The Challenges to the Implementation of Key Demand Side Management and Energy Efficient Infrastructure Projects both for Government and Private Sector

The Challenges to the Implementation of Key Demand Side Management and Energy Efficient Infrastructure Projects both for Government and Private Sector Sabeer Sheik Ibrahim (CEO) 17 SEPTEMBER 2013

OVERVIEW The Company DSM Market Sectors Technologies & Methodologies Demand Side Management What has Government Done? Challenges Facing Government & Industry A Role for PMSA? Questions Presentation Time 35 minutes

Company Profile ITRAMAS CORPORATION AFRICA (PTY) LTD GROUP STRUCTURE 100% South African BEE owned e 51% owned ItraMAS Technology Ltd Mauri us 49% locally owned 100% owned ItraMAS Technology Africa (Pty) Ltd Projects Division Exclusive representa ve agreements VRYHEID Project Offic LADYSMITH Project Offic TSHWANE T3C (Pty) Ltd

Company Profile Business Units BUSINESS UNITS 17% 33% 6% 44% Demand Side Management (DSM) LED Lighting Intelligent Transport Systems Broadband Powerline Technology

Company Profile Business Units DEMAND SIDE MANAGEMENT o Energy Efficient Technologies o Geyser Timers o LED lighting technologies o Small-scale Wind & Solar Power Generation o Broadband Power Line Communications Broadband Power Line Technologies Wind/Solar Power Generation Technologies

Company Profile Business Units INTELLIGENT TRANSPORT SYSTEMS o Street Parking Management Systems o Toll Collection Systems o CCTV Surveillance o Traffic Enforcement Technologies o LED Street-Lighting o Indoor & Outdoor LED Lighting o Decorative LED Lighting Parking Management Technologies

Company Profile Our company is focused on the delivery of core technologies for the Transportation & Energy sectors in order to achieve a cleaner, greener environment, by reducing traffic congestion and harmful emissions. ItraMAS is involved in Energy Efficiency & Demand Side Management projects with Eskom and Industry, where we retrofit existing installations with energy efficient technologies approved and funded by Eskom We also provide a means of Revenue Generation to Municipalities by funding, installing and operating on-street parking technologies and enforcement systems in order to generate revenues. It is our aim to be able to make a difference in the lives of generations to come, by protecting the environment, and by preserving our natural resources.

TECHNOLOGIES Take control of your energy

Broadband Powerline Communications

Street Parking Management PARKING Making Parking a Pleasure

Street Parking Management ItraMAS has installed 284 kerbside mounted Parking Terminals and collects over R20 million per annum for Municipalities in street parking revenues. Since 2010, we have created 73 full time jobs in the formal and informal sectors through street parking management. Our model is to design, finance, install, operate and maintain the parking systems on a revenue sharing model with the Municipalities. ItraMAS continues to generate the highest yield of auditable revenues from street parking in South Africa, for various Municipalities.

Street Parking Management

LED Street-Lighting

LED Street-Lighting ItraMAS is A pioneer in development of homegrown LED based lighting technology o 6 US patents filed o Award by US DoE for quality of light design o Products are UL and Energy Star Listed Energy Star Partner Experience o 10 year track record in design and manufacture of LED based products, with over 46 000 streetlights installed around the globe, including more than 4800 in South Africa o Ranks in the top 2 leading suppliers of LED lighting technology in Southern Africa

LED Street-Lighting facts

LED Street-Lighting South Africa has more than 400 000 streetlights installed. If 25% of all street-lights in South Africa are replaced with LED street-lights, the following is a reality: Assume 100 000 High Pressure Sodium street-lights @ 250W each replaced with 130W LED, average 10 hours use each night. HPS 250 * 100 000 * 10 = 250MW energy per night LED 130 * 100 000 * 10 = 130MW energy per night Total energy savings in one night is 120MW COST FOR IMPLEMENTATION ± R750 million

LED Street-Lighting Creative Destroyer: LEDs LED technology has the potential to destroy established lighting technology companies which have failed to adapt to the fast growing technology. Goldman's Brian Lee says global LED sales will reach $11 billion by 2015, and will see a compound annual growth rate of about 40% over the next five years in the industrial and commercial market. LED technology can take on about 45% of the overall lighting market for that period and has the potential to reach over 60% penetration by 2020. Source: Goldman Sachs Government has established funds to assist companies to set up and grow local R&D and manufacturing facilities to produce LED lighting.

LED Street-Lighting Change to LED LIGHTING CHANGE THE WORLD

TODAY s TOPIC The Challenges to the Implementation of Key Demand Side Management and Energy Efficient Infrastructure Projects both for Government and Private Sector

The President says The President said in the State of the Nation address that We should put South Africa first. All of us have a patriotic duty and responsibility to build and promote our country. The National Development Plan provides a perfect vehicle for united action precisely because it has the support of South Africans across the political and cultural spectrum. Leaders in every avenue should be ready to rise above sectional interests and with great maturity, pull together to take this country forward.

