Portfolio components (mix)
X- Y plot results for the informal urban area community scenario
8.2 Policy implications
8.2.1 Overview of the current pro-poor energy policy setting
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175 in the development of a fully optimised portfolio. The projected declining costs of renewable energy technologies are likely to narrow the trade-offs between goals, particularly the minimisation of upfront capital costs and environmental goals that appeared at a tangent at the time of the study.
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176 Department Implementing agencies and measures
- Energy Sector Management Assistance Programme - Biomass Energy Initiative
a) Integrated national electrification programme
The INEP programme aims to provide universal access to affordable electricity. According to the DMRE, since its inception in 1994, the programme increased electrification rates, from 36% in 1994 to 87% in 2016 (DMRE, 2016). Because it was directly linked to the Reconstruction and Development Programme, the initiative was first focused on urban areas (RDP). The majority of households in formal urban areas have access to electricity except for those families living in informal urban areas. As the government seeks to keep up with the rapid rise of urban settlements, the growth of informal urban settlements has brought issues.
Illegal electricity connections and cable theft have increased in informal communities.
Municipalities, Eskom, and the government are all faced with the problem of illegal electrical connections (Seleka, 2021). Given the significant number of South Africans living in informal urban settlements, the current study included an informal urban settlement scenario and proposed pathways for expanding access to energy for families living in these areas.
b) Free basic electricity policy
According to the Energy Research Centre at the University of Cape Town, the success of the INEP programme was hampered by low usage of electricity due to affordability constraints (ERC, 2002). In 2002, the FBE strategy was implemented to aid the shift from inefficient and dangerous fuels to electricity (DME, 2005). The FBE policy is a subsidy that provides a free monthly allowance of 50kWh of electricity to low-income households. It was expected that the 50kWh allowance was sufficient to meet basic electricity needs such as lighting, powering of electrical appliances and water heating (Winkler, 2006).
According to the Stats SA (2017), the FBE has gone a long way in ensuring the transition to electricity among households connected to the grid. The programme is implemented at the sub-national level and is funded by fiscal transfers. . Implementation challenges at the municipal level and lack of data make it difficult to determine how many people have benefited from the subsidy and the effectiveness of the policy.
c) Free basic alternative energy policy
In 2007, the government introduced the FBAE policy to assist unelectrified households with subsidised alternative energy (DME, 2007). The FBAE policy enables municipalities to supply
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177 off-grid energy to indigent households. Policy energy supply options include candles, kerosene, LPG, bioethanol fuel, solar home systems and coal. Unfortunately, this policy is not geared to benefit families living in informal urban areas.
According to the Non-financial census of municipalities report of 2018 (Stats SA, 2018), out of the 213 local and metropolitan municipalities in the country, 49 indicated that they supply indigent households with at least one form of basic alternative energy source under the FBAE policy. Most of the municipalities are located in the Eastern Cape and Northern Cape, and the North West province. The Non-financial census of municipalities reports of 2018 (Stats SA, 2018) also notes that JB Marks Local Municipality in the North West is the only municipality that supplies LPG as an off-grid solution. The municipality also provides the most options (i.e.
LPG, kerosene, candles and solar).
d) Inclining block tariff policy
The government adopted the Inclining Block Tariff (IBT) in 2010 to further protect the poor from rising electricity tariffs. The strategy was designed as a subsidy scheme, with the utility's tariff being linked to usage levels. The tariff was created to subsidise the electricity tariff for low-energy-consumption families; the tariff rises as consumption rises..
The rationale behind this policy was that low-income households consume a smaller amount of electricity than other households due to the lack of high energy-consuming appliances. The non-payment of electricity bills has further complicated the policy's success even by subsidised households and the inflation tariff increases that the country has witnessed over the years. The efficacy of the intervention has been hampered by the high levels of informal and illegal connections (Seleka, 2021).
e) National solar water heater programme
The National Solar Water Heater Programme (NSWHP) was launched in 2009 under the aegis of the National Energy Strategy, the White Paper on Renewable Energy, and reinforced by the central role identified for solar water heaters in the National Development Plan (NDP). The programme started as a demand-side management project in response to the national electricity generation constraints but shifted to a social programme with additional objectives of mitigating adverse climate change (through a reduction in CO2 emissions), protecting the poor from electricity tariff increases, facilitating local manufacturing industries and employment creation.
