Hydro Landfill gas Solar Biomass Other

Figure 1: Difference in electricity generation by technology
Source: Alfstadt (2004)

3.4 Renewable energy resources
South Africa has a technically feasible renewable energy production of almost 87 000 GWh,
corresponding to about 49% of the electricity consumption in 2001 (DME, 2004). Table 7 reflects
the contribution that each of the RE technologies makes to this technically feasible production of 86
843 GWh.
In South Africa renewable energy accounts for approximately 9% (1999) of the total energy
consumption (Energy Futures, 2000). Most of this energy is generated from fuelwood and dung and
not from modern renewable energy technologies. Less than 1% of the total electrical energy used in
South Africa originates from renewable energy sources. The White Paper on Renewable Energy
Policies (DME, 2004) targets the provision of 10 000 GWh of electricity from renewable resources
(mainly biomass, wind, solar and small-scale hydro projects) by 2013. This is approximately 4% of
the country’s estimated electricity demand or equivalent to replacing two 660 MW units of Eskom’s
coal-fired power stations.



Table 7 outlines estimates of the theoretical potential for RE sources from 3 different sources.

Table 7: Estimates of theoretical potential for renewable energy sources in South Africa
Source: DME (2003a)

DANCED / DME Howells RE White Paper

Resource PJ / year
Wind 6 50 21
Bagasse 47 49 18
Wood 44 220
Hydro 40 20 36
Solar 8 500 000
Agricultural waste 20
Wood waste 9

3.4.1 Hydro
Currently there are 8 licensed small hydro facilities smaller than 50 MW, which have a combined
capacity of 68 MW. In South Africa small-hydro is regarded as RE and ranges from 1 MW to 50
MW. The power generation potential of small hydro schemes amounts to 9 900GWh per year (DME
2003b). However, there are an estimated 3 500 to 5 000 potential sites for mini-hydro along the
eastern escarpment, and currently six small-hydro schemes, taking 10 MW as the cut-off. Eskom
(the national power utility) runs two of these (First Falls, 6 MW licensed capacity; Ncora 2 MW),
municipal generators three (Lydenburg 2 MW, Ceres 1 MW and Piet Retief 1 MW) and one
privately-owned facility (Friedenheim 3 MW). Eskom also runs Second Falls with 11 MW and
Collywobbles at 42 MW (ERC, 2004).
There exists a significant potential for development of all categories of hydropower in the short and
medium terms in specific areas of the country (Figure A1). For example, the Eastern Cape and
KwaZulu Natal provinces are endowed with the best potential for the development of small, i.e. less
than 10 MW, hydropower plants. The advantages and attractiveness of these small hydropower
plants are that they can either be stand-alone or in a hybrid combination with other renewable energy
sources. Further, advantages can be derived from association with other uses of water (e.g. water
supply, irrigation, flood control, etc.), which are critical for the future economic and socio-economic
development of South Africa (DME, 2004).

Table 8: Total capacity and potential for all hydropower types in South Africa
Source: DME (2002)

Hydropower category Hydropower type Installed Potential for development
and size (MW, kW) capacity
Firmly Additional long-
established MW) term (MW)
Pico – up to 20kW Conventional 0.02 0.1 0.2
Unconventional - - 60.0
Micro- 20 to 100kW Conventional 0.1 0.4 0.5
Mini – 100 to 1MW Conventional 8.1 5.5 3.0
Small – 1MW to 10MW Conventional 25.7 27.0 20.0
Transfers - 25.0 5.0
Refurbishment - 11.0 -
Subtotal for small/mini/micro and pico 33.92 69.0 94.0
hydropower



Conventional macro Diversion fed - 3 700 1 500
hydropower
Storage regulated 653 1 271 250
(> 10MW) head
Run-of-river - 120 150
Subtotal for renewable hydropower in SA 687 5 160 1 994
Macro (large) (> 10 MW)-Pumped storage 1 580 7 000 3 200
Total for macro and small hydropower in SA 2 267 12 160 5 194
Macro (large) (> 10 MW) – Imported hydro 800 1 400 35 000
Grand total for all hydropower 3 067 13 560 -

Some 5 160 MW of additional renewable hydropower can potentially be exploited from rural and
urban hydropower resources, for either electrical or mechanical energy conversion (Table 8).

The Southern African Power Pool (SAPP) allows the free trading of electricity between SADC
member countries, providing South Africa with access to the vast hydropower potential of the Inga
Falls in the Democratic Republic of the Congo, and the Lesotho Highlands Water Scheme has the
capacity to contribute some 72 MW of hydroelectric power to the system in the short term.

3.4.2 Solar
South Africa has one of the highest levels of solar radiation in the world (Figure A2). The average
daily solar radiation varies between 4.5 and 6.5 kWh/ m2 compared to about 3.6 kWh/ m2 for parts of
the United States and about 2.5 kWh/ m2 for Europe and the United Kingdom (DME, 2004).

Photovoltaics (PV)
Photovoltaic (PV) systems are used for powering telecommunications networks, applied in small-
scale remote stand-alone power supplies for domestic use, game farms and household and
community water pumping schemes. The installed PV capacity is estimated at 12 MW (DME, 2003).
Off-grid systems include a wide range of applications and sizes. The majority of off-grid systems are
small (<50 Wp) solar home systems.
Folovhodwe solar village project
A village electrification project of 580 SHS systems was completed in the village of Folovhodwe,
Limpopo Province. This project was undertaken through the Department of Minerals and Energy in
1997/8. It was not successful: a case of technology dumping.
Maphephetheni solar village project
The Maphephetheni solar village project is a small project initiated by the Solar Electric Light Fund
and Solar Engineering Services in KwaZulu/Natal over the period 1996 – 2001. Overall, 52
households and a school – with 27 computers – have been equipped with PV systems. However,
some of the households have since defaulted on payments or decided to opt out of the project and
consequently 33 of the households are still equipped with SHS systems and are servicing their loans.
In addition, the Embuyeni Clinic is supplied with key electricity services by three 75 Wp modules.
Off-grid concessions
The DME has established a concessioning process (fee-for-service) for off-grid rural electrification.
Six concession areas have been identified and concessionaires have been awarded concessions in
five of these. Installations of SHS have so far taken place in only 4 concession areas. The sixth
concession was planned to be awarded in September 2004 (see case study below).



Table 9: Concessionaires, concession areas and total number of installations, June 2004
Source: Willemse (2004); ERC (2004)

Concessionaire Concession Area Total number of installations
Nuon-Raps (NuRa) Northern Kwa-Zulu 6541
Natal
Solar Vision Northern Limpopo 4758
Shell-Eskom Northern parts of the 5800
Eastern Cape and
Southern Kwa-Zulu
Natal
EDF-Total (KES) Interior Kwa-Zulu Natal 3300
Renewable Energy Africa (REA) Central Eastern Cape 0
Total 20 399

The overall rate of installation was initially promising (in 1998/9) but has since slowed down
considerably principally because of government subsidy uncertainties. The concession process is
intended to deliver roughly 50 000 systems per concession area over the next 10 years. This
represents a sizeable market, although there are uncertainties as to whether the customer base really
exists, and whether the installation rate can be adequately accelerated.
Other solar systems include:
• Solar lanterns

• Larger household (or small business) systems > 50 Wpeak
• Game lodge / guest house systems
• Water pumping systems
• Telecommunication systems
• School systems
• Clinic systems
• Other (navigational aids, garden lights; electric fencing; gate openers; etc.)
Grid connected PV (seven BP filling stations, Moshoeshoe Eco-Village, the Novalis Institute and the
Green Building in Cape Town) capacity amounts to about 150kW and the new BP head office has
installed about 40 kW.

Table 10: Installed capacity and energy production of off-grid PV systems
Source: DME (2002)

System description Installed capacity Energy production
(kWp) (MWh/year)
Pre-1992 SHS 1 125 1 971
Off-grid concession SHS 350 613
Maphephethe SHS 5 9
Free State farmworkers SHS 40 70
Folovhodwe solar village 29 51
Hluleka mini-grid 50 88
Solar schools 1 460 2 558
Solar clinics 100 175
Telecommunications 7 000 12 264
PV pumping 1 000 1 752
Game lodges 500 876
Total 11 759 20 602



Solar water heating
Domestic solar water heating (SWH) is currently about 1.3% of the solar energy market in terms of
numbers. SWH can reduce domestic electricity consumption by approximately 30% (DME, 2002).
Due to the high initial capital cost, virtually no solar water heaters are found in low-cost housing
areas. As such, until very recently, increased access to affordable energy services for disadvantaged
household has not been provided by solar water heaters. Nevertheless, SWH could make a major
contribution in respect of reducing household expenditure and increasing job creation through the
manufacture, sale, installation and maintenance of SWH especially in disadvantaged communities.

3.4.3 Wind
Wind power potential is fairly good along most coastal and escarpment areas with mean annual
windspeeds above 4 m/s (see Figure A3 in the appendices). The upper limit of wind energy available
to be captured in South Africa is estimated at 3 GW. It is estimated that wind power could supply at
least 1% (198 000 GWh) of South Africa’s projected electricity requirements (DME, 2002).

Table 12: A projection of the available wind energy capacity in South Africa, along with its
estimated annual energy production (DME, 2002a).

Type Capacity (KW) Estimated annual production (MWh)
National grid 3 160 5 000
Rural mini-grid 45 111
Off-grid 510 1 117
Bore-hole windmills 12 000 26 000
Exploited wind energy 16 000 32 000

The South African government has recognised the importance of wind energy in a future energy mix
and has declared the Darling wind farm project a national demonstration project. According to
Haskins and Oelsner, 2004 the Darling wind farm to be established in the Western Cape is an
example of a potential independent power producer. The proposed 10 MW facility will be sited at
the Slangkop farm, north of Cape Town. It will be built over 2 phases: phase 1 will comprise five 1
MW turbines. The City of Cape Town will purchase electricity from the Darling wind farm at a cost
higher than the average price of Eskom-supplied power in the area. City of Cape Town will sell this
as green electricity. City of Cape Town has thus far spent about R2 million on a green electricity
market survey. Work on phase 1 is scheduled to start in November 2004. A R35-million
demonstration and training facility is also being planned (Haskins & Oelsner, 2004).
The Darling wind farm will be used to identify, develop and update the necessary strategies and
regulations on how to deal with independent power producer issues. It will also serve as a case study
to formulate future wind energy policy.
Eskom has started to generate electricity from three wind turbines at the Klipheuwel wind farm,
about 40 km north of Cape Town. The wind farm consists of Danish Vestas V47 660 kW and V66
1,75 MW wind turbines and a French Jeumont J48 750 kW wind turbine. Implementation of this
research and demonstration project started in 2002/2003 with a view to investigate the potential of
large-scale wind energy for bulk electricity generation in South Africa.

3.4.4 Biomass
The main sources of biomass energy are fuel wood in the rural domestic sector, bagasse in the sugar
industry, and pulp and paper waste in the commercial forestry industry for in-house heat and
electricity generation. The total biomass potential is given in Figure A4. Fuel wood is the main
source of energy for most rural households. The Renewable Resource Database identified the
following woody biomass resources:
• commercial plantations;
• indigenous woodlands;
• alien vegetation;



• deciduous fruit tree off cuts from pruning;
• sawmills – mostly woodchips, sawdust and bark;
• pulp mills: boiler ash, sludge, sawdust and black liquor.
The viability of wood as an energy source suitable for electricity generation lies within the wood,
pulp and paper industries. The table below gives the result of the Renewable Resource Database
modeling of the wood and pulp industries’ energy potential based on availability and energy content
of fuels. The electricity generation capacity for sawmills is estimated at 7 600 GWh per year, and for
pulp mills at 4 500 GWh per year.

Table 13: Annual fuelwood and pulp energy potential from specific sources in terms of electricity
generation
Source: DME; Eskom; CSIR (2001)

Type Tonnage (t/Year) Energy potential
(GWh/year)
Sawmills 1.57 million 7 639
Pulp mills 1 million 4 528

Biomass in the form of firewood, wood waste, dung, charcoal and bagasse accounts for close to 10%
of net energy use at a national level.

Bagasse
Bagasse currently produces 210 GWh a year in terms of electricity generation. Potential bagasse
generation capacity is approximately 1 400 GWh per year.

Manure and litter
The potential exists to utilise the manure and litter from livestock to generate methane gas through
anaerobic fermentation in biogas plants. The potential energy from livestock manure and litter is
approximately 5 600 GWh per year (Stassen, 1996).

Table 14: Potential energy from livestock manure and litter
Source: Stassen (1996)

Type Energy production (GWh/year)

Cattle 3 889

Pigs 306

Poultry 1 417

Biodiesel
South Africa could produce 1.4 billion litres of biodiesel per annum without impacting negatively on
the production of food (DST 2003). This amounts to 20% of the country’s diesel consumption. The
study also shows that, for the best-case scenario (i.e. where sunflowers and soybeans are produced
on a rotational basis), biodiesel can be produced with borrowed capital at a break-even factory price
of R3.06 per litre. When return on investment of R0.40 per litre is added to this figure, it means that
the factory gate price of biodiesel is R3.46 per litre. If taxes and levies of R0,79 per litre plus the
existing fuel companies’ wholesale margin is added, the biodiesel wholesale price is R4.54. This
means that a corresponding subsidy would be required, and to ensure fiscal neutrality, this would
require a premium of between R0.01 and R0.03 per litre on petrol.
A number of positive impacts have been identified. Biodiesel would have a positive impact on job
creation and would lead to development in disadvantaged rural areas.

Energy from waste
South Africa disposes most of its refuse to landfill sites. The net realisable energy available from
sewage-derived methane is in the order of 36 MWh (1.13 PJ) per annum for electricity generation



and 96 MWh (3.0 PJ) for heating purposes (DME, DANCED, 2001). Options for energy production
from municipal waste are being examined including biogas digestion as well as methane gas from
landfills (DME, 2004).

3.4.5 Wave energy
Wave potential along the Cape coastline is estimated as significant. The Cape Peninsula has an
offshore mean annual power level of approximately 40 kW/m wave crest. The average harvestable
potential power along the entire coast is estimated to be 56 800 MW (DME, 2004). However the
economic and engineering feasibility of harvesting this resource has not yet been demonstrated in
South Africa.

3.5 Case studies
Three case studies have been selected on the basis of contributing to poverty alleviation and poverty
reduction, their feasibility, and government policy priorities. The case studies are on biodiesel, solar
water heaters, and fuelwood. They address different requirements and contributions to poverty
alleviation. The major contribution to poverty alleviation of a biodiesel programme would be job
creation and economic development in disadvantaged rural areas. Biodiesel could energise remote
communities and raise productivity. Further it would contribute to energy security and reduce
greenhouse gas emissions. SWH are an obvious way of reducing fossil-fuel emissions associated
with water heating aand the high-end market can be expanded at a relatively low intervention cost.
Manufacturing and installing SWH on a large scale would create jobs and if suitably subsidised,
possibly by including them into the existing housing grant for the poor, SWH would increase the
welfare of the poor but the question remains if SWH are the most urgent need of the poor. Fuelwood
is the most commonly used energy source of the rural poor. Even after electrification many poor
households in South Africa still have to rely on fuelwood for cooking because they cannot afford to
pay the monthly electricity bill. Overall the fuelwood potential in South Africa seems to be adequate
although there are shortfalls in several areas and women and children have to walk longer and longer
distances to gather fuelwood for cooking. Fuelwood has been included as a case study because it is
going to be the staple energy source of the poor in Southern Africa and Africa for the next 40 years.
Forests and woodlands around population centres are degrading fast and fuelwood deficits are
getting larger and no clear policy has yet emerged to address the situation successfully. The South
African case study may be useful for other African countries.

