INTERGRATED ENERGY CENTERS

Access to energy for people in areas of greatest need has been identified by government in South Africa as an urgent requirement to facilitate socio-economic development. To address this need, the Department of Minerals and Energy (DME) has undertaken to establish Integrated Energy Centres (IeCs) in these poverty nodal areas, aiming to improve access to energy services, increase awareness of alternative energy technologies, and promote energy efficiency.

DME also recognizes the impact of such energy access in terms of improved health, education and environmental benefits, in addition to providing a platform for income generation from the potential growth of new business in these areas. Parallax believes that energy centres with access to rural communities have the potential to provide an ideal means of support for rural energization, provided that the real needs of the local population are identified, understood and directly addressed.

The initial IeC programme that started in 2003 was supported by Total and SASOL as anchor sponsors, in addition to assistance pledged from organizations such as PASASA, CEF, the Nelson Mandela Children’s Fund, the Energy SETA, Bonesa and Amazing Amanzi. By early 2004, three IeCs had been established in the Northern Cape, KwaZulu Natal and the Eastern Cape with 20 Centres originally planned over a two year period. Unfortunately, the IeC in KZN was closed in 2004 due to corruption allegations at the local level. This, and the motives of the oil companies, raised questions over the viability of the original IeC model and a moratorium was placed on further development, pending the outcome of a review that was completed at the end of 2004.

The review brought little change to the early approach and failed to identify the underlying causes of IeC failure. In a vaguely worded concluding statement, the report pronounced, “A commitment to consultation and engagement is a critical pillar of building ownership and ultimately a critical variable towards ensuring sustainability. It is envisaged that the process of consultation and consensus building between respective stakeholders will continue to play an important role in guaranteeing buy in from all concerned and establishing centres that are sustainable in the medium to long term”.

After approaching UNDP for assistance, support was provided for the IeC programme through the international “Global Village Energy Partnership” (GVEP). Parallax was engaged from January 2005 until March 2006 to assess the IeC programme status and develop a business plan for future rollout that would meet the initial goals of sustainable, affordable access to energy supplies for poor communities. The business plan prepared by Parallax now forms the basis of the IeC programme.

One of the conclusions drawn by Parallax was that the IeC programme was based on a top-down solution without really identifying the broader energy demand of the target markets. Given the investment from the two high profile oil companies, the initial focus of plans for IeCs was, unsurprisingly, on the provision of liquid fuels and related products. This focus may be appropriate for IeCs in some areas, but the experience of Parallax suggested that access to other forms of energy, including renewable energy sources, could also have great potential to fulfill Government objectives.

By Feb 2007, the rollout was already going well. Five IeCs had been established and were operational. Some were making large profits, others were breaking even. These IeCswere all in the rural areas and of the filling station type. DME then discussed with several oil companies (PetroSA, Engen, Shell, BP) the establishment of some 7 new IeCs. The IeC programme was expected to  run until 2015 and the aim was to have some 30 filling station type centres in operation by then and an information type centre in each of approximately 287 municipalities. The APPLES Project, in which Parallax leads the activity in rural areas, was supported by DME and  examined alternative models for energy centres, reporting back in July 2008.

The benefits of renewable energy utilization in remote rural areas are well-documented, but need to be specified in terms of the potential support from a local energy centre. Close links between such a centre and the local Municipality offer particular advantage. Immediate access to an energy source is probably the most valuable benefit of renewable energy in such areas, in comparison with the wait for grid connection, which may be several years. A Municipal Energy Centre can facilitate the access to renewable energy systems and support. The portability of non-grid energy sources and the reduced damage to the local and global environment are also significant advantages. A Municipal Energy Centre can offer local supply of relevant systems and education regarding efficient energy use.

However, the affordability of renewable energy systems for people with low income must be considered carefully. A Municipal Energy Centre can offer potential customers the resources and expertise to find appropriate financing means. It can also encourage the growth of local business to increase the average level of expendable income in the local community and therefore the increase the affordability of energy supplies. By finding the most cost-effective supply of energy resources to local areas, an economically sustainable solution can be reached – renewable energy sources seem the offer an important component of this energy mix.