ANNUAL REPORT 2014/15 - SANEDI...2 SANEDI Annual Reort 2014/15 PLEASE RECYCLE THIS REPORT This annual report was printed on Cocoon Silk 100% recycled. By using this recycled paper,

ANNUAL REPORT 2014/15

2 SANEDI Annual Report 2014/15

PLEASE RECYCLE THIS REPORTThis annual report was printed on Cocoon Silk 100% recycled. By using this recycled paper, SANEDI has reduced its environmental impact. Smaller solid ink areas are used on the cover and inside text, to increase the recycle properties of this report and reduce the carbon footprint.

3SANEDI Annual Report 2014/15



Part A: General information ------------------------------------------------------------------------------ 6

General information ------------------------------------------------------------------------------------ 6

Abbreviations and acronyms ------------------------------------------------------------------------- 7

Foreword by the Chairperson ------------------------------------------------------------------------ 9

Board of Directors --------------------------------------------------------------------------------------11

Chief Executive Officer’s overview -----------------------------------------------------------------12

Statement of responsibility and confirmation of the accuracy of the annual report --17

Strategic overview -------------------------------------------------------------------------------------18

Vision -------------------------------------------------------------------------------------------------18

Mission -----------------------------------------------------------------------------------------------18

Values -------------------------------------------------------------------------------------------------18

Legislation ------------------------------------------------------------------------------------------------18

Organisational structure ------------------------------------------------------------------------------19

Part B: Performance information ----------------------------------------------------------------------20

Auditor-general’s report: predetermined objectives ------------------------------------------20

Strategic outcome orientated goals ----------------------------------------------------------------21

Performance information by programme --------------------------------------------------------22

Applied energy research ------------------------------------------------------------------------------22

Clean energy solutions ---------------------------------------------------------------------------24

Smart Grids Programme -------------------------------------------------------------------------32

Working for Energy --------------------------------------------------------------------------------44

Data and knowledge management ------------------------------------------------------------48

Energy Efficiency programme -----------------------------------------------------------------------51

Energy Efficiency (12L and 12I) tax incentives ----------------------------------------------51

bigEE --------------------------------------------------------------------------------------------------52

Energy Efficiency and Demand Side Management (EEDSM) Hub ----------------------55

Report on performance against objectives -------------------------------------------------------56

Communications ----------------------------------------------------------------------------------------70

Contents


Part C: Human resource management ----------------------------------------------------------------72

Personnel costs by programme ---------------------------------------------------------------------73

Personnel cost by salary band -----------------------------------------------------------------------73

Performance rewards ---------------------------------------------------------------------------------73

Reasons for staff leaving ------------------------------------------------------------------------------74

Labour relations, misconduct and disciplinary action -----------------------------------------74

Staff demographics ------------------------------------------------------------------------------------74

Training costs of personnel ---------------------------------------------------------------------------75

Part D: Financial information ----------------------------------------------------------------------------78

Report of the auditor-general to Parliament ----------------------------------------------------79

Annual financial statements

General information -----------------------------------------------------------------------------------84

Accounting Authority’s responsibilities and approval-------------------------------------86

Board audit and risk committee report ------------------------------------------------------87

Accounting Authority’s report ------------------------------------------------------------------90

Materiality and significance framework ------------------------------------------------------96

Statement of financial position at 31 March 2015 -----------------------------------------97

Statement of financial performance ----------------------------------------------------------98

Statement of change in net assets -------------------------------------------------------------99

Cash flow statement ---------------------------------------------------------------------------- 100

Accounting policies ------------------------------------------------------------------------------ 101

Notes to the annual financial statements -------------------------------------------------- 119

Contents


PART A:General Information

General information

Registered name: South African National Energy Development Institute (SANEDI)

Physical address: Block E, Upper Grayston Office Park, 150 Linden Road, Strathavon, Sandton

Postal address: P O Box 9935, Sandton, 2146

Telephone numbers: 011 0384300

Email address: [email protected]

Website address: www.sanedi.org.za

External auditors: The auditor-general of South Africa

Bankers: ABSA Capital

Company Secretary: CEF Secretariat


Abbreviations and acronyms

AAAMSA Association of Architectural Aluminium

Manufacturers of South Africa

AFD French Development Agency

AGSA auditor-general of South Africa

ASSA Academy of Science for South Africa

BEE Black economic empowerment

CCS Carbon capture and storage

CCT Clean coal technologies

CEF CEF Group of Companies formerly known

as Central Energy Fund

CEM Clean Energy Ministerial

CES Clean Energy Solutions

CEO Chief Executive Officer

CER Centre of Energy Research

CESAR Centre for Energy Systems Analysis and

Research

CFT Carbon fuel tablet

CNES Centre of New Energy Systems

CO2 Carbon dioxide

COCATE Large-scale CCS transportation

infrastructure in Europe

CoRD Centres of Research and Development

CPI Consumer Price Index

CPUT Cape Peninsula University of Technology

CPV Concentrator Photovoltaics

CSAG Climate Systems Analysis Group

CSC Community steering committee

CSP Concentrated solar power

CSIR Council for Scientific and Industrial

Research

CSIR CSP CSIR Concentrated solar power

CSTDI Centre for Solar Technology, Development

and Innovation

DEA Department of Environmental Affairs

DID Gauteng Department of Infrastructure

Development

DKK Danish krone

DoT Department of Transport

DoE Department of Energy

DSM Demand side management

DST Department of Science and Technology

DTU Technical University of Denmark

DBREV Douglas Banks Renewable Energy Vision

dti Department of Trade and Industry

Dx Distribution grid

EDI Electricity Distribution Industry

EE Energy efficiency

EEDSM Energy efficiency and demand side

management

EMWG Energy Management Working Group

eNaTIS Electronic National Administration Traffic

Information System

EPD Energy Performance Database

EPWP Expanded Public Works Programme

ERC Energy Research Centre

ESI Electricity Supply Industry

ETDE Energy Technology Data Exchange

ETDEWEB Energy Technology Data Exchange World

Energy Base

FMPPI Framework for Managing Programme

Performance Information

GAAP Generally Accepted Accounting Practice

GEF Global environment facility

GHG Greenhouse gas

GIZ German Agency for International

Cooperation

GPDRT Gauteng Province Department of Roads

and Transport

GRAP Generally Recognised Accounting Practice

GSEP Global Superior Energy Performance

Partnership

HVAC Heating, Ventilation and Cooling

IAS International Accounting Standards

IDC Industrial Development Corporation

IEA International Energy Agency

IEP Integrated energy plan

IFPEN IFP Energies nouvelles

IIA Institute of Internal Auditors

ipv Institute for Photovoltaics

ISGAN International Smart Grid Action Network

IT Information technology

kW Kilowatt

LAN Local area network

M&V Monitoring and verification

MEASA Marine Energy Association of South Africa

MoU Memorandum of understanding

MTEC Medium-Term Expenditure Committee

MW Megawatt

NAAMSA National Association of Automobile

Manufacturers of South Africa


NBI National Business Initiative

NDA National Development Agency

Necsa South African Nuclear Energy Corporation

SOC Limited

NEEA National Energy Efficiency Agency

NIER Newcastle Institute of Energy Research

NOK Norwegian krone

NRF National Research Foundation

NWA Numerical wind atlas

OWA Observational wind atlas

PAA Public Audit Act

PCSP Pilot CO2 Storage Project

PDI Previously disadvantaged individual

PFMA Public Finance Management Act

PPA Power purchase agreement

PPC Parliament portfolio committee

PSA Plataforma Solar de AlmeríaPV Photovoltaics

RE Renewable energy

RECORD Renewable Energy Centre for Research and

Development

REEEP Renewable Energy and Energy Efficiency

Partnerships

R&D Research and development

SABS South African Bureau of Standards

SACCCS South African Centre for Carbon Capture

and Storage

SACRM South African Coal Roadmap

SADC Southern African Development Community

SAfECCS South Africa - Europe Cooperation on

Carbon Capture and Storage

SAGEN South Africa – German Energy Programme

SANAS South African National Accreditation

System

SANEDI South African National Energy

Development Institute

SANERI South African National Energy Research

Institute

SAPIA South African Petroleum Industry

Association

SAPVIA South African Photovoltaic Industry

Association

SARS South African Revenue Service

SARETEC South African Renewable Energy

Technology Centre

SASGI South African Smart Grids Initiative

SASTELA Southern Africa Solar Thermal and

Electricity Association

SATTIC South African Travel and Tourism Industry

Conference

SAWEA South African Wind Energy Association

SAWEP South African Wind Energy Programme

SAWS South African Weather Service

SAYAS South African Young Academy of Science

SEA Strategic environmental assessment

SETRM Solar Energy Technology Road Map

SLA Service level agreement

SMME Small Micro Medium Enterprises

SMART Specific, measurable, achievable, realistic

and time-bound

SOLTRAIN Southern African Solar Thermal Training

and Demonstration Initiative

TAF Technical assistance facility

TIA Technology Innovation Agency

Tx Transmission grid

UCT University of Cape Town

UCT CSAG University of Cape Town Climate Systems

Analysis Group

UNDP United Nations Development Programme

URL Uniform Resource Locator

VNWA Verified Numerical Wind Atlas

WASA Wind Atlas of South Africa

WAsP Wind Atlas Analysis and Application

Programme

WITS University of the Witwatersrand

WfE Working for Energy programme

WWF World Wildlife Fund

WRI World Resource Institute

WSU Walter Sisulu University

Abbreviations and acronyms


Foreword by the Chairperson

In the quest to meet the government’s mandate of

facilitating the country’s transition to a low carbon

society, SANEDI has continued to make strides in

energy innovation and energy conservation. With the

current energy challenges that the country is facing

SANEDI’s role has become more critical in ensuring

that South Africa has the necessary information and

planning support to plan for a sustainable and secure

energy future that will satisfy the country’s economic,

social and environmental needs. There is no doubt that

changing the energy mix and making concrete steps

towards energy conservation are critical for meeting

these targets.

With the recent budget cuts which may impact a

great deal on delivering on this very important task,

SANEDI continues to strengthen partnerships with

international funders to ensure that essential financial

support for SANEDI programmes is sustained. One

such support was by the World Bank for the Pilot CO2

Storage Project (PCSP). The pilot monitoring project

at the Bongwana natural CO2 release was initiated

with international interest, while the stakeholder

engagement programme continued with about 40

engagements to date. The shale gas investigation work

plan was approved by the Department of Energy (DoE).

Another important milestone was the quantification

of South Africa’s renewable energy resources with the

completion of the wind atlas for South Africa (WASA)

phase 1 project in March 2014. The data has been

placed in the public domain for access by all, thus

levelling the playing field for the independent power

producers. The renewable programme also concluded

the year with successful projects and collaborations in

the renewable energy sector. Some of these include

the launch of the first ground verified high-accuracy

solar resource map for South Africa, the recognition

of renewable energy research excellence through the

RECORD RERE awards (in partnership with SANEA), the

launch of the state of energy research in South Africa

report, and the launch of the RECORD waste to energy

platform.

One of the programmes that has made strides is the

Working for Energy (WfE) programme. The programme

has successfully completed projects in KwaZulu-

Natal (installing 26 biogas digesters coupled to bio-

fertiliser production, rain water harvesting and solar

PV systems to demonstrate the ability of clean energy

interventions to provide sustainability), in Limpopo

(completing over 30 of the 55 biogas digesters),

and the greening of schools and early childhood

development centres across the country. The success

is a result of collaborations and partnerships with

organisations and various government departments

such as the Gauteng Department of Infrastructure

Development, the National Development Agency

(NDA) and the Department of Environmental Affairs

(DEA). The benefits of these clean energy interventions

will be expanded to other partners in other provinces

and sectors, such as agriculture, human resource

development, environment and small enterprise

development.

Ms N MlonziChairperson


SANEDI was instrumental in working together with

the South African National Treasury, the Department

of Energy and all interested and affected parties in

the country to ensure that the energy efficiency tax

incentives (referred to as 12L), were substantially

amended and improved. Furthermore, the South

African component of the internationally-funded

online benchmarking tool (bigEE), went live and is

proving to be a useful tool for local and international

stakeholders.

Traction has also been gained in meeting South

Africa’s commitments to the cool surfaces component

of the clean energy ministerial (CEM), through the

establishment of the South African Cool Surfaces

Association (SACSA), with assistance from the United

States of America’s Department of Energy. Lastly, the

technical assistance facility hosted by SANEDI and

funded by the French Development Agency (AFD)

Foreword by the Chairperson

to provide a green credit facility to finance small- to

medium-size energy efficiency and renewable energy

projects through three commercial banks in South

Africa has exceeded all expectations, with the entire

fund having been exhausted within the contract

period. This may lead to a second phase of this facility

for South Africa.

In closing, there is no doubt that the new financial year

will yield more successful results in the search for clean

and sustainable energy solutions. I would like to take

this opportunity to thank all our partners and funders,

without whose support we would not have managed

what we have achieved.

Ms N Mlonzi

Chairperson


Ms N Mlonzi Mr J Marriott Ms M Modise

Dr D Hildebrandt Ms D Ramalope Mr C Manyungwana

Dr V Munsami Mr G Fourie Ms P Motsielwa

Dr C Sita Mr M Gordon Dr R Maserumule

Board of Directors

◊ Ms N Mlonzi (Chairperson), BProc LLB

◊ Mr J Marriott (Deputy Chairperson), BSc Chem Eng

◊ Ms M Modise, BSc (Hon), HED, MSc (Eng)

◊ Dr D Hildebrandt, BSc Chem Eng, MSc Chem Eng,

PhD Chem Eng

◊ Ms D Ramalope, BSc (Hon), MSc, MBL

◊ Mr C Manyungwana, Dip Management, Higher Dip

Public Managmenet and Administration, Post Grad

Dip Transport Management

◊ Dr V Munsami, BSc (Hon), MSc, PhD

◊ Mr G Fourie, Diploma Mech Eng,

BCom Economics, MBA

◊ Ms P Motsielwa, B Acc (CA)(SA)

◊ Dr C Sita, MSc Chem Eng (Polymer Engineering)

PhD Chem Eng (Polymer Engineering)

◊ Mr M Gordon (alternate director), BSc, MBA

◊ Dr R Maserumule (alternate director), BSc (Applied

Mathematics), PhD (Applied Mathematics)


Chief Executive Officer’s overview

Adding Value in an Uncertain Market

The 2014/15 year has been characterised by lower than

expected economic growth, due mainly to electricity

supply constraints that have plagued the country of

late. The electricity constraints are largely as a result

of delays in the construction of Medupi and Kusile,

the two new Eskom large coal-fired power plants. The

present electricity shortfall is in the region of 3 000

MW and is exacerbated by the number of Eskom’s

power plants that are out of service for planned and

unplanned maintenance. With the first unit of Medupi

only expected to be commissioned in December 2015,

it is likely that load-shedding will continue for the next

two years or so. Compounding the problem is that even

when the two new coal-fired plants are brought on-

line, the expectation is that industrial and commercial

activities will gain momentum, placing further stress

on an already strained electricity supply industry.

The Renewable Energy Independent Power Producer

Programme, REIPPP, has been responsible for just over

4,000 MW of new renewable energy being added to

the grid since 2013/14. This development has offset to

some degree the current shortfall in electricity supply

but is not yet sufficient to mitigate against the impact

of load-shedding. Eskom could well have benefited

from an upscaling and acceleration in its Integrated

Demand Management Programme, but budget

constraints have seriously limited the utility’s ability to

shift or reduce demand for electricity at peak periods.

This dilemma has paved the way for SANEDI to assert

itself as a key role player in identifying additional supply

options as well as initiating energy efficient measures

to assist in reducing the demand for electricity. This

report highlights the various programmes of SANEDI

that are assisting the country deal with the challenge

of spurring on economic growth in an electricity-

constrained market.

Carbon Capture and Storage – panacea or not?

National Treasury has announced plans to introduce

a carbon tax as of 2016/17. Estimated at R120/ton of

Mr K Nassiep Chief Executive Officer

CO2-equivalent emissions, the programme will target

large emitters such as Eskom and Sasol. Eskom has

already indicated that it will pass on such a tax to

the consumer, as it doesn’t have sufficient funding at

present to cover the expected tax. Energy intensive

industries such as Sasol may well consider moving

some of their operations offshore, in an attempt

to limit their tax liability in South Africa. When one

considers these implications of a carbon tax, it is likely

that government will review the scope and extent of

its tax policy in this area. Suffice to say, at least half

of the emissions that need to be reduced must come

from the energy sector, which creates an opportunity

for SANEDI to fast-track its Carbon Capture and Storage

programme.

Under the 2DS scenario of the IEA, CCS is expected to

contribute at least 14% to the measures designed to

reduce greenhouse gases by 2050 to under 450 ppm

and to limit the increase in mean global temperature to

2 degrees Celsius. For CCS to have this impact, it must

be commercially viable and in turn, should initially be

supported by a carbon tax or other fiscal instrument.


SANEDI, through its centre SACCCS (South African

Centre for Carbon Capture and Storage) has made

significant strides in the year towards identifying the

key steps required to take a decision on whether CCS is

a viable option for South Africa, both from a technical

as well as a commercial perspective. The work that is

being done in SANEDI has been recognised in a number

of ways over the past few years, including Cabinet

endorsement of the programme as well as its inclusion

in the National Climate Change Response Strategy

of South Africa. CCS features as a flagship priority

programme of government and therefore it is vital

that accurate and detailed information is presented

to government to enable effective policy-making and

regulation setting.

In the past year, SANEDI has successfully initiated its

Pilot CO2 Carbon Storage Project or PCSP, which will

allow the member organisations and institutions that

comprise the SACCCS Board of Governors to determine

the impact the transportation and injection of carbon

dioxide will have on the environment. Critical to

this pilot project’s success will be buy-in from the

communities affected by such activity and SANEDI has

therefore established a comprehensive stakeholder

engagement plan to deal with civil society’s concerns

in this area.

Funding remains a major consideration in the design

of the pilot project and it is estimated that in excess

of R500 million will be required for this project.

South Africa has demonstrated its commitment to

this programme with a grant of over R200 million

over the current MTEF period. Using this as leverage,

the team in SACCCS has secured a major coup with

the announcement this year that the World Bank

has pledged $27 million to this programme. This is

a remarkable feat, given the nascent nature of the

industry and the technical barriers still to be overcome.

It is testament to South Africa’s commitment and the

confidence in the SACCCS team in SANEDI that this

grant has been secured.

In the coming year, SANEDI will focus on geotechnical

aspects, particularly securing the permits to conduct


exploration activities in specified areas, such as the

Zululand basin. In addition, the team will focus on

understanding the movement of carbon dioxide

through a natural reservoir, engaging with traditional

leaders and their communities and assisting

government in developing an appropriate regulatory

framework.

Incentivising Energy Efficiency in Industrial and

Commercial Sectors

National Treasury has promulgated regulations in

November 2013 that introduce a tax incentive for

companies in industry and the commercial sector

that wish to implement energy saving measures in

their plants or buildings. This is Section 12L of the

Income Tax Act and follows on the implementation of


Section 12I earlier. Section 12I focused on awarding a

tax allowance for companies that invested capital in

energy saving measures. The tax benefit is therefore

based on the associated capital expenditure. In the

case of Section 12L, the focus is on the actual energy

savings and the allowance is based on the kWh saved.

SANEDI has been appointed in terms of the regulation

as the body responsible for verification of the savings

made and for administering the entire application

process for Section 12L. This follows on the success of

the efforts on SANEDI’s part to administer the energy

component of the Section 12I tax allowance, on behalf

of the dti. SANEDI is mandated through its establishing

Act, the National Energy Act, 2008 (Act No. 34 of

2008), to undertake measures to implement energy

efficiency in the country. It is therefore appropriate

that SANEDI direct efforts designed to stimulate and

encourage energy saving, particularly among the large

power users in South Africa.

In the absence of an Eskom-led IDM programme,

Section 12L will form the basis for an incentive for

energy efficiency in the coming years. While Eskom

may well receive additional funding for EEDSM in the

future, a tax incentive will provide a clear market signal

to consumers and will allow for appropriate longer-

term planning and investment in energy efficiency.

With the assistance of the Deutche Gesellschaft

für Internationale Zusammenarbeit (GIZ) and the

University of Pretoria, SANEDI has put in place an

online application and administrative tool that is

assisting applicants in getting their projects registered

and reviewed, as per the mandate of SANEDI under

the current regulations. Several roadshows around

the country have been held thus far, in order to help

raise awareness of the initiative. Feedback to date

suggests positive support for the scheme, although

there are concerns regarding the quantum of the

allowance, which is currently 45 c/kWh before tax, and

the exclusion of renewable energy and cogeneration

from the scheme. SANEDI has incorporated these

concerns into a report to National Treasury and it was

with pleasure that we received news from the Minister

of Finance that he was increasing the tariff applicable

from 45 c/kWh to 95 c/kWh in the 2015/16 tax year. In

addition, cogeneration has now been included in the

list of applicable technologies and will be eligible for

inclusion as of the 2015/16 tax year. This is pleasing

indeed, as cogeneration offers shorter-term option

to providing capacity under the current electricity-

constrained conditions.

Energy Efficiency in the Household – reaching

consumers with state of the art solutions

The only drawback to the current Sections 12I and 12L

schemes are that they don’t cater for the residential

sector, where significant saving potential exists.

SANEDI has approached the large power users as well

as the banks to institute a programme aimed at making

essential energy efficient products available to either

home loan clients or employees of large power users.

SANEDI has undertaken to provide for a revolving

credit facility, subject to funds being made available,

as well as to source the energy efficient products on a

bulk discount basis. To date, the large power users that

comprise the Electricity Intensive Users Group have

expressed their full support for the initiative as has one

of the major banks in South Africa.

The banks will administer the funds and the repayment

of loans on behalf of SANEDI, which reduces the

resource requirements dramatically. In the course of

the year, SANEDI has also developed plans to introduce

efficient high mast lights in Soshanguve, near Pretoria,

in an effort to provide for more sustainable lighting

solutions in these communities. The project is set to

commence in the middle of the next financial year

and will see 840 high mast lights converted to higher

efficiency using an e-box solution from Europe. Plans

are already underfoot to initiate manufacturing of the

product in SA.



Closer to a Smart Grid solution in South Africa

SANEDI, through its affiliation to the International Smart

Grid Action Network (ISGAN), has been instrumental

in establishing a programme of action that will bring

us closer to upgrading our existing electricity network,

particularly the low voltage network under municipal

control. SANEDI has assisted in the establishment of

the South African Smart Grid Initiative (SASGI). This

initiative brings together the key stakeholders in

the electricity sector, such as AMEU, Eskom and the

electricity distribution entities in local government, to

create a single platform to deliberate on and chart a

way forward for the sector.

Through SASGI, SANEDI has been successful in

leveraging approximately R180 million from the EU

for the purposes of introducing smart grid technology

in several municipalities. The initial phase of this

project has now commenced and nine municipalities

are on board already. The initial focus has been on

smart meter technology and aligned to that, the back

office integration, tariffing and data management

associated with the meters. Already, several of these

municipalities have recorded an increase in revenue as

a result of the identification of previously unmetered

large consumers. The project is not only about

revenue management though. A smart grid involves

the integration of electricity, communication and ICT

technology to provide a more robust and customer

needs-driven solution.

We expect to announce more exciting results in this

area soon, as plans are underway to launch the second

phase of this project, again with possible support from

the EU.

Exciting developments in the Working for Energy

Programme

After a somewhat lengthy delay mainly due to

administrative issues in the Working for Energy

Programme, it is now well underway and several

notable projects are already nearing completion.

Partnering with the Fort Cox Agricultural College and

the University of Fort Hare, SANEDI has completed

demonstration projects in the Melani Village and the

College and has been able to successfully commence

construction of well over 100 biogas digesters in the

Nkonkobe District Municipality in the Eastern Cape.

Similar projects are underway in KwaZulu-Natal,

Limpopo and the North West Provinces. Demonstration

of cool surfaces technologies is also top of the agenda

since many of the facilities in low income communities

are without HVAC.



Aside from biogas digesters, SANEDI is also focused

on partnering with municipalities such as eThekwini

Metro to construct power plants that utilise sludge

from sewage, together with biomass, as feedstock for

electricity production.

Our long-standing relationship with Working for Water

has now culminated in the efforts to remove invasive

vegetation from farmlands in the Eastern Cape area

of Uitenhage. This vegetation, mainly in the form of

black wattle trees, will be used as feedstock for power

generation using South African-developed gasifier

technology.

Transformation and Empowerment in the workplace

As a responsible corporate citizen and a member of the

public sector, SANEDI is committed to a programme

of action that seeks to ensure employment equity is

realised in the workplace. During the course of the year,

our Chief Financial Officer was appointed. Ms Lethabo

Manamela, a Chartered Accountant, brings with her a

wealth of experience from the auditor-general. SANEDI

will continue to identify and recruit people with the

requisite skills that represent the demographics of the

country and support employment and gender equity

targets.

Currently within SANEDI there are 52 employees. The

breakdown by race and gender is as follows:

BLACKS COLOURED WHITE INDIANS

Fem

ales

Mal

es

Fem

ales

Mal

es

Fem

ales

Mal

es

Fem

ales

Mal

es

21 12 2 2 3 6 2 4


SANEDI prides itself on employing individuals of a high

calibre in terms of their qualifications and experience

and it is testament to the fact that an organisation

does not have to compromise the quality of its

service through adherence to an employment equity

programme.

