a benchmarking paper on the role of infrastructure in

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A Benchmarking Paper on the Role of Infrastructure in Economic Development and Promoting an Inclusive Low-carbon Future in South Africa TIPS Annual Forum June 2017 1

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Page 1: A Benchmarking Paper on the Role of Infrastructure in

A Benchmarking Paper on the Role of

Infrastructure in Economic Development and

Promoting an Inclusive Low-carbon Future in

South Africa

TIPS Annual Forum

June 2017

1

Page 2: A Benchmarking Paper on the Role of Infrastructure in

Infrastructure and Economic Development

• Infrastructure development supports economic development.

• Infrastructure underlies and supports the operations of the

economy and networks people, products, services, and

innovations in an increasingly connected world.

• Infrastructure narrows the time and spatial barriers within and

among countries and thus helps to spur economic activity and

dynamic enterprise activity.

• Infrastructure, as an enabler of social and economic activity,

possesses important feedback mechanisms for transforming

the interlinkages between business, people, and connectivity.

Inputs, human capital, modes of transport, communication, etc.

Costs, prices, social reproduction, mobility of people, things, and ideas.

2

Page 3: A Benchmarking Paper on the Role of Infrastructure in

Infrastructure and Inclusive Development

• Infrastructure development supports social cohesion, and

inclusion, by supporting access to dignified living standards

and access to economic opportunities.

• Pubic infrastructure development helps level the playing field

between different groups in society and thus supports access

to information, human capital development, innovation, the

entrepreneurial decision, start-up activity, market entry, and

competition.

• Green infrastructure supports social and mental wellbeing in

the built environment and thus includes people in their right to

safe and clean surroundings. It also creates new opportunities.

• But, a dynamic transition to low-carbon economy must ensure

social justice and a common future that is socially cohesive.

3

Page 4: A Benchmarking Paper on the Role of Infrastructure in

Infrastructure and a Low-Carbon Future • Infrastructure underlies every aspect of the modern economy

and consequently green infrastructure has knock-on benefits

through its linkages with the rest of the economy, including,

manufacturing, transport, and public services etc.

• Electricity is a key input in the modern world for almost every

economic transaction and activity, which means the supply of

renewable energy is crucial to the sustainability of all other

sectors.

• The transition to a low-carbon future must be preceded by a

dynamic move toward renewable energy sources for electricity

production and not a mere augmentation of supply.

• Securing an ample supply of renewable energy is also key to

social justice and providing opportunities for participation in

social, political, and economic life moving forward.

4

Page 5: A Benchmarking Paper on the Role of Infrastructure in

Caveats and Considerations • Comparison of electricity infrastructure, electricity

losses, and renewable energy in Germany, Japan, and

South Africa.

• Granted, comparison with Germany and Japan might

seem a bit unfair because they are further ahead in

terms of social and economic development.

• Regardless, the point the comparison is to see where

we are in relation to some of the best examples in the

world of the renewable energy transition.

• Although the results seem like South Africa is not

doing so well, it is commendable that the country has

made the progress it has given its other priorities.

5

Page 6: A Benchmarking Paper on the Role of Infrastructure in

Electricity & Heat CO2 Emissions Compared:

Germany, Japan, and South Africa

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at

Pro

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% o

f T

ota

l

Fu

el

Co

mb

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ion

)

Germany Japan South Africa

Page 7: A Benchmarking Paper on the Role of Infrastructure in

Electricity Basket Compared: Germany

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0

50000

100000

150000

200000

250000

300000

350000

Coal Oil Gas BioFuels Waste Nuclear Hydro Geothermal Solar PV Solar

Thermal

Wind Tide Other

Sources

GW

h

2010 2011 2012 2013 2014

Page 8: A Benchmarking Paper on the Role of Infrastructure in

Electricity Basket Compared: Japan

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0

50000

100000

150000

200000

250000

300000

350000

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450000

Coal Oil Gas BioFuels Waste Nuclear Hydro Geothermal Solar PV Solar

Thermal

Wind Tide Other

Sources

GW

h

2010 2011 2012 2013 2014

Page 9: A Benchmarking Paper on the Role of Infrastructure in

Electricity Basket Compared: South Africa

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50000

100000

150000

200000

250000

300000

Coal Oil Gas BioFuels Waste Nuclear Hydro Geothermal Solar PV Solar

Thermal

Wind Tide Other

Sources

GW

h

2010 2011 2012 2013 2014

Page 10: A Benchmarking Paper on the Role of Infrastructure in

Renewable Electricity Output in Germany,

Japan, and South Africa

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25

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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Re

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Ele

ctri

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Ou

tpu

t (%

of

To

tal

Ele

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city

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t)

