Kuyasa Clean Development Mechanism Pilot Project
South African Export Development Fund
South Africa

The Problem

Since the current democratic government was elected in South Africa in 1994, a major initiative has been underway to build low-cost housing for the millions of South Africans who do not have houses, or who live in informal shacks. 2.4 million homes have been built since 1994; and the aim for the next 15 years is to build a further 3 million. However, the current backlog is estimated to be around 2.1 million; and is expected to grow over the coming years. Cape Town currently has a backlog of 260 000, and this grows by 20 000 each year.

The aim is usually to build low-cost housing as cheaply and quickly as possible, so that people are able to afford the homes, and move in soon. However, this means that the homes are often of a low quality, and little attention is paid to thermal comfort or efficiency. This leads to very poor living conditions, and excessively high rates of energy consumption. People living in low-cost housing have to pay more for heating and cooling (including heating water), which exacerbates the cycle of poverty. Coal and wood fires, and gas or paraffin cookers also cause health problems, especially of a respiratory nature. Ceilings in the houses are also sometimes made of asbestos, which again leads to numerous health problems, including tuberculosis.

South Africa is also facing a major energy crisis. The major national energy and electricity supplier – Eskom – is dealing with a massive shortage of resources which threaten its capacity to generate enough power for all those on its grid. This has led to rolling power-cuts and black-outs across the country in a bid to save energy. This often disproportionately affects those who do not have access to alternative energy sources (such as solar or wind power). Developing new power stations will take a number of years, and by the time they are built, the demand will still likely be beyond their capacity. The cost of developing these power stations is also exorbitant, and it remains to be seen whether the country can actually afford to do so. There are numerous initiatives currently being implemented by different groups across the country to attempt to ease the burden on Eskom, and generate new sustainable energy sources. However, this process is still in its infancy in South Africa, and the majority of people are still dependant on the main power grid. Alternative energy sources also remain expensive, and beyond the means of many people.

Solution and Key Benefits

 What is the initiative about? (the solution)
The project has developed rapidly, and 1000 low-cost houses in Kuyasa, Khayelitsha (an informal housing area outside of Cape Town) had solar-water heaters (SWHs) retrofitted by mid-2009 (with the aim to complete 2300 by the end of the year). The process also included installing insulation ceilings, energy efficient lightbulbs, and safe wiring. These SWHs have had numerous positive impacts on those who received them. It reduces the reliance on coal or gas for heating water, which has both reduced respiratory problems for those living there; and reduced the costs of heating. The new safer ceilings have also helped to reduce health problems. This reduction in monthly expenditure can have a huge impact on the household’s ability to sustain itself. It has also enabled the beneficiaries to have easy access to hot water, without placing an additional burden on the national energy grid.

Through the government’s Expanded Public Works Programme (EPWP – a government initiative to create jobs for the unemployed), the project has created numerous employment and entrepreneurial opportunities for those involved. These included jobs as plumbers, electricians, carpenters, SWH installers, frame installers, maintenance crews, quality controllers, quantity surveyors, and gardeners. 85 full-time jobs were created (50 are youth, 28 women, three disabled); and the project had paid 16 500 job days by mid-2009. Each employee received accredited training, amounting to 1472 training days. A further 1742 people from the Kuyasa community attended 1929 non-accredited training days.

The project obtained registration as South Africa’s first internationally registered Clean Development Mechanism (CDM) project under the Kyoto Protocol; and was the first Gold Standard Project to be registered in the world. It is therefore earning carbon credits (through the Certified Emission Reduction – CER – process) for introducing energy efficiency as a poverty alleviation strategy. It is estimated that the project will result in emission reductions of ~2.85 tonnes of CO2 per household per year over 21 years. It will also contribute to a 5% household temperature increase in winter; a 5% decrease in summer; and a saving of up to 40% on electricity bills. A beneficiary satisfaction survey in July 2009 showed that 96% of the households are either very satisfied (86%) or satisfied (10%). 76% reported a decrease in the frequency of respiratory illness; and a 56% decrease in the number of households spending more than R100/month on electricity (amounting to a saving of R50/month).

