ENERGY FUTURES REPORT: Cape Town Information for decision-makers

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1 SAMSET Supporting Sub-Saharan African Municipalities with Sustainable Energy Transitions ENERGY FUTURES REPORT: Cape Town Information for decision-makers Sustainable Energy Africa March 2015 The SAMSET project is researching and supporting sustainable energy transitions in urban areas in three African countries South Africa, Ghana and Uganda. It involves a partnership between development and academic institutions in Africa and the UK, as well as with six municipalities in the different African countries. This report is a product of the technical support function of the project. For more information on SAMSET: Sustainable Energy Africa, Cape Town, South Africa, Mark Borchers: mark@sustainable.org.za Melusile Ndlovu melusile@sustainable.org.za Purpose of the document: To present key information from the Cape Town State of Energy 2015 report and Energy Scenarios for Cape Town: Exploring the implications of different energy futures for the City of Cape Town up to 2050 (Modeling) Report to stakeholders to facilitate their participation in the Strategy development process.

2 Introduction: a sustainable energy future The sustainable energy imperative Sustainable energy has become an increasingly important imperative internationally, linked to the threat of energy-related global warming emissions and the persistent energy poverty of many developing countries, with Africa being the worst-off. The global Sustainable Energy for All initiative (SE4All) focuses on the three major aspects of sustainable energy: energy efficiency improvements, renewable energy promotion, and increased access by the poor to safe, modern, affordable energy. Energy also has a clear role in the international Sustainable Development Goals 1. Not only are national governments aligning themselves with these imperatives, but it is now widely recognized that local governments have a critical role to play in their delivery. Sustainable energy and the City of Cape Town In response to global and national imperatives linked to sustainable energy, in 2003 Cape Town developed the first Energy and Climate Change Strategy in South Africa. Since then this endeavor has steadily risen in profile and received increasing political attention, with the development of several State of Energy Reports, updated Strategies, detailed energy modeling, and a focus on implementation of a range of sustainable energy interventions. Sixteen key issues and opportunities 1. Over the past decade, the City has made important progress around sustainable energy, including improved efficiency in their internal operations, solar PV embedded generation facilitation, and implementing a Bus Rapid Transit system ( MyCiti ), amongst others. However many opportunities remain, and indeed imperatives exist, to further change the energy and emissions trajectory of the city. This will support economic prosperity, improve the welfare of citizens, promote environmental sustainability, and reduce costs for all sectors within the metro. Key energy-related issues to be addressed 1. Significant growth in energy use is expected into the future (based on past trends and current growth). This will result in increased emissions and costs to individuals and the economy. 2. The commercial sector is expected to continue its high growth rate. They are thus an important focus for electricity efficiency and emissions reduction. Each inefficient commercial building that is erected today, commits the city Figure 1: High energy consumption growth is projected under business-as-usual conditions 1 these are to replace the Millennium Development Goals Cape Town Energy Futures Report for Decision-Makers 2

3 to high energy costs and associated emissions for 50 or more years to come. An expensive future 3. Liquid fuel prices have risen well above inflation over the past decade. In spite of the current decrease, the overall rising trend is expected to continue. Given the significant role transport energy and cost has in the overall city energy profile, inefficient transport systems are likely to be a big drain on the economy in future. 4. With potential price pressures from international liquid fuel supplies, steep electricity price increases and the likelihood of carbon taxes in some form, energy cost increases for Cape Town could rise to debilitating levels. The city should be wary of a potentially expensive, resource inefficient future. 5. With rising energy costs, the financial burden on the poor will increase. They are already spending significant proportions of their income on energy and transport needs (poor households typically spend between 8 and 19% on energy needs, with some studies suggesting up to 25%). Transport 6. Transport system viability is very linked to urban form. It is essential to promote more appropriate, denser spatial form to enable more efficient public transport and therefore manage city-wide transport costs, commute times, and local and global emissions. 7. Unless cheap and efficient public transport is actively promoted, the poor in particular will be faced with excessive transport cost and commuting time increases (the national Department of Transport indicates that overall spending by households on transport more than doubled between 1995/6 and 2005/6 - from 4% to 10.6% 2 ). Electricity generation Figure 2: With energy cost increases and high growth, the city may face an expensive energy future 8. It is unlikely that the national electricity supply mix will meet national and international carbon ambitions, in spite of a promising focus on large-scale renewable energy generation options. Significant nuclear electricity generation is considered unlikely by experts, even with the existing formal support from national government for this option. Cape Town is likely to need to pursue renewable energy options, as well as aggressive energy efficiency, to reduce its carbon emissions to be in accord with national and international ambitions. 2 DoT Speech by Minister Peters on the launch of the 2013 National Household Travel Survey. 17 July Cape Town Energy Futures Report for Decision-Makers 3