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178 Since its commencement in 2010, the initiative has faced numerous implementation obstacles (institutional, financial, and technical). Despite the lack of formal confirmation, preparations were in the works in 2021 to restart the initiative, with procurement and installation functions being centralised at the DMRE and the Government Technical Advisory Centre (GTAC) serving as a strategic partner. GTAC participation is expected to increase the capacity to roll out the programme. It is expected that owing to economies of scale, centralisation of procurement will result in lower the cost at which the solar water heaters can be procured.
f) Non-grid electrification programme
Realising the challenges of connecting rural households to the grid, the government launched the non-grid electrification programme in 1999. The programme, designed as a public-private partnership, involved the government contracting the private sector through concessions to deliver non-grid electricity to unelectrified rural communities under a fee-for-service model.
Under the model, the concessionaire would act as a licenced utility, owning the electricity generation assets and supplying electricity at an agreed tariff to be paid by the customer. The programme aimed to install 350 000 solar home systems based on PV technology with a 50- watt capacity.
The non-grid electrification initiative has been challenging to take implement. The model's economics render the provided electricity unaffordable for the intended recipients. The eligibility criteria (proof of residence, proof of employment, bank statements and demonstrable ability to make monthly payments) also made it difficult for poor households to participate in the programme. Nonetheless, the government decided to subsidise the monthly service fee (the equivalent of the basic electricity support service tariff (BESST) was expected to increase uptake. It has, however, been observed that even after a capital subsidy and the poverty tariff, low-income households would still not afford to pay for the electricity, let alone buy the electrical appliances.
g) Back to basics programme
According to CoGTA, despite registering some achievements in improving the livelihoods of the poor, much still needs to be done to support and enforce the implementation of the local government mandate for service delivery (CoGTA, 2014). CoGTA has been seized with introducing interventions to transform the local government sector. These interventions include the establishment of the Municipal Infrastructure Support Agent (MISA) and the Back to Basics Programme. CoGTA established MISA in 2012 to develop the capacity of municipalities to deliver and manage infrastructure sustainably.
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179 Launched in 2014, the Back to Basics Programme was aimed at supporting the NDP by increasing the capacity of municipalities to better serve rate-payers and residents. The intervention package includes support for improved service delivery through improved infrastructure maintenance and ensuring the provision of FBE and maintenance of the indigent register (CoGTA, 2014).
h) Biomass Energy Initiative
The Biomass Energy Initiative for Africa falls under the purview of the World Bank Africa Energy under its Energy Sector Management Assistance Programme with additional funding from the Africa Renewable Energy Access Trust Fund. The initiative aims to foster sustainable development in Africa by ensuring universal access to clean energy. The Biomass Initiative focused on a wide range of technologies ranging from charcoal to briquettes and high- efficiency cookstoves to bioelectricity, social enterprise and public-private partnerships.
In South Africa, the Biomass Energy Initiative for Africa was launched with a focus on the promotion of improved biomass rocket stoves. It was expected that the intervention would reduce reliance on forests for traditional biomass.
i) Draft strategy for addressing air pollution in dense low-income communities of South Africa
According to the DEFF, several densely populated low-income communities do not comply with National Ambient Air Quality Standards. This means that people living in those communities continue to be exposed to harmful pollutants, particularly in winter resulting in adverse health impacts for adults and children. The department acknowledged that fossil- based fuels (coal, wood, and kerosene) were one of the leading contributors to poor air quality.
In response, in 2016, the Cabinet of South Africa approved the draft Strategy for Addressing Air Pollution in Dense Low-Income Communities of South Africa. The strategy aimed to address the high levels of air pollution in densely populated, low-income communities.
According to the DEFF, this will be achieved by strengthening existing policy instruments to reduce air pollution. These instruments include stringent emissions standards set in terms of the Air Quality Act 39 of 2004 to control industrial emissions, alternative energy strategies implemented by DMRE and subsidised clean energy alternatives.
The draft Strategy will facilitate a coordinated approach to implementing interventions aimed at reducing pollution associated with the burning of “dirty fuels” by low-income households.
The DEFF reckons that coordination is given the role that several organisations will have a
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180 role to play in reducing emissions among low-income communities. Key role players identified in the draft Strategy include the DEFF, DMRE, Department of Human Settlements, National Department of Health (NDOH) and Department of Science and Technology (DST), respective provincial departments, municipalities, industry, non-governmental and community-based organisations.