To deal with the national electricity crisis in early 2008, the Office of the Presidency created the National Energy Response Team (NERT) to bring together leaders from both government and the private sector to address the electricity situation.

One of the initiatives of the NERT was the creation of a Power Conservation Programme (PCP) consisting of three broad areas. One is the Energy Conservation Scheme (ECS), more commonly known as the Penalties, the second is the Energy Growth Management (EGM) strategy and the third is the Trading of the right to consume (RTC)

ECS (Energy Conservation Scheme)

ESC, or Penalties, are designed to make South African electricity customers more efficient on a long term and sustainable basis. If South Africa becomes more energy efficient it will save billions of Rands of capital expenditure flowing out of the country and reduce the risks of load shedding.

The ECS is well developed and is ready for roll out on short notice. The recession of 2009 gave SA a brief respite but the mines and the smelters that have been operating on 90 – 95% of their previous electricity supply have given notice they will need full power again in 2010. This will put tremendous pressure on the system again and may trigger implementation of the ECS.

The penalties use a baseline of a customer’s usage from Oct 2006 to Sept 2007. Failure to reduce current consumption below a specific target for the various sectors shown below triggers penalties.

Market sector target reductions:

EGM, Energy Growth Management, aims to find an appropriate methodology to allocate the limited and scarce supply of electricity to new applications for electricity.  With meaningful new generating capacity years away, it is envisaged that any new supplies of electricity will come mainly from some of the savings arising from the ECS.

RTC, or trading of the Right To Consume is a market based scheme that aims to enable customers who are able to save more than their allocation under the ECS (sellers) to sell their “right to consume” to customers who do not have enough capacity (buyers). The scheme envisages facilitating the reallocation of consumption rights through bilateral trading and auctions of consumption rights by allowing customers a means of selling a portion of their monthly energy allocation to another customer at an agreed price, through the trading of RTC credits.