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The main development driver for the initiative was SouthSouthNorth (SSN – a non-governmental organisation), on behalf of the City of Cape Town’s Environmental Resource Management Department and Urban Renewal Programme. A pilot project was initially implemented six years ago, and its success led to the development of this larger-scale initiative. The project is implemented by the South African Export Development Fund (SAEDF), a non-profit trust, who also under-write the budget for its completion. SAEDF has also committed to sustainable financing and ongoing maintenance and repair of the installations. A large amount of the funding also comes from the Department of Environment and Tourism’s (DEAT) Social Responsibility Programme; and the Provincial Department of Housing.

A number of private sector companies have also supported the project, mainly through supplying materials. Genergy provided the solar technology; while Isoboard supplied the ceiling insulation material. Els Manfacturing and Woolworths have supported a greening initiative in the area, and a public garden is being created and over 2000 trees are being planted. A Project Advisory Committee oversees the implementation of the project, and comprises officials from DEAT, the City of Cape Town, local councillors, and representatives of the local community.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The main objective of this project is for it to be used as a large-scale pilot to gauge the feasibility of energy efficiency interventions in all low-cost housing in the country. A second objective was to create a sustainable, low-cost and energy efficient way for homes to be able to access hot water. Finally, the project hopes to stimulate growth in the sustainable energy market in South Africa, to make it easier to roll-out in the future.

In order to achieve the main objective, the project has been well-documented in each stage, and problems or obstacles dealt with early. This has included keeping effective installation and maintenance data; as well as operational logistics and a maintenance plan. In order to make the project more sustainable, local community members are trained and hired to carry out the maintenance and monitoring of the installations for at least seven years (the initial period over which the CERs will be claimed); as well as for an extension up to a maximum of 21 years. The SAEDF is also working to register a large-scale CDM methodology, which will include establishing systems for CDM monitoring and verification, including data management tools and a handbook to guide future SWH programmes. This will help to ensure that the CDM method and its operationalisation becomes easier to implement in the future. The ongoing monitoring will also help to roll out the initiative on a larger scale across the country.

In order to create sustainable and energy-efficient ways for households to heat water, each beneficiary household was retrofitted with a solar water heater, insulated ceilings, safe wiring, and energy efficient lighting. These have all helped to reduce household reliance on non-sustainable energy sources (eg. Coal, gas); and thereby improve the health conditions for those living in the households. It has also helped to ease the burden on the national electricity provider, as these households use less electricity than previously.

Initially, it was difficult to access good-quality local SWHs, and these had to be imported. There has not been much demand in the country to date for SWHs, and this has meant that few companies have begun developing them. However, by rolling out similar programmes on a large scale, it is hoped that a strong local efficient energy market will begin to develop, as the demand increases. The project has also trained local community members in the installation and maintenance of SWHs, providing them with opportunities for income-generation in the future; but also providing a cheaper way to maintain similar structures in the future.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
In 2003, SSN and City of Cape Town developed 10 pilot houses retro-fitted with SWHs, and monitored and measured their effectiveness to provide practical data for a CDM energy efficiency measuring system. In 2005, the Kuyasa project gained CDM certification (arranged by SSN). In 2006, SAEDF diversified its projects to include renewable energy projects, and became involved in the Kuyasa project. In 2008, the Kuyasa project began, and retrofitting of houses started in August 2008, with the aim of reaching 2300 houses by the end of 2009. SAEDF is primarily a development fund that aims to develop export related business; and has expanded its mandate to include the development of renewable energy and an energy savings industry in South Africa. SAEDF therefore became involved in the Kuyasa project as a way to begin achieving this.