Towards better corporate governance and sound

administration

SANEDI once again has produced an unqualified audit

report in terms of its financial management. There

has been a noticeable improvement in the quality of

service provided by the finance team as well as the

procurement and administrative support staff. It is

testament to their hard work and the support from the

technical staff that we are able to continue producing

pleasing results in terms of our external audit. There

is always room for improvement and in the coming

year, the focus will be on improving the quality of our

performance management system, ensuring that our

key performance indicatives are SMART (Strategic,

Measurable, Achievable, Realistic and Time-bound).

Overall though, the company has put in a strong

showing in terms of its performance, with over 72% of

its objectives met or exceeded.

Once again, this is due to the hard work of the entire

team at SANEDI and I would like to personally thank

and congratulate them on another sterling effort this

year.

Kadri Nassiep

Chief Executive Officer


Statement of responsibility and confirmation of the accuracy of the

annual report

To the best of my knowledge and belief, I confirm the

following:

All information and amounts disclosed in the

annual report is consistent with the annual financial

statements audited by the auditor-general.

The annual report is complete, accurate and is free

from any omissions.

The annual report has been prepared in accordance

with the guidelines on the annual report as issued by

National Treasury.

The Annual Financial Statements (Part D) have been

prepared in accordance with the standards applicable

to the public entity.

The Accounting Authority is responsible for the

preparation of the annual financial statements and for

the judgements made in this information.

The Accounting Authority is responsible for establishing

and implementing a system of internal control that

has been designed to provide reasonable assurance

as to the integrity and reliability of the performance

information, the human resources information and the

annual financial statements.

The external auditors are engaged to express

an independent opinion on the annual financial

statements.

In our opinion, the annual report fairly reflects the

operations, the performance information, the human

resources information and the financial affairs of the

public entity for the financial year ended 31 March

2015.

Yours faithfully

Kadri Nassiep

Chief Executive Officer

21 August 2015

Ms N Mlonzi

Chairperson of the Board

21 August 2015


Legislation

The National Energy Act, 2008 (Act No. 34 of 2008),

Section 7 (2) gave effect to SANEDI’s existence

and provides for its primary mandate and specific

responsibilities. The Act provides for SANEDI to

direct, monitor and conduct energy research and

development as well as undertake measures to

promote energy efficiency throughout the economy.

The business case that established SANEDI outlines

the purpose of the entity and incorporates a set of

key activities that SANEDI undertakes on behalf of

the state. As the energy landscape is a continually

evolving space, it is clear that additional activities and

responsibilities will be undertaken by SANEDI in line

with its legislative mandate. The underlying principle

remains the same, however, in that SANEDI plays a

catalytic role in the development of the energy sector,

without becoming a player and referee in a particular

sector. SANEDI is mindful of the various role players

that are active in the energy efficiency sector and

endeavours to create value in the area in which it

operates.

Strategic overview

Vision

To serve as a catalyst for sustainable energy innovation,

transformation and technology diffusion in support of

South Africa’s sustainable development that benefits

our nation.

Mission

Advance innovation of clean energy solutions and

rational energy use that effectively supports South

Africa’s national energy objectives and the transition

towards a sustainable, low carbon energy future.

Values

Innovation

Accountability

Transparency

Integrity

Professionalism

National interest

Batho Pele


Organisational structure

CHIEF EXECUTIVE OFFICER

Applied Energy Research

AdministrationEnergy

Efficiency

Clean Energy Solutions

Green Transport

Cleaner Fossil Fuels

Working for Energy

Smart Grids

Finance

Human Resources

Communications

Secretariat

Corporate Services

InformationTechnology

Knowledge Management


Auditor-general’s report: predetermined objectives

The report of the auditor-general on predetermined objectives is on page 79 to 83 of the annual report.

PART B:Performance Information


Strategic outcome orientated goals

SANEDI is expected to contribute to government’s twelve outcomes, which are based on government’s Medium-

Term Strategic Framework (MTSF) that clearly articulates the agenda of the government. SANEDI contributes to

the following three outcomes that the Minister of Energy has committed to:

STRATEGIC OUTCOMES PROGRAMMES STRATEGIC OBJECTIVES

All/Crosscutting 1. Corporate governance

and administration

• Corporate, executive, financial, information,

supply chain management, governance and

compliance support to the Institute

• Strong collaborative approach and strategic

international collaboration

Enable well informed

and high confidence

energy planning,

decision-making

and support policy

development

2. Applied energy research

and development

including subprogrammes

for:

• Cleaner Fossil Fuels

including Carbon Capture

and Storage

• Clean Energy Solutions

• Smart Grids

• Working for Energy

• Data and Knowledge

Management

• Green Transport

Programme

• Knowledge creation in support of policy

direction i.e. viable cleaner energy options• Knowledge creation in the energy mobility

and green transport sector in support of

policy direction

• Intelligent energy systems infrastructure

• Demonstrate cleaner energy technology

opportunities and solutions

Support accelerated

transformation to a

less energy and carbon

intensive economy

• Due custodianship of knowledge and data

developed within SANEDI

Foster a culture of

energy efficiency and

more rational energy

use

3. Energy Efficiency

programme

• Support the Income Tax Amendment Act

section 12I and 12L relating to the tax

rebate for energy efficiency improvements• Management of the EEDSM Hub and

oversight of the Hub to a CORD• Provide industry support and capacity-

building• Provide a national champion coordinating

service for all energy efficiency awareness

and promotion initiatives• Establish a national measurement and

verification centre


Performance information by programme

Applied energy research

Cleaner Fossil Fuel inputs

Notwithstanding the progress in the application

of energy efficiency measures and the roll-out of

renewable energies, fossil fuels remain the main form

of primary energy in South Africa. Until renewables/

nuclear comprise a more dominate role in energy

supply, it is imperative that cleaner use of fossil fuels is

undertaken. To this end, two major projects are being

undertaken, namely, Carbon Capture and Storage, and

matters pertaining to the production and use of shale

gas.

Carbon Capture and Storage (CCS)

Carbon Capture and Storage (CCS) is a technology

whereby carbon dioxide (CO2) is captured from an

industrial process, such as fossil fuel power generation,

and permanently and safely stored in a deep geological

formation. It is a transition technology between fossil

fuels and renewable/nuclear that has been shown to

work internationally. The objective of the South Africa

CCS programme is to ascertain whether or not such

technology can be safely applied in the country.

The major deliverable for CCS in SANEDI is the Pilot

CO2 Storage Project (PCSP) that involves the injection,

storage and monitoring of 10 000 to 50 000 tonnes of

CO2 in South African geology.

The PCSP aims to:

• Demonstrate safe and secure CO2 handling,

injection, storage and monitoring;

• Increase human and technical capacity and raise

the awareness of CCS; and

• Support government in its development of a CCS

legal and regulatory framework in South Africa.

The PCSP also involves the development of a research

programme at the Bongwana natural CO2 release to

build capacity in the area of CO2 monitoring.

2014/15 saw critical progress in the PCSP, particularly

in the areas of funding, monitoring, permitting

and stakeholder engagement. The funding work

theme saw World Bank approval of the first of two

project concept notes (PCNs) for the PCSP and the

endorsement of the second. The approval of the PCN

for the World Bank executed activities means that

these activities can now commence. Most important

of these is the procurement of the project design and

advisory services consultant who is scheduled to lead

the development of foundation documentation, the

finalisation of analysis of existing data, and the planning

for the geological investigation and site selection stage.

The endorsement of the second PCN means that the

World Bank can proceed with the recipient appraisal

of SANEDI and the PCSP division to ensure SANEDI’s

financial management, procurement, environmental

and social policies and procedures adhere to the World

Bank partner requirements. Successful completion of

the recipient appraisal will facilitate the transfer of the

balance of the World Bank funding to SANEDI.

With respect to PCSP permitting, an application for

permission to undertake the basin exploration and

site characterisation programme to determine an

appropriate site for the PCSP has been made to the

Department of Mineral Resources. Commencement of

that phase awaits an appropriate response.

The PCSP monitoring work theme saw progress

made on the scoping of a research programme at

the Bongwana natural CO2 release near Harding in

KwaZulu-Natal (KZN). This release presents the PCSP

division and South Africa with the opportunity to build

capacity and experience in monitoring processes and

with monitoring equipment directly relevant to the

PCSP.

The PCSP stakeholder engagement (SE) programme has

continued with consultations with national, provincial

and local governments, environmental NGOs and

organised labour, as well as science and education

centres. The stakeholder engagement activities

moved from a national level to the point where the

local municipalities of uMhlabuyalingana in KZN and


the Sundays River Valley in Eastern Cape are now being

engaged and familiarised with the PCSP. This progress

in engagement will then support the permitting

programme of the PCSP, which in 2014/15 commenced

the development of environmental management

plans, first in the Zululand basin and subsequently in

the Algoa basin, for the geological investigation and

site selection stage of the PCSP. The SE team was

afforded an opportunity to profile SANEDI/SACCCS

and the SE work internationally at the 2014 SaskPower

(symposium) conference and the 12th greenhouse gas

technology (GHGT) conference, whereby the SACCCS

SE lead as a panelist shared challenges faced by South

Africa in raising awareness on CCS. In preparation

for the PCSP Bongwana research programme,

consultations commenced with key stakeholders such

as the Mbizana local municipality (Eastern Cape) and

Ugu district municipality (KwaZulu-Natal) respectively.

The PCSP and the research programme at the Bongwana

natural CO2 release will also form the basis for SANEDI’s

CCS capacity building activities, developing skills at

student and professional levels that are relevant to

CCS as well as the extractive industry more generally

and any other industry requiring environmental

monitoring. The PCSP and the Bongwana programme

will also offer some training and study, and limited

employment opportunities to local communities living

adjacent to the projects.

Shale Gas

Shale gas has the potential to be a ‘game changer’

for energy supply in South Africa. Large potential

resources of shale gas, ease of handling and the

lesser environmental impact compared with coal are

numbered among the aspects that may be considered,

along with the associated challenges.

The SANEDI Shale Gas project was initiated to

assist the South African government to obtain an

independent assessment of the feasibility of shale

gas exploitation in the country. Important aspects of

the study are to develop scenarios on the matching of


supply with demand. The impacts of natural gas use

on greenhouse gas emissions are also being evaluated.

An investigation into the option of using pressurised

carbon dioxide for hydraulic fracturing instead of

water is underway and a risk assessment of shale

gas exploitation is planned. The impacts of shale gas

exploitation on water availability and the handling of

waste water is also an important part of the study.

The impact of shale gas on road use, existing industry

and farming as well as tourism and national parks is

being addressed, while national capacity-building with

regard to shale gas exploitation is part of the study.

During 2014/15, and following the approval of the

work plan by the Department of Energy, the project

got well underway and is due to be completed

during 2016/17. Preliminary results on the effects

of fuel switching from coal and crude oil to natural

gas use in various sectors of the economy have been

obtained. These effects include a substantial decrease

in the emissions of greenhouse gases, a reduction in

electricity use compared with the baseline, a reduction

of crude oil imports, and the need for a substantial gas

infrastructure pipeline network.

Figure 1: Example of bubbles of naturally released CO2 at Bongwana that will form the basis of the Bongwana natural CO2 release monitoring research programme. [Photo: B Beck]


Clean energy solutions

RECORD (Renewable Energy Centre of Research and

Development)

Current collaborative projects

1. Solar measuring station project – Solar MET project

(collaboration team: GIZ, SANEDI, DST, SU, NMMU,

SAWS, USTDA, Eskom)

• Installation/construction of solar MET stations

in specific locations in South Africa;

• Ultimate goal is to produce a verified ground

measurement solar map of the resource

available in SA;

• This will enable a levelling of the playing field

for potential solar installations; and

• The first version of this map based on

18 months of data is now available at http://

www.sauran.net.

2. Renewable energy testing, training and demo

facilities (collaboration teams: SANEDI, GIZ, CSIR,

TIA, Green Cape, CPUT, SU, NMMU)

• RECORD’s Centre for Solar Technology,

Development and Innovation (CSTDI) concept

has collaborative nodes spread across country

at centres of excellence viz, Stellenbosch

University (SU), Nelson Mandela Metropolitan

University (NMMU), University of North West

(UNW) and CSIR; and

• Centre for Energy Research (CER) at NMMU PV

testing and research facility is established and

commenced in 2014 with a three year PV yield

project.


Figure 2: DNI map of South Africa showing installed solar measuring stations; there is also one on Reunion Island.


• South African Renewable Energy Technology

Centre (SARETEC) at CPUT is under way on the

Bellville campus premises:


o Building is almost complete and is on

schedule for opening in May 2015. The

official launch date is 19 May subject

to the availability of the Minister of the

Department of Higher Education and

Training (DHET);

o The wind turbine technician and PV

technician curriculum development is

still in process, but, in the case of wind, is

nearing completion;

o Discussions have begun on the

development of a bio energy training

programme and curriculum;

o The 2015 project agreement contract

between SANEDI and CPUT/SARETEC is

in process. This will support three wind

technician student bursaries; and

o A further agreement which will channel

funds from GIZ and the Danish government

towards equipment transport, curriculum

development, training courses and

bursaries through RECORD, is expected

shortly.

Figure 3: Instruments at CER at NMMU, jointly funded by RECORD and GIZ, which record solar impact and performance data in order to model best cases for South Africa.

Figure 4: Site of SARETEC building construction in January 2015.


State of energy research study

The state of energy

research study, requested

by RECORD and funded

by GIZ, was launched on

21 May 2014. It focuses

on the state of energy

research in the country

with respect to current

areas, related funding,

needs and resources.

According to Professor Daya Reddy, president of the

Academy of Science of South Africa: “This report can

be regarded as an important baseline assessment that

can inform future energy research investment in South

Africa. Such an assessment should be conducted on a

regular basis to ensure that it is current and provides

information useful for decision-makers. Although

considerable effort has been expended in trying to

compile a comprehensive report, it must be recognised

that a status report of this nature is heavily dependent

on stakeholder participation to supply data. Hence it is

important to view this report as the first in a potential

series of such reports and an opportunity to place a

‘peg in the sand’.”

Figure 5: Delivery of the Nordex donated nacelle at the SARETEC premises on 2 July 2014.


SAIREC 2015 Conference

The South African International Renewable Energy

Conference showcases renewable energy on a global

scale and South Africa was honoured to win the bid to

host this year’s conference in Cape Town. It will take

place on 4-7 October 2015. RECORD serves on the

local organising committee, most subcommittees and

on the international advisory committee.

W2E platform launch



The Waste to Energy (W2E) research study was

completed in November 2014 and provided an

overview of current waste to energy research being

carried out at South African universities, universities

of technology and other research institutions. The

research identifies common themes and priorities,

as well as possible gaps not being covered by current

energy research. This review was then used in the

establishment of a waste to energy research platform

(W2EP) in December 2014, formed to look at priorities

in the research area that will be addressed to drive

W2E technologies from a research perspective.

RECORD RERE (Renewable Energy Research

Excellence) Award

This competition was again held in partnership with

the South African National Energy Association (SANEA).

These exciting awards recognise the contribution of

upcoming researchers and novel renewable energy

research in South Africa.

The award includes two categories of merit: up-

and-coming young researcher, and most promising

research leading to commercial application. RECORD

was pleased to present the RECORD RERE awards for

2014 on 14 August at the Maslow Hotel in Sandton.

RECORD/SANEDI is proud to acknowledge and reward

excellence in the renewable energy sector. The

RECORD RERE young researcher award 2014 is Karel

Malan PhD, a student at the University of Stellenbosch.

A commendation of excellence in this category was

awarded to Molelekoa Mosesane, a PhD student at

the Tshwane University of Technology. The RECORD

RERE commercial application award 2014 is EcoVest

Holdings, which was represented by Christiaan

Taljaard.

Figure 7: Winners of the RECORD RERE commercial application award 2014: (left to right) Dr Karen Surridge-Talbot, Dr Thembakazi Mali, Mr Christiaan Taljaard and Ms Marlett Balmer.

Figure 6: Winners of the RECORD RERE young researcher award 2014: (left to right) Dr Karen Surridge-Talbot, Mr Molelekoa Mosesane, Dr Thembakazi Mali, Mr Karel Malan and Ms Marlett Balmer.


The RECORD calendar competition

Energy security is paramount in South Africa in order

to accommodate a growing economy and sustainable

future. Due to the finite nature of fossil fuel reserves

and excellent renewable energy resources, South

Africa has forged ahead with tapping into this

environmentally friendly energy source of the future.

The South African government launched the highly

acclaimed REIPPPP programme in 2011, which

was hailed as global success story. To celebrate the

great achievements towards an environmentally

friendly future, RECORD/SANEDI and GIZ launched a

photography competition. The competition called on

amateur and professional photographers to submit

works interpreting the theme “REnergy for a green

future”.

The Renewal Energy and Energy Efficiency

Partnership (REEEP)

SANEDI has hosted the regional secretariat of the

Renewable Energy and Energy Efficiency Partnership

(REEEP) for Southern Africa since 2009. REEEP is an

international non-profit organisation that advances

markets for clean energy in developing countries,

in which scale and replication is built by connecting

funding to projects, practice to knowledge and

knowledge to policy. REEEP uses donor funding to

support a portfolio of high potential ventures that


create energy access and combat climate change,

often attracting private finance. REEEP monitors

and evaluates projects within their policy, financial

and commercial environments to gain insight into

opportunities and barriers. By continuously feeding

this knowledge back into the projects and programmes’

portfolio, as well as the policy framework, REEEP seeks

to grow markets for clean energy.

REEEP has been advancing clean energy in southern

Africa since the first projects in the region were

launched in July 2005. Since then, REEEP, through its

regional and international secretariats, has supported

22 and 20 projects in South Africa and southern Africa

respectively, and helped shape the region’s clean

energy progress over the decade.

Knowledge is power

For any country seeking to become sustainable

through the application of renewable energy and

energy efficiency, one of the initial hurdles for the

development and application of sound policy and

regulation is to have an accurate understanding of

the opportunities and constraints involved. In order

to assist in the overcoming of this hurdle, REEEP has

driven the development of various financial models and

risk mitigation strategies for projects such as energy

upgrades in low-income housing. REEEP continues

to play a critical role in knowledge management and

information collection, dissemination and sharing in

the region.

This function allows the region to use data as part of

energy development in policy formulation, research

and development, monitoring and evaluation, as well

as more practical implementation of renewable energy

and energy efficiency hardware. REEEP works closely

with the Southern African Development Community

(SADC) energy thematic group, Southern Africa

Power Pool (SAPP) and many other organisations

and committees in supporting energy development

and initiatives and their progress in the sector. REEEP

supports and promotes the engagement of industry,

civil society and all levels of government to transfer



knowledge of industry best practices and raise

awareness of the benefits of clean energy. By making

useable data and information, solid business models,

and numerous examples of success stories available,

REEEP has demonstrated that change in the energy

sector is possible.

Building a foundation

Being able to pinpoint opportunities attracts further

investment and enables market growth for clean

energy. REEEP-funded gold standard workshops

have also helped market development and project

launches, with certification enabling the sale of carbon

credits and offsetting – key financial schemes for some

clean energy business models. REEEP has also worked

closely with municipal and provincial governments

to help move a legal framework forward to promote

large-scale rollout of solar water heaters and map out

the road to national legislation.

Moving forward

REEEP recognises the importance of building local

capacity to ensure the sustainability and replication

of clean energy markets in southern Africa. REEEP

is currently involved in a number of focal areas and

projects, including one exploring community-driven

energy service delivery, aiming to catalyse long-term

support from municipalities and investors and improve

local knowledge of the potential of sustainable

distributed energy markets. Focal areas in the region

currently include the food-energy-water nexus,

quantifying the benefits of access to renewable energy

and clean energy in buildings. Each of these initiatives

has not only been a step in the right direction for the

environment, but also for job creation and poverty

alleviation.

Focal area: Energy efficient buildings: 1 billion m2

REEEP presented its initiative for positive energy

buildings, “1 billion m2” at the May 2013 EE Global

conference. The effort, in collaboration with the

Global Buildings Performance Network (GBPN), strives

to bring about the creation of 1 billion square meters

of positive energy buildings — buildings that produce

more energy than they consume — by 2023.

In 2013/14 the 1 billion m2 effort focused on South

Africa and China, two critical areas for urban-built

environment growth over the next decade. REEEP

brought the initiative to South Africa, which faces

unique challenges in the buildings sector, primarily in

low-income housing. In March, REEEP co-hosted the

first of a series of high-level working groups on energy

efficiency in the housing sector together with SANEDI.

Over 30 delegates, from key international and local

hubs, including government representatives, scientists

and researchers, financiers and foundation leaders,

international organisations and the private sector,

among others, took part in the working group.

Figure 8: Energy Efficiency in the household sector: REEEP hosted its second EE workshop in Cape Town with a focus on how to overcome financial and regulatory challenges in implementing EE across various household types.


SolarTurtle

SANEDI is a proud sponsor of the prototype SolarTurtle

- a renewable energy micro-utility project for rural

electrification. The SolarTurtle functions as an

electricity distribution point, neatly packaged in a theft

resistant shipping container. The shipping container is

fitted with a solar battery charging station, which can

charge multiple battery packs of different sizes during

the day. Micro-grid capabilities are also possible for

surrounding businesses and institutes. This small

power station is assembled off-site then transported

to an off-grid community where it provides an easily

accessible source of electricity to the local community.

The SolarTurtle prototype project started in July

2014 and the PV system installation was completed

in March 2015. A standard 6m container has been

converted into a functional solar powered micro-utility

(Figure 1). The outside of the container boasts an array

of twelve 300Wp solar panels totalling 3.6kW (Figure

3). These panels are mounted on a unique panel

deployment system that is both robust and secure.

The inside of the container holds a 5kW SMA solar

PV system, and a solar battery charging station that

can recharge multiple battery packs at once (Figure

4). These bottled battery packs are carried home to

provide basic electricity for lighting, phone charging

and other energy efficient devices. The solar battery

charging station has been tested and the system

operates satisfactory.

The next step is to deploy the SolarTurtle in rural

communities in the Eastern Cape in the next few

months. At full capacity, the SolarTurtle is expected

to provide basic electricity for around 300 households

plus one or two institutions. The idea is to find a school

in an off-grid community next to which the SolarTurtle

can be deployed. This would allow the school to feed

electricity directly from the SolarTurtle. Schools also

make a natural distribution point. In the morning

learners can bring discharged batteries packs from

their area to school for recharging. After school the

recharged batteries can be returned home with them.

For their efforts the learners will earn a delivery fee. A

female entrepreneur will be approached and trained

to operate the SolarTurtle. She will be responsible for

deploying the solar panels every morning, recharging

the batteries and managing sales of electricity and

energy efficient devices, amongst others.

The SolarTurtle has already received a lot of attention. In

February 2014 the project was proclaimed as a climate

solver by the WWF1. Established by WWF Sweden in

2008, the climate solver platform is an international

platform that displays the best technologies to reduce

carbon emissions and support energy access while

creating awareness of the value of innovation as a tool

to tackle climate change.

The SolarTurtle was also a finalist in the better living

challenge (BLC) in October 2014. The BLC is a call to

designers and innovators, manufacturers and retailers,

students and professionals, self-taught designers,

tradesmen, architects and engineers to develop home

improvement solutions that support a better quality of

life for all. Over the course of two weeks hundreds of

people came to see the SolarTurtle and the response

was overwhelmingly positive. While the SolarTurtle

did not win the overall prize, it was voted as one of the

best projects by the public2. This is very encouraging

as it shows that the public finds the SolarTurtle both

novel and useful and can make a difference to their

lives.

In December 2014 the SolarTurtle was named a 110%

green flagship by the Western Cape government3. A

flagship is an organisation that has made more than

the usual commitment towards the green economy.

The SolarTurtle is proud to be associated with this

initiative.

1 http://www.wwf.org.za/?10381/wwf-sa-awards-recognise-climate-innovations

2 http://www.betterlivingchallenge.co.za/community-public-vote-awards-go/

3 https://www.westerncape.gov.za/110green/flagships/list/Q%2CR%2CS%2CT



This year the SolarTurtle has been invited to the

WWF’s renewable energy festival hosted at Green

Point Stadium on 28 March. The event aims to educate

the public about the benefits of renewable energy,

the accessibility of alternative energy sources and

will also focus on offering solutions to South Africa’s

unemployment, energy and climate crises. The event

will serve as the unveiling of the completed SolarTurtle

before it heads to the rural Eastern Cape.

In short, the SolarTurtle is a social business linked to

a renewable energy micro-franchise model. Women

in communities take ownership of these solar

franchise businesses to provide a fast and sustainable

electrification solution. The technology can reduce

the use of kerosene, which is a primary energy source

in many rural communities, while increasing access

to cheaper, cleaner, safer energy for longer periods.

The first prototype has been built and will soon be

deployed in a rural community as a proof of concept.

Once this prototype has been tested it is expected that

many more of these SolarTurtles will be dotting the

rural landscape of South-Africa, thereby giving power

to the people.


Figure 9: SolarTurtle with its solar panels folded away for extra security and easy transport.

Figure 10: Two large side-frames unlock and unfold to reveal the solar panels hidden behind.

