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Financing Energy Upgrade in South African Low Income Homes

Energy Savings in buildings

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Technologies and measures which are aimed at reducing the use of energy in buildings could have several advantages, such as lower energy bills, increasing comfort of living or working, and reduced impact on the environment, including reduction of CO2 emissions. The options considered for energy savings particularly leading to CO2 emission reductions include the following:

Clean Development Mechanism market status: 

[this information is kindly provided by the UNEP Risoe Centre Carbon Markets Group]

Project developers of energy efficiency in buildings projects in the CDM pipeline mainly apply the following methodologies:

AMS-II.E “Energy efficiency and fuel switching measures for buildings”
AMS-II.C “Demand-side energy efficiency activities for specific technologies”
AMS-II.J “Demand-side activities for efficient lighting technologies”
AM0046 “Distribution of efficient light bulbs to households”
Further information on these metholodogies can be found here.

The energy efficiency household projects are currently representing 0.1% of the CDM projects in the pipeline. Presently, there are six CDM projects registered in energy efficiency for households - four of them are based on lighting/insulation and two on improved stoves. The lighting/insulation projects are located in India and one in South Africa. The improved stove projects are based in Zambia and Nigeria.

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Example CDM project:
Title: Visakhapatnam (India) OSRAM CFL distribution CDM Project (CDM Ref. No. 1754)
The “Visakhapatnam (India) OSRAM CFL distribution CDM Project” involves the distribution of approximately 450,000 to 500,000 OSRAM long life Compact Fluorescent Lamps (CFLs) in the district of Visakhapatnam, which numbers about 700,000 households. The CFLs used are OSRAM DULUX EL LONGLIFE, and have the capacity of 15,000 hours and 80% lower energy consumption than a conventional light bulb.
Project investment: USD 2,036,000
Project CO2 reduction over a crediting period of 7 years: 51,116 tCO2e
Expected CER revenue (assuming USD 10/CER): USD 511,160

To develop a financial model appropriate to the South African context that will enable the national replication of the ‘low income urban housing energy upgrade project' currently being piloted in Kuyasa, Cape Town. This development process will consider both CDM and TREC financing mechanisms for which the energy upgrade project is eligible.

Location

South Africa
25° 42' 24.84" S, 28° 13' 45.84" E
Main activity and output: 
  • Identify the need for financial model to be drawn up based on Kuyasa project for nationwide replication;
  • Assess the Kuyasa energy upgrade;
  • Identify potential investors;
  • Explore and develop replication options;
  • Document lessons learned;
  • Draft a financial model including innovative financing mechanisms such as CDM which can be rolled our nationally or regionally.
Expected impact: 
  • Increased energy savings;
  • Reduced emissions;
  • Increased renewable energy generation;
  • Improved quality of life;
  • Provision of learnings in the use of CDM and TRECs in project financing of this nature internationally.