Amendments proposed to the 100MW licensing exemption and registration requirements

Proposed amendments to the Electricity Regulation Act will amend the licensing exemption and registration requirements for generating, trading, transmitting, and distributing electricity

By Mzukisi Kota, Partner, Jason van der Poel, Partner, Tina Terblanche, Senior Associate & Aviva Hoekstra, Associate at Webber Wentzel

On 2 September 2022, the Minister of Mineral Resources and Energy published proposed amendments to Schedule 2 of the Electricity Regulation Act, 2006 (ERA) for public comment (Government Notice 2459 in Government Gazette 46850) (the Schedule 2 Notice). The Schedule 2 Notice would, once effective, amend the current licensing exemption and registration requirements for trading, generation, transmission and distribution of electricity in terms of the ERA.

In his speech on 25 July 2022, the President announced that the licensing threshold for embedded generation would be removed imminently to encourage increased private investment in electricity generation. This much anticipated removal of the 100 MW threshold is the headline change proposed in the Schedule 2 Notice.

In addition to fixing some drafting issues and deleting definitions that are already contained in the ERA, the Schedule 2 Notice also proposes the following noteworthy amendments:

1.     Activities exempt from licencing:

The activities listed in paragraph 2 of Schedule 2 were exempt from licensing and registration with the National Energy Regulator of South Africa (NERSA) under ERA. In brief, the activities listed in this paragraph are, the operation of: (i) a generation facility for back-up electricity; (ii) a generation facility that does not have a point of connection; and (iii) a generation facility with a capacity of 100 KW or less (and has a point of connection). 

The Schedule 2 Notice indicates that these activities will continue to be exempt from licensing, but it deletes the current language which provides that these activities are also exempt from registration with NERSA. This deletion, which has not been given any context, makes it unclear whether it is intended that these activities should remain exempt from both licensing and registration or whether they will, on the coming into effect of the proposed amendments, be required to be registered with NERSA. If the intention were to subject the activities listed in paragraph 2 to the NERSA registration requirement, this could have the potentially unintended impact of requiring rooftop solar facilities and large generators for back-up power to be registered with NERSA.  

On balance, it seems to us that the better interpretation is that these facilities will, on the language of the Schedule 2 Notice, remain exempt from both licensing and registration requirements. This is because, in terms of section 9(1) of ERA, the Minister must specifically determine which activities are subject to registration, and this could not simply be done by default. Accordingly, silence on whether a particular activity is subject to registration would mean that such activity is not subject to registration.

2.     Activities exempt from licensing, but which must comply with the Code and must be registered with the Regulator

The exemptions listed in paragraph 3.1 of Schedule 2 were previously limited to the operation of generation facilities with a capacity of no more than 100MW. Under the Schedule 2 Notice, this 100MW restriction has been removed and paragraph 3.1 instead applies to generation facilities “of unrestricted capacity”. The intended effect of this amendment appears to be that all so-called “embedded generation” facilities, irrespective of capacity, would be exempted from the licensing requirement. However, the proposed amendment does not simply state this. It, instead, uses the odd phrase “unrestricted capacity” to indicate which facilities are exempt. This phrasing could be justifiably criticised for ambiguity, as it could be read as meaning that the only facilities that are exempt are those which do not have any limits on their capacity. Despite the less-than-optimal choice of phrase, a sensible interpretation is that the amendment is intended to simply mean that “any generation facility”, irrespective of size or capacity, which meets the criteria in paragraph 3, is exempt from the licensing requirement.  

In addition to the above, we note that the removal of the 100MW restriction also applies where a generation facility supplies electricity to one or more customers by wheeling, as was the case, with the previous exemption.

The Schedule 2 Notice also contains the following proposed changes that are worth noting:

·         Connection Agreements will contain the conditions applicable to an end-user customer; references to “energy storage” in paragraph 2.1 and 2.2 will be amended to refer explicitly to “battery storage”.

·         We note that paragraph 3 still refers to “energy storage”, and not just “battery storage”. This potentially makes provision for pumped hydro storage, which in our view should be envisaged. However, clarity on the intention here should be provided; and

·         the following provision will be added to Schedule 2 (paragraph 3.6): “Save for the licensing requirements, a registered generator shall comply with all applicable legislative and regulatory requirements necessary for the sustained operation of the national interconnected power system.” This provision seems to be intended to make it clear that exemption from licensing does not remove the need to comply with the applicable grid codes and any other applicable regulatory requirements.

The greatly anticipated removal of the 100 MW licensing threshold for embedded generation projects is a positive change that will further incentivise private investment in electricity generation and reduce the lead times to commence construction of projects. This, along with other proposed regulatory and legislative changes, should have a positive impact on South Africa’s electricity supply crisis. The changes proposed in the Schedule 2 Notice also pave the way for greater private sector participation in a future competitive power market – as foreshadowed in the draft ERA Amendment Bill published earlier this year.