Table 15: Summary of case studies

Potential case studies criteria Case study 1: Case study 2: Solar Case study3:
Biodiesel water heaters Fuelwood
Representativeness Oil crops can be Can be fitted on many Affects very many
Replicability grown in 6 out of buildings; suitable for all poor households,
9 provinces parts of the country particularly poor rural
households
Potential population benefited 200 000-300 000 15 million 20% of population
Complexity Highly complex Not complex Complex

3.5.1 Case study: Biodiesel
The most common liquid and gaseous biofuels are biodiesel, ethanol and biogas. Biodiesel is the fuel
that has grown most rapidly from almost zero in 1995 to 1.5 billion litres per annum worldwide in
2004 (IEA). The use of biofuels is expected to grow rapidly in the future because they address key
fuel and policy needs of economic development, energy security and environment. New conversion
technologies will make woody biomass and dried leaves and stems of other crops such as maize
important resources for biofuels in the future. Such feedstocks will expand the growing of suitable
biomass to a wide range of climatic conditions and will help reduce the potential for food/fuel
conflict (IEA 2004). Biodiesel is a fuel oil made by a transesterification process from oil plants such
as sunflower, soy, rape and cotton seed or from waste cooking oil. It may be used in any diesel
motor vehicle and mixed in any ratio with mineral diesel. Biodiesel costs two to three times as much



to produce as it costs to produce petroleum diesel (IEA 2004) and appropriate economic, market and
regulatory instruments are required to make biodiesel competitive.
In North America and Europe biodiesel is usually blended with petroleum diesel at concentrations of
5 to 25% (B5-B25). In Germany the use of 100% biodiesel (B100) is common. There are over 1800
biodiesel pumps at filling stations in Germany and Austria; it has a 100% tax exemption which
allows the consumer to buy B100 at about the same price or slightly less than petroleum diesel.
In South Africa a number of positive impacts have been identified. Positive balance of payment
impacts will be achieved through increased exports and reduced imports. At present South Africa is
a net exporter of diesel. This means that any additional diesel produced would add to the amount to
be exported. At R2.00 per litre, this would amount to R2.8 billion per annum. However considering
present estimares the production cost would be higher. The better strategy would be to promote
greater use of diesel within South Africa. In addition, imports of R1 billion per annum (in the form
of oil cake, oil seeds, glycerol and seed cotton) will be saved as these are by-products of biodiesel
production. The impact on job creation is also positive. For the best-case scenario, it is estimated that
up to 300 000 jobs could be created, mainly in disadvantaged rural areas (CSIR, 2002).

Policy issues
At present the cost of biodiesel is greater than petroleum diesel and this means that policies and
regulations are necessary for biodiesel to compete in the marketplace. Biofuel policies in other
countries (covering both biodiesel and ethanol) are based on three approaches (IEA, 2004; Winkler,
2005): taxation-based policies, agriculture-based policies and fuel mandates.
Taxation-based policies typically reduce the fuel excise taxes. In 2002 the South African Minister
of Finance reduced the fuel tax on biodiesel by 30% thus encouraging production of biodiesel. Tax
reductions and exemption reduce government revenue.
Agriculture-based policies in some countries consist of farming credits for using biomass grown on
set-aside lands that are unavailable for food production. This will lower the cost of the biomass
feedstock and the biofuels. Such policies have been used in Europe for ethanol production. So far no
agriculture-based policies or regulations have been developed in South Africa to facilitate the
growing of oil crops for biodiesel. Agriculture-based policies like tax-based policies help to keep the
biodiesel price down at the pump but reduce government revenue.
Fuel mandates determine a minimum percentage of biofuels that motor fuels must contain. Such a
policy is helpful to achieve biofuel implementation. For example Brazil’s policy requires that all
motor gasoline contains at least 22% ethanol. The European Union also has policies that stipulate
minimum percentages of biofuels in the motor fuels mix and fuel mandates are considered in other
parts of the world including North America. Fuel mandates are easy to implement. Motor fuel taxes
levied by government are not affected, but consumers may pay higher prices at the pump to cover
the higher cost of biofuels.

Poverty alleviation
One of the government’s priority policy goals is to facilitate employment creation and to reduce
poverty. The biodiesel programme could contribute to the alleviation of poverty through agricultural
activities in planting and processing oil crops. This requires that oil crops are not grown exclusively
by commercial farmers but also by small-scale farmers in disadvantaged areas. Biodiesel can be
produced on a small or large scale. In Austria and France agricultural cooperatives supply the
feedstock and use scaled-down technology for biodiesel production. Their members are often the
end-users of the fuel. A tax relief on biofuels produced by small pilot plants can be a powerful
incentive to SMEs.

Table 16: Estimation of biodiesel production potential per province with assumed rotation
practices
Source: CSIR (2002)

Province Crop rotation Estimated area for Estimated biodiesel production
oil crop (ha) (million litres)
Eastern Cape 50% maize 450 000 270
25% sunflower
25% soy



KwaZulu-Natal 30% maize 526 000 260
30% sunflower
30% cotton
Limpopo Province 50% sunflower 800 000 480
50% cotton
Traditional maize areas maize 600 000 396
sunflower
Total potential 2 376 000 1 400

Potential population benefited
The number of people who could benefit from the implementation of a biodiesel programme is
difficult to estimate. The programme may start with a pilot area in which oilcrops are grown on a
limited scale and experience is gained. Once this stage is successfully completed oil crops can be
extended to larger areas and more and more small-scale farmers can be involved. The limiting
factors will be availability of land, water, soil and climatic conditions.

Complexity
Manufacturing biodiesel from oil crops is not technologically complex. The typical by-products of
biodiesel are a protein-rich oil cake and glycerol. The value chain from the seed in the farmer’s hand
to diesel in the vehicle engine is long and this makes the implementation complex. A biodiesel
project would involve many sectors such as agriculture, local government, energy, science and
technology, treasury. This is one of the reasons why the initial production will have to be facilitated
and supported, and assistance from different government departments is required.
Four oil crops – sunflower, soy, cotton and groundnut – are grown in South Africa and are suited to
soil and climatic conditions. These crops are often rotated with the staple food maize. Different crop
rotations are suitable in different geographic regions (see Table 16). Various by-products are
associated with each oil crop and these can determine if a crop can be grown economically. Prices
for each crop and by-products have to be set very carefully to satisfy the national demand for the
various end products and to make sure that national food production is guaranteed when more land is
cultivated for oilcrops. At least four ministries are involved here. The Department of Agriculture has
to provide advice through its extension services, and this should be particularly addressed to small
and subsistence farmers to increase productivity in disadvantaged areas. The Department of Science
and Technology should assist with extracting and processing technology and transfer of such
technologies to disadvantaged areas. The Department of Minerals and Energy would be concerned
with policy, strategy, distribution and regulation. Infrastructural services will have to be improved in
disadvantaged areas and the programme will have to be included in the current integrated regional
and local development plans (Department of Provincial and Local Government). Taxes or their
exemption and subsidies will have to be determined and approved by the Treasury. The oil
companies will have to blend the biodiesel with petroleum diesel and have to agree to transport the
biodiesel in their pipelines and wheeling charges will have to be negotiated. The motor car industry
will have to approve the biodiesel blends as suitable for their makes of vehicles and extend the
engine guarantee to customers under the conditions that a certain percentage of the diesel mix is
biodiesel. The Bureau of Standards will have to determine fuel specifications and standards. The list
of stakeholders may even be longer.
The biodiesel by-products may have other advantages, such as the following: If more cotton seed is
grown for biodiesel it would increase the national cotton production and substitute cotton imports.
Also the quality of cotton harvested by small-scale farmers is higher because it is hand picked and
the net income per hectare is higher than for machine-harvested cotton. The by-product, oil cake
reduces the shortage of plant protein as animal feed and also would substitute oil cake imports.
Production levels in disadvantaged rural areas could be increased after studying the production
limiting factors in these areas. Producing 1.4 billion litres of biodiesel per annum will have no
negative impact on food production.



Case study characteristics

Table 17: Involvement of other sectors

Sectors/ Requirement Technology % covered with Target Case study
subsectors RETs population context
Agriculture Oil crops for Growing oil 1.4 billion litres Large- and Need for
biodiesel crops of biodiesel small-scale extension
can be farmers services
produced from
2.3 million ha
Science and Developing Oil extracting Large and Producers to
Technology and and processing small-scale be assisted
transferring technologies, producers with design of
technologies oil cake oil extraction
production equipment
Minerals Policy and Draft strategies Policies and
and Energy strategy and determine strategies
formulation, amount and
regulation, types of
pricing subsidies
Provincial Development Roads, water, Commercial, Land
and Local of electricity small-scale ownership and
Government infrastructure and land tenure,
in areas where subsistence development in
oil crops are farmers disadvantaged
grown, IDP areas
Treasury Taxes, their Determine Producers and Prices, taxes,
exemption and amount and consumers subsidies
subsidies types of
subsidies and
other
incentives
Transport Diesel for Biodiesel 1-10% of Taxis, buses, Encourage
vehicles diesel blend in heavy official fleets to
the next 10 transport use biodiesel
years vehicles,
government
and corporate
fleets, private
cars

The production of biodiesel has many potential benefits in terms of security of supply and
particularly in the future when mineral oil and gas reserves will be declining. It has the potential to
contribute to job creation and development in disadvantaged rural areas. However, the development
is complex and needs the cooperation of different sectors. It is a new venture and few sectors have
experience in it. A coordinated effort is required to develop biodiesel.

3.5.2 Case study: Solar water heaters
All regions of South Africa have an ideal climate for SWH, with high annual radiation levels
averaging daily between 4.5 and 6.5 kWh/m2 compared to about 2.5 kWh/m2 for Europe. Most parts
have clear skies during winter and only in the relatively small winter rainfall region of the Western
Cape and some other areas which experience cold cloudy spells radiation levels in winter are
reduced and SWH systems are usually backed up by grid electricity. About 18% of the urban
residential electricity consumption could be replaced by SWH (CaBEERE 2004).
SWH are manufactured in South Africa and there is a well established SWH industry. The industry
is presently forming an umbrella organisation called Solasure to assist quality assurance. In the
1970s and 1980s ten times more SWH were sold than now, then the industry collapsed and has never
recovered. This had partly to do with the fact that the CSIR stopped a fairly active nationwide



marketing programme and ‘fly-by-night’ companies, unsuitable design and disgruntled customers.
To prevent this happening again the industry got together, planning to set manufacturing and
installation standards. Accreditation will be another feature to assure homeowners and insurance
companies. An ombudsman is also to be appointed. These measures are expected to change the way
solar water heating is viewed and to raise the profile of the industry.

Poverty alleviation
The SWH industry has the potential of adding R1383 million to the GDP and R176 million to the
income of low income households (Table 1). It is estimated that manufacturing, installing and
servicing SWH will create 5909 jobs but since SWH will in some cases replace electric water heaters
some jobs may be lost in the electric-water-heater industry.
SWH improve the welfare of the poor by having running hot water and spending less for it. Hot
water improves hygiene and health.

There are different groups of people who will benefit from expanding the SWH industry. Newly
created jobs will benefit about 6000 people. If all RDP houses are fitted with SWH 6.5 million
people will enjoy the comfort of running hot water and will be spending less for it. The high income
households are principally targeted for the installation of SWH because they are most likely to afford
them. In the commercial and institutional sectors, offices, hotels, banks, hospitals, hostels
(education) and prisons would derive long-term financial benefits.

Complexity
No aspect of SWH is very complex. The greatest barrier is their upfront cost. Affordable financing
schemes have to be developed. If SWH companies offer flexible loans, guarantee the reliability of
SWH and a nationwide marketing drive is maintained SWH will be widely disseminated in the
domestic and commercial sectors. Electricity tariffs are expected to rise in the future and this will
make SWH more attractive. In an expanding SWH market, larger sales volumes can be expected to
lead to lower equipment prices.

3.5.3 Case study: Fuelwood
In the last ten years access to electricity has increased from 36% to 70%, bringing electricity to many
disadvantaged communities. In the early years of the accelerated national electrification programme,
it was thought that households would switch to electricity when they obtained a grid connection or
that those not yet connected would use other modern fuels such as kerosene or LPGas. As a result of
such views, the provision of fuelwood was no longer considered a priority. But many poor
households cannot afford the electrical appliances and the monthly cost of electricity for cooking, in
spite of the fact that South Africa has relatively low tariffs and the poor receive 50 kWh per month
of free basic electricity. Many poor households still depend on fuelwood for their most energy-
intensive activity: cooking. In 2001, 69% of households used electricity for lighting and only 51%
used it for cooking (ERC 2004: 57), indicating that 18% of those households that were connected to
the grid did not use it for cooking. Very poor households use fuelwood and kerosene because they
perceive these fuels to be cheaper. Overall, 21% of South Africans use wood for cooking and 64% of
these households are in the lowest income brackets (annual household incomes from R0 to R9600)
(ERC 2004: 58). The use of fuelwood for cooking is clearly correlated to poverty. Many of the
poorest people live in remote rural areas which have not yet been reached by the electricity grid, and
therefore they miss out on electricity for lighting and also the free basic electricity subsidy.
Fuelwood strategies could explore how poor people without access to electricity could benefit from
free basic energy.
The national fuelwood stock is a very valuable resource and annual fuelwood demand is estimated to
be worth R3 to 4 billion. Locally, the demand is very variable and appears to be higher where more
wood is available (Shackleton et al 2004). Where fuelwood is the major energy source households
consume about 1 to 4 tonnes per year.
Community forest and woodland resources are declining in some areas making it harder for poor
women to satisfy their fuelwood needs. A case study in a poor rural area of the Eastern Cape where



fuelwood sources were depleted showed that households which bought fuelwood spent as much as
R69 on fuelwood per month (Prasad et al 2004).
Fuelwood is a renewable resource and if harvested sustainably it will meet the energy needs of the
rural poor for many decades. Growing trees for sustainable fuelwood harvesting has environmental
and socio-cultural value; the carbon sequestration potential and the international trading of carbon
credits are also of potential benefit (Shackleton et al 2004). At the same time, it must be remembered
that smoky use of fuelwood contributes to local air pollution and health risks, as well as other GHG
emissions associated with incomplete combustion.
Wood and fuelwood are part of forestry and fall within the responsibilities of the Department of
Water Affairs and Forestry. Forestry in South Africa has a long history and has developed in two
sectors, industrial forestry and community forestry, along with the dual economy of the country.
Industrial forestry is a profitable business providing raw materials for a substantial pulp and paper
industry and also supplying timber to the mining and other industries.
Community forestry is expected to meet local social, household and environmental needs and to
assist local development (DWAF 1996b). Communities are the major participants. It includes
forestry programmes like farm forestry, agroforestry, community and village planting, woodlots and
woodland management by rural people, as well as tree planting in urban and peri-urban areas
(DWAF 1996b). Community forestry for fuelwood has been neglected in the past and community
forestry among African people has had little success (DWAF 1996b). Some woodlots in the Eastern
Cape established around indigenous forests helped to conserve the natural resource. Woodlots were
more successful when they were integrated into the natural resource use system in which the needs
of the community were given greater consideration.
Social forestry (SF) is the planting and/or management of trees by local individuals, communities or
groups to meet local needs. It includes a number of options for tree planting and tree dissemination
like agroforestry, homesite tree planting, tree delivery systems based on a network of village
nurseries, school tree planting, using trees for soil rehabilitation. Some SF programmes have been
very successful and their replication in different areas is very promising.
The Biomass Initiative (Gandar1994) has gathered a wealth of information and lessons learned
which are very valuable for designing a fuelwood strategy

Policy issues
Fuelwood is a large national resource that if sustainably managed could contribute to improve the
livelihoods of poor households.
Poor households in remote rural areas often lose out on free basic services such as free basic
electricity because they don’t have access to these services. Such subsidy could be used to facilitate
sustainable fuelwood management and marketing so that the poor have easy and affordable access to
it.
The state owns considerable wooded land resources and access to state woodlands for fuelwood
collection should be considered.
It is important to integrate fuelwood provision into local integrated development plans.

