There needs to be a more coordinated effort amongst the various departments of the South African government so that their purchasing power can be used to move towards a carbon free economy. The same edition of Engineering News reports that Climate change could halve Southern Africa’s cereal crop output. which is a direct result of coal based power generation.

Please see the following article for more details.

http://www.greenlodgingnews.com/Content.aspx?id=3184

“With Eskom negotiating with the World Bank for a US$5 billion dollar loan to finance a part of its planned R1 trillion expansion plan, there is an urgent need to assess Eskom’s current build plan in the sober light of financial long-term health. Eskom’s current plans are for increased investment in coal-fired power stations and nuclear plants. These plants have life expectancies of between 40-60 years.

The attached Sustainable Energy Briefing will summarise recent research into the costs of renewable energy versus fossil fuel energy. This research indicates that the cost of building renewable energy is cheaper (or at par) with that of fossil fuels and without the consideration of externalised costs.

In addition, the unit cost of electricity will be examined. In the next 15 years or less, the unit cost of renewable energy will be less than that of conventional energy. This statement (perhaps one of the most important statements in the energy sector today) has the logical consequence that Eskom’s continued reliance on coal will result in higher than necessary energy prices. Once again, these calculations do not include externalised costs such as carbon emissions, poor air quality, waste storage, and acid rain.

Finally, this issue will outline the faulty economics of nuclear power. Simply put, nuclear power may be the altar upon which this country bankrupts itself.”

Another well thought our proposal was submitted by Earthlife South Africa which may be found at the following link: Earthlife Response to NERSA’s REFIT proposal

In Africa, in particular, sparse and often non-existent energy or water infrastructure means that renewable or distributed energy and water solutions are the only viable options for these areas, and these solutions are often a matter of survival. As a result, there are substantial opportunities for those who can fill the need. However, solutions to these problems, in many cases, have already been developed in Israel and, due to a lack of local research and development expertise and skills in Africa, require international R&D as is found in Israel. In addition, political instability in the region requires independent decentralized solutions to meet basic energy, food and water needs, rather than government-sponsored programs.

Barriers to entry
First, let’s look at the barriers to entry into African and other developing markets:
1.    The need for local partners. New entrants to these markets need to find capable local partners who have an understanding of unstable political and government institutions. It is very difficult to find these types of partners.
2.    Lack of government participation. Small or non-existent government subsidies means that solutions have to be economical on a standalone basis. This is in contrast to more developed markets, such as Germany and California, that offer feed-in tariffs.
3.    Negative local perception of renewable energy. There is a perception that renewable energy is a cheap, unreliable solution for poor people and that acceptance of these new technologies will further delay the introduction of the grid or other basic infrastructure in their communities. This perception is a serious barrier to entry.
4.    Theft of expensive materials, such as photovoltaic cells. This issue is discussed below in further detail.

Opportunities for Israeli entrepreneurs
Despite the above-mentioned barriers, there are enormous opportunities for Israeli entrepreneurs in Africa and other developing regions.
Rough terrain means less competition

Africa is a tough place to do business. Americans and Europeans prefer to stay away from places like Lagos, Abudja, and Johannesburg, where basic public infrastructure is scarce. Israelis, on the other hand, are battle-hardened entrepreneurs who are not afraid of risk and have a proven ability to adapt to new cultures. Israel, in many ways, is a rough land that has forced its entrepreneurs to develop “no frills” solutions that work within difficult conditions. Israeli entrepreneurs can apply these skills to the rough environment of African and other developing regions, as did Netafim, the developers of the world’s first drip-irrigation systems, which were initially developed to be used in Israel’s arid climate. Netafim’s revolutionary systems have enabled African farmers to dramatically increase their agricultural output and consequently increase their standard of living.

The opportunity for Israeli entrepreneurs is to offer cleantech solutions that are developed specifically for the unique environment found in Africa, as opposed to existing cleantech solutions that were mainly developed for European or American markets, but which do not target the unique needs of developing regions. For example, state-of-the-art technology requiring expensive raw materials does not take theft or low skill base into consideration. Major projects backed by governments and multinational companies have failed because of these factors, particularly projects utilizing expensive photovoltaic solar technology. Thus, there is a need for innovation on a much greater level than what is currently on the market – a real opportunity for Israelis.
Population is large and young

The Israeli local economy is very small, so the prospect of targeting markets with tens of millions and sometimes hundreds of millions of consumers can be very attractive regardless of the potential hardships. In addition, African and developing regions are characterized by young populations, offering untapped markets with growing cash-generating economies.

Same time zone
Israel is in the same time zone as Africa, making it relatively easy to coordinate phone calls, meetings and trips.