Despite the positive proposed amendments, there are some remaining issues in the current Schedule 2 that are not addressed by the Schedule 2 Notice:

·         under paragraph 3.2, it is unclear whether the reference to “where there is conveyancing of electricity through the transmission or distribution power system” is intended to exclude the operation of distribution lines that are not connected to the grid at all. In this instance, the electricity exported to the purchaser’s system would not be conveyed through a transmission or distribution power system. We propose that this be clarified by the DMRE; and

·         a “reseller” under Paragraph 3.5 is defined as a person who purchases electricity from a trading entity to sell it to a customer, but “trading entity” is not defined. It is not clear which sellers of electricity would qualify as trading entities. We propose that this be changed to refer to a “trading licensee”.

Interested parties should submit written comments on the proposed amendments by 3 October 2022.

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Extension to comment on the sustainable use of SA’s biodiversity and draft game meat strategy

Extension of the period for public comment on the draft white paper on the Conservation and Sustainable use of South Africa’s biodiversity and the draft Game Meat Strategy until 26 September 2022

The public has been granted an extension to comment on the Draft White Paper on the Conservation and Sustainable Use of South Africa’s Biodiversity and on the Draft Game Meat Strategy, published in July for consultation.

The Draft White Paper was published in the Government Gazette 46687 (Notice No 2252) on 8 July 2022. The date for submissions has been extended from 10 September 2022 to 26 September 2022 at the request of members of the public.

Similarly, the draft Game Meat Strategy for South Africa was published in the Government Gazette 47024 (Notice No.2293) on 18 July 2022.  The closing date for comments has also been extended until 26 September 2022.

The draft White Paper  emphasises the need for a holistic approach to sustainable use, which ensures responsible and humane use of South Africa’s biodiversity, and the ending of poor and harmful practices. Equally importantly, the White Paper also ensures transformation, with access and beneficiation by communities adjacent to protected areas, as well as for previously disadvantaged individuals.

An important companion strategy that has been released together with the White Paper on sustainable use, is the Game Meat Strategy. The strategy acknowledges the significant contribution made by current wildlife businesses and the various associations that drive critical elements of the value chain.

The Department believes, that if properly implemented, the Game Meat strategy will allow for compatible land use on the outskirts of our national parks, and ensure a sustainable off take for surrounding communities.

The Department of Forestry, Fisheries and Environment has, since July, undertaken extensive public consultation processes including face-to-face meetings with stakeholders to solicit their comments.

The Minister of Forestry, Fisheries and the Environment, Ms Barbara Creecy had earlier emphasized the importance of the public participation process to gain the inputs from a broad range of interested and affected stakeholders. The Minister is pleased with the extensive participation to date, and the large number of submissions that have already been received.

Members of public, including interested and affected stakeholders, are encouraged to take advantage of this extension to make valuable contributions and submissions to improve the Draft White Paper on conservation and sustainable use of South Africa’s biodiversity, and to finalise the draft Game Meat Strategy.

Submissions on the Draft White Paper can be made by:

Post to: 

The Director-General: Department of Forestry, Fisheries and the Environment
Attention: Dr Tsepang Makholela
Private Bag X447
PRETORIA
0001

Hand at:
Reception
Environment House
473 Steve Biko Road
Arcadia, Pretoria, 0083

E-Mail: whitepaper@dffe.gov.za(link sends e-mail)

Any inquiries in connection with the draft White Paper can be directed to:
Khuthadzo Mahamba
Cell: 064 880 8728
E-mail: whitepaper@dffe.gov.za(link sends e-mail)

Submissions on the Draft Game Meat Strategy can be made in the following manner:

By post to: Director General: Department of Forestry, Fisheries and the Environment
Attention: Mr Khorommbi Matibe
Private Bag X447
Pretoria, 0001

By hand at: Reception, Environment House, 473 Steve Biko Road, Arcadia, Pretoria, 0083

By email: emasemola@dffe.gov.za(link sends e-mail)  or mmathole@dffe.gov.za(link sends e-mail)

Any inquiries in connection with the Draft Game Meat Strategy 2022 can be directed to Ms Tselenga Mabunda on 063 750 3691 or by emailing  tmabunda@dffe.gov.za(link sends e-mail).

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Minister Mchunu: “Increase private sector involvement in water services to achieve the SDG goals”

Minister Senzo Mchunu addresses International Water Association World Water Congress

Minister Senzo Mchunu says there is a need to increase private sector involvement in water services to achieve the 2030 Sustainable Development Goals (SDG). Minister Mchunu spoke at the International Water Association (IWA) World Water Congress in Copenhagen, Denmark, on 12 September. This year, the global summit focused on Innovative Funding for SDGs and Climate Change. Minister Mchunu was invited by the Danish Minister for Development Cooperation, Mr. Flemming MØller Mortensen and the Danish Minister for Environment, Ms. Lea Wermalin, to present at the high-level summit and to share South Africa’s experiences.

