Declaration of Intent on the South African Renewables Initiative

Full document (pdf)

Introduction
Context
Vision
Roles
Organisation
Signatories

1 INTRODUCTION

1.1 The South African Renewables Initiative (SARi) has been established by the South African Government to enable the large-scale development of renewable energy, securing benefits in terms of energy security, economic growth, climate change mitigation and industrial development, without incurring unacceptable domestic cost burdens.

1.2 Through SARi the Government is seeking to achieve the following objectives, as part of a broader accelerated, collaborative, cohesive, and structured approach:

a) Design, establish and secure appropriate funding to catalyse the generation of power from renewables, as well as associated industrial development;

b) Effectively implement industrial and renewable energy policy, planning and procurement programmes supporting climate-change mitigation and economic development goals domestically;

c) Demonstrate and share learning from an innovative large-scale collaboration to mobilise investment into climate-compatible infrastructure and green growth;

d) Enable public partnerships to leverage funding, including private sector investment, in a manner that supports South Africa’s efforts to move towards a greener economy that offers sustainable social development and upliftment.

1.3 The SARi International Partnership has been developed to support these aims by enabling international collaboration between the Government of the Republic of South Africa, other governments and regional and international public bodies.

1.4 This document provides the framework for the Partnership including its scope, partner roles and organization of the initiative.

2 CONTEXT

2.1 Climate change and the need for affordable, sustainable energy are two of the largest challenges facing the world in the 21st century. Renewable energy has the potential to contribute towards solving both. Developing a competitive and self-sustaining renewables sector globally depends on early public and private investment to scale up solutions.

2.2 Upscaling renewables is part of a broader imperative of aligning public action and private investment towards green growth. This global challenge of energy, environment and development is being tackled through both the ongoing processes of the UN Framework Convention on Climate Change (UNFCCC) and the ‘Rio+20’ United Nations Conference on Sustainable Development.

2.3 South Africa has world-class natural resources for renewable energy generation including excellent irradiance levels for solar power as well as laminar windflow contours for wind power. As South Africa’s National Climate Change Response White Paper highlights, renewable energy is one of the key national opportunities for contributing to climate change mitigation and green growth in South Africa.

2.4 The Government of the Republic of South Africa has laid out its ambitions for increasing its renewable energy supply and creating green jobs in its New Growth Path, Integrated Resource Plan for Electricity (IRP) and Industrial Policy Action Plan (IPAP).

2.5 The South African Integrated Resource Plan (IRP), promulgated in May 2011, calls for the procurement of 19 Gigawatt (GW) of renewable energy by 2030 and the creation of an enabling environment, conducive for private sector investment in the energy sector. Renewables are planned to constitute 42% of all new and additional energy capacity to be installed over that period, and may increase under future IRP revisions if they become more affordable to the South African consumer and the economy.

2.6 Such an ambitious programme of renewable energy development will contribute towards South Africa achieving its international commitments to reduce GHG emissions below the ‘business as usual’ trajectory. These commitments, as expressed in the Cancun Agreement are a contribution towards the global goal of climate change mitigation.

2.7 Developing renewables will also enable development and poverty alleviation domestically and in the region, by contributing to medium-term energy security, stimulating the growth of the renewables industry and its supply chain and establishing the capacity for regional exports.

2.8 The Government of the Republic of South African is continually working to ensure that its policies and institutions provide the clear, credible and long- term frameworks needed to attract sufficient investment. Such coordinated action includes institutional reforms, infrastructure upgrading, an appropriate regulatory framework, and programmes for local supplier development and support. These efforts need to be supported by sufficient finance to reduce the incremental cost differential between renewables and other non-renewable energy sources.

2.9 The ability to deliver on this is supported by the strength of international partnerships on finance, technology and capacity building. Enhanced funding mechanisms, supported by monitoring and reporting arrangements, are needed to enable ambitious domestic action.

3 VISION FOR THE PARTNERSHIP

3.1 The SARi International Partnership will involve the Government of the Republic of South Africa and its Partners working collaboratively to support the accelerated scale up of investment for the development of renewables in South Africa, aligned to domestic policy goals and regulatory environment, and with respect for environmental and social standards.

3.2 Key elements of the Partnership are to:

a) Develop the basis for implementable arrangements to provide financial instruments and resources to support an ambitious development of renewables in South Africa, subject to demonstration of value for money and results. This may include, inter alia, grant payments, payments-for- results, low cost loans, insurance and other risk mitigation instruments, mutually agreed between partners and the South African Government, in consultation with all relevant government departments and agencies;

b) Support South Africa in effectively implementing its renewables strategy through technical assistance and sharing of experience from partner’s own roll-outs of renewables as part of industrial development strategies, and of developing financing solutions for low carbon development;

c) Enable wider international collaboration between Government of the Republic of South Africa, other governments and regional and international public bodies, in catalyzing renewables and industrial development, including actively welcoming further Partners to join the partnership;

d) Ensure ongoing engagement with broader stakeholders and sources of expertise concerning renewables development in South Africa, including civil society, business, investor and technical expert communities;

e) Share experience and models internationally, and explore opportunities for regional synergies.

3.3 The scale of ambition and the financial resources that need to be mobilised over time is large, therefore success of the Partnership depends on growing the collaboration in a stepwise manner, by designing and demonstrating mechanisms, mobilising domestic and international funding streams, attracting growing private sector investment, and involving additional public partners.