Figure 11: Once the two side frames are open gas struts lift all the panels up and lock into place.


Figure 12: Inside the container is a solar battery charging station that can recharge multiple Khaya Power4 bottled battery packs.

Smart Grids programme

4 www.khayapower.co.za


Figure 13: Unveiling of the SolarTurtle at the WWF Renewable

Energy Festival on 28 March 2015.

Background

It is undeniable that South Africa’s economy is coal

intensive. The distribution of electricity is represented

by a market disequilibrium which is constituted by a

high demand-side coupled with a constricted supply

in power generation. South Africa remains one of the

leading contributor to CO2 emissions. As such, in order

to achieve a low carbon future, economic strategic

planning needs to critically assess environmental

impacts along with sustainability in terms of the long-

term use of coal.

In the South African context, infrastructure is the

central nerve and a high level priority in ensuring a

secure and stable supply of electricity. However, the

ineffectual support of asset management is adversely

conditioned by two symptomatic challenges:

• The acquisition of adequate investment; and

• The consistent maintenance of infrastructure and

valuable assets.

To this end, aging power plants are pushed beyond

their capacity to support a rapidly evolving economy,

an increasing population and changing consumer

needs. Due to imperfect market conditions, state-

owned entity Eskom is faced with a situation of dealing

with a “market failure” in securing an adequate supply

of electricity. The financial implications are that the

costs outweigh the benefits based on the analysis of

economic values.

Strategic initiatives and technological advancements

are needed to modernise the electrical system by

urgently addressing the viability of an electrical utility

in the following ways:

• Revenue management;

• Non-technical and technical losses;

• Effective resource deployment;

• Supply quality, availability and reliability; and

• Customer base and promotion of customer choice.

The International Energy Agency (IEA) states that by

2030 energy demands will have increased by 45%. This

means an even greater dependency for developing

countries such as South Africa, where the adequate

and stable supply of electricity is a national crisis. A

sustainable energy supply is a critical component in

economic growth and development. The development

of clean energy strategies and technological

advancements are needed to change the status quo

in the quality of power, the security and efficiency of

energy and minimum cost to maximum benefit output.



Understanding the “smart” in smart grids

The effective deployment of technology in the

electricity supply industry (ESI) is recognised worldwide

as a key business enabler. The implementation of

appropriate technology contributes, amongst others,

to improved customer service, improved business

efficiency and improved business sustainability. The

desirability of a smart grid project is steadily gaining

attention in South Africa. As a result, the attractiveness

of this technology is attracting much interest in respect

of the benefits it produces. Smart grid is an essential

transformative network that facilitates the efficiency

of energy and integration of renewable energy to meet

the energy demand of various consumers.

What is a smart grid?

The definition articulated by the European Technology

Platform Smart Grid (ETPSG) has been incorporated

into the South African Smart Gird Initiative (SASGI)

documentation framework for smart grids. They define

a smart grid as follows:

“A smart grid is an electricity network that can

intelligently integrate the actions of all users connected

to it - generators, consumers and those that do both –

in order to efficiently deliver sustainable, economic and

secure supplies.”

Based on the ETPSG definition, smart grid employs

innovative products and services together with

intelligent monitoring, control, communication, and

self-healing technologies to:

• Better facilitate and manage the connection and

operation of all sources of energy;

• Give consumers more choice so they can optimise

energy use;

• Provide consumers with greater information and

choice of supply;

• Significantly reduce the environmental impact of

the whole electricity supply system; and

• Deliver enhanced levels of reliability and security

of supply.

The shift towards implementing a smart grid strategy in

South Africa is intended to fast track the development

of an adequate electricity supply system or network

for two basic reasons, namely the improvement and

upgrade of the “business as usual” (BUA) grid, and

the outcome of substantial benefits that come with

establishing a smart grid. For much that has been

gathered, the value application of a smart grid has

benefits in the following key areas:

• Efficiency: By reducing the cost and improving

the manner in which electricity is produced,

distributed and consumed, greater efficiency will

result.

• Economics: Electricity is an essential commodity

for the economy. Smart grids render their

deliverables on a broader scale of benefits.

In comparison with the BUA grid, consumers

will benefit from prices being kept down, jobs

being created, and positive returns on the gross

domestic product (GDP).

• Reliability: By lessening the occurrence of

power cuts and the disadvantage of widespread

load shedding, the electricity supply will be

more reliable. Smart grids will also contribute

towards minimising the costs of interruption and

disturbances to the quality of power.

• Security: Greater security will be possible

through reducing risks caused, for example, by

theft or negligence.

• Environmental: Integrating renewable energy

into the grid will significantly improve the

generation, transmission and consumption of

electricity which will also constitute a reduction

in CO2 emissions in comparison to the BUA grid.

• Safety: There will be a reduction of injuries and

fatalities related to the grid.

Shaping the face of smart grids in South Africa

SANEDI’s Smart Grid programme aligns with the

strategic objectives of the Department of Energy

(Electricity Chief Directorate) and is focused on the

introduction of the various concepts of smart grids

in the South African electricity distribution industry



(EDI). A business plan was developed for rolling out

this programme, which builds into the DoE’s policy

development in the following areas:

• Distributed generation;

• Municipality revenue enhancement;

• Energy efficiency demand side management; and

• Asset management.

SANEDI’s Smart Grid team leading the South African

Smart Grids Initiative

Industry and stakeholder cooperation is regarded

as holding the key to the effective deployment of

technology. To this end, the South African Smart Grid

Initiative (SASGI) was established in 2012. SASGI is

an industry forum established under the guidance of

SANEDI and chaired by the Department of Energy. The

main objectives of SASGI are to facilitate cooperation,

to contribute to policy formulation, to provide

guidance in the establishment of standards, to identify

technology functionality, and to provide leadership in

the deployment of appropriate technology.

The following are the achievements of SASGI to date:

• Smart grids vision for South Africa (vision

document);

• Workgroups that provide technical support to the

Smart Grids team;

• Highly technically-competent members serving as

subject matter experts; and

• Easy access to local case studies.

SASGI’s role comprises a number of activities which

include coordinating and facilitating the smart

grid vision for South Africa. It also coordinates and

integrates issues relating to smart grids which emerge

within the electricity supply industry. It plays a role

in respect of evaluating options pertaining to grid

intelligence. Consideration is also given to the design

and implementation of smart grid demonstration

pilots and evaluation of results and lessons learnt.

Work groups are also co-opted intermittently and

subject matter experts are called on as and when

the need arises. SASGI also evaluates and makes

recommendations for adopting grid modernisation

and intelligence, thereby promoting smart grids. It

may have a role to play in engaging organised labour,

depending on the need and discussion issues at hand.

It plays a role in the assessment of smart grid

developments which are unfolding in the South African

electricity supply industry (ESI), focussing especially

on technology deployment, setting of standards

and specifications, and identifying local smart grid

enablers.

The South African smart grid vision statement is as

follows;

An economically evolved, technology enabled,

electricity system that is intelligent, interactive,

flexible and efficient and will enable South Africa’s

energy use to be sustainable for future generations.

Governance structure

The governance structure of SASGI is illustrated in

the figure below. SASGI has three focus areas: policy

formulation, technology and standards formulation,

and applied research.

The three focus areas are supported by higher learning

institutions, research and development institutions,

subject matter experts, solution architects, engineering

bodies, product developers, consultants and electricity

retailers.



South Africans membership of the International

Smart Grid Action Network (ISGAN)

South Africa, represented by SANEDI, has been

accepted as a full member of the International

Smart Grid Action Network (ISGAN). As a member

of ISGAN, the aim is to promote the requirements

of South Africa and to leverage the international

experience to the benefit of the local ESI. Through

the SANEDI interventions and SASGI guidance the ESI,

and in particular the distribution sector, was able to

embark, amongst others, on a technology investment

optimisation approach.

In April 2011, ISGAN was formally established as

the IEA implementing agreement for a cooperative

programme on smart grids (ISGAN), operating under

the IEA framework for international energy technology

co-operation. Participation in ISGAN is voluntary, and

currently includes Australia, Austria, Belgium, Canada,

China, Denmark, the European Commission, Finland,

France, Germany, India, Ireland, Italy, Japan, Korea,

Mexico, Norway, the Netherlands, Russia, Singapore,

Spain, South Africa, Sweden, Switzerland, and the

United States (25 countries).

Figure 14: SASGI Governance Structure.

ISGAN is organised as the IIEA implementing

agreement for cooperative programme on smart grids.

The institution is managed by its executive committee

(exco). It is supported by a secretariat which is based at

the Korea Smart Grid Institute.

The ISGAN community includes representatives of

governments, transmission and distribution system

operators, national laboratories and research

institutions, power generators and more. Projects are

largely task shared through participation of in-kind

contributions, although it does have a common fund

for certain joint expenses at its secretariat.

The role of ISGAN

ISGAN is a mechanism for bringing high level

government attention and action to accelerate the

development and deployment of smarter electricity

grids around the world and is responsible for the

following:

• Sponsoring activities which build a global

understanding of smart grids, address gaps in

knowledge and tools, and accelerate smart grid

deployment;



• Building on the momentum of and knowledge

created by the substantial global investments

being made in smart grids;

• Fulfilling a key recommendation in the smart grid

technology action plan released by the major

economies forum global partnership in 2009; and

• Leveraging cooperation with other initiatives and

implementing agreements.

ISGAN is organised as a task shared IEA Implementing

Agreement (2011) and was launched as an initiative of

the clean energy ministerial in 2010.

ISGAN objectives

These objectives and the associated scope of activities

are described in the ISGAN Annex 1 programme of

work, issue 3.1 (revised August 2012).

• ISGAN facilitates dynamic knowledge sharing,

technical assistance, and project coordination,

where appropriate;

• ISGAN participants report periodically on progress

and projects to the ministers of the clean energy

ministerial, in addition to satisfying all IEA

implementing agreement reporting requirements;

• Consistent with the IEA framework for

international energy technology cooperation,

ISGAN is open to governments of IEA member as

well as non-member countries, on invitation of the

ISGAN executive committee;

• Though the primary focus is on government-to-

government cooperation, ISGAN is also open to

entities designated by participating governments,

and select private sector and industry associations

and international organisations;

• To work as efficiently as possible, ISGAN will strive

to establish collaboration strong cooperative ties

with existing smart grid organisations;

• ISGAN recognises that robust, reliable, and

smart electric grids play a key role in enabling

greenhouse gas (GHG) emission reductions

through the management of electricity demand,

integration of growing supplies of both utility-

scale and distributed, small-scale renewable

energy systems, accommodation of an increasing

number of electric and plug-in hybrid electric

vehicles, improvement of operational efficiency,

and application of energy efficient technologies to

their full potential.

Our projects

European Donor Funded Smart Grids Programme

The European Union (EU) made available a seed funding

of R179.4 million to National Treasury over a two-

year period which was intended to accelerate South

Africa’s journey toward achieving a smarter grid. This

programme was formally initiated in September 2014

with the revised end date being June 2016. It involves

two phases which run in parallel: first, the Smart Grid

Maturity Model (SGMM) survey and second, the Smart

Grid demonstration pilot.

The Department of Energy has identified four areas

within the EDI that require policy and regulatory input.

These four areas have resulted in the selection of nine

municipalities to participate in projects that are aimed

at addressing issues within the municipality and to

provide policy and regulatory input.

The Electricity Chief Directorate and the Smart Grids

team strategically want the projects to not only provide

input to national policy and regulation for the industry

but to develop a guide on how to deploy various smart

grid technologies, business case and lessons learned

reports.



The table below illustrate the priority areas, projects and participating municipalities:

DoE Priorities Smart grid projects Participating municipalitiesDistributed Generation Active Network Management eThekwini

Monitoring and Evaluation of IPPs DoE implemented

Revenue enhancement Revenue enhancement Nala

Naledi

Govan Mbeki

Thabazimbi

Mogale City Advanced metering infrastructure in

residential and commercial customer base

City Power

Asset management Advanced Asset Management Msunduzi

Nelson Mandela BayEnergy Efficiency Demand Side

Management

Energy efficiency in Public buildings DoE Implemented

Table 1: Priorities, projects and municipalities

The Smart Grid Maturity Model Assessment is the

second part of the project done in parallel with the

demonstration projects. It is done to assess the

electricity network and organisational status of a utility.

This complements the demonstration projects as it

addresses root cause issues and provides a strategic

direction for the municipality in the long term.

Smart Grid Maturity Model (SGMM) Assessment

SGMM methodology

The Smart Grid Maturity Model (SGMM) was developed

by a collective of electricity distributors (utilities) and is

maintained by Carnegie Mellon Software Engineering

Institute (SEI). The model provides a management tool

using a common language and framework for defining

key elements of smart grid transformation, and helps

utilities to apply a programmatic approach in tracking

progress during the smart grid journey. The model also

enables utilities to plan, prioritise options and measure

progress during implementation.

An SEI certified navigator is assigned to assess the

smart grid maturity and required framework needed

to improve the status of the utility. The SGMM

methodology provided below in figure 1 illustrates the

seven steps which are required to achieve a smart grid

journey.

The smart grid journey comprises a number of

successive implementation steps:

• Formulating a smart grid vision which sets the

course for the smart grid journey;

• Conducting an “as is analysis” to determine the

utility’s current organisational and electricity

network status;

• Performing a gap analysis to assess what

corrective measures need to be taken to improve

the utility’s smart grid maturity status;

• Developing a smart grid strategy and roadmap

with key stakeholders in the utility who hold

various responsibilities in the electricity

distribution network value chain;



• Preparing a business case and value proposition

to implement the strategy and roadmap;

• Mapping out the required functionalities to

support the vision and strategy roll out; and

• Formulating implementation guidelines which

ensure the successful smart grid journey.

The entire SGMM methodology is mapped out below in figure 14.

Figure 15: Smart Grid Road Map (diagram from SEI).

The SGMM survey comprises the following:

• Sections 1 and 2 capture contact information for

the responding utility and the person completing

the survey;

• Section 3 collects key data about the responding

organisation and will be used to normalise survey

data and help to generate meaningful comparative

data for users;

• Section 4 collects grid performance data that is

used to correlate the impact of increasing smart

grid maturity with overall grid performance; and

Sections 5-12 present multiple choice questions

organised by SGMM domain that address each

expected characteristic in the model.

The survey evaluates each utility in a two by two

matrix format, comprising eight domains along the

X axis (as illustrated in Figure 15), and five maturity

levels along the Y axis (as shown in Figure 15). There

are over 175 questions in the SGMM survey, each

grouped under different domains and measured along

the five maturity levels. Some questions are repeated

in different domains in order to test the robustness of

previous questions appraised.



Figure 16: SGMM domains (diagram from SEI).

Figure 17: Maturity Levels (diagram from SEI).



Projects in detail

All projects within the EU Donor funded Smart Grid

programme have the following in common: they have

been divided into seven phases, with approval of

deliverables that close out each phase. In completing

each of the seven phases, funding is broken down into

percentages to ensure that the allocated funds are

optimally used by the municipalities.

Implementation Deliverables Detail

1. Initiation phase Annexure A High-level scope of wor2. Analysis phase Annexure B Detailed scope of work, design and baseline assessment3. Design phase

4. Procurement phase Procurement report Details of all procurement of goods and services carried

out by municipality5. Implementation phase Implementation report Service level agreements, change control measures and

certificate of completion are documented6. Integration phase Integration report Change management strategy, capacity development

and skill transfer programme are documented7. Policy

recommendations and

lessons learned

Business case

How to guide

Project close-out

report

Business cases and how to guides for all four priority

areas are developed. A project close-out report closes

individual projects.

Table 2: Table of project phases and deliverables

Active Network Management Project (one

municipality)

The Active Network Management of small scale

embedded generation onto the distribution grid and

the implementation of an Advanced Distribution

Management System (ADMS).

Ethekwini is tasked with this project, as they have

relatively a good control of their grid. The objective of

this project is to document the systems and process

required by utilities to manage small scale embedded

generators within their grid. Ethekwini has already

identified that there is a growing number of residential

customers and small businesses that have started

putting up PV roof top panels. Ethekweni completed

a full SGMM survey in 2014 and have gone through

the entire methodology. They have a draft smart

grid vision document and are presently realigning

various business units in the electricity department

to this vision. There are seven phases in this project

and Ethekwini is presently is the third phase (project

design).

Advanced metering infrastructure in residential

and commercial customer base project (one

municipality)

The advanced metering infrastructure (AMI) in

residential and commercial customer base project

focuses on piloting the systems and processes to:

• Dispense free basic electricity (FBE) to 1 000

indigent customers;

• Implement inclining block tariff (IBT) with the

selected indigent customers;

• Implement a time of use (TOU) tariff in both

customer bases.



City Power, on behalf of the City of Johannesburg, is

the participating utility. The objectives of this project

are far reaching. We have indigent customers within

the boundaries of every municipality, and it is thus

very important that free basic electricity is provided to

them through an efficient and reliable system. In order

for NERSA to provide for cross-subsidies for low income

domestic customers as required by the electricity

pricing policy (EPP1) the IBT has been introduced.

The initiation of the TOU tariff is a very important

element of the use and pricing of electricity in South

African municipalities. Customers are charged different

prices according to when the electricity is used. The

TOU tariff will significantly reduce the demand for

electricity in peak periods. The Smart Grids team

intends to document the benefits and savings of this

approach, and ultimately make it available to every

municipality in South Africa.

City Power has completed the SGMM assessment, and

is presently in the project design phase.

Advanced asset management project (two

municipalities)

The advanced asset management (AAM) project

originates from the DoE’s Electricity Chief Directorate,

and is intended to address the maintenance and

refurbishment backlogs in the distribution grid of

municipalities. The smart grids concept addresses

maintenance and refurbishment in a very advanced

way. Sensors and intelligent devices are installed

across assets such as transformers, substation, circuit

breakers and more. These field devices generate data

that is integrated into a back-office for data analytics.

Management and technical staffs can take informed

decisions based on what the data analytics provide.

The scope of the AAM project at Nelson Mandela

Bay is to focus on critical grid assets. The sensors

and intelligent devices are used to monitor, analyse

and report. These reports then inform scheduling of

maintenance and refurbishment of critical assets.

Workforce management is also automated with a

better control of the municipal grid.

Nelson Mandala Bay has concluded the SGMM

assessment and has also concluded three phases of

the demonstration project. The municipality is in the

fourth phase of the programme.

Revenue enhancement project (five municipalities)

The revenue enhancement projects are focused

on using advanced metering infrastructure/smart

grids concepts to address revenue challenges in

municipalities.

Municipalities have immense problems when it comes

to revenue collection. They lack proper management

processes and technical capabilities to effectively

manage the distribution of electricity. In order to

address the technical part, an advanced metering

infrastructure is required. The Smart Grids team plays

the role of introducing new management processes to

the municipalities and the supervision of every detail

of the project implementation phase.

The objectives of this project are to give municipalities

the technical ability to manage their customer bases

effectively, thereby reducing technical and non-

technical losses. As a result, revenue collection will be

improved and remain sustainable over time.

Five municipalities are participating and currently

concluding the project design phase.

Conclusion

Ultimately, there are four deliverables to be achieved

by the implementation of the EU donor funded Smart

Grids programme. These deliverables become the

basis and foundation on which future projects in this

space are determined.



The four deliverables are:

• Policy and regulatory recommendations

derived from the projects. The intent of

initiating smart grids projects through the

participating municipalities is to present a

policy recommendation that is applicable and

appropriate to South African conditions;

• How to guides on the various types of Smart

Grids components deployed. The essence of the

how to guide is to have a standardised blueprint

that provides a step-by-step approach to what

a smart grid is and how to implement it. The

purpose of this guide is to facilitate the successful

implementation of smart grids projects;

• Business cases outlining the benefit against cost.

The development of business cases will provide

a detailed outline of the viability of initiating a

smart grids project. Business cases will provide

a comprehensive account of the cost-benefit

analysis of implementing a smart grids project.

The effectiveness of this document is to inform

decision makers in their course of action; and

• Lessons learned from projects and shared

with industry. The knowledge base is an

important factor of the success of the smart

grids programme as such lessons will equip all

stakeholders to make informed decisions based

on the outcomes of their reports and what past

experiences have taught them.

Continuous efforts of the Smart Grids programme

Rooftop photovoltaic workshop

On 23-24 March 2015, a two-day global forum on the

outlook of distributed solar power in South Africa was

hosted at the Eskom Academy of Learning in Midrand,

Johannesburg. The forum was co-hosted by the

Department of Energy (DoE), South African National

Energy Development Institute (SANEDI), National

Energy Regulator of South Africa (NERSA), Eskom Clean

Energy Regulators Initiative, 21st Power Partnership,

International Smart Grid Action Network (ISGAN), and

the Global Smart Grid Federation (GSGF). This two-day

global forum focused on two goals:

• To share international experience and lessons

in sustainable PV integration with South African

stakeholders; and

• To facilitate an exchange of stakeholder

viewpoints regarding the technical, regulatory

and institutional implications of solar PV for South

African consumers, developers, utilities, and

others.

Over 200 delegates attended the forum and the

programme comprised the key themes:

• Setting the scene;

• Regulatory and utility business model frameworks

for solar photovoltaics;

• International perspective; and

• Experiences in integrating rooftop photovoltaics

on distribution networks with active distribution

network management.

Setting the Scene

Mr Kadri Nassiep (CEO of SANEDI) provided an

overview of the programme for the global forum on

unleashing rooftop photovoltaics in South Africa.

Regulatory and utility business model frameworks for

solar photovoltaics

The regulatory framework is the central set of

guidelines governing small scale renewable electricity

generation (SSREG) interconnection – spanning all

financial, procedural and technical aspects of the

programme – to facilitate controlled and standardised

deployment of distributed renewable generation.

Guided by the SSREG regulatory framework, utility

business models must begin shifting to maintain long-

term financial viability. This session focused on topics

at the nexus of regulatory and business models for



distributed generation, and how approaches must

evolve to capture SSREG opportunities while mitigating

potential adverse impacts.

International perspective

A diverse range of international experiences were

presented, eg Spain (feed in tariff (FIT)), Germany (FIT),

Thailand (FIT Adder), the United States of America

(full retail rate net energy metering (NEM) and shift

toward unbundling), Cape Town City Electricity (rate

unbundling and avoided cost), Tamil Nadu (NEM),

Australia (NFIT at higher-than-retail-rate). Lessons

learned will be synthesised and key regulatory

principles for SSREG tariff design were enumerated.

Experiences in integrating rooftop photovoltaics

on distribution networks with active distribution

network management

Active distribution network management (ADNM)

brings together a range of advanced energy,

communications and control technologies to allow

more efficient, dynamic operation of electricity

distribution grids, thereby providing a foundation for

increasing amounts of distribution generation to be

effectively integrated into power systems.

The transition to ADNM, and in particular ADNM to

support rooftop PV (RTPV) integration, entails a host

of technical, institutional, policy and regulatory shifts

across the power sector, requiring holistic approaches

and governing frameworks that bridge the areas of

power engineering, information and communications

technology, utility business practices, electricity

consumer engagement, and more.

Global forum wrap-up

Some of the more pressing challenges include the

significant infrastructure investment backlogs which is

in the order of R35 billion and growing. The impending

significant tariff increases in the country will have

a huge impact on consumers. Efforts to place the

customer at the centre remain a serious challenge.

As a way forward, we must learn from both international

and local experiences shared on various platforms

that South Africa is party to. Grid modernisation is a

journey and not a once off event. South Africa must not

reinvent the wheel but must take advantage of ongoing

collaboration and relationships with institutions such

as ISGAN, GSGF, and SASGI among others. We must

constantly seek to align strategically to established

bodies like DoE, SANEDI, SABS, CSIR, NERSA and Eskom

to vigorously drive the technology journey.


Working for Energy Programme

The Working for Energy (WfE) Programme is a

multi-year renewable energy programme under the

environment and culture sector of the Expanded Public

Works Programme (EPWP). It is aimed at delivering

clean energy solutions to rural and urban low income

communities through labour intensive methods where

possible, with special emphasis on youth, women and

people with disabilities.

WfE is in its sixth year and has gained traction with

the roll out of its project pipeline in KwaZulu-Natal,

Limpopo, Gauteng, Eastern Cape and the Northern

Cape and the North West. The programme has four

components, namely, Energy Research, Renewable

Energy, Energy Saving and Community Outreach.


Research to investigate the sustainability of

decentralised renewable energy systems in South

Africa

The concept of the sustainability of minigrids as an

option for the electricity service delivery in remote

and rural communities in South Africa has not yet

been thoroughly investigated. To this end, SANEDI,

in partnership with the national Department of

Environmental Affairs (DEA) and the Department of

International Development (DFID) through CARDNO

Emerging Markets has initiated a study to determine

challenges impeding the implementation of minigrids

in South Africa. The study will be completed in

the next financial year and will provide proposed

implementation strategies for the implementation of

minigrids in South Africa.

Applied research in rural energy provision

Due to its novelty, most of WfE’s projects are at

extensive demonstration stage in terms of clean

energy options, with special emphasis on relevance

energy access, social acceptability, and assessing their

socio-economic impacts on targeted beneficiaries

and communities. The sustainability of the projects

has emerged as an area needing attention and the

number of project increase and need operation and

maintenance capabilities on the ground.

