How the EDC works

Government and policy
The Energy Development Corporation (EDC), as a division of CEF, is part of a group owned by the South African government and controlled by the Minister of Minerals and Energy. It is one of the government's key institutions to responsible for translating its favourable policy framework on renewable energy into reality. Being close to the policy makers, EDC is able to lobby the relevant government departments and institutions for support when necessary. At the same time it operates as a fully commercial entity.

EDC is committed to ensuring that it meets the objectives of the government's broad-based black economic empowerment strategy. The intention is to ensure that EDC maximises its procurement from black or black empowering enterprises and facilitates ownership.

The government’s Department of Minerals and Energy is responsible for formulating strategies and drafting legislation for the South African energy sector.

The government has committed itself to a target of 10 000GWh renewable energy contribution to final energy consumption by 2013. This is to be mainly procured from biomass, wind, solar and small-scale hydro. This renewable energy will be used for both power generation and non-electrical technologies, such as solar water heating and bio fuels.

President Thabo Mbeki, in his State of the Nation address in February 2006, said: "To implement ASGISA [the Accelerated and Shared Growth Initiative of South Africa], the state-owned enterprises and the public sector as a whole, working in some instances through public-private partnerships, will make large investments in various sectors to:

  • Meet the demand for electricity;
  • Provide an efficient and competitive logistic infrastructure;
  • Expand and modernise the telecommunications infrastructure; and,
  • Satisfy the demand for water.

The public sector will also accelerate infrastructure investment in the underdeveloped urban and rural areas of South Africa through the municipal infrastructure grant, the expanded public works programme and other infrastructure funds to improve service delivery in the areas of the so-called second economy, including the provision of roads and rail; water; energy; housing, schools and clinics; business premises and business support centres; sports facilities; and, multipurpose government service centres, including police stations and courts.

Mbeki said R372-billion would be provided for both these sets of programmes over the next three years.

The president said particular attention would be paid to the expanded public works programme as it an important bridge between the two economies in South Africa and a significant part of the government’s poverty alleviation programme. Resources for the public works programmes will be pooled to ensure maximum impact, both in terms of products delivered and employment and skills-training opportunities.

The biofuels sector has also been identified by ASGISA as one of the sectors for accelerated growth, building on the work already done within the context of the existing Micro-Economic Reform Programme.

Development and donor agencies

Renewable energy's cost is higher compared to developed energy sources and, in most instances, is not viable without subsidies or donor funding.

Donors mainly provide funding for projects that often only deliver benefits for as long as the grant money is flowing. However, EDC is primarily an equity investor with a long-term commercial perspective. Therefore partnerships with development organisations offer a high level of potential sustainability as donor funds can be used to bridge the viability gap. Thereafter EDC will, as part of its investment management, ensure that benefits continue to be delivered.

Already donor agencies are providing substantial financial backing for some of EDC's development projects.

Donor agencies with which EDC has mutual co-operation include:

  • Danish International Development Assistance (Danida);
  • Norwegian Agency for Development Co-operation (Norad);
  • German Technical Assistance (GTZ);
  • United Nations Development Programme (UNDP); and
  • Global Environment Facility (GEF).

 

Partnerships
In EDC you will find a capable partner with the necessary infrastructure that can play an important role in Africa, providing equity funding for commercial projects and development funding for developmental and social projects. As part of the CEF Group of companies, substantial financial as well as human resources are at EDC's disposal. CEF is responsible for providing financial support to EDC until it becomes self-funding. EDC seeks to leverage the capital and technological expertise of its joint-venture partners and prefers to develop projects in conjunction with private-sector partners, recognising their contribution in terms of technology know-how, industry knowledge, financial, marketing and other entrepreneurial capabilities.

EDC is ideally placed to take advantage of the transformation in South African energy markets with its strong links to the government and its relationships with donor agencies and other institutional entities. EDC in Africa

EDC is committed to contributing to the achievement of the objectives as set out in the Southern African Development Community (SADC) and New Partnership for African’s Development (Nepad) protocols.

Nepad is a vision and strategic framework that focuses on the current challenges facing the African continent. Issues such as escalating poverty levels, underdevelopment and the continued marginalisation of Africa need radical intervention, spearheaded by African leaders, to develop a new vision that guarantees Africa's renewal.

A core objective of Nepad’s environmental initiative is to combat poverty and contribute to socioeconomic development in Africa. The initial focus is on monitoring and regulating the impact of climate change. EDC's initiatives fit within this objective through projects such as the low smoke fuels and other renewable activities.

EDC's commitment to Nepad is enforced by the contributions that makes through investments in energy infrastructure. EDC's aim is to forge alliances and develop partnerships with foreign investors and the development community.

The vision of the SADC is one of a common future, a future in a regional community that will ensure economic well being, improvement of standards of living and quality of life, freedom, social justice, peace and security for the people of southern Africa.

The programmes and activities of EDC share the vision of SADC. EDC engages in projects that yield the triple bottom-line benefits (economic, social and environmental). The nature of EDC's projects improves the lives of the people through low smoke fuel projects and it protects the environment through ventures such as the wind projects.