The Minister of Finance said.. Over the next three years, R827 billion is planned to be spent by the fiscus and stateowned companies to build infrastructure. The financing for these projects is in place, and is not affected by the spending cuts in the budget. The fiscus has allocated just under R430 billion for schools, hospitals, clinics, dams, water and electricity distribution networks, electrification of over a million new homes, sanitation schemes, building more courtrooms and prisons, and improved bus, commuter rail and road links. Most of the spending falls under provinces and municipalities. Eskom, Transnet and other State-Owned Companies fund a further R400 billion of projects. This will be financed both through own resources and additional borrowing over the next three years, supported by Treasury guarantees. This will pay for the ongoing building of power generation plants and new transmission lines, investment in rail, ports and pipelines, large new water transfer schemes, and various airport upgrades.

The Minister of Finance says Of course, we are well aware that there are parts of government that struggle to spend their full infrastructure budgets. It is important to bear in mind that spending programs have become more ambitious, funding levels have increased, and pressure to deliver has intensified. Records show that government s ability to spend has been steadily rising from year to year...but it is not yet fast enough.

The National Development Plan: a new trajectory The NDP, supported by the New Growth Path and other programmes, invites us to look beyond the constraints of the present to the transformation imperatives of the next twenty and thirty years. These imperatives are already apparent in the realities of the social and economic restructuring that is under way. The first reality is our demographic transition a million young people leave school every year, and we need a package of reforms that will improve education, training and work opportunities for young people. The second is that we are a rapidly urbanising society. This means we need to meet urgent demand for housing, municipal services, schools, clinics, public transport and commercial development, but it is also means we have an opportunity to build an integrated urban landscape, with effective partnerships between municipalities, local businesses and civic associations.

The National Development Plan: a new trajectory A third imperative is economic competitiveness. We need to invest in infrastructure, raise productivity and diversify our economy, to create jobs and raise living standards. Improving the quality of education and training is an essential foundation of a more productive and inclusive growth path. The NDP emphasises key institutional capabilities: The need to professionalise the public service and strengthen accountability, Improved management and enforcement systems to fight corruption, Reinforcement of the education accountability chain, with lines of responsibility from state to classroom, Improved planning and management of strategic infrastructure projects. How many in this audience are below the age of 35?

So Where is The Problem.? A national assessment of the state of local government, conducted by(cogta), concludes: local government is in distress, a comprehensive turnaround is needed. a major challenge is the huge service delivery and backlog challenges many municipalities are simply unable to deliver basic services or to grow their economies. Some other challenges included in the report are: Poor financial management, illustrated by negative audit opinions Insufficient municipal capacity due to a lack of scarce skills, high vacancy rates, and a lack of performance management, training and career paths There is inadequate human resource capital to ensure professional administrations or positive relations between labour, management and councils There are serious leadership and governance challenges in municipalities including weak responsiveness and accountability to communities Problems are experienced with the political or administrative interface Corruption and fraud are impacting negatively on service delivery

So Where is The Problem.? Limited availability of appropriate skills to access funding Need for supplier development interventions in order to optimise local content (manufacture). Initiate decisions to build new infrastructure earlier System capacity constraints, given the 8% reserve margin and ageing of existing power generation plants Financial sustainability and emphasis on cost management, given increasing energy diversification Understanding the needs and wants of the market, industry has lagged behind in joining hands with government to deliver. Think about why most of the larger SA consulting/pm firms were bought out by international companies

Definitely no shortage of funds Billions of rands in grant funding are made available annually in the fiscus to address some of the above challenges. In South Africa grant funders have seen the need to channel their funding via the National Treasury, and municipalities are required to compete for these grant opportunities. However, grant applications require specialist skills given the numerous and diverse requirements and conditions associated with different funders, and this has been a constraint that faces many municipalities, severely hampering their ability to access these grants. In South Africa, government s planned infrastructure spending is estimated to be R787 billion over the next three to five years.

Whats the Solution? Various grants are available, but municipalities lack the resources and capacity to access these Government has made available various infrastructure grant programmes to municipalities, provincial government, public entities and even to private sector enterprises. Difficulty in accessing the grants or funding can be attributed to the fact that 22 of the national departments perform some infrastructure functions. Several government departments are also responsible for the administration of the infrastructure grant programmes and there are varying conditions and reporting requirements for each of the different infrastructure grant programmes. Within this context the knowledge and experience required for the preparation of grant applications are not typically located within municipalities. The stringent reporting regulating these grants also inhibits the municipality from making the applications.

Whats the Solution? South Africa will need to meet about 29 000MW of new power demand till 2030. A further 10 900MW of old power capacity will be retired. As a result, about 40 00MW of new power capacity needs to be built. Eskom is building 2 new power stations (Kusile and Medupi), with total capacity of 9 600MW leaving a clear gap between future needs and already committed investments in infrastructure. IF the existing government funding and grants are accessed by the private sector and turned into deliverable projects in Demand Side Management, the REDUCTION in demand would require a lesser investment into future infrastructure developments.

Will happen of we don t? Given the current situation within the energy sector, and the delays with infrastructure development (such as Medupi), there is a great chance that South Africans will have to live without the simple luxury of energy during peak and winter months. At a huge costs to the economy. Who is to blame.

when the lights go off?

CONCLUSION What can the members of PMSA do to assist government, municipalities and the private sector to access these funds and to implement key projects in Energy Efficiency and Demand Side Management, which will lead to a significant reduction on the demand of scarce energy resources, thereby reducing the strain on Government to continue investing in expensive infrastructure to produce more energy to guarantee future needs.

QUESTIONS?