IDC

1
IDCs approach in developing the Green
Economy Towards a green future

• Presented by
• Rentia van Tonder
• Head Green Industries SBU

2
Contents

• IDCs alignment with IPAP2 and NGP
• Sectoral focus areas
• The Green Economy in the NGP and IPAP2
• IDC Green Economy focus areas
• Non-fuel based green energy
• Energy Efficiency
• Fuel based green energy
• Conclusion.

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IDC Aligned its Sectoral Focus Areas with the NGP
and IPAP2
Logistics, infrastructure and cross-sector
projects
The green economy
Logistics
Industrial infrastructure
Green and energy saving industries
Bio fuels
Tourism, creative industries and high-level
services
Craft and film
Biotechnology
Business process services
Agricultural value chain
Tourism
Agro-processing
Forestry, paper pulp, furniture
Healthcare
Mining related technologies
ICT
Manufacturing activities
Automotives, components, medium and heavy
commercial vehicles
Metals fabrication, capital and transport
equipment
The mining value chain
Downstream mineral beneficiation
Mining
Advanced manufacturing
Plastics and chemicals
Clothing, textiles, footwear, leather
Pharmaceuti-cals
Oil and gas
Other funding areas Venture Capital Funding to
distressed companies
Grreen industry components
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Sectoral focus areas (continued)
Industry Green-Industries Agro-Industries Metal, Transport and Machinery Products Chemicals and Allied Industries Forestry and Wood Products Textiles and Clothing Mining and Minerals Beneficiation
Focus Area Energy efficiency Non-fuel based renewable energy Fuel based green energy Emissions and pollution mitigation Bio-ethanol Canning Indigenous teas Juice and fruit extracts Small-scale milling Seed oils and oil cake Malt Marine aquaculture Small-farmer linkage initiative Suppliers to SOE capex programmes Tooling, die and mould industry Foundry technology Automotive assembly Automotive components Commercial vehicles, buses and taxis Aerospace components Beneficiation in the titanium, zirconium, fluorspar, plastics and petro-chemicals value chains Glass Alternative building materials Forestry Sawmilling Pulp and paper Furniture Textiles and clothing Leather and footwear Steel production Platinum group metals, coal, manganese, chrome, iron ore Potash and potassium Rare earth elements
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Sectoral focus areas (continued)
Industry Tourism Media and Motion Pictures Information and Communication Technologies Healthcare Venture Capital Strategic High Impact Projects
Focus Area Beach tourism Adventure and sports tourism Theme park Film production Production infrastructure Audience development Animation Natural history documentaries Pan African broadcasting Community radio and television stations Mining related technology Business process services Telecommunication Electronics Software development Anti-retroviral active pharmaceutical ingredients Codeine derivatives Malaria prevention Hospital services and healthcare public, private partnerships Development and commercialisation of South African intellectual property by universities, research institutions and the private sector Multi-sector projects Bus/truck/taxi procurement Rolling stock Maritime Industrial infrastructure
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The Green Economy in the NGP

• The New Growth Path targets 300 000 additional
  direct jobs by 2020 to green the economy, with
  80 000 in manufacturing and the rest in
  construction, operations and maintenance of new
  environmentally friendly infrastructure.
• Additional jobs will be created by expanding the
  existing public employment schemes to protect the
  environment, as well as in production of
  biofuels. The IRP2 targets for renewable energy
  open up major new opportunities for investment
  and employment in manufacturing new energy
  technologies as well as in construction.
• The main strategies to achieve these targets are
• Comprehensive support for energy efficiency and
  renewable energy as required by the IRP2,
  including appropriate pricing policies, combined
  with programmes to encourage the local production
  of inputs, starting with solar water heaters
• Public employment and recycling schemes geared to
  greening the economy
• Stronger programmes, institutions and systems to
  diffuse new technologies to SMEs and households
• Greater support for RD and tertiary education
  linked to growth potential and developing South
  Africa as the higher education hub for the
  continent and
• Continuing to reduce the cost of and improve
  access to broadband.