The full roll out will ensue only after the offerings

have been refined and the cost benefits are fully

understood. This stage will be followed by sustainable

fiscus funding for the WfE as part of government’s

service delivery interventions to communities on the

fringes of service delivery programmes of government.

WfE and EPWP

WfE has been fully integrated into the EPWP, where

applicable, and all new and current projects are

subjected to the EPWP protocols, in terms of job

creation, skills development and energy services

delivery.



Bio-Energy cluster projects

ILembe biogas project

The Ndwedwe rural energy project in the iLembe

district municipality has been completed, with the

implementation of 26 biogas digesters, solar panels

and rain water harvesting tanks in some water deprived

families.

Melani and Fort Cox biogas project

Phase 1 of the Melani and Fort Cox Agricultural College

projects have been completed.

Phase 2 of the Melani project, in partnership with the

University of Fort Hare, commenced in the current year

with the signing of the implementation agreement and

the commencement of the stakeholder engagement.

About 100 households and early childhood

development centres under the National Development

Agency (NDA) will benefit from implementation of this

project.

Mpfuneko biogas project

Over 30 of 55 biogas digesters were completed during

the reporting period with an additional 15 at various

stages of completion. The balance will be completed

and commissioned in the next financial year.

Figure 18: Completed biogas digester in Mpfuneko Village, in Greater Giyani District Municipality in Limpopo.

Figure 19: Melani Village biogas project



Lucingweni renewable energy legacy project

An MOA between SANEDI and the Nelson Mandela

Metropolitan University has been concluded for the

establishment of a renewable energy centre on its

campus using some of the renewable energy assets

reclaimed from the Lucingweni minigrid project

under the Renewable Energy Centre of Research and

Development (RECORD).

Greening of Tsireleco high school in Kimberley

An MOA between SANEDI and the Tsireleco high school

regarding the completion of the greening of the school

in the Sol Plaatjie Municipality has been concluded.

Project implementation will commence in the next

financial year. The efficient lighting and water heating

projects have been concluded. The anaerobic digester

will be installed in the next financial year.

Greening of Tygerkloof combined school

An MOA between SANEDI and the Tygerkloof

combined school regarding the greening of the school

in the Dr Ruth Mompati district municipality has been

concluded. Project implementation will commence in

the next financial year.

Greening of Gauteng schools

Through the partnership with the Gauteng

Department of Infrastructure Development, four

schools (Emmanuel, Lehlasedi, Seliba and Kgomoco

Primary Schools) in Sharpeville have been identified

for greening using clean energy interventions. These

include cool surfacing, biogas, efficient lighting and

solar water heating. All procurement matters have

been concluded and the implementation will ensue in

the next financial year.

Greening of Thusanang early childhood development

centre (ECDC)

An MOA between SANEDI and the Thusanang ECDC

regarding the greening of the ECDC in Tshwane

metropolitan municipality has been concluded. Project

implementation will commence in the next financial

year.

Figure 20: Identified Emmanuel, Lehlasedi, Seliba and Kgomoco Primary Schools in Sharpeville.

Figure 21: Thusanang Day Care Centre in Hammanskraal, Gauteng.



EPWP reportingTo

tal N

o.

of

Bene

ficia

ries

Tota

l No.

of

Wor

kday

s

Full

Tim

e

Equi

vale

nts

Tota

l No.

of

Trai

ning

Day

s

82 140 6 109

While the working days derived during the

construction of the projects seem small relative to

the capital investments, the real sustainable jobs will

be created during the operation and maintenance of

these interventions. Identified beneficiaries will need

extensive training to enable them to undertake the

functions.

Future project pipeline

SANEDI continues to seek partnerships to leverage

resources from other relevant stakeholders that have

similar socio-developmental mandates in framing new

initiatives for the future. During this financial year,

SANEDI has been approved to implement waste to

energy projects with the Natural Resource Management

branch of the Department of Environmental Affairs.

These projects, which will focus on using waste from

the value added industries to various forms of energy,

will be implemented over the next MTRF.

Figure 22: Woody waste emanating from the value adding industry which can be used for

various energy forms in Heidelberg.

Figure 23: Waste produce farm which can be used for bioenergy from the Bana Ba Kwale agricultural farm, in partnership with the national Development Agency in the North West.


Data and knowledge management

Centre for Energy Systems Analysis and Research

(CESAR)

A Department of Science and Technology (DST) funded

programme

Background

The Centre for Energy Systems Analysis and Research

(CESAR) was established in May 2009 with the stated

aim of being the authority in the field of energy data

for the purpose of modelling and planning. CESAR

is one of the centres that previously resided with

SANERI, but is incorporated under the South African

National Energy Development Institute (SANEDI). The

CESAR programme managed by SANEDI has remained

a Department of Science and Technology (DST) funded

programme following the restructuring,

The CESAR programme was initiated to provide

a mechanism for energy modelling and planning

to support the alignment of national and local

government energy objectives. The aim is to develop

an energy data repository and technical capacity to

support national and local energy planning and policy.

In addition, CESAR aims to provide an energy platform

where national and local decision makers are assisted

in energy planning and to meet the objectives of the

integrated energy plan (IEP) and national climate

change response strategy.

Objectives

• To develop technical know-how, knowledge, and

human capacity in energy modelling and planning;

• To collect and maintain an open central database

of energy research and related data;

• To research and develop suitable models for the

South African energy system;

• To provide research support and advice on

government initiatives regarding energy data

collection, energy modelling and planning;


• To collaborate with international bodies regarding

research on energy data, energy modelling,

planning and policy development;

• To develop the necessary skills and resources to

support the following:

o Energy modelling

o Planning

o Analysis

o Energy technology innovation; and

• To contribute towards the development of a

centralised energy planning database which is

up to date and can support the requirements of

multiple government institutions (national and

local).

Energy Research Centre (ERC), University of Cape Town

(UCT) collaboration

Historical (2009 – 2012)

The CESAR programme within SANEDI contracted ERC

to undertake research during the period 2009 to 2012.

The study produced two data-rich working papers

which were extensively referenced in the transport

sections of two major national government reports,

the 2012 IEP and the 2013 mitigation potential study.

The study input data, assumptions, methodologies

and results were disseminated in presentations to the

South African National Energy Association (SANEA),

the 16th annual IUAPPA world clean air conference and

to students and staff of the University of Stellenbosch’s

mechanical engineering faculty as a research lecture.

The second working paper was accepted for the 2013

international energy workshop in Paris.

The aim of this project was to perform a comprehensive

analysis of regional transport demand in South

Africa in the medium- to long-term under different

scenario assumptions and in addition, considering

what the resulting demand for liquid fuels would be

and the associated projected CO2 emissions. The

project focused on the development of a number

of models which, when combined, can be used to

develop scenarios around the likely future energy and



infrastructure requirements of the transport sector

and its major influences in terms of both energy and

emissions. The future energy demand of the transport

sector was calculated in terms of services performed

(‘useful’ energy) as well as the amount of energy

supplied (‘final’ energy). This allows analysis of the

substitution between alternative energy forms and

modes as well as an appraisal of the evolution of the

technological improvements in vehicles. A number

of modelling techniques were combined to provide

a novel and rigorous methodology for estimating

the current and future vehicle parc as well as the

associated energy demand. In the end five models

were developed for this study:

• A vehicle parc model;

• A time budget model;

• A computable general equilibrium model;

• A freight demand model; and

• A fuel demand model.

A detailed report consisting of an executive summary,

two papers and a report on two stakeholder workshops

that were held during the course of the project were

completed as deliverables. The papers are stand-

alone data-rich documents currently part of the ERC

working paper series. The first paper focused on the

characterisation of the current vehicle parc of South

Africa by province. The second paper focused on

the projection of the future demand under different

scenario assumptions. The complete data set required

to replicate the results of the model are provided in

spreadsheet format.

Summary of outputs

• The international energy workshop (IEW) 2012

held in Cape Town had over 180, 40 of which were

South African participants and over 94 papers

were presented, of which 10 were from South

Africa;

• The ERC programme produced five masters in

2009 and eight masters in 2010–2011;

• The UP programme produced two PhDs. One of

the PHD’s has joined the university as a lecturer;

• An open database for energy research data was

implemented with data providers Statistics South

Africa, DoE and NERSA. This initiative is sponsored

by SANEDI, DST and UCT. New user registrations

are managed by SANEDI and the ERC;

• Data-rich working papers and five models were

developed in the study: a vehicle parc model (in

Analytica); a time budget model (spreadsheet);

a computable general equilibrium model (in

GAMS, used to project income growth and GDP

growth in a consistent manner); a freight demand

model (spreadsheet); and a fuel demand model

(spreadsheet). Data with which to populate

transport sector models is sparse in South Africa,

and a broad range of input assumptions were

discussed in detail;

• Modelling of regional liquid fuels demand in the

transport sector study was completed as a direct

input into the IEP process for the transport sector

and the 2013 mitigation potential study;

• Provision of research support and advice on

government initiatives regarding energy data

collection, energy modelling and planning; and

• Support for the DoE and international bodies

regarding research on energy data, energy

modelling, planning and policy development.

Current (2014 – 2017)

In order to meet the mandate of CESAR, a collaboration

agreement between the ERC, University of Cape Town

and SANEDI was concluded in 2014 for the period

2014-2017. The collaboration agreement specifies that

the ERC will capacitate and train SANEDI-appointed

energy modellers with relevant technology skills and

knowledge. The long-term vision for the DST is to

develop a fully functioning energy modelling group at

CESAR within SANEDI.

Transport study phase 2

The transport phase 2 study follows up on the previous

study to build on the foundation that was developed,


refine areas that had gaps and focus on a new set of

aspects that were not covered under the transport

study phase 1. The main question is how to meet the

energy needs of the transport sector in the future

considering the uncertainty in future fuel prices

and technology costs compared to performance.

Continuing from the previous study an update of the

current vehicle parc model with key assumptions

as user inputs will be published on ERC and SANEDI

websites. All datasets will be in compatible form so

that it can be integrated for IEP purposes or other

public databases (Open Energy Database, Data First,

UCT). This will include technology assumptions for

the vehicle parc and future technologies as well as

more detail in the road freight and rail categories. A

transport sector link between CGE model and energy

system model in SATMGE will also be included.

The following are potential working papers to be

considered during the period of the study:

• Update of base year assumptions;

• Methodology for projections; and

• Transition scenarios, shocks and their implications.

Future projects

Together with CESAR (SANEDI), DoE and ERC (UCT) the

following projects are under consideration:

• Heavy industry study - development of energy

efficiency targets in heavy industry (nonferrous

metals, iron and steel, non-metallic minerals,

chemical sector based on the long range analysis

of technology choices in the industrial sector;

• Calibrated model for each of the industrial sectors

in TIMES;

• Validated data stored in a database;

• Economic model which can project future

production for key industrial sectors;

• Light industry study;

• Calibrated model for each of the sectors in TIMES;

• Validated data stored in a database; and

• Economic model which can project future

production for key sectors.

Conclusion

The energy sector is facing serious challenges, such as

climate mitigation, universal access to energy, energy

security and energy efficiency. These challenges and

uncertainties in turn threaten the economy, investment

decisions, investor confidence, economic development

and environmental commitments, amongst others

The DST’s interest in energy related data and modelling

relates to the prioritisation of the direction for research

and technology development, the multitudes of science

and technology related development opportunities

that could potentially stem from the energy sector and

the enormous opportunity for technology and science

skills incubation within priority focus areas.

The DST funded programme CESAR aims to provide

this mechanism for energy modelling and planning

to support the alignment of national and local

government energy objectives. These objectives can

only be achieved by an appropriate level of funding,

dedicated specialised skills and relevant tools.



Energy Efficiency programme

Energy Efficiency (12L and 12I) tax

incentives

The promulgation of the regulations on the allowance

for energy efficiency savings in terms of section 12L of

the Income Tax Act as amended came into operation

on 1 November 2013.

These particular tax incentives are being introduced

for businesses that can show measurable energy

savings and SANEDI has been tasked with providing

an overall assurance function on behalf of the South

African Revenue Services (SARS) and various national

government departments.

The 12L regulation sets out the process for determining

the quantum of energy efficiency savings, and the

requirements for claiming the proposed tax deduction,

whilst in the case of 12I, energy efficiency forms a

mandatory component in a series of criteria relating to

this industrial manufacturing incentive.

Section 12L incentives include all energy efficiency

projects that reduce energy use and is claimable

until 2020. A decision of major importance was the

announcement by the Minister of Finance in his

budget vote speech to Parliament on 25 February 2015

that the expected tax relief would be increased from

a 45 cents deduction on taxable income per kilowatt

hour of energy saved (45c/kWh) to 95c/kWh and

that cogeneration projects would now be eligible for

this incentive, subject to all the conditions in the 12L

regulations being met.

These new developments have seen an exponential

increase in the interest shown for these energy

efficiency tax incentives, resulting in a massive stretch

on the current SANEDI resources allocated to this task.



bigEE (Bridging the information gap

on energy efficiency in buildings and

appliances in developing countries)

The international bigEE website launched the

South African page in January 2015 and the site has

since become operational and is upgraded on a

continual basis. The page displays data knowledge

on energy efficiency policies, best available energy

efficient appliances and the best technologies for

energy efficient buildings. It provides easy access to

information that is up to date and relevant for both

local and international investors in energy efficiency.

Furthermore the design, feel and look of the website

is attractive and user friendly. As such the website can

be used by any interested party to gather information -

from company CEOs, professors, students writing their

theses, to school pupils submitting assignments.

The website provides user friendly options such as

suggesting improvement, posing of questions, user

suggestions and any other opinion the user may desire

appropriate to voice out. In addition the user will find

national and international energy efficiency news.

The information on www.bigee.net provides energy

efficiency knowledge in three main categories:

buildings, appliances and policies.

Since www.bigee.net is an international website, it

provides country-specific information according to its

member countries’ levels of energy efficiency. To date,

South Africa has contributed enormously on the best

available technologies in appliances, policies and other

energy efficiency factors.

Energy efficiency best available technologies in

appliances

A substantial body of information about best available

technologies in appliances was gathered by SANEDI on

the most energy consuming appliances in building and

households and uploaded on the side. The summary

of the following appliances shows the most energy

intensive and most used appliances and also highlights

the levels of efficiency that can be gained from these

appliances.

In terms of the appliances the following will be the

BATs vs non-BAT information dissemination:

Electric heaters – the site includes best available

technology for electric water heaters in South Africa

and an updated standard that governs this appliance.

Also included is a graph showing market penetration

of this appliance between 2001 and 2011, as well as

country-wide savings potential.



Energy efficient ovens (stoves) - website includes the

best available oven technology in South Africa. Ovens

are one of the biggest consumers of energy, so the

website shows those that are very energy efficient and

those that are not so energy efficient. The contents

also includes the country-wide savings potential. Also

included are graphs showing:

• Market share of cookers by fuel type (gas, electric

and dual fuel);

• Market share of electric ovens by functionality;

• Annual sales of all formats (electric stove, gas and

coal) from 1999 to 2013, as well as built-in ovens

and non-built in cookers from 1999 to 2013; and

• Energy class distribution of ovens (2014).

Energy efficient televisions - includes best available

technology in television in South Africa, country-wide

savings potential, how the global market is transforming

from LCD to LED as the new market standard, and how

the LED televisions are more energy efficient than LCD

and CRT. Furthermore the contents include graphs

showing penetration rate of TV in SA HH 2000-2013,


and annual sales from 2000-2011. The comparison

in energy consumption is explained in the following

types: LED, LCD, CRT, RPTV, and Plasma. Finally the

proposed energy label programme, from A+++ (most

efficient) to G (less efficient), which will identify the TV

in terms of energy consumption, is shown.

Swimming pool pumps - including best available

technology for these items. Contents also include

country-wide savings potential, pool pumps energy

requirement for different climatic zones in South

Africa (via climatic zone map) in terms of their

temperatures in summer and winter. Also available are

market characteristics for residential housing in South

Africa, which are broken down into six categories. The

standard type of pool pump by energy consumption

using 1.1kW swimming pool pump is also included.

A study by Eskom, used in a national programme to

promote energy efficiency, found that a 750W pump

uses at least 232 kWh of electricity per month. The

campaign recommended reducing the running time

of swimming pool pumsp by four hours per day to

achieve a 40% saving.


Energy efficient dishwashers - contents include best

available technology on this appliance in SA, country-

wide savings potential, graphs showing electricity

consumption of dishwashers, baseline scenario

(A) vs efficiency scenario (B), and annual sales by

subcategory.

Energy efficient clothes dryers and washer dryers -

website includes best available technologies of this

appliance in SA, country-wide savings potential, annual

sales of dryers and washer dryers (1999-2013), forecast

sales (2014-2018), and energy class distribution of

dryers and washer dryer models (2010).

Energy efficient refrigerators - contents include best

available technology of this appliance in SA, country-

wide saving potential and market characteristics

refrigerators (fridges), freezers and fridge/freezers.

Each sub-category is broken down further into size or

carrying capacity. These measures are listed below and

for the purposes of categorization these categories

will henceforth be referred to “small”, “medium”

and “large”. Penetration rates of refrigerators in SA

HH 2000-2011 (in terms of fridge/freezers and free-

standing freezers), penetration rates in SA HH by sub-

category (freezers, fridges, fridge-freezers) 2000-2013

and forecast 2014-2018, graphs showing distribution

of models by energy rating (small, medium and large

categories) as well as SA energy labeling A (more energy

efficient) to G (least energy efficient) and a proposed

energy labelling (A+++ to D) are also included.

Energy efficient washing machines - contents include

best available technology in this appliance in SA,

country-wide saving potential, and categories of

washing machines based on the most popular capacity

ranges in the market, organised under “small”,

“medium” and “large”. Graphs showing penetration

rate by washing machine type (auto front loading, auto

top loading and semi-auto) in SA HH 2003-2013 (%),

total number of units in SA HH by sub-category 2009-

2013, energy cass distribution of models for front and

top loaders (2010) and the proposed energy label from

A+++ to D A+++, with the most efficient and D the least

efficient, are included.

With the information provided, we are able to deduce

that South Africa is becoming one of the most energy

efficient countries with innovative energy efficient

technologies for buildings and appliances. This will

assist in decreasing the demand for electricity from

the grid, thus mitigating the risk of load shedding

which is currently one of the biggest energy challenges

in South Africa, and will also assist consumers of

electrical appliances to know what energy efficient

appliances are available, thus saving them money, as

well as what they can do to make their buildings more

energy-efficient.

Energy efficiency best available technologies in

buildings

The following is information on the best available

technologies in buildings. The work on buildings

information is ongoing.

Lighting – best available technology in SA in terms of

lighting design in buildings, and the types of bulbs that

are efficient.

HVAC- best available technology in SA in terms of

HVAC.

Water heating (solar, heat pump, etc) - the use of

electric geysers is gradually decreasing and the market

for solar geysers is developing quickly. This indicates

that energy efficiency is possible, since electric geysers

are one of the biggest consumers of electricity. The

demand for electricity from the national grid will

decrease as the uptake of solar geysers improves. This

information therefore indicates the best that South

Africa has with respect to SWH.



Building insulation - energy efficiency in buildings

is inevitably linked to building insulation, since this

controls the level at which heat is gained in summer

and lost in winter. Building insulation therefore reduces

the need for heating and cooling of buildings, and the

website will include the best available technology in

building insulation in South Africa.

Plug devices (building functionality oriented devices)

upgrade - the website will include the best available

technology in South Africa in terms of plug devices

(that promote energy efficiency).

Building retrofit and maintenance – historically,

energy and electricity have been inexpensive, resulting

in many of South Africa’s buildings having been

constructed inefficiently. The energy efficient response

is retrofits and maintenance, whereby the building

owner removes the energy inefficient features and

components and replaces them with energy efficient

equipment and technologies. In this case the website

will include the methodology used by UP when dealing

with building retrofits and maintenance, known as

TEOP/POET (technology, equipment, operation and

performance).

Applications on alternative energy resource in

buildings - the website will include the best available

technology in terms of applications on alternative

energy resource in buildings.

Measurement and verification building energy

performance - the website will include the best

available technology in terms building measurement

and verification equipment in South Africa.

Energy Efficiency and Demand Side

Management (EEDSM) Hub

(University of Pretoria)

Although major funding and contractual challenges

were experienced in finalising the activities for this

reporting period, the Hub was still able to complete 89

EEDSM-projects, using external funding. 62 students

are registered at the Hub, with 23 being funded through

the DST/DoE/SANEDI assistance programme. Of the 23

students supported through SANEDI, six are women

and 17 are previously disadvantaged individuals (PDIs)

(56.5% are black, 30.4% are Asian and the remainder

white). Fourteen journal papers were published and 22

conference papers were also published and presented.



Report on performance against objectives

Programme 1: Administration and corporate governance

Objective Indicator Target Performance result

Reasons for variance Interventions put in place to address non-achievement

Corporate governance – to comply with relevant legislation/ policies/procedures

Annual reportStrategic plan Annual performance plan Quarterly reports

Compliance to relevant legislation/policies/procedures

Achieved All corporate documents were submitted as per the compliance calendar.

To have effective financial processes, systems and procedures

Percentage of creditors paid within 30 days after all relevant documentation have been received

100% of creditors paid within 30 days after all relevant documentation have been received

Achieved In terms of the PFMA, all invoices must be paid within 30 days

Effective and comprehensive stakeholder management

Measurable contact with main stakeholders through monthly and quarterly newsletters, DoE communicator’s forum meetings and reports, annual report contribution, participating in DoE official events

Number of monthly (lower level) newsletters 10

Not achieved The resource responsible for the monthly newsletters went on maternity leave and she was not replaced.

She is scheduled to resume duties on 1 June 2015. In the interim, an intern has been appointed

Number of quarterly newsletters: 4

Achieved The quarterly newsletter was completed, printed and distributed. The distribution will continue until the next issue is due.

DoE communicator’s forum meetings (and reports presented): 6

Achieved All communicator forum meetings held by the DoE were attended and presentations were rendered on behalf of SANEDI

Annual report contribution : 1(editorial and design)

Achieved Communications assisted in the drafting of the Chairperson’s report for the annual report.

DoE official events: 4

Achieved SANEDI participated and assisted with arrangements for the IEA-EE indicators workshops held in SA, as well as SAIREC SteerCo



Programme 2 : Energy Research and Development



Advanced Fossil Fuels (including Carbon Capture and Storage)

Determination of the potential for shale gas in the energy economy of South Africa

An appraisal of shale gas energy matters with respect to carbon dioxide as an extraction agent, water and waste issues, demand and supply match, risk assessment, geography and surface issues

DoE approved workplan

Achieved

Contract in place for four tasks

Achieved Annual target for four contracts in place – 3 RfP’s closed and currently under evaluation. The 4th task not approved by DoE because of concern of overlap with work of PASA

The determination of the potential and appropriateness of technologies for the geological storage of carbon dioxide in SA

Pilot CO2 Storage Project (PCSP) as a “proof of concept” for CCS in SA

Interim PCSP foundation documentation

Not achieved Interim PCSP foundation documentation, pre-feasibility (exploration) plan and results for other Gate 2 deliverables not completed due to delays in World Bank approval of the project concept notes and procuring processes.

The World Bank has advertised for expressions of interest for project technical advisory services for the Pilot CO2 Storage Project – submissions close 20 April 2015.

The pilot monitoring project at Bongwana natural carbon dioxide releases planning commenced with international participation

Interim pre-feasibility data analyses

Not achieved

Interim feasibility (exploration) plan

Not achieved

Effective and comprehensive stakeholder management

Support activities Award of bursaries to suitable candidates

Achieved Currently, six bursars are studying


Manage and coordinate Renewable Energy R&D through RECORD

Coordinate renewable energy R&D

Establish solar photovoltaic platform at NMMU and begin yield/performance measurements

Not achieved The report on the first year of the PV platform which was the 4th quarter target was not achieved.

The progress report from NMMU is awaited.

Prefeasibility study on compiling an ocean energy resource map

Not achieved Funding not available due to budgetary constraints

Seek funding for ocean energy resource map

Publish the “State of energy research in SA” study

Achieved





Facilitate renewable energy research collaboration

Implement information exchange sessions with funding counterparts

Achieved Some funding received

Fund and manage existing projects

Achieved

Manage algal bioenergy platform

Achieved

Initiate “State of waste to energy research in SA” study

Achieved

Contribute to renewable energy skills development

Ongoing support to SARETEC (South African Renewable Energy Technology Centre) and preparation of first classes in South Africa

Achieved Ongoing HCD collaboration with GIZ

Renewable energy skills development bursary through Douglas Banks Renewable Energy Vision (DBREV) Fund

Achieved

Collaborative study/training conducted through GIZ

Achieved

Marketing and awareness creation

Raising renewable energy and RECORD awareness through events, conferences, website, articles, etc

Achieved

Present the RECORD Renewable Energy Research Excellence Award in partnership with SANEA

Achieved

Facilitation and support of renewable energy industry association knowledge sharing events

Achieved






Collaborative projects, pilots, demonstrations

Manage and coordinate the WASA programme

Creation of an observational wind atlas.Conceptualise a framework for WASA phase II.

Not achieved Care was taken with the site selection process that no EIA issues were triggered and the sites to be representative of the WASA 2 domain which resulted in that the site selection process was only concluded in November 2014. The impact of that is that the mast selection can only be completed by August 2015 after which the site description report can be finalised and submitted

Facilitate the construction and operation of the mobile waste to energy plant

Building of mobile waste to energy plant

Partially achieved

Mobile plant construction has delayed due to a late start and therefore ordering and receipt of parts.

