The National Energy Regulator of South Africa (Nersa) has published a consultation paper on the revision of regulatory rules for energy efficiency and demand-side management (EEDSM), including the standard offer programme.
Nersa invited public comments on the document, which is available on its website, before July 20. The regulator will hold public hearings in early August, and plans to publish the revised regulatory rules by September.
The regulatory rules were based on the Department of Energy’s (DoE’s) ‘Policy to support the EEDSM Programme for the Electricity Sector through the Standard Offer Incentive Scheme’, which has also recently been published and was available on the DoE website.
The revised regulatory rules put forward a number of institutional changes, including that the Development Bank of Southern Africa (DBSA) would be the interim administrator of the funding and that the National Energy Efficiency Agency (NEEA) would be the administrator of the energy savings achieved. NEEA would advise Nersa and the DBSA of verified energy savings.
Thus, while power utility Eskom would collect the money for DSM through the collection of electricity tariffs, it would not manage or earmark the money for specific projects.
The ‘standard offer’ is a mechanism to acquire demand-side resources (energy efficiency and electrical load reduction) by offering a predetermined rate for electrical demand savings (kW) and yearly energy savings (kWh).
It is envisaged that the Standard Offer Programme (SOP) would be funded by Eskom funds approved by Nersa in Eskom’s multi year price determination (MYPD). The funds would be made available to project developers to initiate approved projects.
The project evaluation and project funding would follow the process determined in the DoE framework on energy efficiency and DSM.
The project developers would then be paid a performance-based incentive per kWh of electricity saving achieved for the duration of the contract. The methodology to calculate the incentives would be based on the avoided cost of electricity supply resulting from the EEDSM intervention.
The rebate was calculated from Eskom’s latest MYPD submission, and was calculated at 54c/kWh, excluding the cost of monitoring and verification and marketing, in 2010.
The SOP rebate would be updated yearly, but was estimated to be 51c/kWh saved in 2011, and about 57c/kWh saved in 2012.
Project installation and achieved savings of technologies with a deemed saving would be verified by accredited measurement and verification (M&V) teams, using the International Performance Measurement and Verification Protocol that has been adopted by different countries.
The energy efficiency and DSM rules contained the criteria relating to the accreditation of the M&V teams.
The first EEDSM regulatory rules were published in 2004 with the plan that it shall be reviewed biannually. This document will be the first review of energy efficiency and DSM regulatory rules since 2004.
One energy-efficiency industry commentator voiced concern that these new institutional arrangements meant that energy saving initiatives, which should have received funding in April, at the start of the State’s new financial year, would now be delayed until September. This could leave the country’s electricity situation under immense pressure in 2011, when government has admitted that the grid is likely to be severely constrained.
The rules were said to be a 180º turn for energy efficiency implementation, and while they could be positive for the industry, it was felt that the definitions within the Nersa consultation document needed to be broadened and clarified.
Owing to the fact that the programmes would be funded through public money, the mechanisms would need to be faultless, and all stakeholders would need to be informed and involved.
Owing to the fact that the programmes would be funded through public money, the mechanisms would need to be faultless, and all stakeholders would need to be informed and involved.
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