Poverty alleviation
The poorest of the poor use fuelwood because they cannot afford other energy sources and
appliances. Poverty alleviation is a priority area for government and subsidies for free basic energy
could include a fuelwood subsidy in poor areas without electricity where fuelwood is the primary
source of energy. Subsidies and/or other support measures for healthier wood-burning techniques
such as stoves and ventilation of smoke could reduce the health costs and hazards of smoky
fuelwood use.
The national fuelwood resources are worth billions of Rands and if sustainably managed the
planting, maintaining, harvesting and marketing of fuelwood can create many jobs.



At the national level, 20% of all households use fuelwood for cooking and space heating. At the
local level the situation is very variable and in some areas more than 50% of households use
fuelwood as their primary energy source.

3.6 Assessment of capacities
The assessment of capacity is done for the three case studies. Capacities for the three cases vary
greatly. Fuelwood is the oldest energy source used by humans. SWH are known and the technology
is used by some while biodiesel is relatively new and it is not well known. The capacity assessment
of the three cases is given in the comparable following lists. See also tables A5, A6 and A7 in the
Appendix.

3.6.1 Capacity assessment: Biodiesel
There are no fuel crops grown for biodiesel production but oil crops such as soya and sunflower
are grown for human and animal consumption. For example sunflower is quite widely grown
and soy beans are also grown in some areas. There would be some capacity to grow some of the
crops but the amount grown would have to be scaled up. There is no biodiesel being processed,
blended and marketed and considerable new capacity would have to be built.

1. Legislative authorities, elected officials and 2. Government macroeconomic and development
planners
There are just a few pioneering farmers who have grown oil plants for biodiesel in the past and
biodiesel is known to some in the agricultural sector but it is not so well known in other sectors and
by elected officials its potential role in creating jobs and uplifting disadvantaged areas is not
appreciated. Since biodiesel cannot yet compete with petroleum diesel, initial incentives – such as
tax relief, subsidies, credits and fuel mandates – are necessary to get the industry started. When the
production cost of biodiesel comes down and the price of fossil oil continues to rise, biodiesel
incentives may be reduced.

3. Government energy authority or ministry
The role of biodiesel is appreciated in the energy and finance ministry and the minister of finance
has recently announced a fuel levy rebate of 30% on biodiesel. This is an encouraging sign for
industry because it would make the biodiesel manufacture more competitive with petroleum diesel.

4. Energy regulatory bodies
The minister of energy is the regulator for the liquid fuel industry including biodiesel. Having
supported a 30% cut in government levy it is expected that the future biodiesel industry will be
encouraged by the regulatory authority.

5. Market coordination agency
There is a need to identify potential market coordination agencies. The recently established South
Africa Energy Management Association (website: www.sema.uct.ac.za) includes industry members,
energy experts and public sector organisations. With government support such organisations could
bridge the gap between policy goals and implementation by providing training, and assistance with
technology development and implementation (EDRC 2003).

6. Non-energy governmental authorities/ministries
The production of biodiesel involves other ministries besides the Department of Minerals and
Energy. The Department of Agriculture would be concerned with food security when food crops are
displaced by oil crops for the transport sector. The technology innovations and the various aspects of
technology transfer either from countries outside South Africa where a viable biodiesel industry has
been established or within the country from technology centres to disadvantaged populations, would
be of interest to the Department of Science and Technology. The DST has recognised the need for
more information and capacity and has set up a joint implementation committee for biodiesel in
which stakeholders are represented.



7. Energy supply industry
Sasol, the world’s biggest producer of fuel from coal, is considering a soybean-to-diesel plant
(Bridge, 2004). If approved, the plant would produce 91 million litres of biodiesel per annum. At
present local farmers produce only 136 500 tons of soy beans and the company may have to import
the shortfall until such a time that South African farmers switch to growing more soy.

8. Entrepreneurs and productive industry
Potential large producers like Sasol, which has declared an intention of starting biodiesel
manufacture, have the in-house capacity to start a biodiesel industry. Any capacity they do not have
they can hire or subcontract. Sasol would build capacity for its own production units but small rural
producers need assistance and support from government..

9. Energy equipment and end-use equipment manufacturers and 10. Energy equipment O&M
services
Some of the equipment will be imported at least initially. The country has a well-developed mining
and manufacturing industry and if demand is sufficient all equipment could be manufactured in the
country. O&M services can be trained locally and will contribute to employment creation.

11. Credit institutions
Credit is essential for manufacturers and farmers. Commercial farmers can obtain credit through the
appropriate farming-related institutions. Large companies have well established relations with credit
institutions and biodiesel would just be another product for which they would seek credit. The small-
scale and community producers need assistance and possibly government support to access credit
institutions. Credit institutions need to become familiar with oil crops as an economically viable
crop.

12. Civil society / NGOs
Civil society and NGOs have important roles to support the implementation of biodiesel as
consumers, advocating diesel cars and supporting community biodiesel producers. They need to be
better informed of the potential benefits of biodiesel.

13. Users
Diesel vehicles are not yet common in South Africa. 99 percent of light passenger motor vehicles
(less than 12 persons) are petrol powered (Table 19). A study on attitudes towards diesel and petrol-
powered vehicles (CSIR 2001) found that petrol vehicles were preferred and gave the following
reasons for their preference:
The respondents said that they don’t know diesel, they are used to petrol, petrol is readily available,
petrol cars are faster, they start first time and start better when it is cold, petrol engines are quieter,
have good performance and are more powerful. The respondents gave the following reasons for
preferring diesel vehicles: they are more economical, they last longer and are more fuel efficient;
diesel vehicles are better for farm and poor roads, their maintenance costs are cheaper and they are
easier to maintain/service (CSIR 2001, p 52).

Table 19: Motor vehicle propulsion
Source: CSIR (2001)

Vehicle type Petrol/diesel-powered
Light passenger motor vehicle (less than 12 persons) 99% petrol
1% diesel
Light load vehicle (GVM 3 500 kg or less) 85% petrol
15% diesel
Motor cycle 100% petrol
Minibus 85% petrol
15% diesel
Special vehicle 90% diesel
10% petrol
Heavy passenger motor vehicle (12 or more persons) 100% diesel



Heavy load vehicle (GVM>3 500 kg, not equipped to draw) 100% diesel
Heavy load vehicle (GVM>3 500 kg, equipped to draw) 100% diesel

There is a taxi recapitalisation programme in place which involves replacing the estimated 120 000
petrol-powered taxis with larger diesel-powered midi-bus taxis expected to use 600 000 kl of diesel
per annum (CSIR 2001). Users need to be better informed about the advantages and disadvantages
of modern diesel engines.

14. Energy specialists and consultant firms
There are hardly any energy experts and consultancy firms specialising in biodiesel. These would
have to be trained.

15. Academia and research organisations
There are no specific courses on biodiesel. Oil crops are well known and are grown in the country as
vegetable oils for human consumption and their cultivation is taught in the agricultural faculties.
Research and teaching in renewable energy resources, technologies, markets and policies has to be
strengthened as a matter of priority at universities and technical training institutions.

16. Media
Media play an important role in shaping public opinion and attitudes. Media should be made aware
of the advantages and disadvantages of diesel engines and explain these to the public.

Concluding the assessment of capacities it appears that a major capacity-building drive at all levels
and in all relevant areas is required to implement a biodiesel programme. The major reason for this is
that biodiesel is a relatively new fuel and has been known to only very few as a viable fuel for motor
vehicles. The very first step is to start an information programme about the potential of biodiesel.

3.6.2 Capacity assessment: Solar water heaters (SWH)
SWH technology is known and a limited number of SWH companies exist. It is necessary to create
greater demand and increase the capacity of SWH companies in South Africa. Reliable studies,
analysis and demonstration are required to evaluate the benefits. Legislative authorities, elected
officials
Wider dissemination of information on the benefits of SWH is required.

2. Government macroeconomic and development planners
The macroeconomic impact: according to the CaBEERE 2004 report SWH for commercial buildings
and high-income households would create 5909 jobs (Table 1); the dynamic financial costs would be
R0.27 per kWh as compared to the dynamic socioeconomic cost of R0.23 per kWh. They would
contribute 2341 GWh to the targeted 10 000 GWh from RE.

The DME with sponsorship from Danida/DANCED has been running a large capacity-building
programme (CaBEERE) focusing on renewable energy and energy efficiency. The White Paper on
Renewable Energy Policy was published in February 2004 and a Renewable Energy Strategy is
being drafted.

No particular regulation is required for SWH. Developing standards for the industry has been going
on for at least 15 years. EDRC recommended standards revisions (EU-compatible) as early as 1990-
91. A weak commercial market, and poor SABS performance in this area, led to stagnation in
effective national standards implementation.
5. Market coordination agency
The market players in the SWH industry formed an association ‘Solasure’ under the auspices of the
Sustainable Energy Society for Southern Africa (SESSA). Its major function is quality assurance.
There is no market coordination agency.



6. Non-energy governmental authorities and ministries
The DST and the DTI are generally supportive of renewable energy programmes. DST has support
programmes for new technologies and SWH could benefit from these.
7. The energy supply industry
The energy supply industry is not involved in SWH. However, it is important for Eskom (and any
other electricity suppliers) to judge the role of SWH in reducing average and peak load demands.
This can affect their generation investment decisions.

There is a good number of entrepreneurs in the SWH industry who are trying to increase the market
share of SWH. Lack of awareness, high upfront costs and relatively low grid electricity prices are the
major obstacles to the expansion of the industry.

9. Energy equipment and end-use equipment manufacturers
The Solar Water Heating Division of SESSA worked out priority areas for their new association
called Solasure. These are generally accepted testing standards, testing equipment and quality
assurance for all sections of the industry. Market transformation was to start at the high-to-middle-
income sector of the market because that sector is open to innovation and can afford the new
technologies.

10. Energy equipment and O&M services
There is a range of companies to supply equipment and provide O&M services. If the market
expands it is expected that the companies will grow in number and size and new capacities will have
to be built.

11. Credit institutions and financial support
The Development Bank of Southern Africa is supportive of developments in renewable energy and
has financed the Lwandle SWH project near Cape Town. The Industrial Development Fund invests
in renewable energy and the Central Energy Fund is a potential co-investor. The Department of
Science and Technology supports technology transfer and innovation and also capacity building in
these areas. It is also supporting energy technologies that are targeting the poor and have the
potential to alleviate poverty. Capital and service subsidies for SHS paid by government facilitate
private investment in PV concessions but there is no funding support for SWH. Credit institutions in
cooperation with SWH companies need to develop affordable financing schemes.
The CDM may offer project opportunities to sell the carbon emission reduction. The buyers in the
market are among others the World Bank’s Prototype Carbon Fund. The DBSA is an intermediary to
assist project developers to access these funds from the World Bank. The Kuyasa project in Cape
Town has developed a methodology for receiving CDM credits from the installation of SWHs.

12. Civil society and NGOs
Civil society and many NGOs lack inform information on technology, cost and financing of SWH.
Reliable information is required.

13. Users
The potential users of SWH generally lack information about the advantages and drawbacks of
SWH. Electricity tariffs being low many users are not convinced that SWH are an economic
investment. It is quite likely that some domestic customers and even some industrial and business
customers would be prepared to pay a little more for installing green water heating. Exporting
industries would be interested to affix the green label to their products

There are specialist and well established consultancy companies. If there is a massive roll-out more
capacity would have to be added to the existing pool.

SWH is a specialised topic which is taught as part of renewables. A masters dissertation has recently
been written on SWH at the Energy Research Centre.



16. Media
Media need to be better informed. Professional magazines carry articles on SWH occasionally.

3.6.3 Conclusion
Basic capacities on which to build exist. However if SWH are rolled out at a large scale, much more
capacity has to be built at all levels and in all relevant areas. Financial schemes have to be developed
as a matter of priority. The SETA on energy should facilitate the training and education activities.

3.6.4 Capacity assessment: fuelwood
The poorest of the poor depend on fuelwood for their energy needs because they cannot afford to
buy commercial fuels. National fuelwood resources exist and the capacity for their sustainable
management has to be created so as to meet the fuelwood needs of the poor. Strategies and
programmes have to be developed at all relevant government levels and in communities to facilitate
affordable access to fuelwood.
1. Legislative authorities, elected officials
The DME has transferred the responsibility for fuelwood to DWAF, which appears to have
considered fuelwood more of a forestry/woodland problem than an acute energy problem of the
poor. Very recently the plight of the poor has been recognised and DWAF is in the process of
preparing a fuelwood strategy.
The framework conditions for wood products are laid down in the forestry policy. With respect to
household energy, government’s prioritisation of electrification has led to the continued fuelwood
dependence of poor households being insufficiently appreciated.
2. Government macroeconomic and development planners
The great value of the national fuelwood resources and its potential to contribute to better
livelihoods and job creation are not fully recognised. A policy, strategy and programmes for
providing sustainable fuelwood for poor households are required.
The Department of Minerals and Energy is concerned mainly with modern fuels and has transferred
the responsibility for fuelwood to the Department of Water Affairs and Forestry (DWAF). As part of
a government drive to implement poverty alleviation programmes DWAF has recently started the
process of drafting a fuelwood strategy. Capacity has to be built for strategy development and
implementation.
DWAF is the regulatory body for fuelwood. As part of a drive to implement poverty alleviation
programmes the DWAF has recognised the urgency to regulate the fuelwood sector and to facilitate
access to this basic energy source for the rural poor. Local government and traditional authorities
have to be involved in formulating local-level regulation.
5. Market coordination agencies
Fuelwood is obtained from three sources: state forests/woodlands, private forests/woodlands and
community forests/woodlands. The fuelwood market is localised and not coordinated. Individual
entrepreneurs transport and sell fuelwood. Their mode of operation is often not sustainable largely
because of very low profit margins. Marketing bodies in which fuelwood-using communities
participate should be established.
6. Non-energy governmental authorities/ministries
Coordination between DWAF, DME and the Department for Provincial and Local Government
(DPLG) is required for strategies and programmes of sustainable fuelwood production. The role of
DPLG is to include the provision of fuelwood into provincial and local integrated development
plans.
7. Energy supply industry