Economic opportunity
The clean development global program for buying carbon credits offers a premium for carbon-saving projects emanating from Africa. This means that businesses involved in renewable energy can generate significant carbon credits, which they can then sell at a higher price than other regions due to the priority given to poorer nations.

Economic and social opportunities for Israel
African and developing markets are not for the faint-hearted but can certainly offer great opportunities and potential rewards for those companies that are willing to take the plunge. An awareness of the challenges can advantageously position Israeli entrepreneurs to do business in Africa. We believe that the Israeli government should consider making entry into that region a priority. Not only would it contribute to the Israeli economy, but should Israeli companies become leaders in solving basic humanitarian needs for water, energy and food in these regions, they would have immensely favorable economic repercussions and would do wonders for Israel’s image throughout the world – far more than any PR campaign ever could.

1 Power Conservation Program (PCP)

2. Renewable Energy Feed-in Tariff (REFIT)

The PCP proposal has the potential to revolutionize the energy efficiency/renewable energy sector in South Africa by requiring South Africa’s biggest electricity consumers to reduce their use of electricity by 10% or face very high rates. Compared to these rates, renewable energy or energy efficiency steps become highly profitable based on avoided penalties.

The feed in tariff on the other hand is not helpful as a promoter of  renewable energy in South Africa since the prices being proposed do not come near to guaranteeing a suitable return on investment. In addition we believe that a 15 year period is too short. Investor are going to want to see at least 20 years guaranteed rate. We are still early in the process so there is still time to influence NERSA to adopt a more realistic rate. Hopefully the final document will reflect a more realistic policy.

1. Size: The size of the deal is significant enough to demonstrate a major commitment of local VCs to Cleantech. Some of Israel’s leading VC firms are involved in this investment, including Israel Cleantech Ventures, Pitango Venture Capital and Evergreen Venture Partners.

2. Management: The management team is made up of experienced entrepreneurs from leading Israeli hi-tech companies, like Checkpoint Software Technologies Ltd.

3. Technology: The science on which the company’s technology is based has received international recognition from Scientific American as one of the top 50 most significant science breakthroughs in 2007.

4. Multi-disciplinary approach: The company seems to be taking an integrated approach, combining various disciplines such as optic design, semiconductor processes, materials science, and mass manufacturing techniques to come up with a solution rather than one product.

With energy crises riddling the world from South Africa and Brazil to Europe and the US, there are many opportunities for companies such as Pythagoras Solar and Infinia Corporation - who recently raised $50M - to achieve massive scale.

The word out on the street is unclear: some say solar is over crowded and valuations are sky high,while others say that solar is the one area that has been historically under-invested and has the most potential for major gains in efficiency and to compete with conventional energy sources, so that the current valuations are still quite reasonable. Time will only tell who is right.

The article may be downloaded at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=973944
or at http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-8594.2007.00290.x .

The article was published in Business and Society Review, Vol. 112, Issue 1, pp. 137-161, March 2007.

The study shows that nearly half (49) of US companies in the Standard & Poors (S&P) 100 Index are now disclosing information about their environmental, social, and governance (ESG) performance. From an Israeli perspective the significance of this milestone demonstrates that it’s time for Israeli companies to start gearing up for a new wave of regulations and standards on the horizon.

Companies such as Bank Leumi and Israel Discount Bank Ltd. have taken the lead in reporting their ESG performance. This study confirms my conviction that Israel is amongst the leading countries in the Global CSR movement.

However the water sector is another story. Israel has had a 50 year head start on the rest of the world. The recent high level delegation of Israel’s leading water industry experts to Australia proved that Israel truly can add value and assist the global community in managing their water problems.  As always the winners will have to keep their eye on the ball, ensure business fundamentals are there and persevere. Good luck to us all!

However I believe that as in any society, the foundations for innovation are not in well funded organizational structures. In fact as Israel has demonstrated, financial stability is by no means a key ingredient for innovation. Israel has succeeded despite lack of financial support. I humbly propose that its our unique social structure that has allowed us to produce tremendous technological innovations. Lev Leviev commented on this topic several months ago and pointed to the need to invest in Jewish education since Jewish education has been Israeli society’s key ingredient for thousands of years and has ensured the moral fiber, national vision and intellectual foundation for generations of Israelis to succeed regardless of the circumstances.

Policy makers of Israel should head the words of one of Israel’s finest business personalities. Leviev is deeply routed in Jewish tradition and education and understands the unique ingredients such an education provides our new generation. I am always amazed that so many of the successful business people I meet on a daily basis concur with these thoughts. So many successful Israeli business people refer to their Jewish upbringing subconsciously and regardless of their level of observance.

Money is everywhere! Technology is everywhere! Only in Israel are there all the ingredients for a full Jewish education. This is our competitive edge and we should view it as such.