During the visit, Minister Mchunu also strengthened the bilateral cooperation between the two countries, a programme run by the Department’s Director-General, Dr. Sean Phillips. In his speech, Minister Mchunu indicated that some of the challenges that hinder achieving the SDGs are the way municipalities run water and sanitation services.

Minister Mchunu explained that municipal water supply is supposed to be managed as a self-sustaining business, with maintenance, operation and refurbishment costs covered by revenue from the sale of water. “In many municipalities, water and sanitation services are in a poor state and deteriorating,” said Minister Mchunu. “And the percentage of the population with access to reliable and safe water and sanitation services is declining.

“Causes include weak governance and corruption, poor billing and revenue collection, poor asset management, operations management, maintenance and a lack of recruitment of people with the required qualifications and experience.” The Minister said where there is a constraint in the municipalities in terms of finance and expertise, there is substantial expertise in the private sector and banks and pension funds.

“However, private sector involvement in municipal water and sanitation services is considerably low compared to other middle-income countries. The reason for this is a lack of capacity in municipalities to take bankable projects to the market, coupled with a Public Private Partnership (PPP) regulatory framework, which means it takes 8-12 years to facilitate a PPP.

“In this context, we are doing two key things, a) Putting in place public-private collaboration agreements with industries, such as the mines and agriculture, for joint funding of infrastructure projects. This agreement will simultaneously provide bulk water to industry and reticulated water to communities, and b) putting in place a Water Partnerships Office (WPO) to assist municipalities [on how] to contract for PPP and independent water producers (IWPs),” he elaborated. 

The WPO is a ringfenced entity in the Development Bank of Southern Africa, and the work of such a WPO will be assisted by reforms of the PPP regulatory framework currently being finalized by the National Treasury.

Minister Mchunu concluded by assuring all relevant stakeholders that South Africa is keen to learn from the experience of other countries as it embarks on this journey.

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NGK receives order for NAS batteries intended for grid storage by Toho Gas

The transaction will help to stabilise electrical power supply and demand and promote the spread of renewable energy

NGK INSULATORS (NGK) has received an order for NAS batteries for electrical power storage intended as those for grid storage from Toho Gas.

The NAS batteries that Toho Gas ordered have an output of 11 400kW (11.4MW) and a capacity of 69 600kWh (69.6MWh, equivalent to one day’s worth of electrical power consumption by approximately 6 000 average households) and will be installed at the former site of Toho Gas’s Tsu LNG station, with construction set to begin this month.

The batteries will be directly connected to an electrical power grid as the same for grid storage and are intended to stabilise the supply and demand of electrical power by storing electrical power when there is an excess supply and discharging it during shortages. With the introduction of these batteries for grid storage, Toho Gas was selected as a business operator for the “Business to Support the Introduction of Storage Batteries for Power Grids to Accelerate the Introduction of Renewable Energy (Revised Budget FY2021)” * led by the Sustainable Open Innovation Initiative, and it is expected that the batteries will stabilise the supply and demand of electrical power supply while promoting the spread of renewable energy.

Although further introduction of renewable power generation, including solar and wind power, is anticipated to achieve carbon neutrality, the fact that the amount of power generated is affected by seasons and weather presents a challenge for renewable energy. Furthermore, handling the tightening supply and demand of electrical power due to factors such as climate change is becoming a social issue. Charging and discharging batteries for grid storage in line with supply and demand for electrical power can help to solve these issues.

NAS batteries have been installed at more than 200 locations worldwide.

They are used for load leveling and providing supply and demand alignment capabilities by harnessing their unique properties which include enabling discharge over long periods of time with a large capacity. NGK will continue to meet demand for large capacity storage batteries, such as those for grid storage, strive to stabilise the supply and demand for electrical power and promote the spread of renewable energy, while helping to realise a carbon-neutral society.

*Business to Support the Introduction of Storage Batteries for Power Grids to Accelerate the Introduction of Renewable Energy: A business that subsidises a portion of expenses for those who introduce storage batteries or water electrolysis equipment in Japan, enabling the provision of alignment capabilities to handle fluctuations in the output of renewable energy and absorption of excess electrical power with the objective of accelerating the introduction of renewable energy and arranging environments that can fully harness its potential to meet the goal of achieving carbon neutrality by 2050.

overview of the ordered NAS batteries >

Installed site: Former site of Toho Gas’s Tsu LNG station (Tsu City, Mie Prefecture)

Output: 11 400 kW (11.4 MW)

Capacity: 69 600 kWh (69.6 MWh)

Number of units to be installed: 48 NAS batteries (container type unit)

Applications: Provision of electrical power to capacity markets, supply and demand adjustment markets, wholesale markets, and others, and adjustment to supply and demand for electrical power

Start of construction: August 2022 (planned)

Start of operation: Fiscal 2025 (planned)

The NAS batteries that were used for NGK are available in South Africa Visit Altum Energy: www.altum.energy

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Rolls-Royce to release mtu marine engines in 2023 for sustainable fuels

Rolls-Royce is setting another milestone on the road to climate-neutral shipping with the approval of its Series 2000 and Series 4000 mtu marine diesel engines in 2023 for use with sustainable fuels.