Talks with DST for collaboration have been initiated

Support municipalities through establishing a waste to energy hub

Waste to energy hub concept document produced

Partially achieved

Proposal sent to a number of donors but no support has been received, However, progress has been made on the web based guideline for MSW for municipalities

Facilitate the development of the SA Solar Energy Technology Road Map (SETRM)

Complete and produce road map

Not achieved Draft roadmap document with the DoE and DST waiting for an interdepartmental consultation

Facilitate the development and uptake of EE in the housing and building sector in SA through collaborative efforts and demonstration

Update and maintain the EE housing database on the SANEDI website with current information

Achieved

Coordinate the set- up of solar measuring stations

Set up two MET stations and initiate solar atlas with DST

Achieved






Representation of SA in international fora, whereby technical knowledge is gained and skills are shared and transferred

Maintain and manage existing IEA and REEEP implementation agreements including Horizon 2020 and other EU-SA initiatives with DST and execute key objectives outlined in the respective agreements/contracts

Achieved

Smartgrids

Stakeholder engagement (SASGI) activities Steering Committee meetings

Industry participation and contribution towards establishing Smart Grids in SA • Minutes • Workshops • Seminars

Four meetings Achieved

Policy Work Group dealing with industry inputs towards developing a national policy

Metering code established

Metering code guidelines for SA

Partially achieved

This target has direct relationship with NRS0409. Had several meetings with NERSA and ESKOM to discuss the way forward to establish a smart metering code for SA. Had a comprehensive literature review and came to the conclusion that New Zealand and Australia have a smart metering code relevant to SA. NERSA has the responsibility to adapt both standards to relevant SA standards.





Smart Grids

Investigate the role of the DSO

Investigate the role of the DSO report

Partially achieved

The ToR has been developed. Delays can be attributed to the formal project approval being received from the DoE in Sept 2014. Collaboration agreement with University of Pretoria to produce first draft.

Technology and standards workgroup that deals with industry inputs towards the development of national smartgrid standards

Smart meter functionality guideline report

Develop an industry approved guideline

Not achieved Met with the NRS049 team – they have a document that covers the electricity smart metering functionality. It is their mandate to produce the report and not SANEDI’s.

AMI security guideline

AMI security guideline report

Partially achieved

The ToR has been developed for the University of Pretoria to carry out the evaluation using the NIST (USA) guideline as reference. Delays can be attributed to the formal project approval being received from the DoE in Sept 2014.

Applied Research Workgroup is established to get industry inputs and share project knowledge with the industry

SGMM assessment of EU donor funded projects

Five SGMM reports

Achieved

Documenting of industry existing case studies

Four case studies document

Achieved

Marketing and awareness workgroup is established to deal with the development of the standardised message for the industry

Establish the SASGI website for information clearing for the industry

SASGI minutes ISGAN informationpresentations

Achieved

Attend conferences and share knowledge

Utility week and AMEU

Achieved

Training and development workgroups is established to deal with industry SG skills development

Establish a smart meter test and evaluation centre at the University of Pretoria

Establish a smart meter test and evaluation centre at the University of Pretoria

Achieved The value proposition was demonstrated to industry. Industry advised that it is not necessary at present to establish a smart meter test and evaluation centre.





Smart Grids

ISGAN Participate in ISGAN Exco meetings Participate in Annexure 3 activities Participate in Annexure 6 meetings

Attend two Exco meetings

Achieved SANEDI hosted the 9th ISGAN EXCO and public workshop at the Radisson Hotel in Sandton. There was representation from the DoE, the municipalities and international communities.

EU donor funded programme : IPP net metering study

To demonstrate that IPPs can be net metered and net billed

Create the infrastructure for billing and net metering with a chosen utility. Monitor and evaluate outputs

Not achieved The DoE has yet to define this project as it requires input from its IPP office

AMI integration (FBE, IBT, EEDSM)

To demonstrate systems, process to implement AMI in a utility• Assess• Design• Procure• Development• Installation• Training• Monitoring

and verification

• Handover

Create the necessary infrastructure, systems and process to do best practice AMI• FBE• TOU, IBT• EEDSM

in commercial buildings

Partially achieved

City Power has completed its project approval phase. Delays can be attributed to the formal project approval being received from the DoE in Sept 2014.

Revenue enhancement study

To demonstrate systems, process to improve municipal electricity revenue collection• Assess• Design• Procure• Development• Installation• Training• Monitoring

and verification

• Handover

Create infrastructure, systems and process to do best practice AMI, FBE, TOU, IBT, EEDSM in commercial buildings

Partially achieved

All five municipalities have completed the project approval phase. Outstanding are six other phases. Delays can be attributed to the formal project approval being received from the DoE in Sept 2014.

Public buildings (EEDSM)

Demonstrate that energy efficiency and demand management can be optimized by incorporating smart grid technology.

Installation of a smart meter in DoE chosen buildings Installation of a building management system in DoE chosen public buildings Installation of control sensors in DoE chosen buildings

Not achieved This is a DoE Energy Efficiency Directorate (Mr Mabusela) responsibility





Smart Grids

Active network management (IPP integration onto the distribution grid)

To demonstrate Active network management systems in a DSO.• Assess• Design• Procure• Development• Installation• Training• Monitoring

and verification

• Handover

Create the necessary infrastructure, systems and process to do best practice ANM in a DSO

Partially achieved

The target addresses imbedded generation. The IPP element in it has been removed.

Asset Management (ADAM)

To demonstrate systems, process to improve utility asset management• Assess• Design• Procure• Development• Installation• Training• Monitoring

and verification

• Handover

Create infrastructure, systems and process to do best practice asset management

Partially achieved

Nelson Mandela Municipality is making good progress whilst Mzundusi is going to be dropped from the project due to internal challenges. Delays can be attributed to the formal project approval being received from the DoE in Sept 2014.

Working for Energy Renewable Energy Provision

Melani village biogas project Phase 2(University of Fort Hare)

55 biogas digesters implementated and handed over

Not achieved Implementation agreement finalised between the University of Fort Hare with the service provider. Stakeholder engagement process commenced. Site selection is in process.

Mass implementation to ensue in the next quarter.

Gauteng DID greening of schools project

Five biogas digesters completed

Not achieved Negotiation with preferred service provider in process, since all received RFP’s were extremely high priced. Negotiation process is unfolding.

Alternative delivery method has been contemplated

NDA greening of facilities project

Five biogas digesters completed

Not achieved Negotiation with preferred service provider in process, since all received RFP’s were extremely high priced. Negotiation process is unfolding.

Alternative delivery method has been contemplated





Working for Energy

Mpfuneko biomass project

Complete implementation of 20 biogas digesters project and hand over

Partially achieved

Construction is at the level of 49 biogas digesters. Balance of six digesters will be completed in the next two quarters and commission, M&V, hand over is expected at the end of the financial year.

Illembe rural biogas project

Project hand over to Ndwedwe district municipality

Not achieved Process awaiting response from the Ministry in respect of the launch of the project. Continuous engagement with SoE oversight branch and the Office of the Minister

Lucingweni community ECDC conversion project

Complete implementation of community ECDC conversion project and hand over

Not achieved Contract has been concluded with Nelson Mandela Metropolitan University to remove obsolete equipment in the facility and clear the site for conversion, establish a clean energy centre under the RECORD and safekeeping of balance of material for Walter Sisulu University and Cape Peninsula University of Technology.

School and clinic renewable energy demonstration centre project

Implementation of a demonstration centre for renewable energy and energy efficiency under the department of science within the school

Partially achieved

Two solar water heaters have been installed and commissioned and the energy efficiency lighting has been partially done.

WFE is currently looking at alternative costs effective processes for digesters

Greening of Tshireleco high school

Complete implementation of a biogas digester project and hand over

Not achieved Delays were encountered soliciting RFQ’s





Working for Energy

Tygerkloof high school

Scoping and planning completed

Not achieved Alternative turnkey contract has been concluded with the school to source specified technologies from the OEM. Water quality assessment, water purification system, low pressure biogas digester installation envisaged by the end of quarter 2 in the 2015/16 financial year

Working for Outreach Programme

Implementation of the outreach programme for the Working for Energy Programme

Not achieved Awaiting dates from Ministry regarding the launch of the program as requested by the Chairperson

NDA greening of schools project

Scoping and planning completed of SWH Projects

Not achieved Project completion envisaged by the end of Quarter 2 of the 2015/16 financial year.

Gauteng DID greening of schools project

Scoping and planning completed of SWH Projects

Not Achieved Baseline studies completed. RFQ are being evaluated. Installation envisaged by the end of Quarter 2of the 2015/16 financial year



Data and Knowledge Management

Integrated EE data respository

Functional, accurate, integrated and user- friendly database

Database fully developed and populated

Achieved




Programme 3: Energy Efficiency Objective Indicator Target Performance

result Reasons for variance Interventions put

in place to address non-achievement

Support the dti and SARS with the energy efficiency component of the Income Tax Amendment Act (Sections 12l and 12L) relating to tax rebates for energy efficiency improvements

Successfully support tax processes as measured by annual review and to customer satisfaction

Second annual review/ report completed for 12I

Not achieved The procurement restrictions did not allow for the publishing of the report

Launch and implement online system to accurately process 12L applications

Achieved Seven applications processed and 57 new applications received

Fully process 5 12I and 10 12L applications

Partially achieved

12i delays experienced due to pressures on improving 12L Regulations with four 12l applications evaluated and seven 12L applications processed

EEDSM Hub (Research Centre)

Continue the Energy Efficiency Hub initiative to strengthen energy related research, human capacity development, and market transformation and enterprise development initiatives that will be tracked against a comprehensive existing set of KPIs.

Number of journal publications: 15; Number of conference papers: 24; Number of registered students: 100; Number of graduates: 23; Number of modules/short courses offered: 45; Number of externally funded projects: 37;External funding: R2.5m;Female student ratio: 19%;PDI ratio: 35%.

Achieved Number of journal publications: 10; Number of conference papers: 3; Number of registered students: 54; Number of modules/short courses offered: 7; Number of externally funded projects: 86; External funding: R0.5m; Female student ratio: 19%; PDI ratio: 50%;Black and 26% Asian

It should be noted that the funding agreement between SANEDI, DST and UP was only finalised fairly late in the 2014/15 financial year which created a vacuum in the continued performance of the EEDSM Hub





Industry support

Support industry stakeholders towards achieving improved energy efficiency in collaboration with international partners

Complete bigEE project successfully

Achieved It is important to note the launch of the South Africa page and continual up –dating of information as new data is collected. Browsers are continually encouraged to leave comments for the improvement of the website. Since there was no initial target work is upgraded on a continual basis.

Best available technologies and non-best available technologies actor constellation

Achieved The appliances aspect of the project has been completed and uploaded on the website, data has been collected in the form of documents containing the technical aspect of the technology appliance in question. The appliance subproject will sign off in the close of May 2015With regards to the buildings, a contract with the University of Pretoria has been entered into objectives outlined.

Best available technologies and non – best available technologies

Achieved Unstructured data with regards to appliances is in the process of analysis. With regards to buildings, data has been collected, analysed and adopted.With regards to best practices, 20 best practice examples are to be submitted. 20 residential best practice and 10 commercial best practices gathered and submitted. 10 extra buildings were gathered. Data on the industrial buildings still necessary.




Actor constellation

Achieved With regards to best practices, 20 best practice examples are to be submitted. 20 residential best practice and 10 commercial best practices gathered and submitted. 10 extra buildings were gathered. Data on the industrial buildings still necessary.

EE policies Achieved The EE policies covers both appliances and buildings. There are no considerable differences.

Climatic zone map Achieved The climatic zone map was developed and is constantly being updated by the CSIR

Provide TAF function, as per contracted outputs

Achieved The entire facility is almost completely committed to RE/EE projects with the three participating banks

National M&V position paper developed

Partially achieved

Document completed but not yet uploaded on the international platform






National M&V Centre

Establish a national consolidated independent M&V function

Consolidate all existing energy (electricity and other energy where relevant)efficiency activities

Partially achieved

Longer-term activity requiring detailed interaction with the shareholder and other stakeholders. However, the basic building blocks are in place and the activity is now regarded as urgent by all the key role-players, including the DoE.

This is an ongoing activity, involving the shareholder and multiple external stakeholders.

National Champion for EE

Join and participate in IEA-DSM task 24 relating to the study and benchmarking of consumer behaviour impacts on the efficient use of energy amongst all participating countries

Join and participate in IEA-DSM Task 24 relating to the study and benchmarking of consumer behaviour impacts on the efficient use of energy amongst all participating countries

Not achieved Due to budgetary constraints, SANEDI exco decided to not formally participate in this IEA task

National M & V Centre

Establish a national consolidated, independent M&V function

Consolidate all existing energy (electricity and other energy where relevant) efficiency activities

Partially achieved

All systems and the M&V process are in place with SANAS for tax related incentives

National M&V position paper developed

Achieved Awaiting DoE’s input/decision on taking this proposal forward


Communications

Communications is a fundamental element

contributing towards the direct success of SANEDI in

the field of energy and its role in contributing to cleaner

and smarter energy in South Africa. The operative

function of communications contributes effectively

to SANEDI’s business activities, both internally and

externally. SANEDI’s communications team has been

hard at work advancing SANEDI through upholding an

excellent standard of promoting the institution to its

stakeholders. This has been achieved by solidifying its

relationships and continuously forging more mutually-

beneficial relationships that will contribute to its

credibility in the public eye. In 2014/15, the team has

taken significant steps in circulating accurate and

consistent information to the public and achieving

maximum exposure of its programmes and as an

organisation. Many of the initiatives set SANEDI on

a platform to earn it much deserved attention in the

energy space and showcase some of the excellent

work it does in this country.

One of the vehicles that has been very successful in

marketing SANEDI activities is participation in various

conferences by means of presentations and exhibitions.

One of these conferences was Sustainability Week and

Africa Energy Indaba.


A quarterly

newsletter was

introduced,

structured to

produce a current

and up-to-date

report of SANEDI’s

activities and keep

its stakeholders

informed about

what is happening

in the organisation.



Mandela Day 2014

SANEDI joined hands with the Department of Energy

and Soweto TV to bring a better life to the babies and

toddlers of the Kidos Educare Centre in Protea South,

Soweto.

This was the second time SANEDI had visited the

centre. Last year SANEDI partnered with Soweto TV

and St Gobain to donate some basic necessities to the

centre. After realising that the centre is in desperate

need for improvement, the partners agreed on a

second phase of the project, which was to provide

the day care centre with a new temporary structure,

water harvesting tanks, fencing and mini kitchen. The

team was joined by the Deputy Minister of Energy, Ms

Thembisile Majola, and the staff from the Ministry. The

success of Mandela Day 2015 was a team effort by all

three organisations - Department of Energy, SANEDI

and Soweto TV.


PART C:Human resource management

Human resources management (HRM) in organisations

is designed to maximise employee performance of

an employer’s strategic objectives. HR, or people

management, as it is known in private companies is

concerned with the management of people within

an organisation within the parameters of policies,

procedures and systems. The HR department, in

partnership with line departments in an organisation,

undertake a number of activities which include

employee recruitment, training and development and

performance appraisal. Labour relations also plays a

critical role in the management of staff.

SANEDI’s HR function is contracted to the CEF Group

of Companies and is managed through a service level

agreement. It is envisaged that a human resources

manager will be appointed

SANEDI is still dependent on CEF’s human resources

policies, procedures, programmes, systems and

processes to attract, develop and retain requisite

skills within SANEDI through effective recruitment

and selection processes, facilitation of training and

development, transparent performance management

processes, attractive remuneration, an effective payroll

system, and a healthy and safe work environment

as well as skills development through an internship

programme.

SANEDI has a performance management system

that provides standards by which the performance

of individual employees is monitored and measured

to allow for management of performance and the

rewarding of deserving employees.

The following policies have been developed for

SANEDI:

• Performance management policy;

• Internship policy;

• Leave policy and procedure;

• Study assistance for employees policy; and

• HIV/AIDS and other life threatening diseases.

The performance management policy of SANEDI

recognises the value of a performance based

institutional culture that promotes employee

productivity, engagement, and development by

aligning individual performance goals with the entitiy’s

mission, strategic goals, and objectives.


The internship programme is aimed at giving students

the opportunity to apply their knowledge in real world

environments. At the same time, they will develop

skills which will help them perform better at their

jobs. They are provided with experience that will make

them stronger and more confident in their abilities.

The experience also helps develop their work ethic. By

effectively being engaged in the internship programme,

students will increase their skills and make themselves

valuable in the job market. Their employers are likely

to benefit as well.

The study assistance policy for employees is designed

to encourage personal and professional development

of staff thereby benefitting the organisation.

Employees are encouraged to take responsibility for

their own development. The purpose of the policy

is to provide assistance to all permanent employees

for part time study in order to obtain appropriate

academic qualifications. The field of study embarked

on must be related to the employee’s position or the

general objectives of the company.

Personnel costs by programme

Programme Total expenditure

for the entity

Personnel expenditure (TCTC)

Personnel expenditure

as a % of total expenditure

No of employees

Average personnel cost per employee

Corporate governance and administration R45 456 606 R15 484 707 34% 22 R703 850 Energy Research and Development R58 222 924 R20 062 110 34% 33 R607 943 Energy Efficiency R9 088 457 R2 599 695 29% 2 R1 299 848

Personnel cost by salary band

LevelPersonnel

expenditure

% personnel expenditure to total

personnel cost No of employees Average personnel cost per employee

Top management /senior management (P1-4) R4 039 441 11% 2

R2 058 466

Middle management (P5-7) R24 009 278 64% 18

R1 348 848

Junior staff (P8-12) R9 700 300 26% 37 R263 521

Performance rewards

Level Performance rewards Personnel expenditure % of performance rewards

to total personnel cost Top management /Senior management (P1-4) R717 042 R4 039 441 17%Middle management (P5-7) R4 921 096 R24 009 278 20%Junior staff (P8-12) R1 507 860 R9 700 300 15%

Human resource management


Reasons for staff leaving

Reason Number % of total no of staff leaving

Death 0 0%Resignation 2 67%Dismissal 0 0%Retirement 0 0%Ill Health 0 0%Expiry of contract 0 0%Other 1 33%TOTAL 3 100%

Labour relations, misconduct and disciplinary action

Nature of disciplinary action Number Verbal warning 0Written warning 0Final written warning 0Dismissal 0

Staff demographics

SANEDI has a staff complement of 52. The profile is as follows:

Category WM IM CM BM WF IF CF BFCEO 0 0 1 0 0 0 0 0CFO 0 0 0 0 0 0 0 1Senior managers 4 1 0 1 0 0 0 1Financial manager 0 0 0 0 0 0 1 0Manager: CS/Office of the CEO 0 0 0 0 0 1 0 0IT manager 0 1 0 0 0 0 0 0System administrator 0 0 0 0 0 0 0 1Accountants 0 0 0 2 0 0 0 1Centre managers 0 0 0 0 2 0 0 0Project managers 0 1 1 1 0 0 0 0Geologist 0 0 0 0 0 0 0 1Public awareness officer 0 0 0 1 0 0 0 2Project officers 0 1 0 3 0 0 0 0Project coordinators 0 0 0 0 1 0 0 2Procurement officer 0 0 0 0 0 0 0 1Admin officer 0 0 0 0 0 1 0 2Research assistants 0 0 0 0 1 0 0 0Personal assistant 0 0 0 0 0 0 1 1




Category WM IM CM BM WF IF CF BFConsultants 4 0 0 0 0 0 0 0Receptionist 0 0 0 0 0 0 0 1Driver 0 0 0 1 0 0 0 0Interns 0 0 0 3 0 0 0 2Refreshment officers 0 0 0 0 0 0 0 2Total 8 4 2 12 4 2 2 18

There is 79% black representation and 55% women representation.

Training costs of personnel

Programme/activity/objective

Personnel expenditure

Training expenditure

Training expenditure as

a percentage of personnel

cost

Number of employees

trained

Average training cost

per employeeCorporate governance and administration R15 087 215 R291 334 2% 11 R26 484 Energy research and development R20 062 109 R293 192 1% 15 R19 546 Energy efficiency R2 599 695 R78 068 3% 2 R39 034


The following staff were not at the photoshoot:

− R Abrahamse

− J Nankoo

− E Nkile

− R Hamid

− S Sekoa

K Nassiep

CEO

Dr M Bipath

L Smith

N Algio

Dr S Hietkamp

J Schaffler S Nyathi

B Beck

A Otto S JumbaC Snyman

E Nyandoro

T Mokoena N Faleni

L Radebe

R Raselavhe

P ModikoS Tshivhase

F Manganyi

Dr AD Surridge W Ingcobo

Dr T MaliW Jali

K Mpheqeke

D Batte



E DeesK Modingoana

T Yusuf

Dr K Surridge-Talbot

D Coetzer S Msweli

S Nxumalo

C Borchard

M Monewe D Phakula

B Kamaki

N Garane

D Mahlangu

T Soci

L ManamelaD Lundall N Cassim B Bredenkamp

D Mahuma

D Govender B Xakaza

T Benuka

T Snyer



RepoRt of the auditoR-geneRal to paRliament on the South afRican national eneRgy development inStitute

PART D:Financial Information



Report on the financial statements

Introduction

1. I have audited the financial statements of the South African National Energy Development Institute (SANEDI)

set out on pages 97 to 134, which comprise the statement of financial position as at 31 March 2015, the

statement of financial performance , statement of changes in net assets and cash flow statement and the

statement of comparative and actual information for the year then ended, as well as the notes, comprising

a summary of significant accounting policies and other explanatory information.

Accounting Authority’s responsibility for the financial statements

2. The Accounting Authority is responsible for the preparation and fair presentation of these financial

statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA

Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act

No. 1 of 1999) (PFMA), and for such internal control as the Accounting Authority determines is necessary

to enable the preparation of financial statements that are free from material misstatement, whether due

to fraud or error.

Auditor-general’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my

audit in accordance with International Standards on Auditing. Those standards require that I comply with

ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on the auditor’s judgement, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal control relevant to the entity’s

preparation and fair presentation of the financial statements in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies

used and the reasonableness of accounting estimates made by management, as well as evaluating the

overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my

audit opinion.

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the

South African National Energy Development Institute as at 31 March 2015 and its financial performance

and cash flows for the year then ended, in accordance with SA Standards of GRAP and the requirements

of the PFMA.

Emphasis of matter

7. I draw attention to the matter below. My opinion is not modified in respect of this matter.



Restatement of corresponding figures

8. As disclosed in note 19 to the annual financial statements, the corresponding figures for 31 March 2014

have been restated as a result of a correction of error discovered during 2014 in the financial statements

of the South African National Energy Development Institute for the year ended, 31 March 2014.

Report on other legal and regulatory requirements

9. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general

notice issued in terms thereof, I have a responsibility to report findings on the reported performance

information against predetermined objectives for selected programmes presented in the annual

performance report, non-compliance with legislation and internal control. The objective of my tests was

to identify reportable findings as described under each subheading but not to gather evidence to express

assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

10. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance

information for the following selected programmes presented in the annual performance report of the

public entity for the year ended 31 March 2015:

• Programme 2: Applied Energy Research on page 57 to 65

• Programme 3: Energy Efficiency on page 66 to 69

11. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

12. I evaluated the usefulness of the reported performance information to determine whether it was

presented in accordance with the National Treasury’s annual reporting principles and whether the

reported performance was consistent with the planned programmes. I further performed tests to

determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound

and relevant, as required by the National Treasury’s Framework for managing programme performance

information (FMPPI).

13. I assessed the reliability of the reported performance information to determine whether it was valid,

accurate and complete.

14. The material findings in respect of the selected programmes are as follows:

Programme 2: Applied Energy Research

Usefulness of reported performance information

Measurability of indicators and/or targets

Performance targets not specific

The National Treasury Framework for managing programme performance information (FMPPI) requires

that performance targets be specific in clearly identifying the nature and required level of performance.

A total of 28% of the targets were not specific in clearly identifying the nature and the required level of

performance. This was due to the fact that management was aware of the requirements of the FMPPI but

did not receive the necessary training to enable application of the principles.



Performance targets not measurable


that performance targets be measurable. The required performance could not be measured for a total of

21% of the targets. This was due to the fact that management was aware of the requirements of the FMPPI

but did not receive the necessary training to enable application of the principles.

Performance indicators not well-defined


that indicators/measures should have clear unambiguous data definitions so that data is collected

consistently and is easy to understand and use. A total of 100% of the indicators were not well defined in

that clear, unambiguous data definitions were not available to allow for data to be collected consistently.

This was due to the fact that management was aware of the requirements of the FMPPI but did not receive

the necessary training to enable application of the principles.

Indicators not verifiable


that it must be possible to validate the processes and systems that produce the indicator. A total of 100%

of the indicators were not verifiable in that valid processes and systems that produce the information on

actual performance did not exist. This was due to the fact that management was aware of the requirements

of the FMPPI but did not receive the necessary training to enable application of the principles.

Reliability of reported performance information


that institutions should have appropriate systems to collect, collate, verify and store performance

information to ensure valid, accurate and complete reporting of actual achievements against planned

objectives, indicators and targets.