The state, private individuals and plantation owners are suppliers of fuelwood. In addition
community members can collect fuelwood from communal woodland for no charge. Community
leaders generally stipulate conditions, under which fuelwood can be collected. The authority of the
leaders is frequently challenged and the conditions are often not enforced.
In plantation forests fuelwood is a by-product and in community woodlands it is one of the resources
community members gather free of charge. The right to free collection is often abused - sometimes
by outside fuelwood sellers. The sustainable management of woodlands by communities is required
and entrepreneurs in community forestry should be trained.
9. Energy equipment and end-use manufacturers
There have been many attempts to disseminate different types of woodstoves which increase the
wood-burning efficiency and reduce indoor air pollution but in most cases user acceptance has been
slow. A more effective dissemination strategy has to be developed. Energy centres and rural energy
stores should be encouraged to sell improved stoves.
10. Energy equipment O&M services
The poor for whom the improved stoves are intended have to be involved in designing, testing and
producing the stoves. Skill training in rural areas for production and repair services is necessary. A
umber of efficient and low-smoke stoves are available, eg, Vesta stoves.
11. Credit institutions
Access to credit specifically designed to help the poor is very limited. Microcredit for the poor
should be widely introduced.
12. Civil society/NGOs
Some NGOs have been active in promoting improved stoves. Fuelwood is a by-product of the very
successful public works programme Working for Water whose objective is to remove alien invasive
species. In areas where alien vegetation is the major or only fuelwood source, such vegetation should
not be removed indiscriminately, but instead (where possible) carefully managed to maintain a
sustainable fuelwood source for the poor.
13. Users
The most important group of fuelwood users are the poorest of the poor. When the poor cannot
afford commercial fuels they fall back on fuelwood particularly when it can be collected free of
charge. In order to assist the poorest of the poor it is very important that access to free or affordable
fuelwood remains an integral part of any energy and forestry policy and strategy.
There are hardly any energy specialists working on fuelwood problems at the moment. There are a
few experts in environmental science and forestry who have concerned themselves with the
sustainability of woodlands where most of the poor live and from which much of the fuelwood is
collected.
Very little work on fuelwood has been done since 1995/6 when the Biomass Initiative was
effectively put on hold, and responsibilities fell in the cracks between DME and DWAF.
Most attention was on the dissemination of modern fuels and how to phase out fuelwood to achieve
the transition from traditional biomass fuels to electricity, gas or even paraffin.
16. Media
The media follow the general trend, reporting extensively on issues to do with modern fuels. In
contrast, fuelwood as an energy source for the poor is hardly ever reported on and has been
forgotten. Awareness has to be raised.



3.6.5 Conclusion
Capacity is required to put the provision of fuelwood on the agenda of government and follow up on
the implementation. A dedicated sub-sector within DWAF should be created. The fuelwood
resources exist but they are spatially variable and there are local shortfalls of supply; sustainable
management is required to supply fuelwood where it is needed. Capacities have to be built in
different departments of government and in local communities in order to manage wood resources
sustainably, providing affordable fuelwood for the poor and creating jobs at the same time.

3.7 Renewable energy niches

3.7.1 The concept of niche in the context of this project

The niche concept (Nadal 2004) was introduced in this project to characterize those situations in
which it would be feasible to extrapolate some components of case study to national or regional level
and generate a significant positive impact for the population. It involves the selection of those
renewable energy resources and technologies as well as those energy system sectors and uses where
their penetration is more likely, and where the potential for poverty alleviation is high. A niche is
defined by a combination of activities and requirements, energy resources and biogeographical
characteristics. One could also go into more detail and include socio-cultural and capacity aspects. In
relation to mature technologies and renewable resources, either good present availability or potential
for their development in the short and medium term are required. A niche tends to be of more
general applicability than a case study and therefore includes the potential for replication and
viability and sustainability aspects in the analysis. A niche does not simply refer to market issues but
also to other non-economic aspects (technical, cultural, resources, etc.).
The prospects for successful dissemination of renewable energy fuels and technologies depend to a
large degree on policy and strategy support, on the willingness of government to subsidise
technologies that cannot yet compete with existing alternative technologies, on interested private
producers who are willing to invest, on customer or user acceptance of the new product or service,
and the ability of the technology to be financially self-sustaining in future. Table 22 gives an
estimate of some of these factors for biodiesel, SWH and fuelwood.

Table 22: Support for technology

Biodiesel SWH Fuelwood
Specific policy/strategy High Low at the moment Moderate
support
Energy Ministry support High High Moderate
Other ministries’ High Moderate Moderate
support
Government’s High Not yet decided Moderate
willingness to subsidise
Private producers High Very high Low
interested
User/customer Moderate Low High
acceptance

3.7.2 Niches for biodiesel
There are three major niches for biodiesel. Blending biodiesel with petroleum diesel for the transport
sector is the most common market outlet for biodiesel in other countries and is estimated to absorb
the largest amount of biodiesel in the future. Jobs will be created in the new industries and as the
overall demand for transport fuel rises no jobs will be lost in the petroleum diesel sector.
Cooperatives are established in some European countries and together with niche 3 in Table 25 have
great potential for development and poverty alleviation.



Table 25: Potential niches

Potential niches criteria N1 N2 N3
Blend for petroleum Cooperative with Energy fuel in remote
diesel at industrial surrounding rural area
scale producers and
customers

Representativeness
Replicability High High Very high
Potential population benefited Biodiesel Difficult to Difficult to estimate at
producers and estimate at this this time
the global time
environment
Complexity High High High
Suitability/Viability/Sustainability
Affordability Medium
Effectiveness High
Risk of obsolescence Low
Flexibility Medium
Technological capability Low
Suitability and urgency High
Resilience High
Adaptability High
Environmental impacts Very positive
Social acceptance High but need for information and education
CD requirements High
Income generation High

Assessment of niches
Affordability: There are three aspects of this technology for poor rural people: growing the oil crop,
manufacturing the diesel and buying the diesel fuel. Poor rural people in communal areas have some
land under communal land tenure, which they could use for oil crops. The government is
implementing a land reclamation and redistribution programme under which many communities and
individuals have made successful claims. The biodiesel cannot yet be produced at prices which
directly compete with fossil diesel. In the long term, prices of fossil fuels are bound to rise. In the
shorter term, the volatility of oil prices can pose problems for the financial sustainability of
competing products such as biofuels. There is also a question about the ability of smaller-scale
producers of oil crops (such as poor rural communities) to compete with larger agro-business. In the
meantime, the Government has announced a fuel levy exemption of 30% for biodiesel, but further
measures would be required to make biodiesel competitive at current prices. Such measures might
have to include stabilisation mechanisms, to offset the effects of volatile prices in the petroleum
sector.
Efficiency: At present oil crops for biodiesel are not grown and biodiesel is not produced. Adequate
extension services for growing the crop and technological and management support will be required
to produce biodiesel efficiently.
Risk of obsolence: There is very little risk of being locked into an obsolete technology. Crops can be
changed within less than a year, the manufacturing equipment could be adapted if more advanced
technologies are developed. Potential producers will be aware that biodiesel is a new technological
area in which adaptation and technological innovation is part of the on-going development.
Flexibility The technology can be upscaled or downscaled according to the capacity to grow and
process oil seeds.
Technological capability: The technology is not overly complex but relatively new in South Africa.
Big companies with wide international experience such as Sasol have the capacity to assess the
technological components on the market, assess their value, select which specific technology is
needed, use it, adapt it and improve it and finally develop technologies themselves. Poor rural
communities will need assistance to develop technological capability.



Suitability and urgency: Growing oil crops creates jobs in agriculture. The processing plants create
employment and business opportunities in rural areas where unemployment is a major problem. The
government has made poverty alleviation and job creation one of its urgent priorities.
Effectiveness and efficacy: Biodiesel production meets the needs for rural employment and increased
rural productivity. It can also provide decentralised power systems to energise rural areas.
Resilience and adaptability: Different oil plants have different degrees of resilience under varying
soil and climatic conditions. As the oil plant stock will be improved over the next five to ten years
and technological processes will become more efficient the production system will have to remain
resilient. At the same time the system has to be able to change to fit the changed circumstances.
Environmental impacts: There might be competing land and water demands for growing food and
oil crops in some areas. The water use of the new oil crops would have to be assessed. Proactive
planning can avoid a potential conflicting situation.
In contrast to petroleum diesel, biodiesel is CO2 emission-neutral if harvested plants are replaced by
new crops.
Social acceptance: Maize and sunflower are very common crops, cotton is well known in some areas
and soy is known in few areas. Crop rotation is a well known practice. A few farmers have grown
crops for diesel before. General social acceptance is expected provided that effective and sensitive
information and education programmes are conducted and previously disadvantaged people benefit.
Capacity requirements: Capacity building at all levels is required. Extensive education campaigns
have to be developed and implemented. In poor rural areas biodiesel crops will be new and sensitive
and intensive capacity building is necessary.
Income generation: Biodiesel production will create jobs at many different levels from labourers to
entrepreneurs.

Poverty alleviation
Poverty alleviation potential for all three niches is high because of the number of created jobs in
agriculture and the production process and increase in agricultural productivity particularly for
subsistence farmers in disadvantaged areas. In addition new cooperatives centred around the
biodiesel production units could be development hubs for other agricultural activities such as cattle
feed lots.

Chances of being implemented
The chances of implementation are quite high because the minister of finance announced a 30%
reduction in fuel levy for biodiesel and Sasol is considering production of biodiesel from soy beans.
This would pave the way for many smaller producers who could be subcontracted by Sasol to grow
the oil crops or start their own biodiesel and oil cake production and combine it with a feedlot. This
combination is described in Appendix B.

3.7.3 Niches for solar water heaters
The market provides three niches for the dissemination of SWH. Better information and access to
affordable financing is important for all three niches. The middle-to-high-income customers are one
niche. The recipients of RDP houses for the poor make up the second niche. In this case the SWH
could be a part of the existing or an additional grant. Poor people without piped water could be
excluded from this benefit unless alternative systems are provided. However, poor households might
prefer any additional subsidies to be used to increase the size of the house.The third niche would be
in the commercial and institutional sectors such as in offices, hospitals and prisons.



Table 26: Niches for solar water heaters

Potential niches criteria N1 N2 N3
Higher- Recipients of Commercial and
income housing grants institutional sectors
households (lower-income
households)
Representativeness
Replicability High High High
Potential population benefited 7.5 million 7.5 million ?
Complexity Low Moderate Moderate
Suitability/viability/sustainability
Affordability Moderate Very low Moderate
Effectiveness High High High
Risk of obsolescence Low Low Low
Flexibility Low Low Low
Technological capability High Moderate Moderate
Suitability and urgency High High High
Resilience High High High
Adaptability High High High
Environmental impacts Very low Very low Very low
Social acceptance High High High
CD requirements Moderate Moderate Moderate
Income generation Low Low Low

Affordability: The upfront cost of SWH is too high for most people. Middle to high income groups
and institutions are the most likely groups to buy SWH if affordable financial schemes are offered.
The poor will have to rely on government subsidy for installing SWH.
Efficiency: SWH are efficient in providing low-cost hot water in most parts of South Africa during
most of the year. In the winter rainfall region and areas with cold cloudy spells in winter electricity
grid backup is required in the cold season.for reliable hot water service. If SWHs are ineffective on
the coldest days of the year, and require electrical back-up then, the overall effect could be to make
the national electricity load profile more peaky over the course of a year, which is bad for electricity
supply efficiencies.
Risk of obsolescence: Internationally, SWH manufacturers are improving designs, materials and
manufacturing processes. However, the technology is considered relatively mature, and
improvements are likely to be incremental.
Flexibility: The technology is adaptable to all climatic regions and (potentially) to small households
with low incomes as well as large institutions.
Technological capability: Basic technological capability exists for assessing technological
development, innovation and adaptation. Companies are manufacturing, installing, servicing and
marketing a limited number of SWH. For medium to large scale roll-out, technological capability
will have to be developed, in manufacturing, installation and service capacity, marketing and
awareness campaigns, and quality assurance.
Suitability and urgency: SWH are very suitable to heat water. There is still some doubt if solar water
heating is less expensive than electric water heating at the present relatively low electricity tariffs.
The urgency is related to the possibility of reducing peak electricity demand levels although further
information is need to assess this; SWH could contribute to poverty alleviation provided capital and
maintenance expenses are covered by government in which case government needs to ask whether
this is a more important subsidy area than others such as social grants.. Hot water is a basic
requirement for households and poor people would greatly benefit having affordable running hot
water. The technology is unsuitable in areas where there is no piped water and where most of the
very poor live.



Environmental impacts: SWH don’t emit any GHG and replace grid electricity which is generated
from coal, reducing the overall country emissions.
Social acceptance: SWH projects in poor areas have a mixed record. Free or almost free installation
and maintenance seem to guarantee user satisfaction. If free maintenance is not included in the
project SWH are generally not repaired when faulty. When a project is successful home owners
appreciate the service provided; it saves labour because they don’t have to heat water on stoves and
it saves money because they don’t have to buy kerosene for water heating.
Capacity development requirements: capacity exists for limited sales but has to be stepped up for
medium- and large-scale roll-out.
Income generation: When the SWH market is expanded new SWH have to be built. The
manufacturing, installing and servicing SWH creates additional jobs. Having running hot water in
the house increases the chances of income generation when poor women start home businesses such
as a crèche.

Poverty alleviation
SWH can contribute to poverty alleviation in so far as jobs are created in manufacturing, installation
and maintenance. SWH in poor households improve livelihoods, comfort levels and health but do
not alleviate income poverty. Most of the poor live in areas without piped water and they would be
excluded from the benefits of SWH.

SWH replace electric geysers and thus save electricity produced from coal. Using SWH also reduces
peak load and since new electricity capacity is required by 2007 any reduction peak electricity
demand is desirable. It is believed that government has an interest to provide incentives for the
installation of SWH.
Domestic electricity prices can be expected to rise in the future, due to industry restructuring, the
need for investments in new generation capacity, and other factors. The poor may be shielded from
such price rises to a greater extent than higher-income households. Higher-income households in
South Africa mostly use electric geysers for water heating, and higher electricity prices would be an
incentive for them to consider SWH options.
If proper access to attractive financing is developed, technical standards are implemented and the
public is well-informed, the chances of wider-scale SWH implementation should be very high.

3.7.4 Niches for fuelwood
In the context of energy poverty alleviation two niches for fuelwood have been identified: the rural
and the low-income peri-urban market. Since the poorest people live in rural areas with few job
opportunities they will have to rely on fuelwood for a very long time to come. The peri-urban
market depends on the macroeconomic situation of the country. It may shrink and eventually
disappear with rising incomes and more employment opportunities, if these socio-economic targets
are achieved. However, if high levels of unemployment and poverty continue, affecting both the
economic situation of peri-urban settlements as well as in-migration in search of jobs, it is likely that
the demand for fuelwood will remain significant in those peri-urban areas where fuelwood is locally
accessible or cheaper than other available energy options.