Following successful bench and field tests, the Rolls-Royce business unit Power Systems will gradually be approving its Series 2000 and Series 4000 mtu marine engines for EN15940 synthetic diesel fuels from the beginning of 2023. These fuels include the sustainable fuels BtL (Biomass to Liquid), HVO (Hydrotreated Vegetable Oil/renewable diesel) and PtL (Power to Liquid) such as e-diesel. They can all replace conventional diesel fuel, which is made from fossil petroleum, without any adjustments in these engines. Last year Rolls-Royce pledged to prove that the Series 2000 and Series 4000, its most popular in-production engines, can be used with sustainable fuels.

“There is already a lot of interest now from many customers in the marine industry who want to improve their carbon footprint, particularly with HVO,” explained Denise Kurtulus, Vice President Global Marine at Rolls-Royce Power Systems. “Results from pilot customers show significant reductions in greenhouse gases, nitrogen oxide and particulate emissions by using HVO instead of fossil diesel.” The engines are used, for example, in ferries, workboats and large yachts.

Rolls-Royce Power Systems is initially developing methanol engines based on the mtu Series 4000 and will launch them for yachts, tugs, ferries and workboats from 2026. With green methanol from renewable energies, CO2-neutral operation will be possible.

41 000 hours with HVO

“Since 2019, we have been successfully testing the use of HVO (renewable diesel) with mtu engines in six ferries in our fleet,” stated Jim Swindler, General Manager of Golden Gate Ferry in San Francisco (California). The tests in over 41 000 operating hours confirmed, that when HVO is used, mtu engines perform as outstandingly as diesel – in terms of maximum power, load acceptance and fuel consumption. “And the visible smoke that was seen at the dock with conventional diesel has been reduced with the switch to HVO.” Four other shipping companies in the US are currently testing the use of HVO with their mtu engines. HVO is a drop-in fuel, which means that the previous diesel system infrastructure can be used unchanged for its use, and no engine hardware or software modifications are required.

Rolls-Royce will be launching the mtu Hybrid Propulsion Pack for the engines of the mtu Series 2000 and Series 4000 from 2023. It offers flexible propulsion solutions for yachts, ferries, tugs and windfarm vessels and provides a power range from 1,119kW to 4,300kW by the diesel engines plus 165kW to 743kW by the electric motors per drive train.

HVO use significantly reduces CO2, nitrogen oxide and particulate emissions

Waste vegetable and animal fats and used vegetable oils can be used as base materials for HVO, which are converted into hydrocarbons by means of a catalytic reaction with the addition of hydrogen. Through this process, the fats and vegetable oils are adapted in their properties to diesel fuel and can supplement it as an admixture or replace it completely. The benefits of HVO are clean combustion with reductions in particulate emissions of up to 80 percent, nitrogen oxide emissions by an average of eight percent, and (depending on the manufacturing process and feedstock) CO2 emissions by up to 90 percent compared to fossil diesel. Because HVO fuel is produced from renewable raw materials, its production, transport and combustion only generate about as many greenhouse gases as were absorbed by the plants during the growth of the biomass.

Target: 35% greenhouse gas reduction with new fuels and mtu technologies by 2030

Rolls-Royce announced in 2021, as part of its sustainability program, that it would realign its product portfolio so that by 2030, new fuels and mtu technologies can save 35 percent greenhouse gas emissions compared to 2019. “We have realigned our offering for the maritime industry to actively support ship operators on their journey to Net Zero,” explained Denise Kurtulus. The company is now working on methanol engines and fuel cell systems for shipping and developing electrolysers to produce green hydrogen.

Rolls-Royce will deliver mtu Series 4000 gensets similar to the one pictured for the F126 frigates, bedded on specialist mounts and surrounded by an acoustic enclosure. Not pictured: the mtu SCR system for fulfilling the IMO III emissions directive.

Learn more about sustainable mtu solutions for shipping in: Pioneering the Journey to Net Zero (mtu-solutions.com)

Rolls-Royce has completely realigned its mtu portfolio for marine applications to actively support customers on their path to Net zero. The company is working on methanol engines and fuel cell systems for marine use and is developing electrolysers to produce green hydrogen. According to a clear roadmap, marine diesel propulsion systems will gradually be released for sustainable EN15940 fuels, such as HVO, from the beginning of 2023.
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The question of oil: where will it go by 2030?