4 Decoupling 9. There is an observed decoupling of energy use and GVA because of some fuel switching in the industrial sector, and the increased proportion of commercial sector contributing to the total GVA (commercial operations are usually less energy intensive than industrial operations), and because of electricity efficiency resulting from the steep power price increases from 2008 onwards. Such decoupling is positive and in keeping with international trends, but Cape Town remains amongst the more energy intensive urban economies in the country, so efficiency efforts need to be accelerated. Figure 3: Cape Town is amongst the more energy intensive urban economies Opportunities for a more sustainable, prosperous energy future Transport efficiency 10. In the transport sector, behavior change to increase private vehicle occupancy, as well as a modal shift to public transport, both have great impact on total energy consumption, emissions, and cost The modal shift requires a concomitant focus on urban form to better support public transport viability. 11. Efficiency improvements in vehicles is also important, although this is largely within national government s sphere of influence. Electricity efficiency Figure 4: Different impacts of various efficiency options 12. Electricity efficiency potential is significant. The biggest benefits lie in the commercial sector (mainly lighting and HVAC), followed by the residential sector (mainly lighting, water heating and fridges). Easing the burden on the poor 13. Ensuring adequate energy services for the poor requires constant attention. Electricity tariffs need to allow purchase of adequate power by poor households, the existing subsidies need to reach this target group more effectively, affordable and efficient public transport needs to Cape Town Energy Futures Report for Decision-Makers 4

5 connect poor areas of the city, and efficient housing (71% of poor households still don t have ceilings) and water heating programmes for these areas need to be further pursued. Renewable energy 14. Local embedded renewable energy generation in the form of rooftop solar PV could make a significant contribution to electricity supply into the future, and this trend is already accelerating. This will positively impact on the GHG emissions profile, and, with the correct tariffs, will not threaten City electricity revenue, nor will the City have to pay for such generation capacity as it is privately funded. However, it may have load-balancing implications for the electricity distribution system in the longer-term. Carbon emissions reduction 15. Because electricity is relatively more carbon-intensive than transport fuels, the greatest GHG emissions reductions arise from the electricity efficiency interventions. 16. With the implementation of an ambitious set of sustainable energy interventions, the GHG emissions from the energy sector can bring Cape Town s emissions into the range of the national carbon trajectory (peak-plateau-decline trajectory). Nevertheless, further intensification of efforts will be required if this course is to be maintained beyond about 2035, otherwise emissions will rise above acceptable parameters. Figure 5: Even with significant sustainable energy implementation, emissions rise above acceptable levels after about 2035 Potential implementation options for the Energy and Climate Change Strategy to consider In order to address the problems and pursue the opportunities related to the energy sector in Cape Town, the below list of sustainable energy options can be used as a starting checklist in the strategy development process: Improving electrical energy efficiency in the building sector (commercial, government and residential), which involves: o ensuring that new buildings are energy efficient enforcement of energy efficient building regulations SANS 10400XA building energy management systems passive solar design Cape Town Energy Futures Report for Decision-Makers 5