Community participation and consultation has been ongoing from the beginning of the project; and community engagement has resulted in a strong sense of ownership by those living in Kuyasa. Community members received training in installation and maintenance of the SWHs; and retrofitting commenced in 2008. Beneficiary households also attended information workshops. Once households have been retrofitted with the SWH, ongoing monitoring is conducted, and a household impact survey took place in July 2009. 2300 houses were to be retrofitted by the end of 2009. The project was registered under the CDM project of the Kyoto Protocol; and was the first Gold Standard Project to be registered in the world. SAEDF has also invested in the registration of a large-scale SWH methodology, to improve CDM operationalisation.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
One of the biggest obstacles to this project was the unavailability of low-cost SHW units when the project began. Initially, SAEDF bought a cheap and reliable imported product, which was an unpopular choice. However, because the project generated a market for these units, and set a benchmark price, a number of South African companies responded by producing relatively competitive products. The project also faced initial difficulties in terms of financing. Although it was registered under the CDM in 2005, implementation only began taking place in 2008, as the project was deemed too expensive to implement. SAEDF committed decided to underwriting any budget shortfall and recover it out of future carbon credits. However, the budget for the project was less than originally estimated, and SAEDF did not have to contribute significant additional funding.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The work on the initial conceptualisation and design of the Kuyasa project was supported by funders of SSN, including the Royal Netherlands Embassy; and DANIDA. The budget for the current project has been set at R30 million. The DEAT Social Responsibility Programme provided R24 million; while the Provincial Department of Housing allocated a further R4 million. SAEDF has underwritten any budget shortfall, and recovers it out of future carbon credits. Currently, the project earns R800 000 worth of carbon credits per year. Over the 21 year crediting period, this will amount to roughly R17 – R18 million. However, the world’s carbon markets are currently experiencing a downswing, and it is estimated that the value of CERs could increase to €30 per unit in the future, which would generate a substantially larger carbon income stream per year. The first 10 000 CERs fro this project were sold to the UK government to offset the G8 summit at Gleneagles in 2005.

Contractors involved in the installation and maintenance of the project are employed under the government’s EPWP. Many earn a monthly income of R3500 – R4000 a month, and a number have been able to gain full-time employment. The SWH units were initially imported from Genergy in China (each costing around R5000). However, more local products have been developed recently, and will hopefully be used in future projects. Isoboard supplied ceiling insulation material. Woolworths and Els Manufacturing have been supporting a greening initiative in the area, and 2000 trees are to be planted. Two community liaison officers are employed by the project, and they receive any complaints from beneficiary homeowners and help to coordinate the maintenance team. They also conduct workshops on solar energy and related issues to ensure community participation and support.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
The aim of the project was to be both sustainable and transferable. One aspect that greatly improves its sustainability is that the project can generate future income through carbon finance (through the sale of CERs). Although it is unlikely that these CERs will be able to cover the upfront costs of a project, it will make it easier to attract funding, as sponsors will be able to recover their costs. The project has also helped to generate a local market for energy efficiency (including SWHs), and created a new area of income-generation. Because the project has created demand for SWHs, local businesses have begun developing cheaper and more effective units, which has pushed down the costs. It has also created jobs for contractors in terms of construction, installation and maintenance of these units. Because the labour will now be able to be sourced locally, the costs of maintaining these units will also be reduced.

By helping to reduce the costs of implementing and maintaining similar units, this initiative has helped to make it easier to replicate this project. Other initiatives in the future will be able to source locally-produced units, as well as local labour for installation and maintenance. The project is also working on registering a CDM monitoring and verification methodology, which will make it easier for other projects to be able to complete this in the future. The process in developing this project was also well-documented, meaning that other groups will be able to implement it more easily in the future. The project has received positive attention and support from government, and this will hopefully lead to similar projects being rolled out with government funding in the future. However, similar projects will require significant up-front funding, and community buy-in.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The project has an impact on two major groups – on the efficient energy market in the country; and on the beneficiary households in Kuyasa. The project has helped to generate demand for locally-produced SWHs, and for local contractors able to install and maintain them. This therefore means that energy efficient initiatives will be more accessible to people across the country. By working on a CDM verification methodology for the country, the project has once again made it easier for similar projects to be implemented in the future. It has also helped to make heating water cheaper and safer for those in the beneficiary households. This has helped to reduce incidences of respiratory illnesses, and costs of water heating.

The main lesson learnt is that energy efficient interventions can be implemented in low-cost housing, and can also help to save costs on these units in the future. Although they will require more funding up-front, in the long-term the costs will be reduced, and the benefits to those involved have been well-documented through this project. Because of South Africa’s energy-generation crisis, such interventions will only become more necessary in the future, and it would be better to begin implementing these projects sooner rather than later. This will help to lessen the current energy crisis, and to make it unnecessary to create new energy-generation plants in the future, which would require substantial funding.

Contact Information

Institution Name:   South African Export Development Fund
Institution Type:   Public-Private Partnership  
Contact Person:   Karen Morris
Title:   Administrator  
Telephone/ Fax:   +27 21 461 7827
Institution's / Project's Website:   southsouthnorth.org
E-mail:   kuyasacdm@telkomsa.net  
Address:   PO Box 12842, Mill Street, Gardens
Postal Code:   8010
City:   Cape Town
State/Province:   West Cape
Country:   South Africa

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