Fred Razak, Chief Trading Strategist at CMTrading, weighs in on the state of the international oil market, currently under severe pressure and scrutiny due to the Russia-Ukraine crisis, rising prices and 2030’s looming climate deadlines in Europe and the USA.

“As ordinary working people on the street, we will never know precisely what is happening behind closed doors at the White House, the Kremlin or even Luthuli House. But there are always agendas at play that we may not be aware of. Many conspiracy theorists would have much to say about what those agendas might be. All we can do is speculate based on what we see in our world.

“The subject of oil is hotly contested in our current climate. Most of us are familiar with the story surrounding the discussion about oil. Russia – an oil-producing country – is at war with Ukraine. Europe and the United States have voiced their support for Ukraine, and President Joe Biden recently announced a $3 billion military aid package to Russia’s beleaguered neighbour.

“Additionally, the European Union and the United States aim to implement significant steps to move away from fossil fuels by 2030. So, where does this leave oil? This all brings us back to those agendas no one knows about. But while we may not know, we can, of course, speculate.

“Throughout history, wars have been primarily economically motivated. As tragic and senseless as any war is, this conflict is no different. Vladimir Putin recently demanded that ‘hostile countries’ pay for all their natural gas imports in rubles rather than in Euros or US dollars. As the ruble fell rapidly amid the war, Russia blamed the West for its decline. And to strengthen the currency, he issued this ‘ruble clause.’  

“This policy on Russian energy exports means that ‘hostile’ importers in Europe and the US need to buy rubles to buy Russian oil – primarily from the Russian Central Bank. In a roundabout fashion, the importers will still be buying in dollars and Euros, but through the Central Bank, rather than directly from Russian exporters.

“If the Russian Central Bank restricted the movement of the ruble, or if the ruble exchange rate became more favourable towards the dollar because of limited access to Russian commodities like oil and wheat, in theory, buyers would want to accumulate rubles, rather than dollars and Euros.

“In this sense, Ukraine is a pawn in one of Putin’s (and there are many) economic plays for power. In the interim, the oil price has soared. But this is less due to a shortage in supply than it is due to the toxic speculative climate. It’s a gamble and a waiting game on Putin’s part, which could have severe humanitarian consequences for the Russian people who make a living via the supply chain. But Putin is sticking to his guns.

2030 and big oil

“In the story of climate change, fossil fuels and pollution are the villains. Under President Bill Clinton in the late 90s, the ‘bad guy’ was tobacco. Of course, both ‘villainous’ commodities are understandably perceived as destructive. In the case of fossil fuels, because of the damaging effect they have on our environment, and in the case of tobacco, because of the immense health risks associated with tobacco products.

“Shares in major cigarette manufacturers Philip Morris, RJ Reynolds and British American Tobacco fell in response to Clinton’s threat of a multi-billion-dollar lawsuit against the tobacco industry, which was based on Clinton claiming that taxpayers should not have to pay the medical costs associated with lung cancer.

“In the end, however, Clinton’s proposed healthcare reform bill was defeated. And speculators who have not been privy to those ‘secret’ agendas behind closed doors attribute the defeat to big tobacco companies funding opposition to the bill. Tobacco shares bounced back, and anyone who invested in tobacco during the crash capitalised on that.

“Tobacco, though globally regulated and off limits to marketing and advertising companies in most countries, lived to fight another day. Big oil will too. China controls most of the minerals needed to build electric vehicles. And while the West is scrambling to find alternative sources of supply, the oil industry remains in charge.

“Even when electric vehicles become more commonplace in developed markets than fossil fuel-powered vehicles, big oil will still – at least for the foreseeable future – be needed elsewhere. Oil is also used to make many other items we use every day. Some of these are surprising. Even wind turbines – touted as one of the solutions for clean energy – use some oil-based plastic products.

Oil and natural gas are also used to create the asphalt we use on our roads. It is an ingredient in cosmetics, creams, deodorants, and medical equipment like MRI machines. It is still widely used in construction, in many lubricants, waxes, paints, and a variety of other things we see daily that may come as a surprise.  

“Many developing markets are also not equipped to become climate neutral yet. Fossil fuel-powered vehicles are likely to be around far longer in those markets than in Europe and the United States. So, for now, the likes of Exxon Mobil, Saudi Arabian Oil and BP are here to stay, despite oil being one of the world’s most significant matters of contention.  

“Oil companies have the scope and the time to reinvent themselves in changing markets. And they are likely to stick to their guns, just like the cigarette companies did against the Clinton Administration. Is this another case of the villain emerging victorious? Perhaps oil is the villain now, but we may see it reinvent itself in the years leading up to 2050. The story is far from over.”

