INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC868 Date ISDS PreparedtUpdated: May 20,2004 I. BASIC INFORMATION A. Basic Project Data Country: South Africa Project ID: PO78093 -PO73322 (GEF) Project Name: Renewable Energy Market Task Team Leader: Arun P. Sanghvi 1Transformation I 1 Estimated Appraisal Date: June 30,2004 Estimated Board Date: January 15, 2005 Managing Unit: AFTEG Lending Instrument: Specific Investment Loan (Sector: Renewable energy (100%) ITheme: Climate change (P); Infrastructure 1 Iservices for private sector development (S) Safeguard Policies Specialists in the task team: LoanlCredit amount ($m.): IBRD: 0 GEF 6.0 - Other financing amounts by source: ($m) B. Project Objectives [from section 2 of PCN] The project development objective is to enhance environmentalsustainability in South Africa's energy sector by facilitating significantreduction in South Africa's GHG emissions. 2a. Proposed global objective The project's global objective, in line with GEF OperationalProgram 6 (OP6), is to remove the barriers to, and reduce the implementation costs of, renewable energy technologies to help mitigate greenhouse gas emissions. C. Preliminary Project Description [fromsection 3 of PCN] Preliminary Preliminary FinancingPlan Component Cost (USSM) Estimates (US$M) GEF grants Government Private TA and Capacity Building 6.5 5.0 1.5 0 Commercial Solar Water Heating 10.0 1.O 0 9.0 (CSWH) Total 16.5 6.0 1.5 9.0 The Dept. of Minerals and Energy will contract DBSA to be the implementing agent for the project. TA and CapacityBuilding The overall objective is the creation andlor strengtheningof the organizations and institutions that would help the Government meets its renewable energy target. The capacity areas covered would be the policy setting, promotion, regulation, serviceprovision, and monitoring/evaluation of renewable energy power generation. The agencies covered would include DME, National Energy Regulator (NER), and potential project sponsors and financiers. Investments Commercial Solar Water Heating (CSWH). The project will support expansion of South Africa's nascent solar water heating industry by promoting installation of systems for solar water heating for commercial, institutional, and industrial a plications; this will be coordinated with. a P UNDPIGEFprogram aimed at the residential market . There are already a few companies serving the CSWH market in South Africa, without any subsidies or other incentives; however, they face some barriers which makes it difficult for them to scale-up. The near-commercial nature of the CSWH presents good prospects for rapid take-off during the project with GEF support. The project-supported solar water heating investments will be installed in existing institutional, commercial, and industrial facilities, within the confines of their facility perimeters. In most cases, the solar arrays will be installed on rooftops of existing buildings, but ground mounting of the arrays is possible. The associated water storage tanks, pumps, water softening equipment, 1 A typical CSWH system, suitable for a hospital, has a storage capacity of 30,000 litres, whereas the capacity of residential systems is 200-30 litres. Some of the main end-users of CSWH systems are hotels, hostels, hospitals, flatslapartment blocks, and industrylfood processing. etc., will for the most part be installed inside existing buildings but in any case will be in close proximity to the associated (existing) institutional, commercial, or industrial uses of the hot water. No new land taking is envisioned for the investments. Renewable energy power generation. This project is expected to trigger significant private sector investments in renewable energy power generation; these investments will befinanced outside of the REMTproject by a combination ofprivate equity and debt, with debtfinancing facilitated by an output-based revenue streamprovided by external 'carbonfunds' such as the PCF. Preliminary analysis indicates that over 2005-2008 there will be about 5-6 projects: With a renewable generation capacity of 75 MW that would displace about 900 GWh per year of Eskom's generation, and capital cost of about $ 150 million, with 'carbon funds' providing about $ 50 million; Which would utilize resources such as landfill-gas-to-electricity,bagasse cogeneration in sugar industry, waste-based generation in the paper industry, small hydro and wind; Alternative development interventions/approaches The conventional approach of the Bank, including GEF, financing renewable energy power generation investments was rejected -this reflects the emergence of non-Bank funds2as well as the well-developed nature of South Africa's private and financial sectors. Lending instrument. The project provides only GEF grants, as there is no need for South Africa to borrow IBRD hnds for this project. D. Project location (if known) Project supported solar industrial process heating investments will be installed primarily in the major cities: Johannesburg, Pretoria, Capetown, etc., but eligibility for the program is country- wide. E. Borrower's Institutional Capacity for Safeguard Policies [fromPCN] The Government of South Africa has considerable institutional capacity for renewing, analyzing, and enforcing safeguard policies. 11. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policy . If Applicable, How Might It Apply? [Nl Environmental Assessment (OP/BP 4.01) [Nl Natural Habitats (OP/BP 4.04) 2 PCF funds come from sources outside the Bank, and are not considered as part of WBG funds. [N1 Pest Management (OP 4.09) IN1 Involuntary Resettlement (OPBP 4.12) [Nl Indigenous Peoples (OD 4.20) [Nl Forests (OPBP 4.36) [Nl Safety of Dams (OPBP 4.37) [Nl Cultural Property (draft OP 4.11 - OPN 11.03) [Nl Proiects in Disputed Areas (OPBPIGP 7.60)* [N1 Proiects on International Waterwavs (OPIBPIGP 7.50) Environmental Assessment Category: [1A [I B [XI C [ ] FI [ ] TBD (to be determined) The technical assistance and solar water heating investments in the project are not expected to present any environmental or social risk. Solar water heating is not a 'listed activity' with respect to South African environmental requirements, and therefore would not be subject to the environmental screening or environmental assessment process. Since the project does not involve any land taking, and the only construction will be within the perimeter of existing institutional, commercial, or industrial establishments, (and in fact, mostly on rooftops) no social safeguards are expected to be triggered. 111. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared. July 2004 B. For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing3should be specified in the PAD-stage ISDS. By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputed areas IV. APPROVALS 2 . wq guards Coordinator: Thomas E. Walton 3 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.