Table 27: Selection matrix for fuelwood niches

Potential niches criteria Niche 1 Niche 2
Rural market Peri-urban market
Representativeness
Replicability High Limited
Potential population benefited About 20% of the Poor peri-urban fuelwood
population users
Complexity High High
Suitability/Viability/Sustainability



Affordability High High
Effectiveness High High
Risk of obsolescence Very low Very low
Flexibility High Moderate
Technological capability Moderate Moderate
Suitability and urgency High High
Resilience High Moderate
Adaptability High Moderate
Environmental impacts Moderate Moderate
Social acceptance High High
CD requirements Moderate Moderate
Income generation Moderate Moderate

Affordability: Woodlands and forests provide social, economic and environmental benefits for the
poor. The sustainable management of woodland and forest resources as well as the marketing of
fuelwood has to be supported by the government initially.
Effectiveness: As long as poor households have severe cash constraints and cannot afford modern
fuels, fuelwood remains the most suitable thermal energy source for the poor, where available.
However support measures are needed to assist sustainable resource management, and reduce health
hazards associated with exposure to wood smoke.
Risk of obsolescence: Wood is used for many different purposes, increasing the incentives for
sustainable resource management. As a fuel, the risk of becoming obsolete is very low in the short-
to medium-term since fuelwood (together with some other biomass fuels, such as dung and crop
residues) is the only energy source over which poor people have some control. Fuelwood as an
energy source for the poor will become obsolete when income levels rise sufficiently to lift the poor
out of poverty. Community management structures, which are set up for fuelwood management, can
be used for other development activities if with rising incomes the need for fuelwood is no longer
felt.
Flexibility: It is expected that fuelwood demand will go down when employment and income levels
rise. Fuelwood planting and harvesting can easily be downscaled or upscaled as economic conditions
of the community improve or deteriorate. However, it does take time for trees to grow.
Technological capability: Communities have limited capabilities to manage their wood resources.
DWAF will also have to develop strategies and support structures to assist communities. As far as
improved stoves are concerned NGOs and private producers have the technical capability to produce
them. Marketing of improved stoves needs some assistance from NGOs, government and energy
centres.
Suitability and urgency: In rural areas fuelwood is the most common energy source of the poor but it
is not always easily available. The management of the fuelwood resource is very urgent in some
areas where resources are declining due to over-harvesting and lack of replanting.
Environmental impact: Sustainable management of woodlands and tree planting will prevent biome
degradation and will have a beneficial impact on the environment. Carbon sequestration is another
environmental benefit when more trees are grown continuously. Local smoke pollution from wood
burning can affect the health of fuelwood users, especially women and children exposed to
unventilated smoke.
Social acceptance: The social acceptance of tree growing and fuelwood harvesting is high when
adequate support structures such as extension services, seedling production and marketing of tree
products are facilitated. Using fuelwood in the home is an age old tradition and women have always
accepted it although they would prefer cooking with modern fuels such as electricity if they could
afford it.
Capacity development requirements: Capacity development is required in DWAF for fuelwood
strategies and programmes, in DPLG for including fuelwood into integrated development plans and



in communities for forest and woodland management and fuelwood marketing. Fuelwood users may
need assistance to choose ways of avoiding smoke health hazards.
Income generation: There is potential for income generation and job creation in the management of
woodlands and the sale and transport of fuelwood. The marketing of fuelwood may have to be
subsidised initially.

Poverty alleviation
A sustainable fuelwood programme would help to ensure that many poor households depending on
this fuel will have access to fuelwood at no monetary cost, or where commercialised, at a more
affordable financial cost. Women and children could save time and energy by collecting fuelwood
closer to home. Improved stoves and ventilation practices can reduce indoor air pollution, with
positive effects on health. Improved methods of using fuelwood can also reduce the quantities
consumed, and/or increase the benefits from fuelwood use.

The chances of providing better access to fuelwood are quite high. As poverty alleviation is one of
the government’s priority areas, and fuelwood is a primary energy source for the poor, a fuelwood
strategy will be drafted in the very near future and the proposed programmes will probably be
implemented. It is recognised that successful programme implementation in this area will be difficult
and complex because of he spatial variation and spread of fuelwood-management problem. The past
history of South Africa and some neighbouring countries have not been encouraging and it is not
easy to find the ‘breakthrough’. DWAF needs to draw on all available experience, vision, outreach,
cabinet support etc to achieve a successful, comprehensive programme.

3.8 Assessment of other experiences
The solar electrification by the concession approach is included in the report in order to highlight the
problems, and opportunities associated with the provision of electricity for all. The policy objective
is the provision of electricity for lighting and media to people living in remote rural areas, who for
economic reasons will not receive grid electricity in the near future. Some of the key findings were:
the poorest of the poor could not afford the solar home system and the job opportunities were not so
great.

3.8.1 Solar electrification by the concession approach

Introduction
South Africa is committed to provide universal access to electricity by 2012 (Mlambo-Ngcuka
2004). Grid electricity is the general approach and 70 percent of households are already connected to
the grid. For the remaining households the Energy White Paper indicates that Government will
determine an appropriate mix between grid and non-grid technologies (DME 1998) and ‘in remote
rural areas where the lowest capacity grid system cannot be supplied within the capital expenditure
limit, this system will provide a natural opportunity for Remote Area Power Supply (RAPS) systems
to be supplied’ (DME 1998). In 1999, 51 percent of rural households were still without electricity
and it became clear that the supply technology had to be re-evaluated. Photovoltaic solar home
systems (SHS) were selected to provide a basic service to those households that cannot be grid-
connected within acceptable cost parameters (Kotze 2000).
A pure commercial model and a utility model were considered for the SHS implementation and it
was decided to select the utility model and to involve the private sector in the non-grid electrification
programme (Kotze 1997; 1998).
The South African off-grid electrification programme grants private companies the rights to establish
off-grid energy utilities. This utility service provision is a fee-for-service model including the
maintenance of the off-grid energy systems by the utility. The utilities have exclusive rights to
government subsidies to cover most of the capital costs for five years. The fee-for-service agreement
will last for 20 years (Afrane-Okese & Thom 2001).
The rationale for the private utility model was (Kotze 2000):



• It would speed up universal access to electricity envisioned in the Energy White Paper since
non-grid electricity service had become increasingly cost-effective in remote areas.
• It could attract larger, better organised private companies with their own sources of financing.
• It would facilitate and rationalise electrification planning, funding and subsidisation at national
level, allowing regulation and financing mechanisms to maximise targets and optimise resource
allocation.
• It had the potential to reduce equipment costs (through volume discounts), transaction costs, and
operation and maintenance costs (through economies of scale).
• It ensures service to customer over a long period of time (e.g. 20 years).
• The utility would own the hardware as assets, which should facilitate the raising of capital on
the money markets, while the strong financial and maintenance controls characteristic of the
private sector should facilitate the channeling of international development funding.
• This should facilitate relocation of technologies that may arise over time as the grid reaches
more remote areas.
• It was expected that the service providers would adopt a delivery model that promotes a range of
fuels such as gas or kerosene, in addition to SHS or mini-grid systems. This energisation model
has been motivated by the realisation that electricity often does not meet all the energy needs of
rural people who, after electrification, tend to continue to rely on multiple fuels.
• Most rural dwellers that have access to grid electricity are usually not able to afford higher
consumption of electricity and they tend to use it mainly for lighting, radio and B/W television,
services that can be equally provided by SHS. The service level that is subsidised under the non-
grid electrification programme was set at 50 Wp.
The main disadvantages of the utility route were considered to be that the systems were installed at
the clients’ premises under their control but not under their ownership of the utility and were
therefore prone to vandalism, neglect and misuse.

Limitations of the SHSs
The SHSs can only be used for lighting and media. The systems do not provide for the greatest
energy needs of the rural population which are cooking and space heating.

Results obtained
Four companies are operating on a fee-for-service model in four concession areas and they have
installed about 20 000 SHSs. Regulatory, institutional and contractual arrangement for off-grid
energy services have been worked out as the part of the programme. Among the achievements is the
publication of a service standard for non-grid electricity customers. The standard outlines the service
activities and the minimum standards for measuring the quality of service provided by the non-grid
service providers. The standards give the National Regulator a basis for evaluating quality of service
to non-grid customers.

Population target
The programme targets 300 000 households for SHSs, 50 000 for each of the six concessions. So far
the roll-out has often been delayed by institutional and contractual disagreements among the various
stakeholders and it is unlikely that the target will be achieved within the next years if installation
rates are not increased.

Population benefited
Accurate installation figures are difficult to get. It is estimated that 20 000 SHSs had been installed
under the concession programme by 2004. Assuming an average household size of 4.5, this would
imply that about 90 000 people have benefited so far. In some areas, households did not continue
with payments, and a proportion of the installed SHSs were repossessed by the company.

Weak points
The systems are expensive, requiring large subsidies in order to be affordable for the rural
households and a reasonable commercial venture for the supply utilities. They are of very limited use



providing electricity only for lighting and media. Maintenance is problematic. The payment of
regular monthly service fees is difficult for poor households, which are characterised by low and
irregular income. In one of the concessions the utility provided SHS to only those households with
proof of regular income, effectively excluding the poor.

Capacity status assessment of the project
Part of the programme was to build capacity and that is one of the reasons why the initial phase was
very slow. Further capacity building is necessary to implement the project and provide 300 000
households with off-grid electricity by 2012.

Stakeholders
The major stakeholders directly involved in the programme are the off-grid customers, and the
service providers. Eskom and municipalities are the licensed electricity providers and they have to
demarcate areas in their license area in which the off-grid service providers can operate. The
Department of Minerals and Energy is to facilitate the process, formulate policy and administer the
capital subsidy for the installation of the systems. The Department of Provincial and Local
Government is charged with providing services and channeling the free basic electricity subsidy to
the service providers. The Electricity Regulator approves the installation of the systems according to
the set standards. Service providers are paid the capital subsidy only after the installation has been
approved by the Regulator. The commercial providers of PV systems sell and may manufacture
components.

Zones
The concession areas were chosen in relation to the national grid. They are in the Eastern Cape,
KwaZulu-Natal, Mpumalanga, Limpopo and the North-West Province in areas where it is unlikely
that the grid will reach in the very near future. However some households which had opted for a
SHS have recently been connected to the grid.

Replicability
SHSs, the concession approach and the fee-for-service model are replicable in any rural area without
grid electricity supply. A basic maintenance service is required and the battery has to be replaced at
least every 3 to 4 years.
Solar concessions are not financially viable without the capital subsidy for new installations and the
operational subsidy. The government seems to be deciding the replicability question by limiting the
funds available for capital-cost subsidy. The future payment of the monthly operational subsidy is
also doubtful. Unless something changes, the whole programme may slowly come to an end.

Complexity
Although the SHS technology is easy to use the introduction of PV technology in remote rural areas
has often been compared to providing space age technology to the least developed populations. In
many cases the technology gap and the problems related to service delivery had not been identified
as one of the potential major barriers to successful implementation. This knowledge gap extends into
two directions. The service provider does not understand the needs and conditions of the customers
and the customer does not understand the technology and the often complicated agreements that go
with it. The methods for supplying the technology, negotiating government subsidies, etc., are not
simple and have led to widespread confusion. The provision of SHSs has to be backed up by
information and training, customer responsive service and maintenance long-term contractual
subsidy agreements with government.

Assessment of niche

Affordability
It was clear from the beginning that poor rural households for which the systems were intended
would not be able to afford the initial capital cost and a government subsidy of R3500 for each
installed system was included in the programme for the first five years. The subsidy was paid
directly to the service provider. The customer had to pay R110 as an installation fee and a cellular
phone charger was offered for an additional R20.



In 2001 the government announced a subsidy for free basic electricity for grid-connected
households, equivalent to 50 kWh per month. SHS users in the concession areas also received a
monthly subsidy of R40 reducing the service fee charged by the service provider to R18 per month.
It is still doubtful if very poor rural people can afford even this highly subsidised service of PV just
for lighting and media use. A comparison of mean monthly incomes of 348 households in the
Eastern Cape Province indicates that the very poor households remained without electricity. SHS
users earned the highest income (R2307/month) compared to R1860 for grid users and R819 for
households without electricity (ERC 2004).
There is also a question whether and for how long the government can afford the high capital
subsidy for each system.

Effectiveness
The programme has not been very effective in delivering electricity to the rural poor. However,
considering that the technology, delivery mode, financial and institutional arrangements have been
new and in many cases untested, all stakeholders have learned during the process and it is hoped that
the next phase of implementation will be more effective.

Risk of obsolescence
The solar panel, the most expensive part of the system, has a lifetime of about 20 years. It is quite
likely that cheaper and/or more efficient panels will be developed within that time period, locking
the poor into a system of obsolete expensive technology.
If the programme fizzles out the question arises: how to make best use of the investments so far?
They are substantial – maybe R100 million by government maybe R 40 million by the companies.
These amounts are small compared with grid electrification budgets and subsidies (about R1
billion/year) but high compared with other RET investments in South Africa.

Flexibility and technological capability
SHS technology is not very flexible and is limited in its application. The major energy requirement
of poor households is cooking and PV systems do not provide energy for cooking. The operation of
higher-power media appliances such as colour televisions usually requires a larger PV system than
the standard 50 Wp SHS. Similarly, power for refrigeration requires larger and more expensive
systems.

Suitability and urgency
It is urgent to provide energy services to the poor, but PV systems are only suitable in very remote
rural areas where the grid will not reach in the future.

Adaptability
Since South Africa has high solar radiation the technology can be used almost anywhere. PV
technology is modular, allowing for upscaling or downscaling. PV systems of various sizes can meet
a range of electricity needs but are not economic for thermal applications.

Environmental impacts
Concerns are raised about the disposal of disused batteries and solar panels. No clear disposal
strategy has been developed. The electricity generation of SHS is emission neutral. However the
manufacture of PV modules, and routine maintenance (by vehicle) in spread-out rural areas can be
relatively energy-intensive.

Social acceptance
The reaction to SHS and the mode of delivery has been ambivalent. The customers are pleased to
have lights, to watch TV and listen to the radio. They are disappointed that they cannot cook and
they still have to pay more for other fuels like kerosene, wood and gas for their thermal needs. They
also don’t understand the fee-for-service model and are often ignorant of the government capital
subsidy. In the Eastern Cape study only 57 % of SHS-users would recommend others to get a SHS
while 96 % of grid-connected households would recommend grid electricity to others (ERC 2004).



CD requirements
There are high capacity development needs in the villages where SHS are installed. Local
technicians should be trained to do simple O&M services. This would create some employment in
disadvantaged rural areas and also would reduce the cost of the service.

Income generation
Hardly any income generation was created by acquiring SHSs. Although productive end uses for PV
systems are known in other parts of South Africa, the concessions programme has failed to initiate
income generation among its customers.

3.8.2 Conclusion
SHS owners are happy having electricity for lighting and media but they still have to use other
sources such as fuelwood and paraffin for their greatest energy need, cooking. The monthly SHS
service fee has been R58 per household, and for electric lighting and media only, this has been a
high cost for very poor households. The poorest of the poor for whom the SHSs were intended can
neither afford the initial installation fee nor the monthly service fee. In line with its policy of free
basic services for the poor, government subsequently proposed a further monthly subsidy of
R40/month for SHS users, reducing their monthly payments to R18/month. This makes SHS
electricity more affordable to a wider range of poor rural households; but it is difficult to implement
this subsidy, because it has to be administered at another government level, local government (in this
case, impoverished rural district municipalities). Local government leaders may not endorse SHS
subsidies if they have higher priority spending needs in their areas. As a result, the R40/month SHS
operational subsidy proposed by national government has only reached a few of the concession
areas. In one area, this subsidy was started, then stopped, causing quite serious problems for
customers and the service provider.
In all cases, the installation of SHSs has been highly subsidised by the government (R3500 or more
per household) and the subsidy may be better used extending the grid. The individual and collective
benefits of grid electricity supply are greater than the benefits of SHS services. Nonetheless, SHSs
have their niche in very remote rural areas which cannot be reached by grid electricity in the medium
to distant future.