6 efficient lighting (e.g. LED, CFL etc) solar water heating efficient HVAC systems green building approaches o retrofit programmes to address existing stock solar water heaters HVAC efficiency and user behavior efficient lighting (e.g. LED, CFL etc) Improving transport efficiency and travel avoidance, which includes: o densification (e.g. corridor) of urban areas o provision of improved public transport o more efficient modes of transport (e.g. elec vehicles) o demand-side measures such as private vehicle occupancy increases o mixed use zoning to reduce travel needs o introduction of LPG/CNG vehicles o introduction of biofuels Greater share of renewable energy in the mix, including: o decentralized electricity generation options such as rooftop solar PV landfill gas generation sewage methane generation o institutional biogas plant Improving the welfare of the poor and reducing their energy burden through: o thermally efficient low-income housing (ceilings most important here) o use of efficient technologies such as solar water heaters o reducing the travel cost burden through better located land, improved public transport and mixed-use zoning to reduce travel needs o Ensuring wider access to electricity o Promoting access to LPG o Managing affordability of electricity for the poor to reduce the the use of less safe and inefficient energy sources Improving the efficiency of municipal services equipment through: o Efficient water pumps o Efficient pumps at sewage treatment plants o Improved management of vehicle fleet o Introduction of LPG/CNG vehicles o Efficient streetlights o Efficient traffic lights (LED lights) Cape Town Energy Futures Report for Decision-Makers 6

7 APPENDIX 1: Energy trends and developments in Cape Town The below information provides more detail on important trends and developments relevant to Cape Town s sustainable energy future (for more information see Cape Town State of Energy 2015 by Sustainable Energy Africa): Population and economic growth in Cape Town have largely matched that of the Western Cape Province, and been just higher than that of the country overall, indicative of the relative growth of the region. There has been, however, a dramatic slowing of economic growth in the period over the preceding period, with growth rates halving at city, province and national level. Total energy consumption in Cape Town has continued to grow in absolute terms. However, growth has been slightly below population and economic growth rates. The city comprises two thirds (64%) of provincial population and nearly three quarters two thirds (73%) of economic value, yet energy consumption in Cape Town is only half that of the province. Similarly, at a national level, energy consumption is proportionally lower than economic value contribution and population. This is likely due to the composition of Cape Town s economy which is dominated by tertiary sector activities (low energy intensities) and limited heavy industry (such as smelters). The growth in Cape Town s energy consumption between 2001 and 2012 has been 8%; between 2007 and 2012 it has grown by 10.58%. This amounts to an average annual growth rate of 2.03% - just below economic or population growth. This relative slowing of energy demand growth in the period (as opposed to the period) relates to the electricity consumption decrease in the city from around This is associated with the steep electricity price increases and efficiency behaviour changes and the slowing of economic growth. This trend is apparent nationally and in other metros in the country. As the economy has continued to grow at a slightly faster rate than energy consumption, and in particular electricity consumption, this indicates a trend towards the decoupling of economy and energy, i.e. similar and slightly growing economic value produced off lower levels of energy input into the system. The continued growth of total energy demand, despite declining electricity consumption, is led by growth in transport related fuels. Petrol and diesel consumption has increased at a rate above the projected business as usual growth. This is a matter of concern as it represents a sizeable cost to the economy. The proportion of petrol consumed in Cape Town relative to the rest of the region provides fascinating indication that urban form and mobility in larger cities, with limited public transport (and quality and crime as inhibiting factors) and relatively sprawling, low density conditions, become enormous consumers of private passenger transport and related fuel use. Growing private car ownership is a looming problem for the city. Between 2009 and 2013 total light passenger vehicle ownership in Cape Town increased from to an average annual increase of 4%. Trip times to work are far longer for commuters using busses or trains and the indication is that as soon as such people have sufficient income, they will move into private transport. Renewable, independent power production is a growth area nationally. The national electricity supply mix is beginning to diversify to include renewable energy and in Cape Town the City has finalised the necessary institutional procedures to accommodate the production of small-scale, embedded generation. While the scale of distributed generation may be small, it substantially alters the way in which power provision is conceived. Cape Town Energy Futures Report for Decision-Makers 7