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Focus on impact investing grows as investors eye new opportunities addressing the energy transition

Impact investing is now viewed among the key pillars of sustainable investing, alongside integration and positive screening, Schroders Institutional Investor Study 2022 has found. Schroders flagship annual institutional study, first launched in 2017, is an influential bellwether of the investment appetite of investors globally, spanning 770 investors and US$27.5-trillion in assets.

Just under half (48%) of investors said impact investing was their preferred approach to implementing sustainability, a significant increase on 38% a year ago and 34% in 2020. The Study also found that the importance of full ESG integration into the investment process had grown as a focus, further cementing it as the most favoured approach among investors. 

Q. What is your preferred approach to implementing sustainable investments?

Growing demand for investment solutions focused on the energy transition was also reflected by the findings. Well over half of investors (59%) said that new investment opportunities addressing the energy transition would encourage them to invest more into sustainable investments. This focus was particularly strong in the UK and Asia Pacific where 68% and 62% of investors respectively highlighted the need for more transition-oriented solutions.

Q. What would encourage you to invest more in sustainable investments?

Interestingly, although the South African sample was small, nine out of 10 respondents said that they believe more consensus around frameworks and methodology would help the journey to net zero.

Sustainable investment performance concerns

At the same time, performance concerns over investing sustainably have ticked up over the past 12 months, with 53% of investors citing this as a challenge compared with 38% a year ago. This is a significant reversal with worries about performance having consistently fallen year-on-year until now, and likely reflects the more challenged market environment. Specifically, in South Africa, eight out of 10 respondents cited performance as a concern. A lack of transparency and reported data was also recognised globally as one of the major obstacles holding investors back from investing sustainably.

Engagement remains a key focus for investors globally with 59% stating that tangible evidence of real world outcomes was the most important component of any active ownership strategy. Specifically, almost two-thirds of investors (64%) believed governance (e.g. transparency of voting and shareholder resolutions) was the top engagement theme. A focus on human rights and the climate completed the top three in terms of engagement priorities.

Encouragingly, almost four in ten investors globally said they had committed to reaching net zero by 2050, with European investors leading the field on this point, ahead of those in Latin America, Asia Pacific and North America. One-third of North American investors are still exploring the transition but are not yet committed to specific targets. Locally, concerns around the practical implications of a just transition are evident with seven out of 10 respondents stating that they are committed to reducing emissions but not to net zero.

Q. Where are you on your path to net zero?

“The findings of today’s influential Study are striking; more and more institutional investors want to measure, manage and deliver impact. Recognising concerns over tensions between sustainable investment and return goals, it’s becoming clear that thoughtful approaches grounded in investment experience will be increasingly critical,” says Andy Howard, Schroders Global Head of Sustainable Investment.

The Study shows that this focus on impact is increasingly important and Schroders is committing significant time, resource and expertise to developing robust and rigorous solutions to meet that need. This focus also extends to offering solutions designed to support the energy transition among a spectrum of social and environmental goals, which is strikingly now one of the key priorities for investors going forward.

“The Study’s overarching focus on delivering real investment outcomes for investors was further evidenced by the importance placed on engagement. Schroders’ market-leading Engagement Blueprint, published this year, is setting new standards on active ownership as it maps out our ambitions and how we look to engage with companies to support and drive progress.”

Investment outlook

More broadly, investors’ return expectations for the next five years have deteriorated compared with a year ago, compounded by significant concerns over the impact of rising inflation and interest rates, as well as geopolitical uncertainty growing and fears over a global slowdown.

Q. Which one worries you the most?

Amid a more challenged outlook, the Study did however find that investors’ confidence in achieving their returns has remained steady – most likely the result of their scaled back expectations.

Interestingly, concerns over global pandemics have markedly fallen in importance as an issue for investors compared with the previous two years.

Markets continue to be caught in the cross currents of concerns about rate increases and worries about recessionary risks. The Study found that investors’ allocations to equities have dipped, reflecting our own house positioning. Indeed, determining what other positions to own around that core defensive position in equities requires a view on whether rates or growth risks are most important,” comments Johanna Kyrklund, Schroders Group Chief Investment Officer and Co-Head of Investment.

“More broadly, in terms of the impact on portfolio performance, the Study found that a number of issues are increasingly on the radar of investors: rising inflation and interest rates, hawkish monetary policy stances, global conflicts and the looming threat of a global economic slowdown. These are all factors that Schroders as an active manager is also looking to navigate on behalf of its clients globally.

“Our conclusion is to continue to focus predominantly on the consequences of rising rates because traditional inflation models are vulnerable to supply bottlenecks caused by a myriad of unprecedented sources; post-pandemic spending patterns, lockdowns in China and the war between Russia and Ukraine. This leaves central banks focused on normalising policy above all else.”

