Responses to NERSA’s REFIT Proposal

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Following is Kayema’s reponse to NERSA’s REFIT proposal

Another well thought our proposal was submitted by Earthlife South Africa which may be found at the following link: Earthlife Response to NERSA’s REFIT proposal

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The next cleantech frontier: Africa

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Israeli technology companies tend to regard European and American markets as the “Holy Grail” for establishing a global presence. While these markets are certainly attractive, solely focusing efforts there means that Israeli entrepreneurs are missing out on attractive and lucrative opportunities in African and developing markets.

In Africa, in particular, sparse and often non-existent energy or water infrastructure means that renewable or distributed energy and water solutions are the only viable options for these areas, and these solutions are often a matter of survival. As a result, there are substantial opportunities for those who can fill the need. However, solutions to these problems, in many cases, have already been developed in Israel and, due to a lack of local research and development expertise and skills in Africa, require international R&D as is found in Israel. In addition, political instability in the region requires independent decentralized solutions to meet basic energy, food and water needs, rather than government-sponsored programs.

Barriers to entry
First, let’s look at the barriers to entry into African and other developing markets:
1.    The need for local partners. New entrants to these markets need to find capable local partners who have an understanding of unstable political and government institutions. It is very difficult to find these types of partners.
2.    Lack of government participation. Small or non-existent government subsidies means that solutions have to be economical on a standalone basis. This is in contrast to more developed markets, such as Germany and California, that offer feed-in tariffs.
3.    Negative local perception of renewable energy. There is a perception that renewable energy is a cheap, unreliable solution for poor people and that acceptance of these new technologies will further delay the introduction of the grid or other basic infrastructure in their communities. This perception is a serious barrier to entry.
4.    Theft of expensive materials, such as photovoltaic cells. This issue is discussed below in further detail.

Opportunities for Israeli entrepreneurs
Despite the above-mentioned barriers, there are enormous opportunities for Israeli entrepreneurs in Africa and other developing regions.
Rough terrain means less competition

Africa is a tough place to do business. Americans and Europeans prefer to stay away from places like Lagos, Abudja, and Johannesburg, where basic public infrastructure is scarce. Israelis, on the other hand, are battle-hardened entrepreneurs who are not afraid of risk and have a proven ability to adapt to new cultures. Israel, in many ways, is a rough land that has forced its entrepreneurs to develop “no frills” solutions that work within difficult conditions. Israeli entrepreneurs can apply these skills to the rough environment of African and other developing regions, as did Netafim, the developers of the world’s first drip-irrigation systems, which were initially developed to be used in Israel’s arid climate. Netafim’s revolutionary systems have enabled African farmers to dramatically increase their agricultural output and consequently increase their standard of living.

The opportunity for Israeli entrepreneurs is to offer cleantech solutions that are developed specifically for the unique environment found in Africa, as opposed to existing cleantech solutions that were mainly developed for European or American markets, but which do not target the unique needs of developing regions. For example, state-of-the-art technology requiring expensive raw materials does not take theft or low skill base into consideration. Major projects backed by governments and multinational companies have failed because of these factors, particularly projects utilizing expensive photovoltaic solar technology. Thus, there is a need for innovation on a much greater level than what is currently on the market – a real opportunity for Israelis.
Population is large and young

The Israeli local economy is very small, so the prospect of targeting markets with tens of millions and sometimes hundreds of millions of consumers can be very attractive regardless of the potential hardships. In addition, African and developing regions are characterized by young populations, offering untapped markets with growing cash-generating economies.

Same time zone
Israel is in the same time zone as Africa, making it relatively easy to coordinate phone calls, meetings and trips.

Economic opportunity
The clean development global program for buying carbon credits offers a premium for carbon-saving projects emanating from Africa. This means that businesses involved in renewable energy can generate significant carbon credits, which they can then sell at a higher price than other regions due to the priority given to poorer nations.

Economic and social opportunities for Israel
African and developing markets are not for the faint-hearted but can certainly offer great opportunities and potential rewards for those companies that are willing to take the plunge. An awareness of the challenges can advantageously position Israeli entrepreneurs to do business in Africa. We believe that the Israeli government should consider making entry into that region a priority. Not only would it contribute to the Israeli economy, but should Israeli companies become leaders in solving basic humanitarian needs for water, energy and food in these regions, they would have immensely favorable economic repercussions and would do wonders for Israel’s image throughout the world – far more than any PR campaign ever could.

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South Africa’s Renewable Energy Feed-in Tariff

Filed Under Cleantech, Global Warming, South Africa | Tags: none | Leave a Comment

The National Electricity Regulator of South Africa (NERSA) just published two key pieces of new proposed regulations:

1 Power Conservation Program (PCP)

2. Renewable Energy Feed-in Tariff (REFIT)

The PCP proposal has the potential to revolutionize the energy efficiency/renewable energy sector in South Africa by requiring South Africa’s biggest electricity consumers to reduce their use of electricity by 10% or face very high rates. Compared to these rates, renewable energy or energy efficiency steps become highly profitable based on avoided penalties.

The feed in tariff on the other hand is not helpful as a promoter of  renewable energy in South Africa since the prices being proposed do not come near to guaranteeing a suitable return on investment. In addition we believe that a 15 year period is too short. Investor are going to want to see at least 20 years guaranteed rate. We are still early in the process so there is still time to influence NERSA to adopt a more realistic rate. Hopefully the final document will reflect a more realistic policy.

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Brightsource Energy Video

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Following is a video describing breakthrough of achieving 550 degrees Celcius at 140 bar of pressure

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