Germany Japan South Africa

Page 11: A Benchmarking Paper on the Role of Infrastructure in

Electricity Losses in Germany, Japan, and South

Africa

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(% o

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Germany Japan South Africa

Page 12: A Benchmarking Paper on the Role of Infrastructure in

Electricity Consumption (GWh) in Germany,

Japan, and South Africa

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0

50000

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150000

200000

250000

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350000

400000

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Germany Japan South Africa

Ele

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Use

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GW

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2010 2011 2012 2013 2014

Page 13: A Benchmarking Paper on the Role of Infrastructure in

Electricity Consumption (% of Total) in

Germany, Japan, and South Africa

13

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

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2010 2011 2012 2013 2014

Page 14: A Benchmarking Paper on the Role of Infrastructure in

Development Finance on Renewable Energy

Compared

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2011 2012 2013 2014 2015

Bil

lio

ns

US

D

Germany South Africa

Page 15: A Benchmarking Paper on the Role of Infrastructure in

Development Finance on Renewable Energy

Compared as % of National GDP

15

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

2011 2012 2013 2014 2015

De

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ina

nce

by

KfW

an

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DC

as

% o

f N

ati

on

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DP

Germany South Africa

Page 16: A Benchmarking Paper on the Role of Infrastructure in

Government Finance on Renewable Energy

Compared

16

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2014 2015 2016 2017

Mil

lio

n U

SD

Germany South Africa

Page 17: A Benchmarking Paper on the Role of Infrastructure in

Government Finance on Renewable Energy

Compared as % of National GDP

17

0.0000%

0.0010%

0.0020%

0.0030%

0.0040%

0.0050%

0.0060%

0.0070%

0.0080%

0.0090%

2014 2015

Go

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Sp

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(%

of

Na

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DP

)

Germany South Africa

Page 18: A Benchmarking Paper on the Role of Infrastructure in

South African Government Spending on

Renewable Energy as % of National GDP

18

0.0000%

0.0005%

0.0010%

0.0015%

0.0020%

0.0025%

0.0030%

0.0035%

0.0040%

0.0045%

2010 2011 2012 2013 2014 2015

Bu

dg

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llo

cati

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on

Re

ne

wa

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En

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s %

of

Na

tio

na

l G

DP

Page 19: A Benchmarking Paper on the Role of Infrastructure in

Other Sources of South African Financing and

Renewable Energy Policy

• The New Growth Path and the National Development Plan prioritise renewable

energy and aim to get 20,000 MWh from renewable energy sources.

• The South African Green Fund with budget of 1.1 billion ZAR has spent 204 million

ZAR on renewable energy.

• Department of Energy initiatives on electricity efficiency and renewable energy.

Su -Programme 2.4: Electricity, Energy Efficiency and Environmental Policy

Su -Programme 6.1: Energy Efficiency

Su -Programme 6.2: Renewable Energy

Combined Spend: 10.5 million ZAR (2015)

• The Renewable Energy Independent Power Producer Public Procurement (REIPPPP)

programme.

6 376 MWh of electricity procured from 102 renewable energy IPPs in six rounds of bidding.

28 484 job years

256.2 million ZAR in socio-economic development contributions

80.5 million ZAR in enterprise development contributions

30% Black South African Shareholding for the first three bidding rounds.

19

Page 20: A Benchmarking Paper on the Role of Infrastructure in

Findings

• South Africa has higher levels of CO2 emissions from electricity than

Germany and Japan and produces less electricity.

• South Afri a’s ele tri ity provision basket is skewed toward coal, whereas

Germany and Japan have a more balanced reliance of varied sources.

• I effi ie ies i South Afri a’s tra s issio a d distri utio syste are causing double the energy losses compared to Germany and Japan.

• South African electricity from renewable energy sources is still small and

signs of lock-in are evident from the reliance on coal.

• South Africa Development and Government financing compared to

Germany is significantly less, but growing.

• Nevertheless, South African policy is making progress creating a supportive

environment and promoting private buy-in.

20

Page 21: A Benchmarking Paper on the Role of Infrastructure in

Debates/Recommendations

• State-led/public utility based transitioning versus private buy-

in approach.

• Vertically integrated versus decentralised with off-grid, mini-

grid, and industry power self sufficiency initiatives.

• Multi-dimensional approach with greater government support,

public utility component, private investment, on-grid and off-

grid projects, and power self-sufficiency for appropriate

industries (i.e. industries with backward linkages to agriculture

and available bio-matter waste and by-products for generation

heat and or decomposition related electricity).

21

Page 22: A Benchmarking Paper on the Role of Infrastructure in

Thank You!

22

Trade & Industrial Policy Strategies

Email: [email protected]

Tel: +27 (0)12 433 93 40

Cell: +27 (0)72 678 8905