3.9 Analysis of barriers and problems

3.9.1 General
South Africa has taken major steps to promote renewable energy by publishing a White Paper on
Renewable Energy. The stated target of supplying 10 000 GWh from renewables by the year 2013
sets a specific goal. One of the biggest challenges will be finding the finances for this
implementation.
Identifying barriers to implementation is an important step to future progress. The following general
barriers to the further implementation of renewable energy have been identified (DME 2004):
• Many renewable energy technologies remain expensive, on account of higher capital costs,
compared to conventional energy supplies for bulk energy supply to urban areas or major
industries.
• Implementation of renewable energy technologies needs significant initial investment and may
need support for relatively long periods before reaching profitability.
• There is a lack of consumer awareness on benefits and opportunities of renewable energy.
• The economic and social system of energy services is based on centralised development around
conventional sources of energy, specifically electricity generation, gas supplies, and to some
extent, liquid fuel provision.
• Financial, legal, regulatory and organisational barriers need to be overcome in order to
implement renewable energy technologies and develop markets.
• There is a lack of non-discriminatory open access to key energy infrastructure such as the
national electricity grid, certain liquid fuels and gas infrastructure.



• Market power of utilities.
Most of these barriers affect the implementation of biodiesel and SWH. Fuelwood being an energy
source of the poor does not compete, to the same extent, with modern fuels and faces different
problems such as sustainability and access for the poor.

3.9.2 Problems and barriers: biodiesel
There are some national challenges such as unemployment and the historical income gap of rich and
poor people which can be addressed, to some limited extent, by biodiesel production. Then there are
the problems which are specific to biodiesel, the growing of oil plants and the production process.
Oil companies are facing the reality of finite petroleum resources.
Producing biodiesel is technically feasible. The biggest barrier is price competition with mineral
diesel. However with increasing crude oil prices and reducing production cost biodiesel will be able
to compete in the future.
Biodiesel needs substantial initial capital and support for at least ten years before reaching
profitability. At present the projected cost of biodiesel cannot compete with petroleum diesel at the
pump.
There is a lack of information and awareness on the benefits of biodiesel.
Being a new fuel biodiesel’s entry into the market faces legal and regulatory problems which have to
be solved. There are also no standards for biodiesel and these have to be agreed upon by all
stakeholders. Also the access to pipelines will have to be negotiated and regulated.
The oil refineries in South Africa produce more diesel than the country needs and have to export
some of it. Biodiesel will therefore not replace oil imports but increases the diesel export. Markets
will have to be found.
Sunflowers are the most common oil crops but the sunflower seed cake has relatively low nutritional
value and does not substantially contribute to the value of the crop. Further research is required on
how to increase the nutritional value of sunflower cake.
There is potential conflict with food crops over land and water resources; national food security and
the limited water resources have to be carefully assessed before large-scale oil crop plantations are
started. If poverty alleviation is to be achieved emergent farmers and farmers in disadvantaged areas
have to be included in the programme as a priority and the lack of infrastructure in disadvantaged
areas has to be addressed.
Starting capital is needed to assist small-scale and community producers to set up biodiesel plants.
SASOL the world’s largest producer of coal-to-oil, has indicated plans to produce biodiesel from soy
beans. There are not enough soy beans grown in South Africa to support the large-scale production
and soy beans would have to be imported at least initially. If only commercial farmers will provide
soy to SASOL poor subsistence and emergent farmers will not benefit.

3.9.3 Problems and barriers: Solar water heaters (SWH)
There is not enough information and awareness on SWH so that the benefits and limitations are not
appreciated. The initial installation cost of SWH is high and affordable financing schemes are not
offered; electricity tariffs are low so that people perceive the installation of SWH as not worth the
initial expenditure. Potential customers are also not sure about quality assurance of SWH.
If SWH were rolled out at a large scale there is presently insufficient capacity.
Most poor people live in areas without piped water and therefore cannot benefit from normal SWH
systems even if their installation is subsidised.
Since SWHs replace grid electricity there is a potential for CDM credits but the mechanism of
accessing CDM credits is complicated and not widely known.
The government is attempting to redress the enormous housing backlog for the poor by providing
housing grants to all poor people. If a small grant for SWH is added, the livelihoods of the poor



would be much improved. However, low-income householders express other competing demands for
the use of housing subsidy grants, such as trying to maximise the floor space of their dwellings.
To summarise, the main barriers to installing SWHs on a large scale are lack of attractive financing
mechanisms, poor information availability, the need for effective marketing and overcoming
perceptions that SHW is inefficient and unreliable. Affordable financial and service loans are widely
available for buying a car and similar arrangements could be developed for buying a SWH.
Accreditation of manufacturers and installers to a professional association is the obvious solution for
quality assurance. This must be backed up by standards approved by the South African Bureau of
Standards. The need for nationwide information programmes has been pointed out earlier.

3.9.4 Problems and barriers: fuelwood
One of the greatest barriers to sustainable fuelwood supply for the poor is an incorrect understanding
of the problem. The fuelwood crisis was originally thought to be a resource problem; the demand for
fuelwood exceeding sustainable yield resulting in deforestation and land degradation. Woodlots were
supposed to solve the supply problem and efficient stoves, kerosene subsidies and similar measures
were the technology remedies (Gandar 1994). It has now been understood that agricultural practices
and land clearing and not fuelwood collection are the major causes of deforestation. Also the
regenerative capacity of woodlands had been underestimated and the coping strategies of rural
people had not been considered.

Better understanding of the problem
It is not widely recognized that fuelwood resources are a major national asset.
The role of trees in the rural economy and environment is not fully understood and insufficient
recognition is given to the value of woodland and woodland products to rural communities. Building
on indigenous knowledge systems in sustainable woodland management may be one of the useful
strategies. Woodland management is generally not included in the local integrated development
plans.
The emphasis on industrial forestry, which creates large-scale employment and export earnings
marginalised the role of community forestry.
The management of natural woodlands is not built on existing practices in communal woodlands.
There is usually inadequate regulation of harvestable areas, the time of fuelwood harvesting, the
material harvested (live wood, allowable species) and who has access to the forest resources of the
community.

Capacity in communal and social forestry lacking
Capacity in sustainable fuelwood management is lacking at all levels.
A community approach and social forestry (SF) has proved to be a successful strategy in rural
communities. Facilities for training in SF need to be better developed. Constraints in the area of
extension and fieldwork should be addressed.

Fuelwood strategies
There is no clear strategy to address the fuelwood problem. Alternative strategies are not widely
considered. There are two strategies to address fuelwood demand: one is to increase the efficiency of
wood usage, and the other is to shift the demand from wood to other forms of energy. Making LPG
available and affordable would help to preserve the forest resources and ease the burden of wood
collection of and exposure to indoor air pollution of women and children.
Woodstoves used by the poor are generally inefficient. They use more wood than improved stoves
and emit large amounts of smoke affecting the health of women and children.
There is no institutional framework for fuelwood management and it is not integrated into
development plans at national, regional and local level. Government, communities and NGOs are not
closely interacting to address the problem.



4. Objectives and policy outlines

4.1 Problems, opportunities, objectives and policy outlines
The methodology of the multi-country RET study describes problems as a situation that is
considered negative and objectives outline the desired and feasible situation at which the application
of policy is aiming.
Problems, opportunities, objectives and policy outlines are given for the case studies in Tables 28, 29
and 30. Strategies for achieving the objectives are outlined for each case study.

4.1.1 Strategic objectives and policy outlines: Biodiesel
Two different strategies may be pursued in implementing biodiesel, industrial-scale biodiesel
production and small-scale decentralised production.

Industrial scale biodiesel
Sasol Oil is considering to take up the production of biodiesel at a centralised location and providing
the oil market. Recognising the importance to its long-term sustainability Sasol is intending to build
a 400 000 t/y soybean-to-diesel plant. The USA already produces biodiesel from soy at a commercial
scale. This production is subsidised and such agricultural subsidies may pose a problem when
countries such as South Africa will be marketing biodiesel on the world market. Soy is regarded as
the most appropriate oil crop since not only can the oil can be used but the residue oil cake is also a
very desirable by-product either for animal feed or for human consumption, alleviating protein
deficiency. Biodiesel is produced by a process of transesterification, involving the addition of
methanol, resulting in biodiesel and the by-product glycerine. In the initial phases production is
limited and biodiesel is being blended with petroleum diesel ranging from 2% to 10% biodiesel and
98% to 90% percent petroleum diesel. No engine modification is required at such low percentages of
biodiesel.

Small-scale production of biodiesel
The objective is to encourage the small-scale production of biodiesel for decentralised consumption.
Small towns and remote rural areas can be energised, leading to local development.

Problems, objectives and policy outlines for biodiesel are presented in Table 28. The Table is not
intended to be an exhaustive list. It summarises some of the important problems and gives some of
the policy outlines in order to reach the strategic objectives.

Table 28: Identification of problems, opportunities, objectives and policy outlines for biodiesel

Problems and Opportunities Objective Policy outline
1. Implementing a biodiesel All concerned ministries Facilitating the cooperation
programme is complex because cooperate to support the between ministries to
many ministries must work implementation of biodiesel implement biodiesel
together to make it succeed

2. Global political developments Sustainable production of Producing biodiesel in SA
threaten the continuous supply of biodiesel has been achieved and
Increasing security of
oil and, in the long term, reserves has become competitive with
supply
of oil and gas will be exhausted. petroleum diesel, which is
gradually being replaced. Greater Replacing petroleum diesel
security of supply has been
achieved.
3. Developing new technologies Capital investments have been Facilitating the attraction
and products is a long and made. Expertise in growing and of capital for biodiesel
capital-intensive process. Who processing crops for biodiesel is development.



will advance or fund the developed and the technology has Providing agricultural
development until such a time matured and is adapted to small-, extension services to
when the new products can medium- and industrial scale farmers growing oil crops.
compete in the market? production. Biodiesel is
Supporting oil plant
competing with petroleum diesel
research.
in the market without being
supported by incentives. Transferring technologies
and research results.
4. Very high unemployment rates Biodiesel plants have been built Training farmers and other
undermine the government’s in central locations as well as in rural people to grow and
policies aiming at greater rural areas and the extracted and process oil plants.
equality, poverty reduction and processed oil and the residue of
Encouraging the
development of disadvantaged protein cake are fuelling and
establishment of feedlots
rural areas. feeding secondary developments.
for cattle raising
Many jobs are created. The
biodiesel plants in rural areas Promoting black economic
have become development hubs, empowerment
black economic empowerment is
achieved.
5. South Africa has one of the Petroleum diesel is gradually and Reducing GHG emissions
highest per capita GHG emission sustainably replaced by biodiesel by replacing petroleum
rates worldwide. and consequently GHG emissions diesel with biodiesel.
are reduced.
Complying with future
obligations of the Kyoto
Protocol.

Objective 1: All concerned ministries cooperate to support the implementation of biodiesel
Interministerial cooperation on new projects is complex and can take a long time. When several
ministries are involved expected to complete interdependent tasks it is not always easy to make
progress.
Objective 2: Sustainable production of biofuels has been achieved.
As petroleum resources decline over the next decades, biodiesel will gradually replace petroleum
diesel. Initially production will be limited and biodiesel will be added to petroleum diesel at a low
ratio of 2% to 10% (B2 to B10). This ratio will rise with time. Fuel mandates are used in other
countries to achieve biofuel implementation. They stipulate minimum percentages of biofuel for all
vehicle fuels. Fuel mandates are easy to implement. Government levies are not reduced and the
higher prices to cover the higher cost of biofuels are paid by the consumers at the pump.
Educational programmes explaining the environmental and social benefits of biodiesel may be
necessary to convince the motor vehicle users to buy biodiesel.
Objective 3: Oil companies are realising the long-term benefits of biodiesel and have made capital
investments in biodiesel production. Government policy is supporting the development. Expertise in
growing and processing crops for vehicle fuels is developed and the technology is matured and
adapted to small-, medium- and industrial-scale production.
Various oil crops are cultivated in different climatic zones supported by agricultural extension
services. Plant breeding programmes have developed varieties that optimise oil content and quality
and high-value protein seed cake. Sunflower and cotton are widely produced and the poor quality of
sunflower oil cake has been improved to compete with oil cakes from other crops. Agricultural
extension services and research institutions work closely with farmers to support the transfer of new
plant varieties and their farming systems. The marketing of improved by-products initially facilitated
through extension programmes, are now competitive. High yields are achieved and oilseeds and their
by-products are economic crops which do not require any further subsidy. Oil seeds are grown in



many SADC countries, custom barriers have been removed and they are freely traded in a liberated
regional market.
Objective 4: Biodiesel plants have been built in rural areas. The oil fuels secondary developments
and the protein cake feeds cattle growing industries and jobs are created in disadvantaged areas.
Initially capital assistance is required to set up oil processing plants. Private investment, government
investment or foreign aid are possible sources of funding. Incentives for private investment will be
necessary.
In disadvantaged rural areas all technically qualified people continually migrate to the cities in
search for jobs and therefore training will be needed at all levels. Once the plants are established and
rural areas become development hubs, job seekers will be attracted to these centres and the migration
to the cities will be slowed down.
Emergent farmers are successfully growing oil crops and black economic empowerment groups are
managing the oil processing facilities. Cattle feedlots are added and initially aided by extension
services. More emergent farmers are benefiting by raising and selling cattle. Once the system is in
place the market will drive further developments and no further incentives are required.

Objective 5: Petroleum diesel is gradually replaced by biodiesel and GHG emissions from
petroleum diesel are reduced. The use of fossil oil in engines is gradually phased out and it is used
predominantly in manufacturing and other industries.
Using biodiesel is carbon neutral when crops are grown continuously. Growing plants such as oil
crops absorb CO2. The CO2 is released back into the atmosphere when the fuel is burnt. Petroleum
diesel only emits carbon dioxide without absorbing it. As less and less petroleum diesel is burnt less
GHG is emitted.
As petroleum resources decline petroleum prices go up and fossil oil is phased out as a motor fuel
and it is used predominantly in petroleum-based industries such as plastic, pharmaceutics and
cosmetics.
The driving forces are emission reduction regulations such as the Kyoto protocol, economically
viable biofuels and their by-products and declining petroleum resources.

4.1.2 Conclusion
The cooperation of different ministries to implement biodiesel is essential. Strategies to raise the
initial capital for biodiesel production and making the cost of biodiesel competitive with petroleum
diesel have to be addressed. Expertise in growing and processing oil resources has to be created.
Development of biodiesel production in remote rural areas should be given priority because it leads
to poverty alleviation by creating jobs, better livelihoods and rural development.
Replacing petroleum diesel with biodiesel reduces GHG emissions.

4.1.3 Strategy objectives and policy outlines: Solar Water Heaters
The seven most important problems have been identified. The objectives outline the way to address
the problems.