The information presented with respect to Programme 2: Applied Energy Research was not reliable when

compared to the source information and/or evidence provided.

This was due to the lack of standard operating procedures for the accurate recording of actual achievements.

Programme 3: Energy Efficiency

Measurability of indicators and targets

Performance target not specific


that performance targets be specific in clearly identifying the nature and required level of performance.

A total of 69% of the targets were not specific in clearly identifying the nature and the required level of

performance. This was due to the fact that management was aware of the requirements of the FMPPI but

did not receive the necessary training to enable application of the principles.



Performance targets not measurable


that performance targets be measurable. The required performance could not be measured for a total of

85% of the targets. This was due to the fact that management was aware of the requirements of the FMPPI

but did not receive the necessary training to enable application of the principles.

Performance indicators not well-defined


that indicators/measures should have clear unambiguous data definitions so that data is collected

consistently and is easy to understand and use. A total of 100% of the indicators were not well defined in

that clear, unambiguous data definitions were not available to allow for data to be collected consistently.

This was due to the fact that management was aware of the requirements of the FMPPI but did not receive

the necessary training to enable application of the principles.

Performance indicators not verifiable


that it must be possible to validate the processes and systems that produce the indicator. A total of 100%

of the indicators were not verifiable in that valid processes and systems that produce the information on

actual performance did not exist. This was due to the fact that management was aware of the requirements

of the FMPPI but did not receive the necessary training to enable application of the principles.

Reliability of reported performance information


that institutions should have appropriate systems to collect, collate, verify and store performance

information to ensure valid, accurate and complete reporting of actual achievements against planned

objectives, indicators and targets.

I was unable to obtain the information and explanations I considered necessary to satisfy myself as to the

reliability of information presented with respect to Programme 3: Energy efficiency. This was due to the

fact that the annual performance report, contrary to the requirements of the FMPPI, was presented in

such a manner that the nature and level of actual performance was not clearly identified. Consequently,

the actual performance could not be measured. The institution’s records did not permit the application of

alternative audit procedures.

Additional matter

15. I draw attention to the following matter:

Achievement of planned targets

16. Refer to the annual performance report on page(s) 56 to 69 for information on the achievement of the

planned targets for the year. This information should be considered in the context of the material findings

on the usefulness and reliability of the reported performance information for the selected programmes

reported in paragraph 14 of this report.



Compliance with legislation

17. I performed procedures to obtain evidence that the public entity had complied with applicable legislation

regarding financial matters, financial management and other related matters. My findings on material

non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of

the PAA, are as follows:


18. The financial statements submitted for auditing were not prepared in all material respects in accordance

with the requirements of section 55(1)(b) of the PFMA. Material misstatements identified by the AGSA

relating to valuation of conditional grants, accuracy of revenue from exchange transactions, valuation of

property, plant and equipment, notes on prior period errors and changes in accounting policies, were

subsequently corrected resulting in the financial statements receiving an unqualified audit opinion.

Expenditure management

19. The Accounting Authority did not take effective steps to prevent irregular expenditure, as required by

section 51(1)(b)(ii) of the Public Finance Management Act.

Internal control

20. I considered internal control relevant to my audit of the financial statements, annual report on performance

against predetermined objectives and compliance with legislation. The matters reported below are

limited to the significant internal control deficiencies that resulted in the findings on the annual report

on performance against predetermined objectives and the findings on non-compliance with legislation

included in this report.

Leadership

21. Management did not exercise adequate oversight responsibility regarding financial and performance

reporting and compliance as well as related internal controls.

Financial and performance management

22. Non-compliances with laws and regulations could have been avoided had the Accounting Authority

implemented proper controls over monitoring of compliance with laws and regulations.

23. The financial statements contained misstatements that were corrected. This was mainly due to staff

members not fully understanding the requirements and the application of the financial reporting

framework.

Pretoria

31 July 2015


annual financial statementsfor the year ended 31 march 2015

General information

Country of incorporation and domicile South Africa

Nature of business and principal activities Energy research and development

Registered office Block C, Upper Grayston Office Park

150 Linden Street

Strathavon

Sandton

2199

Business address Block E, Upper Grayston Office Park

150 Linden Street

Strathavon

Sandton

2199

Postal address PO Box 9935 Sandton 2146

Bankers ABSA

Auditors Auditor-general of South Africa

Secretary Vacant



Index

Accounting Authority’s responsibilities and approval 86

Board audit and risk committee report 87

Accounting Authority’s report 90

Materiality and significance framework 96

Annual financial statements:

Statement of financial position 97

Statement of financial performance 98

Statement of changes in net assets 99

Cash flow statement 100

Accounting policies 101

Notes to the annual financial statements 119



Accounting Authority’s responsibilities and approval

In terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999), the SANEDI Board of Directors (the

board) are required to maintain adequate accounting records and are responsible for the content and integrity of

the annual financial statements and related financial information included in this report. It is the responsibility of

the board to ensure that the annual financial statements fairly represent the state of affairs of the entity, as at the

end of the financial year, including the results of its operations and cash flows for the reporting period.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised

Accounting Practice (GRAP), including any interpretations, guidelines and directives issued by the Accounting

Standards Board.

The annual financial statements are based on appropriate accounting policies, consistently applied and supported

by reasonable and prudent judgments and estimates.

The board acknowledges that it is ultimately responsible for overall internal financial controls established by

the entity and places considerable importance on maintaining a strong control environment. To enable the

board to meet these responsibilities, the Accounting Authority has set standards for internal controls, aimed at

reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of

responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation

of duties, to reduce and/ or avoid risk to the entity. These controls are monitored throughout the entity and all

employees are required to maintain the highest ethical standards, in ensuring the entity’s business is conducted

in a manner that, in all reasonable circumstances, is above reproach. The focus of risk management in the entity

is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operating

risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure,

controls, systems and ethical behaviour are applied and managed within predetermined policies and procedures.

The board is of the opinion that, based on the information and explanations given by management, the internal

controls in place provide reasonable assurance that the financial records can be relied on for the preparation of

the annual financial statements. Although extreme diligence is applied, these internal financial controls can only

provide reasonable, and not absolute assurance against material misstatement or deficit.

The Accounting Authority is primarily responsible for the financial affairs of the entity.

The external auditors were engaged to express an independent opinion on the annual financial statements and

have been given unrestricted access to all financial records and related data.

The audited annual financial statements set out on pages 97 to 134 which have been prepared on a going concern

basis, were approved by the Accounting Authority on 31 July 2015 and were signed on its behalf by:

Ms Rosette Nothemba Mlonzi

Chairperson

SANEDI Board of Directors

Accounting Authority’s responsibilities and approval



Board audit and risk committee report

We are pleased to present our report for the financial year ended 31 March 2015.

Charter

The audit and risk committee (the committee) has adopted a formal terms of reference as its audit committee

charter. The charter is reviewed and approved on an annual basis. The committee has regulated its affairs in

compliance with this charter and has discharged all its responsibilities as contained therein.

Membership

The committee members were appointed by the Board of Directors. The committee comprises three independent

non-executive members, two of whom are experts in the field of finance with the other members being

representatives of the shareholder. The committee is required to meet on a minimum of four occasions per

annum, as per the charter.

Board audit committee and board risk committee

Name Appointed Re-appointed ResignedMs P Motsielwa (Chairperson) 23 October 2013Mr V Magan 1 January 2008 1 January 2011Dr C Sita 23 October 2013Ms M Modise 23 October 2013Dr R Maserumule (alternate member) 23 October 2013 Dr D Hildebrandt 23 October 2013

During the financial year, four meetings were held and attendance was as follows:

24 April 2014

26 May 2014

27 May 2014

28 July 2014

22 October 2014

Ms P Motsielwa (Chairperson) Y Y Y Y YMr V Magan Y Y Y Y NDr C Sita N Y Y Y YMs M Modise N Y N Y YDr R Maserumule (alternate member) Y N N N YDr D Hildebrandt Y N Y N Y

Y = Attended meeting

N = Apology received

Internal audit

The committee considered and approved the internal audit charter and approved the annual work plan for the

internal audit function. The internal audit function is responsible for reviewing and providing assurance on the

adequacy and effectiveness of the internal control environment across operations. The chief audit executive is

responsible for reporting the findings of the internal audit work against the agreed audit plan to the committee

on a quarterly basis.

The chief audit executive has direct access to the committees, primarily through its chairperson. The audit

committee is also responsible for the assessment of the performance of the internal audit function. The internal

audit function is required to undergo a quality review by an independent reviewer every four years. This was




undertaken in April 2013 and the review reported positive results and rated the internal audit function as “general

conformance”, in accordance with the IIA Standards.

The internal audit function is independent and had the necessary resources, budget, standing and authority within

the entity to enable it to discharge its functions. The chief audit executive, through a service level agreement,

reports functionally to the chairperson of the audit committee and administratively to CEF SOC Limited.

We are satisfied that the internal audit function is operating effectively and that it has addressed the risks

pertinent to the entity in its audits. We believe that internal audit contributes to the improvement of internal

controls within the entity.

Internal control effectiveness

The system of internal controls is designed to provide cost-effective assurance that assets are safeguarded and

that liabilities are effectively managed. In line with PFMA requirements, internal audit and the Auditor-General

of South Africa (AGSA) provide the audit committee and management with assurance that the internal controls

are adequate and effective. This is achieved by means of evaluating the effectiveness of the management of

identified risks, as well as the identification of corrective actions and suggested enhancements to the controls

and processes.

Internal and external audit provides the audit committee with reasonable assurance that the majority of internal

controls are appropriate and effective. This is achieved by means of the risk management process, as well as the

identification of corrective actions and suggested enhancements to the controls and processes.

The system of internal control was not entirely effective during the year under review, as several instances of

non-compliance with internal controls were reported by both internal audit and AGSA. From the various reports

of the internal and external auditors, we noted deficiencies with various internal controls which were brought to

the attention of management. Corrective measures have been undertaken to rectify these deficiencies. We also

take note of the improvement in the control environment as noted from the reduction in the number of issues

raised by the internal and external auditors.

Corporate governance

We acknowledge that the entity continues to strive towards applying sound principles of good corporate

governance. To this extent the entity has endeavoured to ensure that oversight sub-committees aimed at assisting

the board to advance its strategic direction are established and operational with all respective charters reviewed

on an annual basis.

There were, however, challenges with the operational effectiveness of the committees for the year under review.

This was mainly caused by inability of the committee meetings to quorate as some departmental representatives

do not have alternates for the committee. The matter has been escalated to the office of the Minister of Energy

and is receiving urgent attention.

Overall we are satisfied with advancements made by the entity towards applying best practice on corporate

governance in the interest of the entity and its stakeholders.




Risk management

The Board assigned the oversight responsibility of the risk management function to the committee. The entity

implemented a risk management strategy, which includes a fraud prevention plan. A formal risk assessment

was undertaken for the year ended 31 March 2015 with quarterly reviews, updates and reports. Consequently,

internal audit used this data to prepare the three-year rolling strategic plan and an annual operating audit plan.

The risk committee monitored the significant risks faced by the entity through risk reporting, evaluation of the

reports and participation in risk assessment workshop. We are satisfied that significant risks have been managed

to an acceptable level.

Appointment of auditors

The AGSA continues to serve as the independent external auditors of the public entity as mandated by the Public

Audit Act, 2004 (Act No. 25 of 2004). We have reviewed the audit strategy and audit fees and we are satisfied that

the audit strategy adopted is adequate for an organisation of this nature and size. We are also satisfied as to the

independence, skill and competence of the auditor.

The auditors continue to have unrestricted access to the committee and we are satisfied that they have had

unrestricted access to systems and records to enable them to arrive at their opinion.


We have:

• Reviewed and discussed the unaudited annual financial statements to be included in the annual report,

with the AGSA and the accounting officer;

• Reviewed the entity’s compliance with legal and regulatory provisions;

• Reviewed the AGSA management report and management responses thereto;

• Reviewed accounting policies and practices;

• Reviewed information on pre-determined objectives to be included in the annual report; and

• Reviewed the annual financial statements for any significant adjustments resulting from the audit.

Auditor-general’s report

The audit committee has met the auditor-general of South Africa and discussed its report to ensure that there

are no unresolved issues. We have also reviewed SANEDI’s implementation plan for the audit issues raised in the

AGSA management report and continuous oversight will be exercised to ensure that all matters are adequately

addressed.

Conclusion

The committee expresses its sincere appreciation to the board, chief executive officer, management, internal

audit and the AGSA for their ongoing support. The committee also congratulates SANEDI for achieving another

unqualified audit report.

Ms P Motsielwa (Chairperson)

31 July 2015




Accounting Authority’s report

The directors present the Accounting Authority report that forms part of the audited annual financial statements

for the year ended 31 March 2015.

The South African National Energy Development Institute (SANEDI) is incorporated in terms of section 7 of the

National Energy Act 2008 (Act No. 34 of 2008), and is listed as a national public entity in terms of schedule 3 of

the Public Finance Management Act, 1999 (Act No 1 of 1999) (PFMA), as amended.

1. The Board of Directors acts as the Accounting Authority in terms of the PFMA.

Name Appointed Resigned/term ended

Ms N Mlonzi 1 September 2011Mr J Marriott 1 September 2011Mr M Vilana 1 September 2011Ms D Ramalope 17 October 2011Mr M Gordon (alternate director) 17 October 2011Dr D Hildebrandt 1 September 2011Dr R Maserumule (alternate director) 26 June 2012Ms P Motsielwa 23 October 2013Ms M Modise 1 September 2011Mr C Manyungwane (alternate director) 3 September 2013 Dr V Munsami 1 February 2013 Mr G Fourie 1 January 2013

Attendance at meetings

Name 11 June 2014 29 July 2014 8 October 2014Ms M Mlonzi Y Y YMr J Marriott Y Y NMr M Vilana N N NMs D Ramalope Y Y NMr M Gordon (alternate director) N N NDr D Hildebrandt Y Y NDr R Maserumule (alternate director) N N NMs M Modise N Y YDr C Sita N N YMr C Manyungwane (alternate director) N N NMs P Motsielwa Y Y YMr G Fourie N Y Y






2. Board audit committee and board risk committee

Name Appointed Re-appointed ResignedMr V Magan 1 January 2008 1 January 2011Ms P Motsielwa 23 October 2013Dr C Sita 23 October 2013Dr R Maserumule (alternate director) 23 October 2013Dr D Hildebrandt 23 October 2013

Attendance at meetings

Name 25 April 2014

26 May 2015

27 May 2015

28 July 2014

22 October 2014

Mr V Magan Y Y Y Y NMs P Motsielwa Y Y Y Y YDr C Sita Y N Y Y YMs M Modise N Y N Y YDr R Maserumule (alternate member) Y N N N YDr D Hildebrandt Y N Y N Y



3. Nature of business

Main business and operations

The main business and operations for the South African National Energy Development Institute (SANEDI)

are defined in Chapter 4 of the Energy Act, 2008 (Act No. 34 of 2008). In terms of the Act, the main

business and operations of SANEDI are:

• Energy research and development; and

• Energy efficiency.

The principal activities of the South African National Energy Development Institute are outlined below:

• Undertake energy efficiency measures as directed by the Minister;

• Increase energy efficiency throughout the economy;

• Increase the gross domestic product per unit of energy consumed;

• Optimise the utilisation of finite energy resources;

• Direct, monitor, conduct and implement energy research and technology development in all fields

of energy, other than nuclear energy; and

• Promote energy research and technology innovation.

In addition to the above, SANEDI is expected to provide the following:

• Training and development in the field of energy research and technology development;

• Establishment and expansion of industries in the field of energy;




• Commercialisation of energy technologies resulting from energy research and development

programmes;

• Register patents and intellectual property in its name resulting from its activities;

• Issue licenses to other persons for the use of its patents and intellectual property;

• Publish information concerning its objectives and core functions;

• Establish facilities for the collection and dissemination of information in connection with research,

development and innovation;

• Undertake any other energy technology development related activity, as directed by the Minister,

with the concurrence of the Minister of Science and Technology;

• Promote relevant energy research through cooperation with any entity, institution or person

equipped with the relevant skills and expertise within and outside the Republic;

• Make grants to educational and scientific institutions in aid of research, by promoting the training

of research workers by granting bursaries or grants in aid of research;

• Undertake the investigations or research that the Minister, after consultation with the Minister of

Science and Technology, may assign to it; and

• Advise the Minister and the Minister of Science and Technology on research in the field of energy

technology.

4. Review of financial position

The entity’s business and operations and the results thereof are clearly reflected in the accompanying

annual financial statements. All material subsequent events have also been adequately disclosed in the

financial statements note 20.

The entity’s assets continue to exceed liabilities, with a positive cash balance being maintained in respect

of third party funding earmarked for research projects.

The overall allocation for the financial year under review was R168 million. We continue to allocate a large

percentage of the overall budget towards funding research programmes with a total of 64% allocated for

projects and 36% for administrative activities as we strive towards the achievement of set targets.

There were no unspent administrative allocation funds at the end of the financial year. All other programme

funding is being spent as agreed with the relevant third parties.

5. Going concern

SANEDI’s assets exceed its liabilities by R15 million. SANEDI has applied for approval of the current surplus

funds of R0.035 million from the National Treasury in terms of section 53(3) of the PFMA.

The directors believe that the entity will operate for the next foreseeable 12 months given the revised

allocation received from MTEC for the next financial year.

6. Review of operations

Government Gazette No. 34175, dated 1 April 2011 states that in terms of section 21 of the National

Energy Act, 2008 (Act No. 34 of 2008):




“I (The President of the Republic of South Africa), hereby fix 01 April 2011 as the date on which Chapter 4

of the said Act shall come into operation.

Chapter 4 of the National Energy Act, 2008 (No. 34 of 2008) provides for the establishment of the South

African National Energy Development Institute (SANEDI) as a successor to the previously created South

African National Energy Research Institute (Pty) Ltd (SANERI) and the National Energy Efficiency Agency

(NEEA) (a division of CEF SOC (Ltd). All assets, liabilities, and staff of SANERI and NEEA are legislated to be

vested in SANEDI.

The establishment of SANEDI therefore comprises the incorporation of two functioning bodies into one.

The relevant sections of the National Energy Act (sections 7 to 15) are operationalised. All employees

(including board members) of SANERI and NEEA are transferred to SANEDI and all assets and liabilities are

transferred to SANEDI. Funding which is currently allocated to SANERI through the science vote should be

budgeted for within the DoE budget and allocated to SANEDI through transfers and subsidies. Mechanisms

to ensure that CEF continues to provide support services and systems for SANEDI are in place.”

Below are summaries of the highlights of the year:

Centre for Carbon Capture and Storage

The World Bank has advertised for expressions of interest for project technical advisory services for

the pilot CO2 storage project (PCSP) - submissions closed 20 April 2015. The pilot monitoring project at

Bongwana natural CO2 releases planning commenced with international participation. The South African

shale gas delegation (SANEDI, DoE, DST, DSW, PetroSA, PASA) to the USA took place in March, 2015. The

first shale gas task (task 7 COs emission reductions due to fuel switching from coal to gas) was completed

and the draft report is being addressed by the shale gas steering committee.

Energy efficiency

bigEE (Bridging information gap on energy efficiency in buildings and appliances)

The international bigEE website launched the South Africa page in late January 2015 and the page has since

been operational and upgraded on continual basis. The page displays data knowledge on energy efficiency

policies, best available energy efficient appliances and the best technologies for energy efficient buildings.

It provides easy access to information that is up to date and relevant for both local and international

investors of energy efficiency. Furthermore the design, feel and look of the website is attractive and user

friendly. As such the website can be used by any interested party to gather information - from company

CEOs, professors, students writing their theses, to school pupils submitting assignments.

Since the launch of the bigEE project to date, 70% of the funds have been utilised and about 80% of the

work completed. The remaining objectives to be achieved are related to energy efficient buildings. The

appliances data has been collected, analysed and uploaded and will be closing in the coming months. All

additional aspects such as climatic zone map, actor constellation in both appliances and buildings have

been completed and will in future only be updated with time.




Appliances

The appliances part of the project has been completed and the subproject sign off will be end of May

2015. The data that can be expected on the web has been collected in the form of documents relating

to refrigerators and freezers, washing machine, tumble dryers, TVs and other electrical appliances. The

documents are specifically outline the technical aspect of the captured appliance technology. In addition

to the appliances, five policy documents have been developed as well. The following documents outline

the policy position of South Africa regarding the appliances and the topics that have been covered:

• “Template 8” (policy package in South Africa);

• “Template 7” for SWH/HP programme;

• “Template 7” for residential mass rollout programme/CFL programme;

• “Template 7” for SANS 10400XA; and

• “Template 7” 12L tax incentive.

The information is available on www.bigEE.net/ (select South Africa).

Buildings

On the building aspect of the project, seemingly insurmountable challenges were encountered, and it

was only in the third quarter that solutions started to emerge. The project has leverages on the EEDSM

partnership between SANEDI and the University of Pretoria. The EEDSM head has been contracted to

assist in collecting data on best available technologies in buildings.

Wind Atlas of South Africa (WASA)

A WASA presentation was made to the Danish Minister for Climate, Energy and Buildings, the Danish

ambassador and delegation on 2 Sept 2014 at the University of Cape Town (UCT).

The Danish Minister encouraged the application of WASA to enhance the wind data and analysis in the

revised and future revisions of the independent resource plan (IRP). The issue of awareness raising and

training of the WASA phase 1 results was also raised with the Danish ambassador, who indicated that his

office could assist with this endeavour.

While an environmental impact assessment (EIA) is no longer required for wind met masts, any other

EIA listed activities that are triggered can result in a full EIA having to be done which could take up to six

months and more to complete. Therefore, special care was taken in the selection of the wind met masts

sites so that they will not trigger a full EIA and can still meet the input requirements for the WASA 2

modelling to be representative of the WASA 2 domain.

The WASA 2 wind measurements work package (WP22) CSIR team improvised and a rapid environmental

screening study was undertaken that confirmed that no other environmental issues were triggered at the

identified sites. This resulted in the masts’ site selection only being completed at the end of November

2014. The masts, installation and equipment tenders, that are dependent on the site selection, were

published in January 2015. Contracting of service providers is taking place with the masts and equipment

installation envisaged to be completed by June or July 2015 and with wind measurements, data capturing

and display to start July or August 2015.




7. Subsequent events

The directors are not aware of any other matters or circumstances arising since the end of the financial

year, not otherwise dealt with in the annual financial statements which significantly affect the financial

position of the entity or the results of the operations.

8. Approval

The audited annual financial statements set out on pages 97 to 134 which have been prepared on the

going concern basis, were approved by the Accounting Authority on 31 July 2015 and were signed on its

behalf by:

Ms Rosette Nothemba Mlonzi

Chairperson - SANEDI Board




Materiality and significance framework

For purposes of materiality (as per PFMA sections 50(1) and 55 (2)) and significance (as per PFMA sections 54(2))

framework the following acceptable levels were agreed with the Executive Authority in consultation with the

Auditor- General of South Africa:

• Section 50(1): Material facts to be disclosed to the Minister of Energy are considered to be facts that may

influence the decisions or actions of the Stakeholders of the Public Entity.

• Section 55(2): Disclosure of material losses in the annual financial statements will be for all losses through

criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred

during the year.

• Section 54(2): The criteria to determine the level of significance was based on the guiding principles as

set out in the “Practice Note on applications under Section 54 of the PFMA No. 1 of 1999 (as amended)

by Public Entities” as published by National Treasury during 2006 subject to adjustments for any Section

54(4) exemptions.

The significant Rand level was determined as being 1% of revenue as follows:

APPROVAL LEVELS IN TERMS OF SECTION 54

Public Entity’s board approval levels < 1 134 500

Obtain DoE approval and inform National Treasury > 1 134 500

Materiality and significance framework



Statement of financial position at 31 March 2015

Notes2015

R’000

Restated2014

R’000Assets

Non-current assets 5 107 8 292Property, plant and equipment 2 2 781 3 926Intangible assets 3 2 326 4 366

Current assets 371 802 154 155Receivables from exchange transactions 4 6 743 2 893VAT receivable 207 -Cash and cash equivalents 5 364 852 151 262

Total assets 376 909 162 447

LiabilitiesCurrent liabilities (361 369) (146 942)Payables from exchange transactions 8 (14 901) (10 058)Unspent conditional grants and receipts 6 (338 957) (129 618)Provisions 7 (7 511) (7 266)

Total liabilities (361 369) (146 942)

Net assetsAccumulated surplus (15 540) (15 505)

Statement of financial position



Statement of financial performance

Notes2015

R’000

Restated2014

R’000Revenue Revenue from non-exchange transactions 9 106 965 84 091Revenue from exchange transactions 9 6 421 9 520

Total revenue 113 386 93 611

Expenditure

Employee related costs 11 (39 955) (34 032)Project costs (51 770) (16 573)Depreciation and amortisation 2,3 (4 846) (3 040)Repairs and maintenance (342) (163)Bad debts (538) -Operating expenses 10 (15 868) (30 363)(Loss)/Gain on foreign exchange (39) (53)Impairments 2 7 (819)

Total expenditure (113 351) (85 043)

Surplus for the year 35 8 568




Statement of change in net assets

Notes

Accumulated surplus

R’000

Total net assetsR’000

Opening balance as at 31 March 2014 8 402 8 402

Prior period errors 19 (1 465) (1 465)

Surplus for the year 8 568 8 568

Restated opening balance as at 31 March 2014 15 505 15 505

Surplus for the year 35 35

Balance at 31 March 2015 15 540 15 540

Statement of changes in net assets



Cash flow statement

Notes2015

R’000

Restated2014

R’000Cash flows from operating activities

Receipts 321 660 161 998

Grants 301 478 145 481

Interest income 17 640 9 298

Membership fees and sponsorships 2 542 7 219

Payments (106 290) (149 527)

Employee costs (29 954) (32 744)

Suppliers (72 048) (44 983)

Transfers of funds (4 288) (71 800)

Net cash flows from operating activities 12 215 370 12 471

Cash flows from investing activitiesPurchase of property, plant and equipment (419) (3 133)

Proceeds from sale of property, plant and equipment 14 58

Purchase of other intangible assets (1 375) (4 213)

Net cash flows from investing activities (1 780) (7 288)

Net increase in cash and cash equivalents 213 590 5 183

Cash and cash equivalents at the beginning of the year 5 151 262 146 079

Cash and cash equivalents at end of the year 5 364 852 151 262

Cash flow statement



Accounting policies

1. Presentation of annual financial statements

1.1. Basis of preparation

The annual financial statements have been prepared in accordance with the effective Standards of

Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives

issued by the Accounting Standards Board.