Source The New Growth Path - The Framework
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The Green Economy in IPAP2

• Key Sectors
• Wind power generation
• Photovoltaic power generation
• Concentrated solar power generation
• Industrial energy efficiency
• Water efficiency
• Waste management
• Biomass and waste management
• Energy-efficient vehicles
• Key action programmes
• Roll-out of national solar-water-heating
  programme manufacturing and installation
  capacity
• Solar and wind energy
• Development of an industrial energy-efficiency
  programme
• Strengthen water-efficiency standards
• Demonstrate viability of Concentrated Solar
  Thermal (CST) power as a major renewable energy
  generation source
• Biomass Energy
• Clean and Multi-Energy Stoves
• Water- and Energy-Efficient Appliances
• Efficient Motors, Variable-Speed Drives, Energy
  Metering and Control and Electricity Storage
  (Batteries and Fuel Cells)

Source Industrial Policy Action Plan 2011/12
2013/14 February 2011
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IDC focus areas Green industries
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Non-fuel based green energy Renewable Energy

• Exciting time for Renewable Energy development in
  SA and throughout Africa
• Energy Crisis in South Africa and Region
• Opportunities both in South Africa and throughout
  the Region significant investor interest
• SA need is for 50 000MW new generation capacity
  by 2030
• 19 000 MW to come from renewable technologies
• Launch of South Africas REPP
• IDC targets a R14bn investment over 5 years

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IRP2010
33 of new capacity from wind and solar 19GW
R500bn
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IRP2010 - Investment requirement 5 Years
The total investment up to 2030 R500bn
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IDC Funding possibilities for RE projects

• Participation and cost sharing of bankable
  feasibility studies
• Equity participation
• Minimum Meaningful 10 with minority protection
• Maximum Not majority, 30
• BEE and BBBEE funding
• Lending to Community Trust or BEE shareholder to
  invest in project
• Repayment with dividends
• Will allow 20-25 cash (trickle dividend) for
  community trust / BEE shareholders
• Favours community trust concept
• Debt participation
• Senior debt with tenure of 15 years post
  commercial operation date (COD)
• Interest capitalisation during construction
• Construction loan

Target investment of R14bn over 5 years. Projects
under consideration CSP - 4 Wind - 12 PV -
18 Hydro - 3
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Current IDC initiatives to respond to demand

• Streamline IDC processes
• Resource support internal REFIT forum
• Panel of technical advisors
• Portfolio approach through partnering with other
  funders
• Standardised IDC documents
• Senior Debt Term Sheet
• Sub-debt Term Sheet
• Equity Term Sheet
• BBBEE Pref Term Sheet
• BEE Term Sheet
• Trust Deed

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Industry associations

• SAPVIA
• Founding member
• NERSA presentations on revised REFIT
• Sponsored launch event
• Elected to Management Board and alternate
  nominated
• Association has appointed admin manager
• SASTELA
• Founding member
• IDC is hosted Special GM
• IDC has Exco Seat
• SAWEA
• IDC to become a member
• Association has appointed CEO
• Associations co-operate well especially on
  liaising with government and legal opinions

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IPP Procurement Programme RfP Highlights

• Up to 5 Phased Bid process pending subscription
  by Bidders of total allocation of 3 725MW spread
  across renewable energy technologies
• First phase submission of bids by 4 November
  2011
• Two phased selection process Qualification and
  Evaluation
• Key qualification criteria Project Structure,
  Legal, Land, Financial, Environmental, Technical,
  Economic Development, Bid Guarantee
• Proven technology - equipment must have been
  installed on two previous projects
• Track record of contractor - must have
  constructed two similar projects
• A bid bond of R100k/MW must be provided with the
  bid, increasing to R200k/MW when the Project is
  selected as preferred bidder
• If Qualification is met the bid will be evaluated
  mainly against Price (70) and Economic
  Development (30)
• Price not to exceed price caps for each
  technology
• Economic development matrix with focus on Jobs,
  local content, community and skills development.

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IPP Procurement Programme RfP Highlights

• Non-negotiable documentation include PPA,
  Implementation, Direct and Connection Agreements
• Bidders must provide confirmation that equity is
  fully underwritten and preliminary approval for
  debt
• Bid must be accompanied by audited Sponsor and
  Banker Case Financial Model.

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IDC focus areas Green industries
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Energy Efficiency KfW facility Opportunity
Facilitate the growth in EE

• Energy Efficiency scheme
• R 500 million
• Interest Rate at prime -3
• Targeting SMEs with a 20 energy saving.