Table 29: Identification of problems, opportunities, objectives and policy outlines for SWH

Problems and Opportunities Objective Policy outline
1. High upfront capital cost and SWH companies offer attractive Facilitating attractive
the absence of affordable financing schemes and many financing schemes.
financing schemes discourage the households and the commercial
Expanding markets for
installation of SWH sector are installing SWH
SWH.
2. Many people don’t know about Information, education and Supporting information
or have a negative perception of quality assurance have convinced programmes.
SWH people of the benefits of SWH
Encouraging research on



evaluating the benefits and
limitations of SWH
Implementing quality
assurance.
3. High unemployment rates limit Employment is created in Encouraging and
socio-economic development manufacturing, installing and supporting manufacturing
servicing SWH SWH for employment
generation.
Training in SWH
manufacturing, installation
and maintenance.
4. Electricity peak load demand Installed SWH have reduced peak Reducing peak electricity
will be greater than generation load demand by expanding
capacity by the year 2007 SWH market.
5. The poor live in shacks and SWH are installed in all housing Subsidising capital
houses with insufficient service projects for the poor expenditure on SWH for
provision. Even if they have an the poor.
electricity connection they cannot
Improving quality of live
afford to use it for water heating
by facilitating SWH for
people in social housing.
6. Black economic empowerment A high percentage of SWH Facilitating the training of
is still lacking in the country companies are owned and black entrepreneurs in the
managed by black entrepreneurs SWH sector.
Supporting access to
finances for black
entrepreneurs.
7. South Africa has one of the Solar water heaters replace Facilitating the
highest GHG emission rates electric geysers and water heating replacement of electric
because electricity is generated on stoves reducing GHG geysers by SWH and
from coal-fired power stations emissions supporting the installation
of new SWH.
Reducing GHG emissions
for water heating

Objective 1: SWH companies develop attractive financing schemes together with service contracts
targeting different market niches. It is expected that high income groups are the first to take up the
offers and monthly electricity expenditure will be much reduced when SWH are installed. Particular
schemes are developed for institutions such as clinics, hospitals, prisons, schools and boarding
houses, adjusting their repayment schemes to the saved electricity expenditure. The barriers of initial
up-front costs are lowered and many SWH are installed.
Objective 2: An information and education campaign is carried out by government in cooperation
with SWH companies. Information on SWH, their benefits and limitations is widely disseminated in
different media. Easily accessible demonstration sites are set up. The association of SWH
companies, Solarsure, assures quality and dissatisfied customers can complain when they are not
satisfied with the installed product.
Objective 3: Affordable financing schemes and government assistance have facilitated an active
SWH market and have created sustainable employment in manufacturing, installing and servicing
SWH.
Objective 4: Private house and flat owners have replaced their electric geysers with SWH and
people who heated water on electric stoves have switched to SWH. Institutions have installed SWH



and it is estimated that about 2300 GWh (DME 2003) of grid electricity is replaced by SWH thus
reducing the peak load.
Objective 5: Government is implementing housing plans to provide basic housing to improve the
livelihoods of the poor. In addition to the basic housing grant of about R23 000 they receive an
additional amount to install SWH. Part of this amount is to be included as an addition in the housing
grant and the other part to be paid by the customer in affordable instalments. The precise proportions
and the repayment schedule is to be worked out by government, SWH companies and the customer.
SWH are made affordable for the poor and are installed in new RDP houses and retrofitted in old
ones.
Objective 6: Intensive training conducted by the Energy SETA (Sectoral Education and Training
Authority) and other organisations, together with financial incentives for BEE companies, have
encouraged black technicians and entrepreneurs to set up SWH companies. After initial support the
BEE companies have gained technical and managerial experience and successfully compete in the
market without further incentives.
Objective 7: The measures under Objectives 1 to 6 have led to the dissemination of many SWH
replacing water heating that previously used grid electricity from coal-fired power stations. GHG
emission rates have been reduced.

4.1.4 Conclusion
The major objectives are developing proper access to attractive financing, implementing of technical
standards, wider information programmes and increasing the capacity of the industry to implement
together with support for BEE companies. Additional benefits are lowering of peak loads and the
reduction of GHG.

4.1.5 Strategy objectives for fuelwood
Five major objectives have been identified. Four are in the fuelwood sector and the fifth emphasises
the importance of disseminating efficient fuelwood stoves.



Table 30: Identification of problems, opportunities, objectives and policy outlines for fuelwood

Problems and opportunities Objective Policy outline
1. Fuelwood is becoming scarce A fuelwood strategy is in place Developing a fuelwood
and poor women and children and the poor have easy access to strategy.
have to walk longer and longer affordable fuelwood.
distances to gather fuelwood for Providing affordable access
their cooking and heating needs. to fuelwood for the poor

2. The value of woodlands for the Fuelwood is recognised as a Recognising fuelwood as a
poor is not fully recognised. major national resource and major national resource.
Fuelwood production is not marketed together with other
economically viable. wood products such as bark and Facilitating the marketing
poles and communities are of fuelwood together with
involved in the harvesting and other wood products.
marketing and jobs are created. Involving and supporting
communities in the
harvesting and marketing
of fuelwood.
3. Unsustainable harvesting of Communal woodlands and Facilitating community
wood from communal forests and forests are managed by the management of fuelwood
woodlands and inadequate community and generate a resources.
resource management has sustainable supply of fuelwood.
negative environmental impact. Community members and Generating a sustainable
outsiders respect rules governing supply of fuelwood.
access and harvesting of Creating employment in the
fuelwood. Employment is fuelwood sector.
created.
4. Women and children are Efficient cooking stoves that are Recognising indoor air
exposed to indoor air pollution smokeless and burn efficiently pollution as a major health
when cooking. Smoke from wood using less wood are problem.
fires is particularly bad and leads disseminated, accepted and used.
to a number of diseases. Promoting the
dissemination of efficient
and smokeless stoves.
5. The poor do not have access to Strategies have been Facilitating access to state-
87% of land, which is owned implemented to give the poor owned land for fuelwood
privately or by the state. access to state-owned land for collection.
fuelwood collection.
Developing strategies and
rules for access to state-
owned land for fuelwood
collection

Objective 1: A fuelwood strategy is in place. Communities are sustainably managing forests and
woodlands and fuelwood is harvested at a reasonable distance from homesteads.
The objective is to provide easy access to affordable fuelwood for the poor. These issues are under
discussion.
Objective 2: The value of woodlands as a national resource is recognised. Its particular importance
as a fuelwood resource for the poor is appreciated. Fuelwood marketing is facilitated.
Objective 3: Rules have been drafted regulating the harvesting of fuelwood covering such issues as
right of access, season and time of access, species to be harvested, dead or live wood and thickness
of stem to be harvested for which purpose. The rules are known, respected and enforced. It is clear



who has the power to enforce the rules effectively and what the penalties are if they are transgressed.
Fuelwood and other marketable wood products are included in the integrated local development
plans and they do not remain the sole responsibility of DWAF. Local communities, entrepreneurs
and local government develop plans for marketing wood products. When trees are harvested for
commercial use such as bark, poles and paper the small branches of waste wood are used for
fuelwood. Waste wood sources are integrated in the fuelwood management and transport of
fuelwood is minimised.
Objective 4: Efficient and smokeless wood burning stoves have been developed and some new
models such as Vesta stoves are locally manufactured. Micro-lending schemes permit poor
households to buy the improved stoves. Fuelwood is saved and indoor air pollution is reduced.
NGOs and energy centres are promoting and disseminating the improved stoves. Solar cookers,
which are not yet very popular, are also promoted by NGOs and energy centres in order to reduce
indoor air pollution and dependence on wood and other sources of energy.
Objective 5: Strategies have been developed to give the poor greater access to state-owned forests
and woodlands to collect fuelwood resources. Access is well managed and controlled.

4.1.6 Conclusion
Woodlands are recognised as a major national fuelwood resource for the poor. Policies and
strategies have been put in place to facilitate affordable access to fuelwood for the poor. Community
woodlands are well managed and women and children walk shorter distances and spend less time to
gather fuelwood for their household needs.
reduced.

4.2 Stakeholder reactions
Two meetings with stakeholders were held, one in Pretoria the capital and one in Cape Town, the
seat of parliament. In Pretoria representatives from the Treasury, the Department of Water Affairs
and Forestry and policy analysts attended the discussion. In Cape Town we addressed the entire
Parliamentary Portfolio Committee on Energy, a representative of the Department of Minerals and
Energy and policy analysts; the presentation was followed by a question-and-answer session.
The Minister of DWAF has requested to draft a policy on fuelwood in order to alleviate the worst
effects of poverty. A preparatory meeting gathering background information on problems and
objectives was attended in Pretoria on 26 October 2004 (See Shackleton et al, 2004). We also
attended a meeting convened by the Energy Sector Education and Training Authority discussing
training programmes for artisans for the installation of SWH.
The stakeholder reactions were enriching and in some areas broadened the discussion. Discussing
with stakeholders from the treasury was very useful and contributed to our understanding of the
limitations and opportunities of incentives.

4.2.1 Stakeholders’ reaction: Biodiesel
1 In order to facilitate the implementation of biodiesel the DST convened a joint
implementation committee of stakeholders in biodiesel. This is strategic support
for the development of biodiesel.
The Treasury’s 30% exemption from fuel level is a government incentive for biodiesel.
Depreciation on capital investment for biodiesel plants is suggested.The depreciation on
capital investment for technology projects is normally 4 to 5 years and reducing this period
to 3 years will be a further incentive to make the biodiesel production cost competitive with
petroleum diesel.
The effects of new crops on stream flow reduction would have to be monitored and assessed
according to the Water Act of 1998. It might restrict the land on which oil crops are grown.
2 The availability of oil seeds limits the amount of biodiesel in the market. Oil crops for
biodiesel are not yet widely grown and may even have to be imported until such a time that



they are grown locally. For this reason the initial percentage of biodiesel in the petroleum
diesel blend will be 1% rising to 5% in 2010.
3 A recent SADC strategic planning meeting on ‘Farming for Energy for Better Livelihoods
in Southern Africa’ recommends biodiesel, which can be produced in decentralised
locations as an appropriate crop to overcome farmers’ lack of access to markets.
4 The SADC meeting found decentralised small- to medium-scale developments very suitable
for Southern Africa. Definite strategies have to be developed and the capital for the
processing plants has to be raised. It was suggested that a pilot plant be set up as a
demonstration project. It is expected that after an initial period of learning and support the
processing plants be privatised.

4.2.2 Stakeholders’ reaction: SWH
1 The poorest people in urban and rural areas live in housing without piped water and
therefore cannot benefit from SWH that are connected to the piped water system.
2 Some of the stakeholders are aware that the high initial cost is the biggest constraints and
strategies have to be put in place to facilitate financing programmes.
3 Installing SWH increases the value of the building and this may increase the municipal tax
on the property.
4 In the winter rainfall region there is not enough sunshine during the coldest months and a
backup system is required.
5 Hot water is important for hygienic purposes.

4.2.3 Stakeholders’ reaction: Fuelwood
The Department of Water Affairs and Forestry convened an expert workshop on 26 October 2004 to
discuss the opportunities and constraints for intervening in the fuelwood sector to help poverty
alleviation. Stakeholders from different sectors were represented. The workshop proposed the
following strategies for immediate, medium term and the long term intervention (Shackleton et al
2004):
Immediate action:
• Creating a sub-directorate in DWAF (Department of Water Affairs and Forestry) regarding
fuelwood initiatives
• Prioritization of local-level hotspots for intervention
• Subsidize fuelwood marketing
• Better cooperation with Working for Water to supply wood
• Advocate for state lands for sustainable harvesting of fuelwood
• Identify and address information gaps
• Examine and treat the issue in a holistic manner
• Differentiate rural requirements from peri-urban/urban ones

Medium term strategy:
• Develop and implement a national biomass conservation stove programme
• Subsidise small-scale industries to manufacture biomass stoves
• Develop and implement a national tree planting incentive programme
• Provide incentives to private land owners to maintain pockets of natural woody vegetation
on their land



• Promote closer cooperation between DWAF and the National Dept. of Agriculture in terms
of maintaining trees in the environment
• Liaise with the Dept. of Housing around fuelwood needs for peri-urban and local-cost
housing programmes
• Amend legislation to facilitate greater ease in establishment of woodlots of fast-growing
alien species
• Increase the capacity of local government

Long term strategy:
• Develop long-term plans for use of fuelwood as a national resource
• Develop an effective woodlands extension service
• Promotion of rehabilitation forestry

5. Key findings and Recommendations

5.1 Key findings:
South Africa has an abundance of coal and the cost of electricity generated from coal is amongst the
cheapest in the world. Approximately 40% of the country’s petrol and diesel is manufactured from
coal and gas. Large quantities of diesel are being exported. This poses a major challenge to the
successful implementation of a RE strategy.
In 2004 the Renewable Energy Policy Strategy was published targeting a cumulative 10 000 GWh
by 2013. The renewable energy strategy is seen as having the potential to assume a significant role in
socio-economic development Pursuing the 10 000 GWh target more than 35 000 jobs will be
created, more than R5 billion would be added to the GDP and R687 million would be added to the
incomes of low-income households. More jobs opportunities will be created as a result of RE
technologies than in coal-fired power stations.
The solar home systems currently being installed in South Africa can only be used for lighting and
media. They do not provide energy for cooking and space heating – thus the rural poor stays
dependent on fuelwood and kerosene (paraffin) for cooking and space heating.
Solar water heaters (SWH), biodiesel and fuelwood have the greatest potential to meet the
government’s 10 000 GWh RE target by 2013.
The country has high levels of solar radiation and an established manufacturing infrastructure for
SWH. The high upfront capital cost and people’s negative perceptions of SWH are some of the key
barriers to the development of a SWH market in South Africa.
Biodiesel has the potential to create job opportunities especially amongst the poor. However, there
will be competition with food crops if market prices of biofuels are higher than food crop prices
Nationally there are sufficient fuelwood resources and climate and soil conditions are suitable for
forestry in many parts of the country. Many causes of deforestation/degradation are outside the
household energy system (e.g. agriculture, overgrazing, forest fires, infrastructure) and some aspects
of these must be addressed at the policy level.

5.2 Recommendations
In the light of the barriers identified to implement a RE strategy the following key recommendations
are proposed:
• A reduction in the initial cost (or form of subsidy) of RE technologies is critical in order to
make it more competitive to conventional technologies.



• The cost of conventional energy services should be more cost-reflective.
• Training and skills development for nationals in RE technologies should be promoted as a
private-public initiative.
• R & D in RE technologies is to be promoted in order to develop the local industrial market.
• RE technology projects should have a pro-poor focus.
• Legal and regulatory framework to be in place that would give equal access to RE
independent power producers.
• More needs to be done to promote communication and awareness of RE and RETs.
• Quality standards of RETs are to be developed and implemented.

6 Suggestions for future actions
South Africa has developed a renewable energy strategy setting a target of 10 000 GWh of RE
(solar, small hydro, biomass and wind) to be achieved by 2013. Future activities should include an
identification of instruments and actions that would best achieve the objectives of the policy oulines.
Meetings with stakeholders, in particular policymakers and government officials, illustrated a lack of
awareness and knowledge of RE technologies. Future work should address the area of
communication, awareness and education.
Future action should also look at opportunities for public and private partnerships to promote RETs.



