Financing energy efficiency measures
in low-income and affordable housing
September 2012
Shehnaaz Moosa
SouthSouthNorth
shehnaaz@southsouthnorth.org
Presentation Structure
•
•
•
•
•
Sustainable Settlements Facility
Housing Landscape
Financing Landscape
Costing the SSF NAMA
Way forward
• NAMA
2
Sustainable Settlements
Facility (SSF)
• The SSF is envisaged as a large scale public programme which
will establish all future subsidised and gap housing in South
Africa as low carbon, removing significant future demand from
the coal dominated South African grid.
• By accessing international climate change finance, together
with potential matching domestic energy subsidy finance
through a dedicated Facility operating outside the DHS
structures, the SSF will enable this policy to be enforced. The
co-benefits including poverty alleviation and reduction in
electricity demand are substantial.
3
The Sustainable Settlements
Facility (SSF) NAMA
• The SSF emerged as a concept from the lessons of the Kuyasa
CDM demonstration project addressing methodological design
issues in terms of carbon credits
• The SSF has the support of National Government as a NAMA
and is identified in the National Climate Change Response
Strategy as a flagship project
• The SSF is envisaged as a critical element of a wider climate
finance strategy
4
Context: Housing Landscape
• South Africa’s current housing plan (BNG, 2004) is taking up
the thrust of UN’s MDG target 11
• Eliminate all shack housing in the country
• Replacement of all shacks by 2014
• Current housing delivery focuses on quantity
• Opportunity to improve the quality of the houses especially
on the aspect of energy efficiency
• Addendum XA10400 to the National Building Regulations
• Solar water heater
• Insulated ceiling
• Energy efficient low cost housing is an integral part of
sustainable development
• Numerous housing solutions are possible within this spectrum
5
Housing Landscape (cont.)
Year
Housing Backlog
1996
1.5 million
2001
1.8 million
2011
2.1 million
Source: DoH, 1994 and NDHS, 2011
6
Background: Kuyasa CDM
demonstration project
• Kuyasa CDM (http://www.kuyasacdm.co.za/)
• 2309 low-income houses in Khayelitsha with a SWH, insulated
ceilings and energy efficient lighting
• 2.85 tones of carbon per household per annum saved
• Significant social and economic benefits
• Access to hot water
• Increase in disposable income
• Local job creation
7
Summary: SSF as a NAMA
• Existing demonstration projects:
• Kuyasa CDM Pilot Project (http://www.kuyasacdm.co.za/)
• Quantify emissions reductions
• 168 million tCO2 for a 28 year period
• Assess barriers to implementation
• Financial
• Technology
• Capacity
• Assess scale up potential
• Housing backlog therefore high potential
8
Financing Landscape
• Under the current subsidy framework:
• Cost approximately US$ 37 billion to clear a backlog of 2.2 million
units (approximately US$ 17,000 per unit)
• Assuming a delivery rate of 250,000 housing units per year, the
annual budgetary implication is approximately US$ 4.25 billion
• Beyond the fiscal capacity of the South African State
• Excludes any additions
• Solar water heaters
• Energy efficiency interventions
• A gap exists between the need for energy efficient low-income
housing and the capital available to pay for it.
9
Financing Landscape
• National Department of Human Settlements low income housing
delivery programme
• Opportunity to improve the quality of people’s lives
• Improved housing quality
• Energy access
• Reducing future carbon emissions
• Integration of South African Government initiatives:
• DTI
• Inclusion of solar water heaters and energy efficiency
• DEA
• National programme to bring sustainable resource use criteria into the design of
the settlement projects and subsidized houses across the country. With special
reference to:
• Housing densities, orientation of the buildings, roof overhangs and insulation,
installation of 1000 000 solar water heaters by 2014, and sustainable use of water
and waste resources.
• Green Economy Accord promoting the use of clean stoves
• DEA and DBSA
• Green economy summit
• Energy efficiency
10
The SSF as a NAMA
Current outlook for the SSF NAMA:
Initial ODA to scope and prepare
with the potential to be a
supported
NAMA
with
a
contribution from local Green
Funds.
Official Development
Assistance
Bilateral
Multilateral
Supported NAMAs
Green Climate
Fund
Registry
Unilateral NAMAs
Market Based
Mechanisms
Domestic
Financing
Carbon financing
11
Costing:
No Carbon, including MRV
80
1600
70
1400
60
1200
50
1000
40
800
30
600
20
400
10
200
0
0
1
2
3
4
5
6
7
8
9
10
11
Number of houses
12
13
14
Cost (Rands)
15
16
17
18
19
20
21
196M US$
171M US$
Cost (Millions of South African Rand)
Housing units (in Thousands)
Cost for BNG Houses with SWH and Energy Efficiency
Interventions
146M US$
122M US$
98M US$
73M US$
48M US$
24M US$
12
Cost vs. subsidy for New Build with
energy efficiency & solar water heater
60000
6108 US$
50000
4886 US$
3664 US$
2443 US$
1221 US$
Cost in South African Rand
7329 US$
40000
Cost
30000
Subsidy Income
Shortfall
20000
10000
13
0
EE Interventions
SWH
Top Structure
x 10000
Cashflow with carbon revenue
180000
Cashflow as a function of carbon revenue
160000
140000
120000
100000
80000
Carbon = 12 Euros
60000
Carbon - 6 Euros
Carbon - 2.4 Euros
40000
20000
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21
-20000
Note: Current (Sept. 2012) market prices for CO2e credits are in the approximate €2/US$2.5 range.
14
Sustainable Settlements
Facility: Timeline
Date
Progress
2006
Analysis and interrogation of carbon methodological work at
Kuyasa funded by REEEP
2007-2010
Extensive methodological design work financed by DBSA, DANIDA,
South African Export Development Fund and Energy Development
Corporation
2010-2012
Design phase of programme delivery funded by KfW integrating
carbon methodological designs, public and private sources
2013
Target date or SSF to be operationalized and accessible
15