3.4 It is noted that any partnership arrangement will be aligned to and reflective of South African policy and legislation whilst respecting the policies and legislation of the Partners. This includes the Integrated Resource Plan, Industrial Policy Action Plan, National Climate Change Response White Paper, New Growth Path and Public Finance Management Act. Any funding mechanisms developed will involve the partners and the National Treasury and will be aligned to international borrowing thresholds and other relevant National Treasury guidelines related to international finance and development engagements, and may also build on existing funding mechanisms where suitable.

4 ROLES

4.1 The SARi International Partnership involves national governments and development finance institutions and international finance institutions (DFIs/IFIs) that have committed to working with the South African Government in its efforts to scale up renewables, secure the economic benefits and reduce the incremental cost burden to South Africa.

4.2 The participation of South Africa’s development partners is to support the South African government in achieving its objectives of allowing the increased participation of renewable energy in the energy mix, leading towards the implementation of economic policies such as a more integrated economy, job creation and green growth.

4.3 The specific commitments of international partners will be outlined in individual Memoranda of Understanding (MOU) and may include, inter alia:

a) Engaging with the Government of the Republic of South Africa to support the development of financial mechanisms and to contribute funding and/or investment into such mechanisms by mutual agreement, subject to demonstration of value for money and monitoring, reporting and verification of results;

b) Exchanges of learning experiences and information in respect of (i)large- scale roll-outs of renewables, (ii) benchmarking against international best practice, (iii) industrial development approaches, as well as (iv) different designs of financing solutions for low carbon developments;

c) Technical assistance for strengthening the regulatory and financial environment necessary to scale up renewable energy deployment;

d) Assisting the Government of the Republic of South Africa in engaging additional Partners to support scaled-up renewables deployment in South Africa, as well as facilitating engagement with other stakeholders internationally by mutual agreement.

4.4 The commitments of the Government of the Republic of South Africa in relation to the Partnership are to:

a) Chair the process to achieve the aim of SARi, that is to significantly scale up the deployment of renewables in South Africa generating climate mitigation, economic, industrial and development benefits, without incurring unacceptable incremental cost burdens;

b) Develop a collective work-plan and annual report on progress against the aims and objectives of this Declaration of Intent, in collaboration with relevant ministries and international Partners;

c) Involve all relevant government departments and agencies in the development of SARi, securing their active contribution into the Partnership and ensuring the initiative is aligned to relevant policy frameworks. This includes but is not limited to the Department of Energy and the Department of Trade and Industry, National Treasury, Department of Public Enterprises, Department of Environmental Affairs, Economic Development Department, Department of Science and Technology, Department of Higher Education and The Presidency;

d) Engage with the Partners to seek to develop an appropriate and mutually agreed set of mechanisms to support the development of renewable energy and growth of the renewable energy sector in South Africa in such a way that industrial and job creation benefits are maximised;

e) Advance implementation of domestic policies needed to enable these mechanisms to be implemented and existing commitments to carbon mitigation and renewables growth to be realised and built upon. Key areas of domestic action mobilising domestic funding streams for renewables and completing institutional reforms and infrastructure upgrading;

f) Share learning and information on the ongoing development of South Africa’s renewables procurement processes and industrial strategy on renewables;

g) Seek out and engage additional Partners to support the scale-up of renewables deployment in South Africa; and

h) Ensure ongoing engagement with relevant stakeholders and sources of expertise concerning renewables development in South Africa, including civil society, business, investor and technical expert communities.

5 ORGANISATION OF THE INITIATIVE

5.1 The Government of the Republic of South Africa will establish a Secretariat for the partnership.

5.2 Regular Partnership Meetings will be convened at Senior Official level. The purpose of these meetings will be for the international partners and the Government of the Republic of South Africa to work together in monitoring progress, advancing the development of SARi and to share experiences of and lessons learnt from other similar financing initiatives.

5.3 A collective process for transparency and reporting will be developed, with an annual public report on progress. This will be presented at an Annual High Level Meeting involving key Ministers or their nominees from the Government of the Republic of South Africa and Partner Governments and Senior Officials from Development Finance Institutions to review progress and determine priorities for the next year.

5.4 The partnership will aim to reach its aims in a stepwise manner. In its first phase, from 2012-2015, the Partnership will seek to develop and implement the financial mechanisms as well as attract the additional partners and investments needed to enable an ambitious scale up of renewables. After this time (or earlier, if agreed by the partners) the scope, terms and operations of the Partnership will be reviewed.

5.5 Partners may join at any time by reaching an agreement with the Government of the Republic of South Africa and aligning to this Declaration of Intent. Partners can leave the initiative at any time, by writing a letter to the Minister chairing the initiative. The provisions of this Declaration of Intent will enter into effect upon signature.

6 SIGNATORIES TO THE DECLARATION OF INTENT

IN WITNESS WHEREOF the undersigned, being duly authorised by their respective Governments, have signed this Declaration of Intent in the English language.

For Government of the Republic of South Africa.
Dipuo Peters, Minister for Energy

For the Government of Denmark
Martin Lidegaard, Minister for Climate, Energy and Building

For the Government of the Federal Republic of Germany
Norbert Röttgen, Federal Minister for Environment, Nature Conservation and Nuclear Safety (represented by Dr. Horst Freitag, Ambassador Designate to South Africa)

For the Government of Norway
Erik Solheim, Minister of the Environment and International Development

For the Government of the United Kingdom of Great Britain and Northern Ireland
Chris Huhne, Secretary of State for Energy and Climate Change (represented by Dame Nicola Brewer, High Commissioner to South Africa

For the European Investment Bank
Simon Brooks, Vice-President

DONE at Durban on this. 7th day of December 2011.