These annual financial statements have been prepared on an accrual basis of accounting and are in

accordance with historical cost convention unless specified otherwise. They are presented in South African

Rand.

The financial statements have been prepared on a going concern basis and the accounting policies have

been applied consistently throughout the period.

1.2. Translation of foreign currencies

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign

currency amount the spot exchange rate between the functional currency and the foreign currency at the

date of the transaction. At each reporting date:

• Foreign currency monetary items are translated using the closing rate;

• Non-monetary items that are measured in terms of historical cost in a foreign currency are

translated using the exchange rate at the date of the transaction; and

• Non-monetary items that are measured at fair value in a foreign currency are translated using the

exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at

rates different from those at which they were translated on initial recognition during the period or in

previous annual financial statements are recognised in surplus or deficit in the period in which they arise.

When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component

of that gain or loss is recognised directly in net assets. When a gain or loss on a non-monetary item is

recognised in surplus or deficit, any exchange component of that gain or loss is recognised in surplus or

deficit.

Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign

currency amount the exchange rate between the Rand and the foreign currency at the date of the cash

flow.

Accounting policies



1.3. Events after the reporting date

Recognised amounts in the annual financial statements are adjusted to reflect events arising after the

reporting date that provide evidence of conditions that existed at the reporting date. Events after the

reporting date that are indicative of conditions that arose after the reporting are dealt with by way of a

note.

1.4. Property, plant and equipment

Property, plant and equipment are tangible non-current assets that are held for use in the supply of goods

or services or for administrative purposes, and are expected to be used during more than one period.

Carrying amounts

All property, plant and equipment are stated at cost less accumulated depreciation and accumulated

impairment losses.

The cost of an item of property, plant and equipment is recognised as an asset when:

• It is probable that future economic benefits or service potential associated with the item will flow

to the entity; or

• The cost or fair value of the item can be measured reliably.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable

to bring the asset to the location and condition necessary for it to be capable of operating in the manner

intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an item of property, plant and equipment is acquired at no cost, or for a nominal cost, its cost is its

fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or

monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially

measured at fair value (the cost). If the acquired non-monetary asset’s fair value is not determinable, its

deemed cost is the carrying amount of the asset given up.

Cost includes costs incurred initially to acquire or construct an item of property, plant and equipment

and costs incurred subsequently to add to, or to replace a part of, or service it. If a replacement cost is

recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of

the replaced part is derecognised.

Finance costs directly associated with the construction or acquisition of major assets are capitalised at

interest rates relating to loans specifically raised for that purpose, or at the average borrowing rate where

the general pool of borrowings is utilised.

Derecognition

The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no

future economic benefits are expected from its use.

Accounting policies



The gain or loss arising from the derecognition of an item of property, plant and equipment is determined

as the difference between the net disposal proceeds, if any, and the carrying amount of the item. Such

difference is recognised in the surplus or deficit when the item is derecognised.

Depreciation

Depreciation is charged so as to write off the depreciable amount of the assets, other than land, over their

estimated useful lives to estimated residual values, using the straight line method to write off the cost

of each asset that reflects the pattern in which the asset’s future economic benefits are expected to be

consumed by the entity.

Where significant parts of an item have different useful lives to the item itself, these parts are depreciated

over their estimated useful lives.

The following methods and rates are used during the year to depreciate property, plant and equipment to

estimated residual values:

Item Average useful life

Furniture, fittings and communication equipment 2 – 15 years

Office equipment 5 years

Computer equipment 3 years

Leasehold improvements Over the period of the lease

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total

cost of the item is depreciated separately.

The methods of depreciation, useful lives and residual values are reviewed annually.

1.5 Intangible assets

An asset is identified as an intangible asset when it:

• Is capable of being separated or divided from an entity and sold, transferred, licensed, rented or

exchanged, either individually or together with a related contract, assets or liability; or

• Arises from contractual rights or other legal rights, regardless whether those rights are transferable

or separate from the entity or from other rights and obligations. An intangible asset is an identifiable

non-monetary asset without physical substance.

Initial recognition

An intangible asset is recognised when:

• It is probable that the expected future economic benefits or service potential that are attributable

to the asset will flow to the entity and

• The cost or fair value of the asset can be measured reliably.

Cost

Intangible assets are initially recognised at cost if acquired separately or internally generated or at fair

value if acquired as part of a business combination. If assessed as having an indefinite useful life, the

Accounting policies



intangible asset is not amortised but tested for impairment annually and impaired if necessary. If assessed

as having a finite useful life, it is amortised over its useful life using a straight line basis and tested for

impairment if there is an indication that it may be impaired.

Research

Expenditure on research (or on the research phase of an internal project) is recognised as an expense

when it is incurred.

Development costs

Development costs are capitalised only if they result in an asset that can be identified, and it is probable

that the asset will generate future economic benefits and the development cost can be reliably measured.

Otherwise it is recognised in surplus or deficit.

Derecognition

Intangible assets are derecognised on disposal, or when no future economic benefits or service potential

are expected from its use or disposal.

The gain or loss arising from the derecognition of an intangible asset is determined as the difference

between the net disposal proceeds, if any, and the carrying amount of the intangible asset. Such a

difference is recognised in surplus or deficit when the intangible asset is derecognised.

Amortisation is recognised in profit and loss, on a straight line basis, to their residual values as follows:

Item Useful life

Computer software 2 years

1.6 Non-current assets held for sale and disposal groups

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be

recovered principally through a sale transaction rather than through continuing use. This condition is

regarded as met only when the sale is highly probable and the asset (or disposal group) is available for

immediate sale in its present condition. Management must be committed to the sale, which should be

expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held for sale (or disposal group) are measured at the lower of their carrying amount

and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part

of a disposal group classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are

recognised in surplus or deficit.

Accounting policies



1.7 Impairment of non-cash-generating assets

Cash-generating assets are those assets held by the entity with the primary objective of generating a

commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-

orientated entity, it generates a commercial return.

Non-cash-generating assets are assets other than cash-generating assets.

Identification

The entity assesses at each reporting date whether there is any indication that a non-cash-generating

asset may be impaired. If any such indication exists, the entity estimates the recoverable service amount

of the asset.

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and

its value in use.

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is

impaired.

Irrespective of whether there is any indication of impairment, the entity also tests a non-cash-generating

intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for

use for impairment annually by comparing its carrying amount with its recoverable service amount. This

impairment test is performed at the same time every year. If an intangible asset was initially recognised

during the current reporting period, that intangible asset is tested for impairment before the end of the

current reporting period.

Value in use

Value in use of an asset is the present value of the asset’s remaining service potential.

The present value of the remaining service potential of an asset is determined using the following

approaches:

Depreciated replacement cost approach

The present value of the remaining service potential of a non-cash-generating asset is determined as the

depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the

asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset

may be replaced either through reproduction (replication) of the existing asset or through replacement

of its gross service potential. The depreciated replacement cost is measured as the reproduction or

replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis

of such cost, to reflect the already consumed or expired service potential of the asset.

The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The

rationale is that the entity would not replace or reproduce the asset with a like asset if the asset to be

replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features

which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that

Accounting policies



have a greater capacity than is necessary to meet the demand for goods or services the asset provides.

The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus

reflects the service potential required of the asset.

Restoration cost approach

Restoration cost is the cost of restoring the service potential of an asset to its pre-impaired level. The

present value of the remaining service potential of the asset is determined by subtracting the estimated

restoration cost of the asset from the current cost of replacing the remaining service potential of the asset

before impairment. The latter cost is determined as the depreciated reproduction or replacement cost of

the asset, whichever is lower.

Recognition and measurement

If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the

carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment

loss.

An impairment loss is recognised immediately in surplus or deficit.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-

generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying

amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Reversal of an impairment loss

The entity assesses at each reporting date whether there is any indication that an impairment loss

recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If

any such indication exists, the entity estimates the recoverable service amount of that asset.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has

been a change in the estimates used to determine the asset’s recoverable service amount since the last

impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service

amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset

attributable to a reversal of an impairment loss does not exceed the carrying amount that would have

been determined (net of depreciation or amortisation) had no impairment loss been recognised for the

asset in prior periods.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or

deficit.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-

cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised

carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Accounting policies



Re-designation

The redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-

cash-generating asset to a cash-generating asset only occurs when there is clear evidence that such a

redesignation is appropriate.

1.8 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to

ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and

rewards incidental to ownership.

Operating lease payments are recognised as an expense on a straight line basis over the lease term. The

difference between the amounts recognised as an expense and the contractual payments are recognised

as an operating lease asset or liability.

The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on

a straight line basis over the lease term.

Any contingent rent is recognised separately as an expense when paid or payable and is not straight lined

over the lease term.

1.9 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability

or a residual interest of another entity. A financial asset is:

• Cash;

• A residual interest of another entity; or

• A contractual right to:

– Receive cash or another financial asset from another entity; and

– Exchange financial assets or financial liabilities with another entity under conditions that are

potentially favourable to the entity.

A financial liability is any liability that is a contractual obligation to:

• Deliver cash or another financial asset to another entity; or

• Exchange financial assets or financial liabilities under conditions that are potentially unfavourable

to the entity.

Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial

liabilities that have fixed or determinable payments, excluding those instruments that:

• The entity designates at fair value at initial recognition; or

• Are held for trading.

Accounting policies



Financial instruments at fair value comprise financial assets or financial liabilities that are:

• Derivatives;

• Combined instruments that are designated at fair value; and

• Instruments held for trading.

A financial instrument is held for trading if:

• It is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or

• On initial recognition is part of a portfolio of identified financial instruments that are managed

together and for which there is evidence of a recent actual pattern of short term profit-taking;

• Non-derivative financial assets or financial liabilities with fixed or determinable payments that are

designated at fair value at initial recognition; and

• Financial instruments that do not meet the definition of financial instruments at amortised cost or

financial instruments at cost. Financial assets and financial liabilities are recognised on the entity’s

statement of financial position when the entity becomes a party to the contractual provisions of

the instrument.

Financial assets

The entity’s principal financial assets are accounts receivable as cash and cash equivalents.

The entity has the following types of financial assets (classes and category) as reflected on the face of the

statement of financial position or in the notes thereto:

Class Category

Loans receivable Financial asset measured at amortised cost

Trade and other receivables Financial asset measured at amortised cost

Cash and cash equivalents Financial asset measured at amortised cost

Investments Financial asset measured at amortised cost

Financial liabilities

The entity has the following types of financial liabilities (classes and category) as reflected on the face of

the statement of financial position or in the notes thereto:

Class Category

Trade and other payables Financial liability measured at amortised cost

Initial recognition

The entity recognises a financial asset or a financial liability in its statement of financial position when the

entity becomes a party to the contractual provisions of the instrument.

Initial measurement

The entity measures a financial asset and financial liability at amortised cost initially at its fair value, plus

transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial

liability.

Accounting policies



Subsequent measurement

The entity measures all financial assets and financial liabilities after initial recognition using the following

category:

• Financial instruments at amortised cost.

All financial assets measured at amortised cost, or cost, are subject to an impairment review.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset

or financial liability is measured at initial recognition, minus principal repayments, plus or minus the

cumulative amortisation using the effective interest method of any difference between that initial amount

and the maturity amount, and minus any reduction (directly or through the use of an allowance account)

for impairment or uncollectability.

Gains and losses

For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised

in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through

the amortisation process.

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at

amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable

amounts are recognised in profit or loss when there is objective evidence that the asset is impaired.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial

reorganisation and default or delinquency in payments (more than 30 days overdue) are considered

indicators that the trade receivable is impaired. The allowance recognised is measured as the difference

between the asset’s carrying amount and the present value of estimated future cash flows discounted at

the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount

of the loss is recognised in the income statement within operating expenses. When a trade receivable is

uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries

of amounts previously written off are credited against operating expenses in the income statement.

Trade and other receivables are classified as loans and receivables.

Trade and other payables

All financial liabilities are measured at amortised cost, comprising original debt less principal payments

and amortisations.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid

investments that are readily convertible to a known amount of cash and are subject to an insignificant risk

of changes in value. These are initially and subsequently recorded at fair value.

Accounting policies



Derecognition

The entity derecognises financial assets using trade date accounting. The entity derecognises a financial

asset only when:

• The contractual rights to the cash flows from the financial asset expire, are settled or waived;

• The entity transfers to another party substantially all of the risks and rewards of ownership of the

financial asset; or

• The entity despite having retained some significant risks and rewards of ownership of the financial

asset, has transferred control of the asset to another party and the other party has the practical

ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability

unilaterally and without needing to impose additional restrictions on the transfer.

In this abovementioned case, the entity:

– Derecognises the asset and

– Recognises separately any rights and obligations created or retained in the transfer.

The carrying amounts of the transferred asset are allocated between the rights or obligations retained

and those transferred on the basis of their relative fair values at the transfer date. Newly created rights

and obligations are measured at their fair values at that date. Any difference between the consideration

received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of

the transfer.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the

sum of the consideration received is recognised in surplus or deficit.

Financial liabilities

The entity removes a financial liability (or a part of a financial liability) from its statement of financial

position when it is extinguished, i.e. when the obligation specified in the contract is discharged, cancelled,

expires or is waived.

The difference between the carrying amount of a financial liability (or part of a financial liability)

extinguished or transferred to another party and the consideration paid, including any non-cash assets

transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven

or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with

the Standard of GRAP on revenue from non-exchange transactions (taxes and transfers).

Fair value measurement considerations

The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument

is not active, the entity establishes fair value by using a valuation technique. Valuation techniques include

using recent arm’s length market transactions between knowledgeable, willing parties, if available,

reference to the current fair value of another instrument that is substantially the same, discounted cash

flow analysis and option pricing models. If there is a valuation technique commonly used by market

participants to price the instrument and that technique has been demonstrated to provide reliable

estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen

valuation technique makes maximum use of market inputs and relies as little as possible on entity-

Accounting policies



specific inputs. It incorporates all factors that market participants would consider in setting a price and is

consistent with accepted economic methodologies for pricing financial instruments. Periodically, an entity

calibrates the valuation technique and tests it for validity using prices from any observable current market

transactions in the same instrument (i.e. without modification or repackaging) or based on any available

observable market data.

Provisions

Provisions are recognised when:

• The entity has a present obligation as a result of a past event;

• It is probable that an outflow of resources embodying economic benefits will be required to settle

the obligation; and

• A reliable estimate can be made of the obligation

The amount of a provision is the best estimate of the expenditure expected to be required to settle the

present obligation at the reporting date. Where the effect of time value of money is material, the amount

of a provision is the present value of the expenditures expected to be required to settle the obligation. The

discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the

risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another

party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement

will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The

amount recognised for the reimbursement does not exceed the amount of the provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions

are reversed if it is no longer probable that an outflow of resources embodying economic benefits or

service potential will be required to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the

passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised. Provisions

are not recognised for future operating deficits.If an entity has a contract that is onerous, the present

obligation (net of recoveries) under the contract is recognised and measured as a provision.

Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised, but disclosed in the notes.

1.10 Revenue

1.10.1 Revenue from exchange transactions exchange

Exchange transactions are transactions in which one entity receives assets or services, or has liabilities

extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services,

or use of assets) to another entity in exchange.

Accounting policies



Measurement revenue is measured at the fair value of the consideration received or receivable, net of

trade discounts and volume rebates.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

• The entity has transferred to the purchaser the significant risks and rewards of ownership of the

goods;

• The entity retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits or service potential associated with the transaction will

flow to the entity; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably

Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue

associated with the transaction is recognised by reference to the stage of completion of the transaction

at the reporting date. The outcome of a transaction can be estimated reliably when all the following

conditions are satisfied:

• The amount of revenue can be measured reliably;


flow to the entity;

• The stage of completion of the transaction at the reporting date can be measured reliably; and

• The costs incurred for the transaction and the costs to complete the transaction can be measured

reliably.

When services are performed by an indeterminate number of acts over a specified time frame, revenue is

recognised on a straight line basis over the specified time frame unless there is evidence that some other

method better represents the stage of completion. When a specific act is much more significant than any

other acts, the recognition of revenue is postponed until the significant act is executed.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably,

revenue is recognised only to the extent of the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at the reporting

date. Stage of completion is determined by services performed to date as a percentage of total services to

be performed.

Interest, royalties and dividends

Revenue arising from the use by others of entity assets yielding interest, royalties and dividends is

recognised when:

Accounting policies




flow to the entity; and

• The amount of the revenue can be measured reliably.

Interest is recognised in surplus or deficit, using the effective interest rate method.

1.10.2 Revenue from non-exchange transactions

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange

transaction, an entity either receives value from another entity without directly giving approximately

equal value in exchange, or gives value to another entity without directly receiving approximately equal

value in exchange.

Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement imposed upon

the use of a transferred asset by entities external to the reporting entity.

Conditions on transferred assets are stipulations that specify that the future economic benefits or service

potential embodied in the asset is required to be consumed by the recipient as specified or future

economic benefits or service potential must be returned to the transferor.

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred

asset may be used, but do not specify that future economic benefits or service potential is required to be

returned to the transferor if not deployed as specified.

Recognition

An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue,

except to the extent that a liability is also recognised in respect of the same inflow.

As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources

from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability

recognised and recognises an amount of revenue equal to that reduction.

Measurement

Revenue from a non-exchange transaction is measured at the amount of the increase in net assets

recognised by the entity.

When, as a result of a non-exchange transaction, the entity recognises an asset, it also recognises revenue

equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is

also required to recognise a liability. Where a liability is required to be recognised it will be measured as

the best estimate of the amount required to settle the obligation at the reporting date, and the amount

of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced,

because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is

recognised as revenue.

Accounting policies



Gifts and donations, including goods and services in-kind, including goods in-kind, are recognised as assets

and revenue when it is probable that the future economic benefits or service potential will flow to the

entity and the fair value of the assets can be measured reliably.

Services in-kind are not recognised.

Membership fees

Revenue from membership fees are recognised as revenue from non-exchange revenue and are recognised

and measured in accordance with GRAP 23.

Conditional grants and receipts

Revenue received from conditional grants, donations and funding are recognised as revenue to the extent

that the entity has complied with any of the conditions embodied in the agreement. To the extent that the

conditions have not been met a liability is recognised.

1.11. Irregular, fruitless and wasteful expenditure and unauthorised expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure incurred in contravention of, or

that is not in accordance with:

• A requirement of the Public Finance Management Act, 1999 (Act No. 29 of 1999) (PFMA); or

• A requirement of the State Tender Board Act, 1986 (Act No.86 of 1986), or any regulations made in

terms of the Act; or

• A requirement in any provincial legislation providing for procurement procedures in that provincial

government.

All expenditure relating to irregular expenditure is recognised as an expense in the statement of financial

performance in the year that the expenditure was incurred. The expenditure is classified in accordance

with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the

statement of financial performance.

Fruitless expenditure means expenditure which was made in vain and would have been avoided had

reasonable care been exercised. All expenditure relating to fruitless and wasteful expenditure is recognised

as an expense in the statement of financial performance in the year that the expenditure was incurred.

The expenditure is classified in accordance with the nature of the expense, and where recovered, it is

subsequently accounted for as revenue in the statement of financial performance.

Unauthorised expenditure means:

• Overspending of a vote or a main division within a vote; and

• Expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in

accordance with the purpose of the main division.

All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of

financial performance in the year that the expenditure was incurred. The expenditure is classified in

accordance with the nature of the expense, and where recovered, is subsequently accounted for as

revenue in the statement of financial performance.

Accounting policies



When the Accounting Authority determines the appropriateness of disciplinary steps against an official,

the Accounting Authority must take into account:

• The circumstances of the transgression;

• The extent of the expenditure involved, and

• The nature and seriousness of the transgressio

All unauthorised, irregular or fruitless and wasteful expenditures are disclosed as a note to the annual

financial statements of the entity.

1.12. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets

are added to the cost of those assets, until the assets are substantially ready for their intended use or

sale. Qualifying assets are assets that necessarily take a substantial period to get ready for their intended

use or sale. Investment income earned on the temporary investment of specific borrowings pending their

expenditure on qualifying assets is deducted from the cost of those assets.

Other borrowing costs are recognised as an expense in the period in which they are incurred.

1.13. Key accounting judgments and key sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions

that affect the amounts represented in the annual financial statements and related disclosures. Use of

available information and the application of judgment are inherent in the formation of estimates. Actual

results in the future could differ from these estimates which may be material to the annual financial

statements.

Significant judgment includes:

Going concern

Management considers key financial metrics in its approved medium-term budgets, together with its

existing term facilities, to conclude that the going concern assumption used in the compiling of its annual

financial statements is relevant.

Other provisions

For other provisions, estimates are made of legal or constructive obligations resulting in the raising

of provisions, and the expected date of probable outflow of economic benefits to assess whether the

provision should be discounted.

Impairment testing

The recoverable (service) amounts of individual assets and cash-generating units have been determined

based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require

the use of estimates and assumptions.

The entity reviews and tests the carrying value of assets when events or changes in circumstances suggest

that the carrying amount may not be recoverable. If there are indications that impairment may have

occurred, estimates are prepared of expected future cash flows for each group of assets.

Accounting policies



Useful lives of property, plant and equipment and intangible assets

The entity’s management determines the estimated useful lives and related depreciation charges for

property, plant and equipment and intangible assets. This estimate is based on the condition and use of

the individual assets, in order to determine the remaining period over which the asset can and will be

used.

Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available-for-sale

securities) is based on quoted market prices at the end of the reporting period. The quoted market price

used for financial assets held by the entity is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over-the

counter derivatives) is determined by using valuation techniques. The entity uses a variety of methods

and makes assumptions that are based on market conditions existing at the end of each reporting

period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other

techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining

financial instruments. The carrying values of trade receivables and payables are assumed to approximate

their fair values.

1.14 Employee benefits

Short-term employee benefits

Short-term employee benefits are employee benefits (other than termination benefits) that are due to

be settled within twelve months after the end of the period in which the employees render the related

service. Short-term employee benefits include items such as:

• wages, salaries and social security contributions;

• short-term compensated absences (such as paid annual leave and paid sick leave) where the

compensation for the absences is due to be settled within twelve months after the end of the

reporting period in which the employees render the related employee service;

• bonus, incentive and performance related payments payable within twelve months after the end

of the reporting period in which the employees render the related service and non-monetary

benefits (for example, medical care, and free or subsidised goods or services such as housing, cars

and cellphones) for current employees.

When an employee has rendered service to the entity during a reporting period, the entity recognises the

undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:

• as a liability (accrued expense), after deducting any amount already paid. If the amount already

paid exceeds the undiscounted amount of the benefits, the entity recognises that excess as an

asset (prepaid expense) to the extent that the prepayment will lead to for example, a reduction in

future payments or

• a cash refund and

• as an expense, unless another Standard requires or permits the inclusion of the benefits in the

cost of an asset.

Accounting policies



The expected cost of compensated absences is recognised as an expense as the employees render services

that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.

The entity measures the expected cost of accumulating compensated absences as the additional amount

that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting

date.

The entity recognises the expected cost of bonus, incentive and performance related payments when the

entity has a present legal or constructive obligation to make such payments as a result of past events and a

reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic

alternative but to make the payments.

Post-employment benefits: Defined contribution plans

When an employee has rendered service to the entity during a reporting period, the entity recognises

the contribution payable to a defined contribution plan in exchange for that service: as a liability (accrued

expense), after deducting any contribution already paid. If the contribution already paid exceeds the

contribution due for service before the reporting date, an entity recognise that excess as an asset (prepaid

expense) to the extent that the prepayment will lead to, for example, a reduction in future payments

or a cash refund; and as an expense, unless another Standard requires or permits the inclusion of the

contribution in the cost of an asset.

1.15 Related parties

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by

the South African Government. As a consequence of the constitutional independence of the three spheres

of government in South Africa, only entities within the national sphere of government are considered to

be related parties.

Key management are those persons responsible for planning, directing and controlling the activities of

the entity, including those charged with the governance of the entity in accordance with legislation, in

instances where they are required to perform such functions.