8 Key national documents, notably the IRP (Integrated Resource Plan) Update report and the NDP (National Development Plan), identify the critical role of aggressive energy efficiency in the country. However, despite the power crisis this area of energy management and development still receives limited attention. Strides in terms of electrification of city households are impressive and the City is considered a pioneer with regard to electrification of informal areas and backyard dwellings. However, the indications are that Free Basic Electricity (FBE) subsidies are still not reaching all target groups. Electricity consumption by the poor is different in characteristic to the wealthy, with cooking and water heating, along with other appliances, being drawn off plug sockets, with consequent supply disruptions through tripping when load is too high. This makes it important to consider a suite of alternative energy services, including solar water heating and thermally efficient housing, to address poverty. Local government has made sizeable savings in their internal energy consumption through the retrofit of all traffic lighting with LEDs, many street lights with efficient luminaires, lighting retrofits across major council-owned buildings and the introduction of a building energy management system (including training of building managers). An important achievement of the City s energy efficiency retrofit and monitoring programme has also been the metering and monitoring of public facilities. There is substantially more detailed and accurate data available today than at any time previously. Cape Town Energy Futures Report for Decision-Makers 8

9 APPENDIX 2: Cape Town energy supply and demand overview For more information on the energy situation and trends in Cape Town, see Cape Town State of Energy 2015 by Sustainable Energy Africa. The major fuels supplying the Cape Town energy market are electricity and fossil-based liquid fuels, predominantly petrol and diesel. Electricity is almost entirely supplied by state-owned enterprise, Eskom, whose fuel supply is predominantly coal-derived (approx. 95%), with the nuclear power station at Koeberg comprising the remaining 5%. To date some 3 900MW of renewable energy capacity has been built nationally and in early 2014 some of the first renewable energy sourced through the Renewable Energy Independent Power Producer Programme came on line. The actual contribution of renewable energy to the national mix is as yet unquantified, however, the cabinet approved IRP 2010 (Policy Adjusted Scenario) indicates targets of 5% renewable source electricity by 2020 and 9% by The City purchases a small amount of wind-generated energy from the Darling Wind Farm, through a 20 year Power Purchase Agreement. A miniscule amount of photovoltaic small-scale embedded generation (SSEG) was in place in The City has limited generation capacity and its three power stations (Steenbras pumped storage facility, Athlone and Roggebaai Gas Turbines) are used for load management rather than being base-load generators. Steenbras shifts peak demand in the City by some 6.5%, saving the City financially, but is a net consumer of power. Athlone and Roggebaai (diesel-fired) both contribute small amounts to demand management during winter months. Liquid fuels are imported and refined at local refineries along the coast. Most liquid fuels supplied into the Cape Town market come directly from the local Caltex refinery. Liquid fuel sales data are reported to the Department of Energy by the SA Petroleum Association on a monthly basis. Coal, however, is deregulated and distribution data must be obtained directly from suppliers or consumers. Coal comes into 3 DOE, IRP 2010 Policy Adjusted Scenario. Cape Town Energy Futures Report for Decision-Makers 9

10 Cape Town, through private distributors, from mines upcountry. It is a relatively small component of the energy market (approx. 3%). Transportation continues to dominate the energy consumption of Cape Town. This is made up of passenger, commercial, industrial transportation (petrol and diesel) and aviation and marine. Cape Town has both a large harbour and international airport and this contributes to the energy picture (approx. 11 of all fuels and 17% of the transport sector in ). When examining the energy picture from a climate change-related emissions perspective, the picture is somewhat different: here the electricity consumption of the residential, commercial and industrial sectors dominates the picture. This is due to the very high carbon component within the current South African electricity generation mix. Energy management in the city, in the context of rising supply prices, supply constraint and emissionsrelated environmental threats, thus needs to concentrate on all sectors. Municipal powers and functions that impact on energy use are extensive, and, given the range of sectors driving energy demand in the city, aspects of energy management will need to be held across almost all municipal departments. 4 In 2010 the data for aviation and international marine fuels was extremely high and no international marine or aviation data was collected in the 2003 Cape Town State of Energy, making it difficult to establish a benchmark proportion for these fuels at this stage. Cape Town Energy Futures Report for Decision-Makers 10