About Schroders Institutional Investor Study

Schroders commissioned CoreData to conduct the sixth Institutional Investor Study to analyse the world’s largest investors’ key areas of focus and concern including the macroeconomic and geopolitical climate, return expectations, asset allocation and attitudes to sustainable investing and private assets.

The respondents (770 globally) represent a spectrum of institutions including corporate and public pension plans, insurance companies, official institutions, endowments and foundations, collectively responsible for US$27.5 trillion in assets. The research was carried out via an extensive global survey during March 2022.

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Sustainable, attainable energy is just a subscription away

South Africa is not alone when it comes to energy supply woes. In Europe and the UK, energy prices are soaring while in the US as many as one in six households cannot afford their electricity bills. Globally, we are on the cusp of a profound energy revolution in which renewables are taking the lead.

In the world of clean and sustainable energy, solar power is often touted as the future. This is particularly true in Africa where infrastructure and reliability are a challenge and sun exposure is plentiful. But there has always been a hitch: cost. Versofy Solar co-founder Ross Mains-Sheard believes this barrier to entry is now being turned on its head. Technological advances, coupled with the sort of innovative thinking that sets Versofy Solar apart from the market, are merging to make solar more affordable and accessible to both households and businesses.

“We find ourselves in a perfect storm, with the cost of electricity from the national grid rising significantly each year while, on the other hand, the cost of solar is on a downward trend,” says Mains-Sheard. “We are very close to a scenario where renewables will not only be the best environmental option, but the more economical one as well.”

How do you join the energy revolution?

Gauteng and Cape Town-based Versofy Solar, a trailblazer in the South African solar industry, burst into the sector in 2021 with the aim of solving the pain points for potential solar customers to help drive a widespread uptake of clean solar energy.

Mains-Sheard, a civil engineer with an entrepreneurial streak and a fascination with problem solving, explains: “Traditionally solar has been reserved for the fortunate few who could afford to pay the R150 000-plus price tag upfront and in cash. By offering flexible payment options we have opened up the market from the few to the many. We are quickly reaching the point where if someone can afford to pay their monthly electricity bill they can afford to pay their solar bill.”

Furthermore, the ripple effects of this green uptake will be felt across the South African economy. The solar ecosystem is a hive of activity and opportunity, spanning installers, distributors, banks, insurance and logistics companies. By joining the revolution South Africans will help move the economy forward, at a time when it is most needed.

Power up with flexible payment options

Versofy Solar is playing its part by making it easier for South Africans from all walks of life to join the energy revolution and achieve energy independence by using a flexible, subscription-based payment offering.

“This approach not only allows a wider range of people to gain access to the service, but also removes the cost of ownership required to maintain the product,” says Mains-Sheard. “Another huge benefit to subscriptions is that it allows the end user to constantly have access to the latest and greatest technology.”

Instead of paying for a full system upfront, Versofy Solar offers a 60-month rent-to-own subscription model or a solar-as-service option over 36 months.

The momentum is growing

To date, more than 400 homes have already opted for Versofy Solar’s hybrid solar solution and versatile payment and subscription options. “We have been doubling growth month on month and should surpass our annual target of 600 homes within the next few months,” says Mains-Sheard.

Versofy Solar co-founder Angus Henderson notes that Versofy Solar’s innovative approach to financing solar has certainly resonated with the market and consumers.

“We were one of the first to offer a range of products like this,” says Henderson. “There has been very positive feedback from the market, purely because people are crying out for a solution to the energy crisis.” 

Switch to the sun

Versofy Solar’s growth from a team of two to a business of 20 (in just one year) highlights the demand in the market currently. By using technology to streamline operations they are able to keep up with the growing demand. With still relatively low uptake nationwide, the co-founders hope their unique subscriptions model will further boost the number of households opting to invest in energy security.


“The energy behind the revolution is palpable and we want South Africans to feel this, to feel a part of something bigger, because what we are doing matters. We are extremely excited to be spearheading an energy revolution to fast forward the transition to a renewable, sustainable future,” concludes Mains-Sheard.

And this is how you spark a revolution.

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EUR 100-million loan for Africa Finance Corporation to support transition in Africa

The Italian development finance institution Cassa Depositi e Prestiti SpA (CDP) has agreed a debut 100 million euro loan for Africa Finance Corporation (AFC), the leading infrastructure solutions provider on the African continent, to facilitate investments in renewable power, energy efficient projects and climate-resilient infrastructure.

CDP, with assets totalling over 400 billion euros, is providing the bilateral loan to support AFC projects that are urgently needed to transform African infrastructure to help combat and adapt to global warming, as well as catalyse industrialisation, create jobs and reduce poverty.