Close members of the family of a person are considered to be those family members who may be expected

to influence, or be influenced by, that management in their dealings with the entity.

Only transactions with related parties not at arm’s length or not in the ordinary course of business are

disclosed.

1.16 Budget information

A reconciliation between the statement of financial performance and the budget has been included in the

annual financial statements, as the recommended disclosure as determined by National Treasury, as the

annual financial statements and the budget are not on the same basis of accounting. Refer to note 23 -

Reconciliation between budget and statement of financial performance.

Accounting policies



1.17 Prior period error

Prior period errors are omissions from, and misstatements in, the entity’s financial statements for one or

more prior periods arising from a failure to use, or misuse of, reliable information that was available and

could reasonably be expected to have been obtained and taken into account in preparing these financial

statements. Such errors result from mathematical mistakes, mistakes in applying accounting policies,

oversights and/or misinterpretations of facts.

A prior period error shall be corrected by retrospective restatement except to the extent that it is

impracticable to determine either the period-specific effects or the cumulative effect of the error.

Any prior period error affecting the third set of comparable financial statements shall be disclosed as a

narrative note to the prior period error note. The statement of changes in net assets will be amended in

the prior year comparative financial statements as one line item.

1.18 New standards and interpretations

Standards and interpretations effective and adopted in the current year

In the current year, the entity has adopted the following standards and interpretations that are effective

for the current financial year and that are relevant to its operations:

Standards and interpretations not yet effective or relevant

The following approved Standards of GRAP that have been issued, but are not yet effective, are likely

to affect the annual financial statements when they are adopted as these Standards have been used to

formulate and inform the current accounting policies and disclosures:

1. GRAP 20: Related party disclosures

2. GRAP 32: Service concession arrangements: grantor; and

3. GRAP 108: Statutory receivables

Adoption of the amendments to the Standards of GRAP issued in 2012 and various interpretations of the

Standards of GRAP did not have a significant effect on the financial statements.

Accounting policies



Notes to the annual financial statements

2. Property, plant and equipment

2015 2014

CostAccumulateddepreciation

Carrying values Cost

Accumulated depreciation

Carrying values

Furniture and fixtures 1 630 (674) 956 1 626 (407) 1 219Office equipment 223 (79) 144 156 (48) 108Computer equipment 3 601 (2 123) 1 478 3 413 (1 075) 2 338Leasehold improvements 74 (50) 24 74 (32) 42Communication equipment 288 (109) 179 273 (54) 219Total 5 816 (3 035) 2 781 5 542 (1 616) 3 926

Reconciliation of property, plant and equipment – 2015

Opening balance Additions

Disposals/ impairments Depreciation Total

Furniture and fixtures 1 219 4 - (267) 956Office equipment 108 67 - (31) 144Computer equipment 2 338 333 (133) (1 060) 1 478Leasehold improvements 42 - - (18) 24Communication equipment 219 15 - (55) 179Total 3 926 419 (133) (1 431) 2 781

Reconciliation of property, plant and equipment – 2014

Opening balance Additions

Disposals/ impairments Depreciation Total

Furniture and fixtures 1 297 183 (3) (258) 1 219Office equipment 133 2 - (27) 108Computer equipment 456 2 776 (19) (875) 2 338Leasehold improvements 890 - (749) (99) 42Communication equipment 172 172 (68) (57) 219Total 2 948 3 133 (839) (1 316) 3 926

Management has reviewed useful lives at 31 March 2015 and concluded that they fairly reflect the expected usage of assets. Proceeds, amounting to R13 727 were received from the company insurance for a stolen laptop.

3. Intangibles assets

31 March 2015

2015 2014

CostAccumulated depreciation

Carrying values Cost

Accumulated depreciation

Carrying values

Computer software 7 840 (5 514) 2 326 6 465 (2 099) 4 366




3. Intangibles assets (continued)

Reconciliation of intangibles assets– 2015

Opening balance Additions Amortisation Total

Computer software 4 366 1 375 (3 415) 2 326

Reconciliation of intangibles assets– 2014

Opening balance Additions Amortisation Total

Computer software 1 877 4 213 (1 724) 4 366

4. Receivables from exchange transactions

Financial assets at amortised cost

2015R’000

Restated2014

R’000Receivables from exchange transactions 7 883 7 021Employee costs in advance – 15Prepayments 32 98Project prepayments 2 883 –PAYE control 34 –UIF control 3 –Provision for bad debts (5 180) (4 646)Recoverable fruitless and wasteful expenditure 12 –Interest receivable 1 076 405

6 743 2 893

Trade and other receivables are not pledged as security. The entity does not hold any collateral as security.

Trade and other receivables past due but not impaired

Trade and other receivables which are less than 3 months past due are not considered to be impaired; however,

conditions should not exist that indicate impairment.

At 31 March 2015 R1.7 million (2014: R1.8 million) were past due but not impaired.

The ageing of amounts past due but not impaired is as follows:1 – 3 months past due - 1 162 3 – 6 months past due 1 131 6386 – 12 months past due 538 -




Trade and other receivables impairedThe amount of the provision was R5.2 million as of 31 March 2015 (2014: R4.7 million) 2015

R’000

Restated2014

R’000The ageing of these receivables is as follows:Over 6 months 5 180 4 646

Reconciliation of provision for impairment of trade and other receivables:Opening balance 4 646 6 821Amounts written off as uncollectable – (2 175)Additional provision 534 –Provision for doubtful debts 5 180 4 646

The creation and release of provision for impaired receivables have been included in operating expenses in

surplus. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable

mentioned above.

5. Cash and cash equivalents

Cash and cash equivalents consist of:Cash on hand 15 10Bank balances 364 837 151 252

364 852 151 262

There are no restrictions placed on the realisation or usability of cash balances. The entity does not have access

to any additional undrawn facilities.

6. Unspent conditional grants and third party funds

Unspent conditional grants and receipts comprises:Unspent grants and third party funds 338 957 129 618

Movement during the yearBalance at the beginning of the year 129 618 125 248Prior period error - 417Additions during the year and interest 264 619 95 202Income recognition during the year (55 280) (19 449)Transfers* - (71 800)

338 957 129 618

*An amount of R106 million was repaid, on 30 April 2015, to the RDP Fund for the EU AID demo project and the

Danish renewable energy programme.

These amounts are invested in money market accounts and interest accrues to the invested money.




6. Unspent conditional grants and third party funds (continued)2015

R’000

Restated2014

R’000Unspent conditional grants and receipts comprises:Danish commercial building project 460 472European Union project (COCATE) 457 524FP7 135 67SA Carbon Capture and Storage centre 190,693 85 736Centre for energy systems and research 4,984 4 110SA road map 755 734SDC EE monitoring and Implementation project 1 380 940Working for energy programme 19,755 25 137EU AID demo project 94,343 4 288REEEP 431 797Wind resource mapping 2 331 4 221Shale gas 9 134 1 627Danish renewable energy programme 13 545 -EEDSM 179 1 024Energy efficiency - (51)SASGI - (8)Green transport 375 -

338 957 129 618

7. Provisions

Reconciliation of provisions – 2015Opening balance

R‘000Utilised

R‘000Additions

R‘000Closing

R‘000Bonus provision 7 266 (7 266) 7 511 7 511

Reconciliation of provisions – 2014Opening balance

R‘000

UtilisedR‘000

AdditionsR‘000

Bonus provision

R‘000Bonus provision 7 921 (7 921) 7 266 7 266

The bonus provision is calculated based on a percentage of the entity’s performance and the individual

performance ratings of staff members.




8. Payables from exchange transactions

2015R’000

Restated2014

R’000Trade payables 745 889Accruals 11 630 6 695PAYE control - 7WCA 93 -UIF control 6 11SDL control - 21Salary control 28 144Garnishee control 29 -Medical aid fund control 20 38Leave provision 2 350 2 253

14 901 10 058

9. Revenue

9.1 Revenue non exchange is made up as follows:

MTEF allocation 51 685 61 374Recognition of unspent conditional grants 55 280 22 717

106 965 84 091

9.2 Revenue from exchange transactions is made up as follows:

Interest received 832 225Membership fees and sponsorships 5 512 7 260Other income 77 2 035

6 421 9 520113 386 93 611

Interest is earned on monies in invested in money market accounts with various banks through CEF (SOC) Limited per the service level agreement.

9.2.1 Other Income

Income from tenders 19 67Other debtors written-off - (66)Income from current account - 9Profit on sale of assets - 25Refund - 2 000PV of creditors 58

77 2 035




10. Operating expenses

2015R’000

Restated2014

R’000Advertising 258 1 092Bank charges 30 23Audit fees 818 715Consulting and legal fees 228 6 792IT licence fees 363 -Entertainment 186 114Electricity 505 -Insurance 283 205Conferences and seminars 1 364 70Lease rentals on operating lease 3 251 3 949Marketing and promotional expenditure 1 512 5 420Postage and courier 3 16Printing and stationery 658 489Subscriptions and membership fees 1 931 451Telephone and fax 563 384Travel – local 1 380 3 199Travel – overseas 678 2 496Administration expenses 1 857 4 948

15 868 30 36311. Employee related costsBasic 29 135 25 396Bonus 7 796 5 090Medical aid – entity contributions 450 438UIF 77 68WCA 51 45SDL 358 320Other payroll levies 6 5Leave pay provision charge 164 1 145Employee welfare and training 425 154Recruitment and relocation costs 96 -Provident and pension contributions 1 144 1 156Travel, motor car, accommodation, subsistence and other allowances 253 215

39 955 34 032

In terms of SANEDI’s leave pay policy, employees are entitled to accumulated vested leave pay benefits not taken

within a leave cycle, provided that any leave pay benefits not taken within a period of one year after the end of

the leave cycle are forfeited.




12. Cash generated from operations

2015R’000

Restated2014

R’000Surplus 35 8 568adjustments for: Depreciation and amortisation 4 846 3 040Impairments (7) 819Foreign exchange transactions - 53Accrued expenses (82) (1,496)Movement on bonus provision 245 655Provision for bad debts reversal - (2 175)

Changes in working capital:

210 333 3 007Trade and other receivables (3 849) (632)Payables from exchange transactions 4 843 (731)Unspent conditional grants and receipts 209 339 4 370

215 370 12 471

13. Commitments

Operating lease commitments: CEF (SOC) LimitedMinimum lease payments due –Within one year 408 339

Block C, Upper Grayston Office Park, 152 Ann Crescent, Strathavon, Sandton. The entity has leased Portion 13,

remaining Extent of Erf 14, Portion 1 of Erf 14 Simba Township, together with the building erected thereon

from CEF (SOC) Limited. The agreement commenced on 1 April 2012 and the rent payable shall annually, on the

anniversary date, escalate by 10% or alternatively, shall escalate in accordance with the CPI, whichever is greater.

Either party shall be entitled to terminate this lease on six months’ written notice to the other party.

Operating lease commitments: City Square Trading 522 (Pty) Ltd

Minimum lease payments due –Within one year 2 589 2 369Second to fifth year inclusive 3 567 6 451

6 156 8 820

Block E, Upper Grayston Office Park, Erf 20 Simba Township, Sandton. SANEDI leased units 9 – 12 on the second

floor of Block E, Upper Grayston Office Park, located at Erf 20 Simba Township, Sandton, from City Square Trading

522 (Pty) Ltd. The lease commenced on 1 May 2012 and the rent payable shall annually, on the anniversary date,

escalate by 8.25%. The lease terminates on 30 April 2017. SANEDI has the option to extend the lease for another

5 years.

SANEDI also leased unit 1 on the ground floor of Block E, Upper Grayston Office Park, located at Erf 20 Simba

Township, Sandton, from City Square Trading 522 (Pty) Ltd. The lease commenced on 1 January 2013 and the rent

payable shall annually, on the anniversary date, escalate by 8.25%. The lease terminates on 31 December 2017.

SANEDI has the option to extend the lease for another five years.




13. Commitments (continued) 2015

R’000

Restated2014

R’000Printing equipment Operating lease commitments for printing equipmentMinimum lease payments due – Within one year 59 72 Second to fifth year inclusive 50 181

109 253

SANEDI has entered into a 36 months’ lease for photocopiers. The lease has no escalation clause and is payable monthly in advance. Defaults and breaches

There was no default during the period of principal, interest, sinking fund or redemption terms of loans payable.

No terms were renegotiated before the financial statements were authorised for issue.

Contractual commitments

Within one year 149 647 21 886Second to fifth year inclusive 5 786 -

155 433 21 886

SANEDI has entered into various contracts with service providers for the achievement of its key deliverables for

the Danish renewable energy programme; Working for Energy (WfE) programme; the Centre for Energy Systems

Research, the Hub for energy efficiency and demand side management and various projects under the clean

energy programme.

Capital commitments approved not contracted for

Within one year 840 1 080

These are capex commitments budgeted for and approved by the board but not contracted for.

14. Contingencies

Surplus funds

SANEDI has a surplus for the year ended 31 March 2015 amounting to R0.035 million (Surplus 2014:

R8.6 million). A request has been submitted to National Treasury to retain the surplus, in terms of Section

53 of the Public Finance Management Act.




15. Related parties

Compensation to key management – 31 March 2015

Basic Salary Allowances

Performance Bonus

Subsistence and travel Leave

Entity contributions

2015

R’000Mr KM Nassiep - chief executive officer 1 825 132 717 97 182 32 2 985Ms L Manamela -chief financial officer 1 064 24 - - 29 15 1 132Dr AD Surridge 1 191 108 537 2 45 92 1 975Mr D Batte 1 242 24 426 - 136 21 1 849Dr M Bipath 1 122 84 499 - 51 183 1 939Dr T Mali 1 141 66 423 51 (44) 181 1 818Mr C Snyman 1 068 24 310 32 61 18 1 513Mr D Mahuma 1 242 24 356 7 118 20 1 767Mr B Bredenkamp 1 183 24 499 85 88 182 2 061Total 11 078 510 3 767 274 666 744 17 039

31 March 2014

Basic Salary Allowances

Performance Bonus

Subsistence and travel Leave

Entity contributions

2014R’000

Mr KM Nassiep - chief executive officer 1 719 132 769 75 71 206 2 972Ms L Manamela - chief financial officer

84 2 - - - 10 96

Dr AD Surridge 1 123 108 465 7 - 204 1 907Mr D Batte 1 174 24 397 - - 86 1 681Dr M Bipath 1 058 84 500 15 49 200 1 906Dr T Mali 1 076 66 429 46 46 222 1 885Mr C Snyman 905 21 - 0 - 75 1 001Mr D Mahuma 1 174 24 247 35 - 77 1 557Mr B Bredenkamp 1 118 24 465 85 224 1 916Total 9 431 485 3 272 263 166 1 304 14 921

Members’ emoluments

Committee fees2015

R’000

Restated2014

R’000Mr J Marriott 7 32Ms N Mlonzi 23 24Ms M Modise* - -Mr M Vilana* - -Dr D Hilderbrant 6 24Mr M Gordan* - -Prof E Meyer* - -Ms D Ramalope* - -Dr R Maserumule * (alternate director) - -Ms P Motsielwa 25 8




Committee fees (continued)2015

R’000

Restated2014

R’000Mr G Fourie* - -Mr C Manyungwana* - -Dr C Sita* - -Dr V Munsami* - -

61 88

* These members are not remunerated in their personal capacity

Board audit committee

Committee fees Ms P Motsielwa 25 -Mr V Magan 15 27Ms M Thomani - -Ms M Nyathi - 12Dr C Sita* - -Dr R Maserumule - -Dr D Hildebrandt 15 4

55 43

* These members are not remunerated in their personal capacity.

SANEDI has been established by the Department of Energy and in terms of national legislation. SANEDI is

ultimately controlled by the Department of Energy.

Grants Received

Department of Energy 162 685 134 344Department of Science and Technology 5 100 6 000

All transactions with related parties are arm’s length and will not be disclosed separately.

16. Financial instruments

Introduction

The entity has a risk management and central treasury function that manages the financial risks relating to

the entity’s operations. The entity’s liquidity, credit, foreign exchange and interest rate risks are monitored

continually. Approved policies exist for managing these risks.

Risk profile

The entity utilises the services of risk management and the treasury department in CEF (SOC) Limited to

manage the financial risks relating to the entity’s operations.




Risk management objectives and policies

The entity’s objective in using financial instruments is to reduce the uncertainty over future cash flows

arising from movements in foreign exchange and interest rates. Throughout the year under review it has

been, and remains, the entity’s policy that no speculative trading in derivative instruments be undertaken.

Credit risk

Financial assets, which potentially subject the entity to concentrations of credit risk, pertain principally to

trade receivables and investments in the South African money market. Trade receivables are presented

net of the allowance for doubtful debts.

The exposure to credit risk with respect to trade receivables is not concentrated due to a large customer

base.

The entity manages counter party exposures arising from money market and derivative financial

instruments by only dealing with well-established financial institutions of a high credit rating. Losses are

not expected as a result of non-performance by these counter parties.

Credit limits with financial institutions are revised and approved by the board quarterly.

Fair value

The entity’s financial instruments consist mainly of cash and cash equivalents, trade receivables and trade

payables.

As at 31 March 2014 no financial asset was carried at an amount in excess of its fair value and fair values

could be reliably measured for all financial assets that are available for sale or held for trading.

The following methods and assumptions are used to determine the fair value of each class of financial

instrument:

Cash and cash equivalents

The carrying amounts of cash and cash equivalents approximates fair value due to the relatively short term

maturity of these financial assets.

Trade receivables

The carrying amounts of trade receivables net of provision for bad debt, approximates fair value due to the

relatively short term maturity of this financial asset.

Trade payables

The carrying amounts of trade payables approximates fair value due to the relatively short-term maturity

of these liabilities.

The carrying value of short-term borrowings approximates fair value due to the relatively short-term

maturity of these liabilities. The fair values of other long term borrowings are not materially different from

the carrying amounts.




Maturity profile

The maturity profiles of financial assets and liabilities at the statement of financial position date are as follows:

At 31 March 2015

Less than 1 year

Between 1 and 5 years Over 5 years Non-interest Total

Cash and cash equivalents 364 852 - - - 364 852Trade and other receivables 6 743 - - - 6 743VAT receivable 207 - - - 207Total financial assets 371 802 - - - 371 802

Liabilities Trade and other payables 14 901 - - - 14 901

At 31 March 2014

Less than 1 year

Between 1 and 5 years Over 5 years

Held to maturity

Investments Total Cash and cash equivalents 151 262 - - - 151 262Trade and other receivables 2 893 - - - 2 893Loans receivableTotal financial assets 154 155 - - - 154 155


Financial instruments by category:

31 March 2015

Loans and receivables

Fair value through Profit

and loss – held for trading

Fair value through Profit and loss –des-

ignated Non-interest Total Cash and cash equivalents 364 852 - - - 364 852Trade and other receivables 6 743 - - - 6 743VAT receivable 207 - - - 207Total financial assets 371 802 - - - 371 802





At 31 March 2014

Loans and receivables

Fair value through Profit

and loss – held for trading

Fair value through Profit and loss –des-

ignated Non-interest Total Cash and cash equivalents 151 262 - - - 151 262Trade and other receivables 2 893 - - - 2 893Loans receivableTotal financial assets 154 155 - - - 154 155


Liquidity risk

The entity manages liquidity risk through proper management of working capital, capital expenditure and actual

versus forecasted cash flows. Adequate reserves and liquid resources are also maintained. The table below

analyses SANEDI’s financial liabilities based on the remaining period at the statement of financial position to

the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

At 31 March 2015

Less than 1 year

Between 1 and 5 years Over 5 years Non-interest Total

Liabilities Trade and other payables 14 901 - - - 14 901Commitments 149 647 5 786 - - 155 433Total financial liabilities 164 548 5 786 - - 170 334

At 31 March 2014

Less than 1 year

Between 1 and 5 years

Over 5 years Held to maturity

investments

Total

Liabilities Trade and other payables 10 058 - - - 10 058Commitments 21 886 - - - 21 886Total financial liabilities 31 944 - - - 31 944

17. Fruitless and wasteful expenditure

2015R’000

Restated2014

R’000Reconciliation of fruitless and wasteful expenditure

Opening balance 2 -Fruitless and wasteful expenditure – relating to current year 34 2Less: Amounts condoned by the Board of Directors - -

Fruitless and wasteful expenditure awaiting condonation 36 2




Current year fruitless and wasteful expenditure is as a result of:

• Interest caused by delays with interbank transfers, resulting in payments being allocated late; and

• Two late payments to supplier. Amount will be recovered from the employee who caused the irregular

expenditure.

The necessary steps have been taken to recover the money from the individual staff. Staff have signed an

acknowledgement of debt.

Prior year fruitless and wasteful expenditure was incurred as a result of late payments made to a supplier. All

fruitless and wasteful expenditure was condoned by the Board after the financial year.

18. Irregular expenditure

2015R’000

Restated2014

R’000Reconciliation of irregular expenditure

Opening balance 19 102 12 644Irregular expenditure – relating to current year 426 6 458Less: Amounts condoned by Board (19 102) -

Irregular expenditure awaiting condonation 426 19 102

Condonation of irregular expenditure

At the board meetings held on 11 June 2014 and 29 June 2015, the Board of Directors approved the condonation

of irregular expenditure.

As at the 31 March 2015, none of the irregular expenditure had been condoned by the National Treasury.

Contravention of legislation (Preferential Procurement Policy Framework Act).

No tax clearance certificates

• Goods and services were procured from suppliers without obtaining confirmation that that their tax

matters were in good order resulting in irregular expenditure of R0.098 million. (2014: R1 211 million).

BEEE scores not considered

• Goods and services were procured from suppliers without taking into account the BEEE score of the

subcontractor resulting in irregular expenditure of R0.151 million. (2014: R0.726 million).

Deviation not approved by appropriate authority

• Goods and services were procured from suppliers without deviation from open procurement process

being approved by the Accounting Authority resulting in irregular expenditure of R0.177 million. (2014:

R1.377 million).




19. Prior period errors

Trade and other receivables

• Prepayments relating to straight-lining of operating lease were corrected.

Trade and other payable/revenue from exchange transactions

• Uncleared balances relating to travel and subsistence, salary advances and PAYE were incorrectly accounted

for, resulting in duplicate entries in the clearing accounts. The balances for clearing accounts were written

off to the statement of financial performance.

Deferred income/revenue from non-exchange

• SACCCS, REEEP, Coal Roadmap and CESAR deferred income balance was corrected with monies incorrectly accounted for under SANEDI.

Operating expenditure

• Invoices relating to the prior year were corrected with monies incorrectly accounted for under the current financial year.

The correction of the error(s) results in adjustments as follows:

Statement of financial position Restated2014

R’000Property, plant and equipment 5Receivables from exchange (963)Trade and other payable (528)Deferred Income (417)


Revenue from non-exchange transactions (849)Revenue from exchange transactions 936Personnel costs (4)Depreciation 2Operating expenses 130Repairs and maintenance 1Project costs 222

Prior period errors, amounting to R1.5 million, affecting the 2012/13 financial year impacts directly on the accumulated surplus.




20. Events after balance sheet date

Subsequent to the financial year, on 30 April 2015, an amount of R106 million was repaid to the RDP fund

for the EU AID demo project and the Danish renewable energy programme.

21. Statement of comparative and actual information

NotesOriginal budget

Budget adjustments

Final budget

Final outcome Variance

Actual outcome

as a percentage of original

budget

Actual outcome

as a percentage

of final budget

Financial performanceGrants and other receipts 1 319 684 - 319 684 113 386 206 298 35% 35%

Total income 319 684 - 319 684 113 386 206 298 35% 35%

Employee costs 2 43 439 - 43 439 39 955 3 484 92% 92%Depreciation and asset impairment - - - 4 846 (4 846) -100% -100%Project costs 3 259 549 - 259 549 51 770 207 779 20% 20%Operating expenditure 4 16 696 - 16 696 16 780 (84) 101% 101%

-Total expenditure 319 684 - 319 684 113 351 206 333 35% 35%

Surplus for the year 35

Notes1. Additional Grants from the RDP funds were received for the EU smart metering projects. Moreover

interest that was not budgeted for was earned on grants from money market investments.

2. The increase in employee costs is due to new project related vacancies which arose as a result of new

projects undertaken during the year. These vacancies were not additionally budgeted for. Key vacancies

such as the one for the company secretary and the HR manager were not filled during the year.

3. The variance in projects expenses was as a result of delays in the approval of project plans and finalisation

of project agreements with affected parties. Further details are provided in the performance report.

4. Operating expenditure is in line with the budget and the variance was as a result of cost saving measures

that were applied by the entity during the year.




A state-owned entity established under Section 7 of the National Energy Act 2008, (Act No. 34 of 2008).

Telephone: 011 038 4300Physical Address: BLOCK E,

Upper Grayston Office Park, 150 Linden Road, Strathavon, Sandton

Postal Address: PO Box 9935, Sandton, 2146 Email: [email protected]

Website: www.sanedi.org.za

RP244/2015ISBN: 978-0-621-43838-3

PLEASE RECYCLE THIS REPORT

Documents

ANNUAL REPORT 2014/15 - SANEDI...2 SANEDI Annual Reort 2014/15 PLEASE RECYCLE THIS REPORT This annual report was printed on Cocoon Silk 100% recycled. By using this recycled paper,