Government set aside R66,5-million in its 2011 Budget for the establishment of the ‘South African Energy Development Institute’, which will conduct research and development (R&D) into energy-efficiency technologies and solutions.

The initiative is designed to reduce “wasteful” electricity consumption patterns, as well as South Africa’s carbon usage.

Funding for the institute forms part of a larger additional allocation to the
Department of Energy of R369,7-million to support demand reduction, which will be disbursed over the three-year expenditure period from April 1, 2011, to March 31, 2014.

South Africa is a facing a “tight” power balance over the coming two years, with Eskom projecting that, in the absence of material demand management and private generation interventions, there could be a 9 TWh shortfall – the equivalent of Cape Town’s electricity consumption over a period of a year.

“Research and development conducted by this institute will support energy-efficiency objectives pioneered through the electricity demand-side management grant, which is scheduled to come to an end at the end of 2011/12,” the Budget Review states.

Finance Minister Pravin Gordhan also confirmed the funding of R800-million “green economy” initiatives, but said specific allocations will be made in the ‘Adjustments Budget’.

The emerging New Growth Path, which seeks to generate five-million jobs by 2020, has also emphasised promoting innovation through “green economy” initiatives.

But the Budget Review notes that expenditure on energy will be markedly lower over the Medium Term Expenditure Framework period in comparison with preceding years, owing to the fact that the final tranche of the Eskom R60-billion subordinated loan was paid in 2010/11.

Gordhan made no mention of a further R20-billion equity injection for Eskom, which he announced last year, when unveiling an increase in guarantees to the utility from R176-billion to R350-billion.

Instead, the review states that medium-term spending will focus on universal access to electricity through the integrated national electrification programme, which will grow to R3,2-billion in 2013/14.