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www.southafrica.info/ess-info. 2004



APPENDICES

APPENDIX A: Figures for Renewable Energy Resources

Figure A1: Provincial representation of hydropower capacity, production and potential. This
represents all categories of hydropower including pumping storage but excluding imported
hydropower
(DME, 2002c)



Figure A2: Annual direct and diffuse solar radiation
(CSIR, 2002)



Figure A3: Map of Wind Power Potential in South Africa
(DME, 2004)



Figure A4: Total biomass energy potential for South Africa
(CSIR, 2002)

Table 5b: Wind class description (DME, 2004)

Category Category Category description
number name
1 Class 1 Estimated mean annual wind speed at 60m in excess of 8.5 m per sec

Table A5: Capacity assessment for biodiesel
Capacity Magnitude
Capacity status /
Stakeholder Function/activities development of CD needs
problems
measures / priority
1. Legislative Set national priorities; There is little Information and Very high
authorities, social, economic and awareness of training on RE
elected officials environmental goals; biodiesel and its and more
legal framework potential successful
conditions demonstration
projects are



required; human
capacity
programmes to be
strengthened
Lobby
2. Government Define development Study on these Capacity Very high
macroeconomic goals and macro policy; completed by development in all
and development general economic policy CSIR(DST 2003) areas required
planners issues; subsidies and
trade policy; sustainable
development goals, and
frameworks
3. Government Set sectoral goals; Strategy and goals Study similar Very high
energy authority technology priorities; for RE not yet projects in other
or ministry policymaking and completed; countries
standard-setting standards for
functions; legal and biodiesel have to
regulatory framework; be set; tax rebate
incentive systems; have been
national and local level announced; details
jurisdiction. to be worked out

4. Energy Have monitoring and Minister of Energy Regulatory High
regulatory bodies oversight functions; is the regulator for framework has to
implement the oil and oil products be drafted,
regulatory framework; detailed taxes to
administer fees and be worked out;
incentives. incentives clearly
allocated
5. Market Dispatch entities; have Biodiesel would Build on existing Moderate
coordination operational coordination either be exported capacity in the
agencies functions; or sold through fossil fuel sector
interface with industry existing oil
investors; information companies
brokers.
6. Non-energy Sector policies; cross- DA, DWAF, DST, Strong Very high
governmental cutting issues; inter- DME and DPLG coordination
authorities/ministr relation with have to coordinate required
ies energy policies; public activities
sector energy
consumers; require
energy inputs for social
services provision.
7. Energy supply Private companies and SASOL plan to Private company
industry public utilities; manage produce biodiesel takes over
energy from soybeans capacity
supply, electricity development with
generation; fuels assistance from
management and government
transport; finance some
R&D.
8. Entrepreneurs Business development; Motor vehicle Wider awareness High
and productive economic value added; producers are required
industry employment aware and in the
generation; private past extended
sector energy engine guarantee
consumers. to biodiesel use

9. Energy Supply equipment for Extracting biodiesel Professional Moderate
equipment and the energy industry and from the oil crop capacity has to be
end-use other industries, can be done by trained for this
equipment including vehicles and relatively simple particular job.
manufacturers appliances; impact equipment and this General capacity



energy end-use can be available
efficiency; manufactured in SA
adapt/disseminate
technology; finance
some R&D.
10. Energy Provide O&M. Can be trained Special training Moderate
equipment O&M Feedback on locally required
services performance and
feasibility
11. Credit institutions Financing options for Financing options This might require High
large- and small-scale partularly for small- government
energy scale operators has assistance; eg,
generation; capital to be created credit guarantees,
provision for energy subsidies
using enterprises;
financing options for
household energy
consumers.
12. Civil society / Consumer participation Consumers are More information Very high
NGOs and awareness; reluctant to buy and education
oversight and diesel cars; 99% of needed
monitoring; light vehicles are
environmental and petrol-powered
social advocacy; equity
considerations
13. Users Users of renewable Bioddiesel cars of Taxi High
energy systems. all price categories recapitalisation
Providers of feedback have to be widely should be
and knowledge about available and users speeded up;
resources, cultural have to be market for small-
traits, technology informed about the range diesel cars
performance, advantages/disadv should be
friendliness and antages of diesel facilitated and
suitability. engines once established,
such cars could
then be
manufactured in
SA
14. Energy Strategic advice, Very few specialists Provide training
specialists and problem definition and in the country courses and on-
consultant firms analysis; systems the-job training
development; specialist
services delivery;
options analysis;
information sharing.
15. Academia and R&D, knowledge CSIR is the only A brief overview of
research generation, and sharing; research renewables is
organizations formal and organization given in most
informal education; carrying out undergraduate
technical training; detailed biodiesel engineering
technology studies at present courses ;
adaptation, application, ERC offers a PG
and innovation. course on new
and renewable
energy
technologies
16. Media Awareness raising, Very little Invite media to High
advocacy; information information easily seminars,
sharing; journalistic available on conferences
inquiry, watchdog biodiesel workshops on
functions; monitoring, biodiesel



public transparency.

Table A6: Capacity assessment for solar water heaters

Magnitude
Capacity
Capacity status / of CD
Stakeholder Function/Activities development
problems needs /
measures
priority
1. Legislative Set national political Broad political goals As under 3 High
authorities, priorities; social, economic, are set; social,
elected officials and environmental goals; economic and
legal framework conditions. environmental goals
are defined in policies
are being regularly
reviewed
2. Government Define development goals Development and RE As under 3 High
macroeconomic and macro policy; general goals are defined in
and economic policies; cross- policies; some
development cutting issues; subsidies and implementation
planners trade policy; sustainable scenarios are
development goals, and modeled.
frameworks. Market has to be
stimulated to make
SWH cost effective
(taxes, subsidies)
3. Government Set sectoral goals; Sectoral goals stated Capacity is being High
energy authority technology priorities; in the White papers developed under
or ministry policymaking and an energy policy the CaBEERE
standard-setting functions; (1998) and renewable project
legal and regulatory energy policy (2003);
framework; publication of strategy
incentive systems; federal, paper for RE is in
state, and local level preparation
jurisdiction.
4. Energy Have monitoring and Standards are being Capacity is being High
regulatory oversight functions; developed by the developed
bodies implement the industry
regulatory framework;
administer fees and
incentives.
5. Market Dispatch entities; have The Solar Water Capacity Moderate
coordination operational coordination Heating Division of development
agencies functions; SESSA worked out needed if large-
interface with industry voluntary standards scale roll out
investors; information
brokers.
6. Non-energy Sector policies; cross-cutting SWH suggested for Capacity has to be High
governmental issues; inter-relation with educational, health developed
authorities/minis energy policies; public and correctional
tries sector energy consumers; services
require
services provision.
7. Energy supply Private companies and Private companies If demand increase Moderate



industry public utilities; manage are well established . more capacity is
energy neede
supply, electricity
generation; fuels
management and
transport; finance some
R&D.
8. Entrepreneurs Business development; There are many SWH Only required if
and productive economic value added; companies and a market expands
industry employment range of products are
generation; private sector available on the
energy consumers. market

9. Energy Supply equipment for the Imported and locally Manufacturers
equipment and energy industry and other made equipment is dormed an
end-use industries, available association called
equipment including vehicles and Solasure
manufacturers appliances; impact energy
end-use
efficiency;
adapt/disseminate
technology; finance some
R&D.
10. Energy Provide O&M. Feedback on O&M provided by
equipment O&M performance and feasibility private companies
services
11. Credit Financing options for large- DST supports DTI financially High
institutions and small-scale energy innovation in S&T and contributes to
generation; capital provision particularly capacity building in
for energy using enterprises; technology transfer Industry/academia
financing options for for poverty reduction partnerships
household energy in the energy sector (Technology and
consumers. Other credit options Human Resources
need further for Industry
development, general Programme
loans available for programme)
households
12. Civil society / Consumer participation and Awareness is limited,
NGOs awareness; oversight and social and
monitoring; environmental environmental
and social advocacy; equity advocacy required,
considerations subsidy for equitable
implementation
needed
13. Users Users of renewable energy Relatively few users
systems. Providers of therefore little
feedback and knowledge feedback, technology
about resources, cultural performance good;
traits, technology different climatic
performance, friendliness conditions require
and suitability. different technology
solutions
14. Energy Strategic advice, problem Specialists and
specialists and definition and analysis; consultancy firms
consultant firms systems available
development; specialist
services delivery; options
analysis;
15. Academia and R&D, knowledge generation, Limited amount of
research and sharing; formal and RE, SWH technology
organizations informal education; technical taught, formal



training; technology courses or modules
adaptation, application, and required
innovation.
16. Media Awareness raising, Media need to be
advocacy; information better informed
sharing; journalistic
inquiry, watchdog functions;
monitoring, public
transparency.
***suggest table to appendices (as before)

Table A7: Capacity assessment for fuelwood

Magnitude
Capacity
Capacity status / of CD
Stakeholder Function/activities development
problems needs /
measures
priority
1. Legislative Set national political priorities; Lack of knowledge Presentation of Very high
authorities, social, economic, and about the role of fuel solutions to the
elected officials environmental goals; legal wood dependence in problem. Lobby
framework conditions. poor households

2. Government Define development goals Effective policies on Policy and Very high
macroeconomi and macro policy; general fuelwood are lacking, strategy on
c and economic policies; cross- providing adequate sustainable
development cutting issues; subsidies and fuelwood is part of the fuelwood
planners trade policy; sustainable sustainable provision is
development goals, and development goals; required
frameworks. trade among the poor
seems informal
3. Government Set sectoral goals; technology Fuelwood problem is A champion for Very high
energy priorities; policymaking and not taken seriously fuelwood is
authority or standard-setting functions; because more required
ministry legal and regulatory modern fuel sources
framework; incentive and technologies are
systems; federal, state, and preferred
local level jurisdiction.
4. Energy Have monitoring and Fuelwood is not n/a n/a
regulatory oversight functions; overseen by the
bodies implement the regulatory energy regulator
framework; administer fees
and incentives.
5. Market Dispatch entities; have There are no Marketing bodies High
coordination operational coordination coordinating agencies should be
agencies functions; interface with in the fuelwood established at the
industry investors; information market of the poor local level
brokers.
6. Non-energy Sector policies; cross-cutting Inadequate Coordination Very high
governmental issues; inter-relation with coordination between body should be
authorities/mini energy policies; public sector DWAF, DME and established
stries energy consumers; require DPLG
services provision.
7. Energy supply Private companies and public The community or Communites and Very high
industry utilities; manage energy individuals in the members in the
supply, electricity generation; community are the community
fuels management and suppliers should be
empowered to



transport; finance some R&D. manage the
supply
8. Entrepeneurs Business development; Some fuelwood Entrepreneurs in Very high
and productive economic value added; sellers; community community
industry employment generation; members consumers forestry
private sector energy of fuelwood management
consumers. should be trained
9. Energy Supply equipment for the Improved affordable Improved stoves High
equipment and energy industry and other stoves needed; to be
end-use industries, including vehicles marketing of manufactured at
equipment and appliances; impact improved stoves or community level
manufacturers energy end-use efficiency; alternatives is not
adapt/disseminate effective
technology; finance some
R&D.
10. Energy Provide O&M. Feedback on Consumers have to Skills training in Very high
equipment performance and feasibility be involved in rural areas very
O&M services designing and testing necessary
of stoves
11. Credit Financing options for large- Credit options Credit facilities Very High
institutions and small-scale energy probably non-existing for poor people in
generation; capital provision for poor households rural areas have
for energy using enterprises; to be introduced
financing options for
household energy
consumers.
12. Civil society / Consumer participation and Consumer Training of High
NGOs awareness; oversight and participation and consumers
monitoring; environmental advocacy urgently
and social advocacy; equity required
considerations
13. Users Users of renewable energy Involvement of users Involve Very High
systems. Providers of most important to consumers
feedback and knowledge make programmes
about resources, cultural sustainable
traits, technology
performance, friendliness and
suitability.
14. Energy Strategic advice, problem Strategic advice to be Strategic Very high
specialists and definition and analysis; integrated into planning
consultant systems development; sustainable programmes to
firms specialist services delivery; development plans of be introduced
options analysis; the area
15. Academia and R&D, knowledge generation, Insufficient research Make more High
research and sharing; formal and funding and research research funding
organisations informal education; technical interest available
training; technology
adaptation, application, and
innovation.
16. Media Awareness raising, advocacy; Media not aware of Make media High
information sharing; the problem aware of different
journalistic inquiry, watchdog aspects of
functions; monitoring, public fuelwood scarcity
transparency.



APPENDIX B

A potential rural biodiesel initiative and its impact on the
community (from DST 2003)

A biodiesel factory could operate as a single business entity, but in rural areas there is also the
opportunity to combine the biodiesel factory with a feedlot.
It is also possible to design a biodiesel factory operating in conjunction with an ethanol factory. Here
a potential biodiesel/cattle feedlot is described
A fictional community living in an under-developed rural area is used to illustrate the concept. Such
a community currently cultivates small pieces of land per family, mostly with maize, keeps a small
herd of cattle and/or goats, lives in small houses scattered across a hilly landscape with access only
to a rutted two-track dirt road. Income of the families is low and is augmented by pensions and
salaries earned by family members working in Johannesburg.
For such a scenario, a biodiesel plant operating in conjunction with a cattle feedlot was
conceptualised and its impact quantified. As an example, the biodiesel plant will produce 8 000
l/day of biodiesel, utilising 16 tons of sunflower seed/day, or 4 800 t/annum. The 4800 t/annum of
sunflower could be produced on 4 000 ha of land. Oil cake will be produced at a rate of 6.4 t/day.
In the feedlot, beef cattle consume about 10 kg of feed per day, which consists amongst other things
of 0.5 kg of oil cake plus 4 kg of maize. If 35% of the 6.4 t/day of oil cake is used by the local cattle
feedlot, 5 000 head of weaners could be fed. These weaners will require 20 tons of maize per day, or
7 300 tons per annum. At least 3 000 ha of maize production will be required.
For a project of this size, the following production outputs will be realised:
8 000 l/day of biodiesel.
20 tons of maize per day produced on 3 000 ha.
6.4 t/day of oil cake produced from sunflowers on 4 000 ha, of which some are sold.
14 weaners/day sold to abattoirs.
The impact on the community will be as follows:
If it is assumed that the ratio of cultivated area to natural grazing is 10:1, then the total area
affected will be around 70 000 ha. Physically this represents an area with a radius of about 30
km around the biodiesel factory and cattle feedlot. This brings the market within the reach of the
small-scale farmers.
At least 14 000 head of cattle can be kept on 70 000 ha of natural grazing, producing around 5
000 weaners per annum. These weaners are fattened in the feedlot and sold to abattoirs. At 12
cattle per farmer, around 1 200 cattle farmers will benefit.
At 3 ha per maize/sunflower producer, 2 300 small-scale farmers will have a ready market for
their crops, transforming them from subsistence to small-scale commercial farmers.
With a biodiesel factory and animal feedlot at the centre of such a production area, technical
information transfer, training and input supply by the factory could be arranged to benefit the
farmers.
The cash injection for the community will be around R500/t for maize and R750/t for sunflower
for a total of R7,2 million/annum. On top that, the income from weaners will be around R1 000
a head, totalling R5 million. The biodiesel may realise a profit of R0.20/l for a cash income of
R580 000/annum.
The number of people who will become economically active instead of being subsistence farmers
indicates the potential for job creation. For the project in the example, 2 300 small-scale crop
producers alone will become economically active, which translates into 2 300 jobs created.


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