“Building strong partnerships with major international institutions such as Africa Finance Corporation is part of our strategy to scale up impact finance and accelerate the ecological transition in developing countries” affirmed Antonella Baldino, Head of International Cooperation and Development Finance at CDP. “It is in this spirit that we welcomed AFC recent entry into the International Development Finance Club. By intensifying our commitment to Africa, this operation best places CDP as a partner of choice for regional and local Development Finance Institutions.”

The loan agreement supports CDP’s mission to boost economic growth in emerging markets and expand Italy’s global investment footprint and demonstrates continued interest from European investors in high-quality infrastructure projects on the African continent.

“This milestone agreement today marks the start of a mutually beneficial relationship between AFC and CDP – the Italian DFI” said Samaila Zubairu, President & CEO of AFC. “Access to funding from highly rated institutions, like CDP, helps us to further our commitment to investing in projects that simultaneously combat climate change and develop the critical infrastructure required for Africa’s economic growth, while delivering reliably competitive investor returns.”

AFC has invested over $10 billion in projects spanning 35 African countries over 15 years. The Corporation draws capital from a diverse range of international investors and lenders as part of a strategy to maintain its investment grade credit rating of A3 at Moody’s. CDP joins AFC’s pool of funding partners comprising international development finance institutions such as the German Development Bank KfW, the India Exim Bank, and a syndication of Germany’s DEG, Netherland’s FMO and France’s Proparco, demonstrating global investor confidence in AFC’s strong credit profile and strategy to delivering de-risked, transformational projects for Africa.

The focus on sustainably reducing Africa’s energy deficit led to agreement by AFC last month to jointly acquire Lekela Power, the continent’s biggest renewables independent power producer, with plans to double generation capacity within four years. AFC’s approach to balancing the need for emissions reduction in Africa with critical development imperatives is set out in a recently published white paper titled Roadmap to Africa’s COP: A Pragmatic Path to Net Zero. The report received wide endorsement from leaders including Ghana’s President Nana Akufo-Addo, Nigeria’s Vice President Yemi Osinbajo and the Chair of the African Group of Negotiators at COP26, Tanguy Gahouma.

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ABB Ability™ eMine drives energy transition in the mining industry

Mining houses are confronted with the same energy transition as other industries and have an urgent responsibility to transform the way they mine through technological change.

By Erik Pretorius, Head of Sales: Africa and Australia, ABB

It is clear that the energy needs of the modern mine simply cannot be met sustainably with diesel machinery alone. There has to be a transformation and ABB is committed to working with mines to bring about that transformation.

We care deeply about the health, safety, and well-being of our planet as much as we do the people who inhabit it. Our vision is for CO2-free and energy-efficient mines to help combat climate change, creating sustainable progress for today and future generations. We work hand in hand with our clients and partners to convert existing mines from fossil fuel energy to all electric. In this way, ABB can assist the mining industry to meet its sustainability goals, while staying competitive and ensuring high productivity.

ABB Ability eMine™ makes the all-electric mine possible, with fully integrated electrification and digital systems from mine to port. The solution includes a portfolio of electrification and digital systems to accelerate decarbonisation in the mining sector. We support the mining industry from the early mine design stage to convey the full benefit posed by electrification, assisting with designing the hauling process to optimise it with electrical solutions that match mine constraints and help meet production targets.

The solution also focuses on supplying power to mining vehicles, with fit-for-purpose electrification to achieve the most optimised electrified process. In addition, the solution integrates with ABB Ability™ applications to plan, monitor, and control processes to optimise operations and energy usage.

A key component of keeping the all-electric mine running is ensuring that the equipment performs when required and that trucks can charge when they need to. We provide charging station solutions to meet the needs of modern mining operations and interface with all vehicles. eMine™ is vehicle type and OEM agnostic in that it supports an interoperable approach based on proven standards to provide any solution needed to charge battery electric vehicles (BEVs).

A new pilot innovation known as ABB Ability™ eMine™ FastCharge is set to become the world’s fastest and only fully automated charging system for haul trucks, offering up to 600 kW of power. Designed for the harshest environments, this flexible system can be easily installed anywhere to charge a truck without human intervention, and at the highest power on the market today to minimise downtime.

The solution includes ABB Ability™ eMine Trolley System technology to reduce diesel consumption by up to 90% while haul trucks are on a trolley system, which also reduces energy costs and environmental impact. In addition, electrified trucks run at a higher speed for a better speed-on-grade. Current trolley technology is based on diesel hybrids and can be supported by ABB’s Trolley System to assist with the successful transition to an all-electric mine. The system is ideal for heavy-duty vehicles such as those used for inclined hauling, an application that battery-only solutions cannot cater for at present.

We are committed to create sustainable progress for today and future generations by helping our mining clients through their energy transition. ABB Ability™ eMine makes the all-electric mine possible, with fully integrated electrification and digital systems from mine to port. From design to ongoing service, ABB is the partner that can transform today’s mine operations while improving the world beyond them.

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