• Support to IDC through implementing agents
• 2 years of Technical Assistance
• Resident Team Leader
• Pool of 15 international experts and local
  experts to provide Technical Assitance to IDC
  (through KfW grant)
• GFA other local consultants
• - Energy Audits
• - Business Plans
• - Marketing Materials
• - ESCO business know-how

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Energy Efficiency Example of SWH project

• Solar Academy of Sub-Saharan Africa
• The IDC approved funding for the roll-out of 200
  000 solar water heaters to the South African
  market. The company has a diversified portfolio
  of projects including the mass roll out of the
  low pressure SWH, high pressure SWH and
  investigating opportunities within the renewable
  energy space.
• The low pressure SWH project is the first
  programmatic CDM SWH Carbon Project globally to
  be registered at the UNFCCC.
• The project has rolled out 60,000 LPSWH units to
  the impoverished RDP Communities, uplifting their
  standards of living by providing them with hot
  water on tap, benefiting at least 240,000
  individuals.
• The project supports localisation and in doing so
  is currently establishing a local manufacturing
  plant. The manufacturing facility would allow the
  local content of the product offering and
  service, creating 535 local job opportunities.
  The second phase of training will see 10 of all
  installers being trained to become qualified
  plumbers.

Gauteng
North West
Free State
Sustaining and creating jobs ?
Building a new industry ?
Green industry ?
KwaZulu-Natal
Eastern Cape
Western Cape
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IDC focus areas Green industries
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Fuel Based Green Energy (including hydro)

• To achieve TARGET ZONE
• 1. FEEDSTOCK (FUEL) SECURITY!
• No Feedstock security, no start!
• Feedstock security means quantity, quality,
  price, period!

• PROCESS/INVESTMENT options
• largely driven by FEEDSTOCK QUALITIES,
  QUANTITIES, TERM and OFFTAKE OPTIONS
• Typical R 15-35 mil per MW
• High load factors eg 90 (base load), or peaking
  for gas, hydro
• High RATIO of OFFTAKEFEEDSTOCK prices

Project
- Low OM, so capital can be repaid if Scale
sufficient Offtake/Feedstock price ratio strong
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Fuel type Feedstock and Processes
Agricultural Origin Industrial Origin Municipal Origin Process Technologies
-Livestock manure -Agricultural residues -Animal mortalities -Energy crops -Wastewater (organic) -Industrial sludge (organic) -Industrial by-products (organic) -Spent beverages -Biosolids -Sewage sludge -Municipal solid waste (MSW) organic/wet -Food residues Anaerobic digestion - Methane for power gen (mid-merit) with heat, or as transport fuel
-Alien vegetation removal -Forestry waste -Grown biomass -Timber mills residue -Sugar mill residues -Green waste, cuttings - MSW dry mixed Combustion for heat for steam turbines Gasification for syngas for engine gensets
-Waste gas (fuel) -Waste gas heat -Solid waste (coal fines dumps) Cogen -steam turbines -direct firing in gas engines
-Run of river (farmers, communities) -Dams (DWEA) and irrigation -Dams Hydro
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Example of Co-generation project

• SA Calcium Carbide
• SA Calcium Carbide is the only producer of
  calcium carbide in Africa, through the
  beneficiation of local limestone and coal mineral
  resources.
• The company uses a large portion of the
  electricity supplied to the town of Newcastle.
• Apart from the strain put on the electricity
  supply, recent tariff hikes will result in
  significantly higher production costs.
• IDC will provide funding to assist with the
  installation of a co-generation facility,
  utilising furnace off-gas currently being flared,
  to reduce the companys reliance on the national
  grid for electricity.
• Co-generation promotes energy efficiency and
  reduces the use of coal in power stations and
  hence qualifies for carbon emissions reductions.

KwaZulu-Natal
Green industry ?
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Conclusion

• Pro-active approach to develop Green Industries
• Renewable energy
• Energy efficiency
• Fuel based green energy
• Emission and pollution management
• Bio fuels
• As well as localisation opportunities
• Focus on early phase project development
• Develop specific funding interventions
• Support and development of an emerging industry
  at various level.
• Value chain approach with an objective to develop
  a long term sustainable industry.

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Thank you
Industrial Development Corporation 19 Fredman
Drive, Sandown PO Box 784055, Sandton, 2146 South
Africa Telephone [phone] Facsimile 011 269
2116 E-mail callcentre_at_idc.co.za