Finance and Economic Opportunities
In the State of the Province Address, the Premier notes that the Department of Economic Opportunities and Tourism, along with the Department of Local Government and the Provincial Treasury, is in the process of assessing municipalities “to determine their readiness for and to select those that can be the initial drivers of new energy oppor-tunities”:
- (a) What are the criteria for the assessment of local municipalities and (b) how was this preferred set of criteria determined;
- (a) how many municipalities have been identified and (b) what are the relevant details of each;
- whether his Department completed its assessment and engaged the municipalities that have been identified as meeting the criteria; if not, why not; if so, what has been the response of the local governments?
1 (a) What are the criteria for the assessment of local municipalities
To identify the participating candidate municipalities for the Municipal Energy Resilience (MER) Project, a systematic, rigorous and transparent selection methodology was developed called the Municipal Readiness Evaluation Tool (MRET). The municipal readiness evaluation also enables the identification of municipal grid capacity, technical capacity, financial standing and other gaps and development needs for further renewable energy project preparation, development and implementation that may need to be addressed.
The indicators used in the MRET focus on the following areas:
1. Senior municipal staff management and financial skills/capacity; (MM & CFO)
2. Municipal energy department technical skills/capacity; (Technical/Electrical engineer)
3. Overall financial standing/credit rating of the municipality (Auditor general audit outcome, cash balance, cash coverage, spend of capital budget, liquidity ratio, current debtors' collection rate, income);
4. The energy policy/by-law landscape of the municipality (SSEG policy, amended electrical policy and by-law approved by council, wheeling policy, electricity master plan, cost of supply study, electrical tariff study), and;
5. Current energy-related projects in each municipality (electrical infrastructure projects, renewable energy projects, part of Sustainable Infrastructure Development and Finance Facility (SIDAFF) or the City Support programs).
Two "phase gates" were also used in the assessment of municipal readiness under the MER Project: (1) electricity sales and electricity demand to determine whether the municipalities chosen have the demand to support large infrastructure projects and to consider the impact of the energy projects on the municipalities’ balance sheets; and (2) the required basic technical capacity as measured by the presence of an ECSA (Engineering Council of South Africa) registered professional electrical engineer at the municipality.
1(b) how was this preferred set of criteria determined
The criteria were derived from the requirements of the Department of Mineral Resources & Energy’s New Generation Amendment Regulations published in October 2020.
2 (a) how many municipalities have been identified
Six local municipalities have been identified as potential candidate municipalities. The City of Cape Town is also a collaborative partner on the MER Project as it is the largest energy user in the province and has already publicly progressed plans on Independent Power Producer (IPP) procurement and other renewable energy projects.
2 (b) what are the relevant details of each
The 6 MER Project candidate municipalities are:
- Drakenstein
- Mossel Bay
- Overstrand
- Saldanha Bay
- Stellenbosch
- Swartland
3: Whether the Department completed its assessment and engaged the municipalities that have been identified as meeting the criteria; if not, why not; if so, what has been the response of the local governments?
Yes, the Department of Economic Development has completed its assessment and the 6 MER Project candidate municipalities have each been engaged. All 6 MER Project candidate municipalities and the City of Cape Town have confirmed their interest and we are in the process of establishing a Memorandum of Understanding between the Department of Economic Development and Tourism and each of the candidate municipalities.
